Reddit Stocks: What meme stocks are trending today? – August 4, 2023

US futures rise

• Dow Jones Industrial Average is up 0.1%
• S&P 500 is up 0.2%
• Nasdaq 100 is up 0.3%

US futures are pushing higher as markets digest the latest non-farm payrolls and earnings out from tech behemoths Apple and Amazon last night.

Non-farm payrolls: Wage growth comes in hot

Non-farm payrolls (NFPs) rose 187,000 in July, easing from the 209,000 rise we saw the month before. That was slightly softer than the 190,000 additions expected by economists, but within what was a rather wide consensus range.

The unemployment rate dropped to 3.5% in July from 3.6% in June. Economists thought it would hold steady.

The most important data weighing on the Fed’s mind is wages, which came in hotter than expected and that will not be welcomed by the central bank. Average hourly earnings were up 0.4% month-on-month in July and 4.4% on an annual basis. Wages grew faster than the 0.3% monthly rise and 4.2% annual lift pencilled-in by economists.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. Apple
2. Amazon
3. AMD
4. Shopify
5. C3.ai
6. PayPal
7. NVIDIA
8. Tesla
9. Visa
10. Coinbase

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:

1. Nikola
2. QuantumScape
3. Amazon
4. Palantir
5. fuboTV
6. Apple
7. Tesla
8. Fisker
9. Lucid Group
10. PayPal

US premarket winners and losers

Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Let’s have a look at the top stocks to watch today.

Apple stock: Fails to meet high bar

Apple shares are down 3% and at a three-week low this morning and the iPhone maker is set to lose its $3 trillion valuation today after it reported its third consecutive quarter of lower sales, stoking concerns about demand for devices and mobile phones. The fact shares were near all-time highs before the results and Apple commands a premium valuation meant the bar was high ahead of the results, leaving it vulnerable to some profit taking. One reason Apple has remained in favour is because iPhone sales have proven more resilient compared to rivals amid a slump in demand for smartphones, but a 2.4% drop in sales during the third quarter and the ongoing contraction in iPad and Mac sales is injecting some doubt about when a rebound will occur. The update earlier this week from the largest maker of smartphone processors, Qualcomm, also won’t be helping as it warned it expected tough conditions to last until the end of 2023. Apple’s Services unit was the bright spot and grew twice as fast as Wall Street had expected. Adjusted EPS was up 5% from last year at $1.26, which was welcome considering analysts thought they would come in flat.

Analysts believe the fourth and final quarter will be a turning point, helped along by the potential launch of the new iPhone 15 in the last few weeks of the period. Reports suggest Apple is aiming to keep annual volumes flat, although higher prices should mean higher iPhone revenue – which accounts for almost half of Apple’s topline income. Citigroup initiated a 90-day catalyst watch on Apple ahead of the iPhone 15 launch, stating that the stock has historically outperformed the Nasdaq 100 five out of seven times (and 7/7 versus the S&P 500!) between the release of the third quarter results and the introduction of the latest model.

Amazon stock: Results hit all the right notes

Amazon shares are up 8.9% before the bell and set to open at its highest level in almost a year after delivering an impressive performance in the latest quarter, delivering faster growth in both sales and profits than forecast. Sales were up 11% in the second quarter at $134.4 billion and operating profit more than doubled to $7.7 billion, with diluted EPS swinging from a loss to a $0.65 profit. That was all welcomed considering Wall Street thought sales would grow just 8.6% and were looking for EPS of $0.40.

The 12% sales growth at its cloud-computing arm AWS was also good news as this was ahead of the 10% pencilled-in by analysts. Its huge ecommerce arm also returned to growth, and at a much faster rate than anticipated, providing further good news. The outlook for the second half was already rosy, with analysts predicting profits would more than double, and the results will only make markets more bullish, even if many of its businesses remain highly sensitive to the wider macroeconomic conditions. Amazon’s revenue outlook for the current quarter was, as a result, ahead of expectations. Costs are also finally starting to rise at a slower pace than sales, helping convince markets that inflationary pressures that have hit Amazon harder than other Big Tech giants is finally easing. Analysts had nothing but praise following the results, leading to several price target increases.

Airbnb stock: Bookings slowdown continues

Airbnb shares are down 2.4% and at a three-week low of $137.50 as a slowdown in growth and a moderation in prices tempered a strong earnings beat and rosy outlook. Revenue rose 18.1% in the latest quarter to $2.48 billion and came in just ahead of the $2.42 billion forecast, but that marked the slowest rate of growth on record and analysts believe the brakes will come down further in the second half. Adjusted EPS jumped 75% to $0.98 and comfortably beat the $0.78 forecast.

In addition to the slowdown in bookings, Airbnb reported a mild 1% rise in average daily rates to suggest prices are also peaking, with a 1% drop in North America. Airbnb said there are signs that people are returning to cities, but international travel is still a faster-growing area at present. Its guidance for revenue of $3.3 billion to $3.4 billion in the current quarter was ahead of the $3.2 billion pencilled-in by Wall Street.

Still, brokers were largely positive on the results. Piper Sandler said Airbnb was ‘impressive’ but said there is not a clear path to see its multiple expand from here. Baird said Airbnb has a strong brand and competitive position but said the outlook for demand is uncertain in the near-term. A number of brokers upped their target price this morning, including JPMorgan to $130, RBC to $140, Mizuho to $150 and Wedbush to $145. TD Cowen lowered its view to $145.

AMD stock: Is this a buying opportunity?

AMD stock is up 0.1% today at $113.46. The chipmaker lost ground after releasing results earlier this week but rebounded 3.5% yesterday after Morgan Stanley said the pullback represented a buying opportunity. Analyst Joseph Moore said the recent weakness ‘creates an important buying opportunity’ and said it believes AMD is a ‘significant outperformer versus semis from here’.

‘The AMD quarter should have been a relief, given near universal sentiment that they would guide well below expectations for servers (they didn’t), and that their expectation for margin recovery in PCs was unrealistic (it wasn’t),’ Moore said. The broker has an Overweight rating on the stock with a $138 price target.

Meanwhile, Piper Sandler said it believes AMD is ‘among the best positioned companies to benefit from the tech sector’s broad macro-economic adoption’ of artificial intelligence. Its rival NVIDIA, which is up 0.3% today, has stolen all the attention and has become the number one AI semiconductor stock on the market, but AI is too much of a gamechanger for just one company to monopolise. With that in mind, investors may start to find better opportunities away from NVIDIA given its premium valuation over its rivals.

Tesla stock: Will Tesla invest in India?

Tesla shares are up 0.4% this morning. We discovered late yesterday that executives from the electric carmaker met with India’s commerce minister to discuss plans to develop a manufacturing plant in the country, according to unnamed sources speaking to Reuters. CEO Elon Musk met with prime minister Narendra Modi back in June. Tesla is thought to be keen to produce a cheaper model in India that would be priced at just $24,000, the report said, which is some 25% below its current entry price.

Nikola stock: CEO resigns

Wild times at electric vehicle maker Nikola, which is down over 12% this morning and falling from nine-month highs. President and CEO Michael Lohscheller has stepped down with immediate effect and been replaced by chairman Steve Girsky. Steve Schindler has become chairman.

That announcement came as Nikola reported an adjusted Ebitda loss of $125.1 million in the latest quarter, which was smaller than the $137.2 million estimate as Nikola tries to escape the red as quickly as possible.

Nikola started producing its hydrogen fuel cell electric truck at the end of July and expects to start delivering them in September, having secured orders for over 200 of them so far.

That update comes just one day after Nikola secured approval from shareholders to raise more capital, allaying fears about its cash position. Nikola was forced to delay the investor meeting twice after struggling to secure enough votes from its retail investor base. But the approved plan will give it the ability to issue more shares and raise fresh cash.

Fisker stock: Production goal cut

Fisker shares are up 0.6% after it warned it will produce far fewer vehicles this year than previously hoped because it is suffering from supply chain problems. The company, which recently started shipping its first electric SUV and unveiled its new pickup truck, said it will now make just 20,000 to 23,000 vehicles in 2023, marking a significant cut from its original goal of 32,000 to 36,000.

Fisker generated its first substantial revenue of $825,000 in the second quarter after it began shipping its Ocean SUV, although production of just 1,002 units was way below the 1,400 to 1,700 it had aimed for as those supply chain problems bite. Attention is already turning to when it can become profitable, with analysts believing it could turn its first operating profit before the end of this year, according to consensus numbers from Bloomberg.

Mullen stock: Trading volumes explode

Mullen Automotive is down 4.9% in premarket trade. There has been no news out from the company, but we saw a notable uptick in trading volumes yesterday, when it popped over 12% as over 928 million shares exchanged hands. That compares to its 100-day average volume at time of just 156 million shares and marks the second busiest day for the stock on record! Shares remain near all-time lows, having lost 98% of their value this year.

Draftkings stock: Delivers beat and raises outlook

Draftkings shares are up over 11% today and at their highest level in over 20 months after the gambling giant raised it smashed expectations in the latest quarter and raised its full year outlook. Revenue was up almost 88% in the latest quarter at $874.9 million and came in well ahead of the $763.7 million forecast and adjusted Ebitda of $73 turned from a loss last year and came in over treble the $20 million predicted by Wall Street. Draftkings said the positive Ebitda represented an inflection point and said it will repeat in the fourth, although not enough to counter the losses we saw earlier this year.

The company is now aiming to deliver annual revenue of $3.46 billion to $3.54 billion and an adjusted Ebitda loss of $190 million to $200 million. It was previously targeting revenue of $3.14 billion to $3.24 billion and a loss of $290 million to $340 million.

JPMorgan stock: To pay $3bn to top up FDIC coffers

JPMorgan shares are trading marginally lower before the bell after it said it expects to pay around $3 billion to help rebuild the Federal Deposit Insurance Corp’s fund that was drained during the banking crisis earlier this year. Around $16 billion was used sorting out the collapse of several banks and the FDIC is now seeking money to help restore it, with the largest paying the price.

That comes after Wells Fargo said it will be contributing about $1.8 billion while Bank of America will pay about $1.9 billion.

Shopify stock: Target price climbs post earnings

Canadian firm Shopify is up 0.8% today at $59.50 after several brokers raised their target price on the stock this morning, including Goldman Sachs to $65, CFRA to $78, JMP Securities to $72, and Citigroup to $77.

That comes in the wake of its results this week that showed continued to attract merchants looking to tap-into its ecommerce services and benefit from price hikes. However, the stock closed at a two-month low yesterday after Morgan Stanley criticised the company for providing a longer-term roadmap, although that appears to be attracting buyers back into the market.

PayPal stock: Rebounding from 7-week low

PayPal shares are up 0.5% at $64.52 after slumping to a seven-week low yesterday, when investors fretted over its margin being crunched to 21.4% in the second quarter from 22.7% in the first as it booked more provisions that are put aside for potentially bad loans. That overshadowed an otherwise strong update.

We have seen brokers cut their target price on PayPal, with KBW lowering its view to $90 while Citigroup trimmed its view to $100 this morning, but the stock is still way below these estimates.

Coinbase stock: Confident it can defend against SEC

Coinbase shares are down 3.6% and at a three-week low of $87.95 after reporting narrower losses and a more mild drop in revenue than expected in the latest quarter. The cryptocurrency trading platform said its net loss in the latest quarter came in at just $97 million. That compared to the record quarterly loss of $1.1 billion the year before! Revenue was down 12% at $707.9 million as cryptocurrency volatility hit ‘multi-year lows’, according to finance boss Alesia Haas, but this was higher than the $631.2 million forecast by analysts.

The beat was also accompanied by a confident tone from management over the regulatory pressure facing Coinbase and the wider industry. The SEC sued Coinbase in June after being accused of running an illegal exchange but management said he is sure it can defend itself. ‘With respect to the litigation with the SEC, I want to be very clear, we do think we can win. We expect to win,’ said chief legal officer Paul Grewal.

Several brokers raised their price target on Coinbase this morning, including Piper Sandler to $80, JPMorgan to $64 and KBW to $50.

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