Reddit Stocks: What meme stocks are trending today? – August 8, 2023

US futures fall

• Dow Jones Industrial Average is down 0.6%
• S&P 500 is down 0.7%
• Nasdaq 100 is down 0.8%

US futures are under pressure today as fresh concerns spread through the banking system after agency Moody’s downgraded 10 small-to-mid-sized banks and warned it could also lower a string of larger players (more on this below).

Elsewhere, poor economic data out of China is also not helping sentiment today, as both imports and exports experienced larger declines than hoped, stoking further fears about the economic recovery in wake of abandoning its fight against Covid-19 earlier this year. Imports were particularly bad after falling 12.4% from last year in July when economists had forecast a fall of just 5%, while exports were down 14.5% compared to forecasts for a 12.5% fall.

The economic calendar is quiet today ahead of key inflation data out later this week, with the IBD/TIPP economic optimism and API crude oil stock change pencilled-in later.

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. Palantir
2. Apple
3. Tesla
4. C3.ai
5. NVIDIA
6. Visa
7. Rivian
8. Disney
9. Rite Aid
10. AMC Entertainment

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. Palantir
2. Nikola
3. Novavax
4. Tilray
5. Lucid Group
6. AMC Entertainment
7. Tesla
8. Datadog
9. Eli Lilly
10. IonQ

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.

US banks: Moody’s downgrades hurt sentiment

The KBW Bank Index is down today as several small-to-mid-sized US banks were downgraded by ratings agency Moody’s, which also warned it could downgrade some larger names like Bank of NY Mellon, US Bancorp, State Street and Truist Financial after putting them up for review.

The agency downgraded 10 banks in total including M&T Bank, Pinnacle Financial Partners, Prosperity Bank and BOK Financial Corp. ‘Many banks’ second quarter results showed growing profitability pressures that will reduce their ability to generate internal capital,’ Moody’s said. ‘This comes as a mild US recession is on the horizon for early 2024 and asset quality looks set to decline, with particular risks in some banks’ commercial real estate portfolios.’

The move comes just months after the banking crisis that led to several banks collapsing earlier this year, and swiftly after ratings agency Fitch downgraded the country’s debt rating.

UPS stock: Union deal pushes up costs

UPS shares are down 5.2% and at their lowest level in around six weeks after the delivery giant said it will make less profit this year than previously hoped because of softer conditions for parcel volumes and tighter margins as cost pressures persist, having recently agreed to raise pay for workers in order to avoid strike action.

It said revenue this year is now forecast to be just $93 billion, down from $97 billion beforehand. It said its adjusted operating margin will be around 11.8%, far below its previous goal of 12.8%. That overshadowed news that earnings fell less than anticipated in the latest quarter.

Importantly, the deal struck with the Teamsters union, which represents around 330,000 UPS staff, is still to be ratified by members but we should find out the final result later this month.

The news is also dragging down rivals, with FedEx shares down 1.4% today.

Eli Lilly stock: Strong beat and upgraded outlook

Pharmaceutical giant Eli Lilly is up 8.6% and at fresh all-time highs after it upped its outlook for the remainder of the year and beat expectations in the latest quarter. The company said it now expects annual adjusted EPS to be in the range of $9.70 to $9.90, up from its previous goal of $8.60 to $8.85.

Adjusted EPS in the latest quarter came in at $2.11, beating the forecast from Wall Street of $1.98. The better than expected performance was partly down to strong demand for its obesity drug name Mounjaro, where sales came in over $230 million above estimates. It is currently only being sold as an off-label treatment but Eli Lilly is hoping to secure approval for it treat obesity to unlock more value.

Notably, rival Novo Nordisk said today that its own obesity drug named Wegovy reduced the risk of major cardiovascular events such as a strike by 20% in overweight or obese people with a history of heart disease. The stock is up over 13% and also at all-time highs!

Novavax stock: Big beat delivers surprise profit

Novavax shares are up over 14% after it reported its first positive EPS in a year, surprising analysts that were anticipating a hefty loss. The company reported EPS of $0.58, turning from the $6.27 loss we saw last year and surprising compared to Wall Street’s estimates for a $1.37 loss. That came as revenue soared to $434.4 million and smashed the $238.3 million forecast.

Restaurant Brands stock: Burger King helps deliver beat

Restaurant Brands is down 0.2% before the bell after beating expectations in the latest quarter thanks to a better performance form Burger King. Comparable sales were up 10% in the second quarter, impressing analysts that had only forecast 5.8%. That delivered a revenue beat and adjusted EPS of $0.85 was also higher than the $0.77 forecast. Comparable sales at Burger King stores in the US grew 8.3%, smashing the 4.5% pencilled-in by analysts. Traffic at Tim Horton’s was also strong considering comparable sales were up 12.5%.

Palantir stock: Buyback and AI fail to meet high bar

Palantir shares are down 2.7% at $17.50 after the company beat expectations in the latest quarter, raised its outlook and launched a $1 billion share buyback as CEO Alex Karp tried to meet growing hype around its prospects, driven by AI, by predicting it has ‘a good chance at becoming the most important software company in the world’.

Revenue rose 13% to $533 million in the second quarter and came in just ahead of forecasts, while a third consecutive quarter of profit, this time with adjusted EPS of $0.05, met expectations. Palantir said it is now anticipating annual revenue of over $2.2 billion and adjusted profit of over $576 million. The uptick was modest, but pushed them above analyst forecasts.

Palantir tried to meet the hype around its AI prospects, with Karp describing demand for its AI platform named AIP as ‘unlike anything we have seen in the past twenty years’. Over 100 organisations are now using it and it is in talks about adding 300 more.

A number of brokers raised their target price on Palantir this morning, including Mizuho to $16, Citigroup to $10 and DA Davidson to $15 – but they are all below the current share price to suggest we are seeing some profit taking today following the rally that had seen the stock more than double in the three months before the results.

AMC stock: Delivers surprise profit

AMC Entertainment shares are up 3.9% after the cinema chain and meme stock favourite celebrated its best second-quarter performance in four years, beating expectations and posting a surprise profit.

Revenue rose 15.6% to $1.35 billion and came in ahead of the $1.28 billion forecast, while adjusted Ebitda of $182.5 million was the highest quarterly figure achieved since the pandemic and was also well above the $153.3 million estimate. EPS at the bottom-line of $0.01 was welcome considering Wall Street had pencilled-in a $0.04 loss.

AMC warned that it needs to raise more cash as the dispute over its plan to convert APE preferred shares, which are up 1.1% today, into ordinary stock continues. ‘Even with our $643 million of quarter-ending liquidity, our ability to continue to raise capital and remain agile are absolutely vital to maintaining our strong recovery trajectory. There are real and potentially severe liquidity hurdles on the horizon that we will need to overcome. Even so, at this point, we are accustomed to and skilled in rising to meet any and all challenges and are very much committed to our relentless efforts to ensure that AMC is best positioned for sustained long term success,’ said CEO Adam Aron.

Lucid stock: Enough cash to last until 2025

Lucid Group is down 0.9% after saying it does not need to raise any fresh cash in the immediate future and that it has enough money to start producing SUVs next year as it reaffirmed its hopes of raising output to 10,000 vehicles in 2023.

The company reported slower revenue growth and a wider loss than anticipated in the latest quarter, but investors appear happy that its production goal remains on track. Lucid said it has over $6 billion in liquidity after raising cash in the second quarter, which it said should last it ‘into 2025’.

Lucid said it remains on schedule to start producing the Lucid Air Sapphire and the Lucid Air Pure Rear Wheel Drive in the middle of September and plans to unveil the new Lucid Gravity in November ahead of production starting in ‘late 2024’.

Rivian stock: Big beat may be needed to impress

The mantle will passed to larger electric vehicle maker Rivian, which is down 2.1% ahead of results out after markets close today. The electric vehicle maker has seen its share price jump over 87% in the last seven weeks alone, suggesting the bar is high ahead of the update. The electric carmaker is expected to report its first quarterly revenue of over $1 billion. However, the key job will be reaffirming its goal to double annual production to 50,000 vehicles. With guidance unlikely to be raised, it may need to post significantly smaller losses than forecast to impress investors this week following the recent rally.

The company ended March with $12 billion in cash, giving it a healthy cushion to fund its operations. Still, Rivian is expected to burn through around $1.06 billion in free cashflow in the second quarter alone and over $4 billion over the full year, and it has to stretch that balance as far as possible considering Wall Street thinks it won’t generate any money until 2028! Find out what you need to know in our Rivian Q2 Earnings Preview.

Tesla stock: Surprise shake-up in CFO

Tesla shares are down 1.9% and at their lowest level since late June after it surprised the markets yesterday with a regulatory filing that said chief financial officer Zachary Kirkhorn stepped down on August 4. That follows on from a 13-year stint at the company, the last four of which he was CFO. He has been replaced by Vaibhav Taneja, who is taking on the CFO role in addition to his position as chief accounting officer, but Kirkhorn will remain available until the end of the year to provide a ‘seamless transition’.

Tesla swiftly started generating cash after Kirkhorn took over, earning him credit for being a major driver behind Tesla’s financial performance in recent years. Notably, Kirkhorn was considered as one of a rather slim group of potential candidates that could one day succeed CEO Elon Musk

Lyft stock: Can new management revive its fortunes?

Lyft shares are down 0.6% ahead of quarterly results out after the closing bell today. Lyft has underperformed this year. The ride-hailing service has seen its margin crunched as it has been forced to lower prices in order to compete against larger rivals, and yet it is still losing ground. Top dog Uber reported a landmark profit just this week and said its ride-hailing service saw a 38% jump in revenue in the latest quarter. Meanwhile, Lyft is expected to report a sales rise of just 2.9% - the slowest growth in over two years - to $1.02 billion. Adjusted Ebitda is expected to fall 64% from last year to $28.3 million.

That challenging backdrop comes at a time when the top brass have been shuffled, leaving Lyft in an uncertain position. This will be the first set of results since new chief financial officer Erin Brewer came onboard, soon after its two co-founders relinquished their roles as CEO and president and reverted to non-executive positions. With this in mind, some analysts have said they believe Lyft could explore strategic options.

Disney stock: House of Mouse needs a catalyst

Disney shares are down 0.3% ahead of third quarter results due out tomorrow, with the home of Mickey Mouse in desperate need of a new catalyst considering it has underperformed the market this year and continues to trade at a discount. That is unsurprising considering Disney is facing an array of headwinds. The brakes have been coming down on sales growth over the past year and earnings have been in decline for four consecutive quarters.

CEO Bob Iger has recently agreed to stay on for another two years after being brought back in late 2022 to put the magic back into Disney – a job that is yet to be achieved considering he has some big tasks to complete in that time, including finding a successor. We could see him lean into M&A to help revive Disney’s fortunes and refocus the business.

Disney’s streaming operations remain in the red and becoming profitable as soon as possible is key, with markets believing it is still some way away despite having booked over $11 billion in losses to date. However, slumping subs at Disney+ is not making this any easier. Find out what to expect in our Disney Q3 Earnings Preview.

ARM IPO: Apple, Samsung, NVIDIA and Intel to invest

Apple, Samsung, NVIDIA and Intel are among the major companies planning to invest in semiconductor designer Arm as soon as it completes its listing later this year, potentially in September, according to the Nikkei. They could take stakes worth a few percent each for companies willing to invest over the medium-to-long term, the report said, and hopes it will help stabilise its price upon listing – which is especially important given the subdued and fragile nature of the IPO market at present.

Apple stock: Hits 2-month low as selloff continues

Apple shares are down 0.1% after closing at a two-month low yesterday, having plunged almost 6.5% since releasing results last week – wiping over $300 billion off its valuation - that failed to meet a high bar as it starts to feel the pressure from the crunch in demand for smartphones, prompting profit taking and testing its valuation. Selling pressure has been heavy this week, reinforced by strong candlestick movements and a rise in trading volumes. The RSI is, however, on the cusp of signalling the iPhone maker is oversold.

C3.ai stock: Losing streak sends it to 6-week low

C3.ai shares are down 4.3% and on course to lose ground for a fifth consecutive day, sending the stock to its lowest level in six weeks. The share price has been losing ground since last week, when we discovered Baker Hughes sold off around one-third of its stake in the company. While that may be in response to the fact C3.ai shares have more than tripled in value this year, it is also fuelling concerns that relations between the two companies may be deteriorating. Baker Hughes is thought to be C3.ai’s biggest customer and some short sellers have claimed that the partnership between the two firms is strained.

Rite Aid stock: Is the rally over already?

Rite Aid shares are down 3.7%. The stock has risen 60% since the start of August alone but appeared to peak yesterday after climbing to a five-month high before swiftly reversing and closing heavily down after testing the 200-day moving average, which appears too rich for the markets. The RSI is also in deep overbought territory to suggest the swift rise will reverse. Notably, Rite Aid is heavily shorted with short interest standing at over 23% of its float, suggesting we have seen a short-squeeze.

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