Reddit Stocks: What meme stocks are trending today? – September 27, 2023

US futures

• Dow Jones Industrial Average is up 0.3%
• S&P 500 is up 0.4%
• Nasdaq 100 is up 0.4%

US futures are bouncing back today as a pullback in treasury yields, which had climbed to 16-year highs following the higher for longer narrative from the Fed last week, provided some much-needed momentum to growth and large tech stocks. However, the mood remains fragile ahead of a wave of economic data later this week and threats of a US government shutdown as the clock ticks down toward the October 1 deadline.

US durable goods orders

US durable goods orders rose 0.2% month-on-month in August, marking a change in fortunes following the 5.2% decline we saw the month before. That was a surprise for markets considering economists had anticipated a 0.5% fall.

Economic calendar

The economic calendar is quiet for the remainder of the day, with the only noteworthy event being EIA crude oil and gasoline stocks change data out this morning. Economists expect inventory levels to have kept falling in the week to September 22.

It is a much busier day tomorrow, when markets will be dealing with a US data dump with GDP, jobs, home sales, inflation data and speeches from several members of the Federal Reserve all pencilled-in, with more data to follow on Friday.

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. NVIDIA
2. Tesla
3. C3.ai
4. Visa
5. Amazon
6. Costco
7. Apple
8. Novavax
9. Rush Street Interactive
10. Target

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. MSP Recovery
2. Nikola
3. Gingko Bioworks
4. Tesla
5. Marathon Digital
6. Palantir
7. Carnival
8. Tilray
9. IonQ
10. Lucid Group

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.

Costco beat fails to clear high bar

Costco shares are down 1.6% despite beating expectations in the latest quarter after the bar was set high ahead of the update.

Adjusted EPS came in at $4.78 and came in just ahead of the $4.77 forecast, although comparable sales growth of 3.8% was just behind the 3.9% estimate. Still, sales growth remains impressive considering the tough comparatives from last year as its focus on value and its membership model keeps resonating with customers. Costco has also made a purposeful shift in inventory toward more necessities that remain in demand. Margins are also recovering as inflationary pressures ease.

Unfortunately, the results were not enough to boost Costco shares. That may be because the bar was quite high. Costco shares have outperformed the broader retail space and boasts a huge premium over its rivals, which is limiting the amount of value investors will assign the retailer without any major new catalyst. With that in mind, Morgan Stanley said it was disappointed that Costco didn’t announce when it will raise membership fees, which would be a big deal considering it earns billions from this each year and is enjoying record-high renewal rates.

Still, Wall Street remains bullish on Costco and sees any dips as a potential opportunity. Morgan Stanley said it would “look to take advantage of any pullbacks” while Truist Securities said it remains an aggressive buyer. Jefferies said Costco remains well-positioned and Bloomberg Intelligence described Costco as having the “model of retail resilience”.

Target stock selloff builds amid exposure to theft

Target shares keep falling lower, with the stock losing further ground today and on course to open at its lowest level in over three years.

The company has been under pressure because it has underperformed this year. For example, Target slashed its full year outlook and missed expectations when it released its last set of results in August, while Walmart delivered a beat and raised its guidance to reinforce fears that Target needs to up its game.

More selling pressure has been added after Target said it is closing nine of its stores in the US because it is experiencing so much theft that they are no longer viable. The company had already warned it could lose up to a staggering $500 million this year because of a rise in theft. That adds another huge headwind to Target’s already thin-margins.

Visa and Mastercard break key support

Visa and Mastercard are trading higher today after both sank to new lows and broke through key support levels yesterday, making the pair worth a watch. Both have been big winners this year as consumer spending has remained resilient, partly thanks to the strength in demand for travel, but the outlook is becoming more challenging.

Visa shares have lost ground for six consecutive sessions and plunged below the supportive trendline that has been a reliable floor throughout the whole of 2023. Investors will hope the 200-day moving average at around $229 will provide some support but there is a risk it could sink below $226 if this fails to provide a safety net.

Mastercard shares are at a five-week low and plunged below the rising, supportive trendline that has been in play for the last six months. That may grab the attention of bears. There is no sign of any support emerging until $392, aligned with May-peak and 100-day moving average, and it could sink to as low as $387.50 before finding a floor.

US consumer spending woes hit Nike stock

We will get more insight into how the broader retail sector is faring when Nike reports quarterly results tomorrow, with the athleisure giant languishing near 11-month lows ahead of the update as markets worry it will suffer if consumers tighten their belts. The stock is up 0.6% this morning.

US consumer spending, which accounts for about 65% of the country’s GDP, has remained buoyant for years but the outlook is weakening. The savings squirreled away after the waves of stimulus dished-out during the pandemic are expected to dwindle before the end of 2023, if not sooner, and the restart of student loan repayments, which were put on hold during the turmoil of the Covid-19 crisis, next month could also drastically lower the amount of money consumers, particularly younger ones, have to spend. Commentary on North America will be key as this is where the slowdown is biting the most. In fact, constant-currency sales growth is expected to decline for the first time in over a year this quarter. China is also a key segment to watch after sales growth erupted in the last quarter following years of lockdown-induced troubles, and investors will want to know how sustainable this recovery is.

Therefore, Nike is under pressure to show it can shine during a tough time. Nike says it is on the “front foot” and competing from a “position of strength” amid the uncertain economic outlook – but it is clear it needs to convince the markets.

You can find our insight and latest technical analysis in our Nike Q1 Earnings Preview.

Amazon hits 3-month low on FTC lawsuit

Amazon shares are up 0.1% after sinking to its lowest level in over three months yesterday, when excitement around its investment in AI firm Anthropic earlier this week gave way to worries about a new lawsuit filed by the Federal Trade Commission that accuses the company of monopolising online marketplace services.

The lawsuit has been filed by the FTC and 17 US states, which are alleging that Amazon purposefully excludes rivals from providing online marketplace services and forcing sellers on its platform to use its logistic and delivery services by supplying merchants with promotions.

“Amazon is a monopolist and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for a worse service,” said FTC chair Lina Khan. Amazon has denied the claims and said the FTC is “wrong on the facts and the law”, arguing its model has helped increase competition by providing a wider selection of goods, lower prices and swift delivery for consumers.

While markets reacted unfavourably as regulatory pressure builds on Amazon, Wall Street believes the threat is muted. The case is likely to take years to resolve and Baird described it as “more of a benign scenario for Amazon”. Bloomberg Intelligence said “it won’t be easy” for the FTC to win its case and multiple analysts said the chance it will lead to some form of breakup of Amazon is unlikely.

Meta in play ahead of annual Connect conference

Meta shares are up 0.2% and on the radar today ahead of its annual Connect conference, when it is expected to provide updates on its plans with breakthrough technologies like the artificial intelligence, the metaverse and virtual and augmented reality.

The Quest headset and content will be key components of the conference and we could see it unveil new generative AI chatbots, according to reports.

Microsoft: Has OpenAI trebled its valuation?

Microsoft shares are up 0.6% before the bell. OpenAI, the company behind ChatGPT that is backed by Microsoft, is in talks about selling existing shares to investors at a much higher valuation, according to reports from the Wall Street Journal.

OpenAI could be targeting a valuation of $80 to $90 billion. It conducted a share sale earlier this year that valued it at just $30 billion. Notably, Microsoft agreed to plough $10 billion into OpenAI earlier this year.

Apple stock hits 4-month low

Apple shares are recovering 0.6% this morning at $172.95 after closing at a four-month low yesterday. That is now in the support zone that has been in play since May, with any slip below $171 potentially opening the door to a sharper drop.

Apple’s operations in India are under the spotlight this week. A fire at an iPhone assembly plant owned by Taiwanese supplier Pegatron was worse than previously thought after a state government official said the fire spread and damaged six machines. The plant has now lost three days of production and it is not clear when things will kick back off again. The fire was caused by a short-circuit after machines were left on once they had been tested, unnamed sources told Reuters. Importantly, the factory only makes older models of the iPhone and does not make the new iPhone 15.

Meanwhile, India’s income tax department has conducted searches at the offices of another one of Apple’s suppliers in the country named Flex, according to local media reports. The company is subject to an inquiry but has not yet been informed what it is about.

Instacart stock closes below IPO price for first time

Instacart shares are up 0.8% at $30.14 after the grocery tech company closed below its IPO price for the first time yesterday.

The stock went public just over a week ago at $30 per share and has remained under pressure after popping on its first day of trading. It closed down 1.7% yesterday and closed at $29.89, but is back above the IPO price in premarket trade today. You can read our insights in Slower Growth and Losses to Test Instacart’s Valuation.

Other IPO stocks are having a tough time gaining ground since going public. British chip designer Arm, which trades at a huge premium, is up 0.7% at $53.90 and is only marginally above its $51 listing price. You can read our analysis in Can Arm Maintain or Grow its Premium Valuation?

Meanwhile, email marketing specialist Klaviyo is down 0.3% at $34 after listing last week at $30.

Cisco hits 7-week low in wake of Splunk deal

Cisco shares are up 0.4% and rebounding from seven-week lows today, but is still down heavily since announcing it will complete its biggest-ever acquisition by buying cybersecurity firm Splunk last week.

Cisco has agreed to pay $157 per share, giving Splunk a $28 billion valuation. Cisco, which has made a name for itself supplying the hardware needed to run datacentres and IT systems, is shifting toward higher-margin and faster-growing software and believes Splunk can help it achieve that quicker.

You can find out more, including our technical analysis, in Everything You Need to Know About the Cisco-Splunk Deal.

NVIDIA and AMD test moving averages

Popular chipmaker stocks have found some sort of floor following the heavy selloff that started at the beginning of August.

NVIDIA shares are up 0.7% today at $422 and have found some support from the 100-day moving average, which currently sits at $415. Buyers have reliably returned to the market when it has tested this indicator over the past four sessions. This is a key level to watch considering NVIDIA shares have not traded below the moving average since January 2023.

AMD shares are up 0.8% at $96.70 and have found some support from the 200-day moving average at $95.50 in recent sessions. It will be the first time it has slipped below the moving average in over six months if it breaks below here.

Micron could feel more pain ahead of results

Micron shares are up 0.7% and rebounding from September-lows ahead of fourth-quarter results out after markets close today. Micron is still feeling the pain and will be glad to see the back of the financial year, plagued by the sharpest fall in revenue on record and the first time it has been in the red since 2013.

For the fourth quarter, revenue is forecast to fall for a fifth consecutive time, by 41% to $3.92 billion. It is expected to report its fourth straight quarter of losses, with the adjusted loss per share forecast to come in at $1.18.

Micron believes it is over the worst of its problems, and markets have agreed considering the shares have steadily climbed 38% over the past year. Its woes stem from the fact its customers loaded-up on memory chips when there was a boom in demand for devices during the pandemic and demand for Micron’s chips has therefore been under pressure, as have prices, while these inventory levels unwind. The fall in demand for consumer electronics has added further pressure on prices.

Still, we are still far from a pivot to better times. Wall Street believes Micron will return to growth in the new financial year, underpinned by expectations that we will see a recovery in the second half, although it is set to be another year of losses. While markets believe we will see demand return to growth later on in 2024, recession fears are growing in the ‘higher for longer’ interest rate environment and could pose a risk to those expectations. Plus, new sanctions from China targeting Micron, with the country accusing it of being a national security risk, muddies its prospects in a key market.

The outlook for the new financial year will therefore be crucial. For the first quarter, analysts are looking for Micron to target $4.19 billion in sales and adjusted loss per share of $0.98.

Is there downside risk to Tesla earnings estimates?

Tesla shares are up 0.4% after Deutsche Bank warned there is considerable downside risk to Tesla’s earnings estimates in 2024 because the outlook for volumes is worse than has been priced-in. It said it believes Tesla will deliver 2.1 million cars in 2024, below the 2.3 million currently baked-in the consensus.

Meanwhile, CEO Elon Musk has weighed in on the strikes being undertaken by the United Auto Workers against Ford, General Motors and Stellantis, warning the union’s demands could put all three of its rivals in financial difficulty.

“They [the UAW] want a 40% pay rise and a 32 hour work week. Sure fire way to drive GM, Ford and Chrysler bankrupt in the fast lane,” Musk posted on his social media platform X in response to a post from president Joe Biden supporting the UAW. Tesla has been regarded as a potential winner from the industrial action plaguing its legacy rivals as its workers are not represented by unions.

Meanwhile, Tesla is planning to upgrade technology at its factory in China so it can cast almost all vehicle underbody parts in one piece, according to unnamed sources speaking to a state-owned Chinese newspaper Shanghai Securities News. The new ‘gigacasting’ process is expected to reduce costs and other automakers like Xpeng are also thought to be adopting similar methods.

Ford ordered to disclose relationship with CATL

Meanwhile, Ford is also under pressure after US lawmakers ordered it to hand over documents related to its partnership with Chinese battery firm CATL as they look into whether US subsidies are indirectly flowing through and benefiting foreign companies. Ford is up 0.6% this morning.

Ford announced this week that it is halting construction of a $3.5 billion battery manufacturing factory in Michigan, casting huge doubt over thousands of jobs and providing fresh frustration for the UAW union. The plant was set to employ 2,500 people and produce enough batteries to power hundreds of thousands of electric vehicles each year. Ford was planning to licence technology from Chinese firm CATL but has now stopped work amid the fresh political pressure.

Streaming stocks rise as writers end strike action

Disney, Netflix and Warner Bros Discovery are up 0.4% to 0.6% and among those content-reliant stocks gaining ground after writers in Hollywood ended their strike action following a tentative deal struck with studios last weekend.

The Writers Guild of America voted to end strike action that has plagued the industry since early May today and said the new deal is worth around $233 million a year. However, the SAG-AFTRA union that represents actors remains on strike, and has also threatened video game makers like Activision Studio, EA and Take-Two Interactive with strike action unless they strike a new deal with voice actors and motion capture actors.

Novavax stock among most-shorted on Wall Street

Novavax shares are up 0.6%. The company, known for its Covid-19 vaccine that has underperformed versus the jabs made by its rivals, is among the most-shorted stocks on Wall Street. Short interest stands at over 54% of its free float, according to data from Fintel. All eyes are on whether its updated Covid-19 jab will be in demand this fall and winter, with European regulators currently evaluating whether or not to approve it by October.

Plant-based burger maker Beyond Meat and AI stock C3.ai are among the other most shorted stocks at present.

ChargePoint rises on new Buy rating

ChargePoint is up 4.3% at $5.06 and rebounding from all-time lows after UBS initiated coverage with a Buy rating and a $9 price target. Analyst Robert Jamieson said ChargePoint is in a strong market-leading position for Level 2 chargers across North America and has a path to breakeven by the end of the 2025 financial year.

Guardant Health raised to Overweight

Guardant Health is attracting attention today and is up 4.8% at $27.05 after Piper Sandler upgraded the stock to Overweight and slapped a $40 price target on the blood test provider. The stock is hit four-month lows this week.

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