Reddit Stocks: What meme stocks are trending today? – July 19, 2023

US futures hold steady

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

US futures are holding steady as they digest another wave of earnings out this morning, with another due out after markets close today when we will have results out from the likes of electric vehicle maker Tesla, streaming giant Netflix and chipmaker IBM.

We have US housing starts and building permits out before markets open today, with crude oil and gasoline stocks change data due out soon after the opening bell.

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. Tesla
2. NVIDIA
3. C3.ai
4. Microsoft
5. Carvana
6. Rocket Lab USA
7. Netflix
8. PayPal
9. Visa
10. Apple

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. Carvana
2. Lilium
3. Nikola
4. Joby Aviation
5. AT&T
6. Tesla
7. Opendoor Technology
8. IonQ
9. Verizon
10. Lumen Technologies

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

Goldman Sachs is down 0.3% this morning and falling from a one-month high. The bank missed expectations in the second quarter after revealing EPS plunged to $3.08 from $7.73 last year, coming in shy of the $3.94 average forecast by Wall Street. Notably, EPS estimates ranged from as low as $2 to as high as $6.91 ahead of the results. Goldman Sachs beat expectations across the board at the topline, including in trading, investment banking and advisory fees, although loans came in soft. Still, a lack of dealmaking continues to take its toll and trading revenues were down sharply. A $504 million writedown of its investment in Greensky also weighed on results.

Broadcom is up 0.5% and just below all-time highs and VMware is up 7.3% at over $170 after their proposed $61 billion combination was given provisionally clearance by regulators in the UK. The Competition & Markets Authority said its initial findings show it shouldn’t have a big impact on competition for key server products. European regulators gave the green light earlier this month. The CMA will provide its final decision on September 12.

Dutch outfit ASML, which makes equipment used to make semiconductors, beat expectations in the latest quarter and raised its full year outlook, appearing to benefit from strong demand from Chinese customers buying older equipment due to the restrictions imposed by the export ban that has been led by the US. Demand for newer equipment is being stifled as it waits for major companies to build their new fabrication plants. It warned that customers across different markets are ‘more cautious’ and that a recovery will be later than hoped, but said it can navigate this period thanks to its EUR38 billion backlog. Net profit in the quarter was up 35% at EUR1.9 billion, ahead of the EUR1.82 billion forecast. ASML said sales should now rise around 30% over the full year, up from its previous goal of 25%. ASML shares on the Nasdaq are down 0.6% today.

US chipmaker NVIDIA is trading marginally higher, which could allow it to close at yet another record high. The company has now more than trebled in value since the start of the year and has been the best performer in both the S&P 500 and Nasdaq 100, driven higher as markets assign huge value to its AI prospects. However, that means NVIDIA is trading at a huge premium that it will have to justify this earnings season. It currently trades at 52x forward earnings – 75% above the industry average.

Nasdaq is up 0.3% and at its highest level in almost a month after showing its diversification into steadier businesses has helped in the current environment, allowing it to beat expectations in the second quarter. While the IPO market remains subdued, demand for its fintech services is holding up. Trading revenue was down 1% in the second quarter while its solutions business reported a 6% rise. Adjusted EPS of $0.71 came in above the $0.66 forecast.

Baker Hughes is down 2.7% and falling from 13-month highs despite revealing adjusted EPS almost quadrupled to $0.39 in the second quarter from the $0.11 reported the year before, coming in ahead of the $0.33 forecast. The oilfield services provider said it remains confident about upstream spending in the second half and that any weakness in North America will be countered by better demand elsewhere. It said it ‘remains optimistic’ about its full year outlook.

Rival Halliburton is down 2.1% and falling from a four-month high. It also beat expectations as adjusted EPS leapt over 50% from last year to $0.77, above the $0.75 estimate provided by Wall Street. It said it believes it can continue to outperform rivals and suggested buybacks could accelerate thanks to its strong cashflow.

Microsoft shares are up 0.6% at $361.80 after experiencing their strongest daily gain in over three months yesterday, with the Big Tech giant at fresh all-time highs. The stock popped yesterday after outlining how much it will charge corporate customers for its new artificial intelligence products, providing investors with an idea of how lucrative they could be. The suite of products, named Microsoft 365 Copilot, will cost $30 per user each month. Barclays said this was higher than expected and described it as ‘a major next step for Microsoft’s AI monetisation’. Bernstein agreed and said it could set the gold standard for other companies. Analysts are bullish on demand in spite of the price tag due to the potential productivity gains on offer. Enough so that a string of brokers raised their target price on Microsoft, which has also found support as it moves closer to closing its takeover of Activision Blizzard. Mizuho upped its view to $420, JPMorgan to $385, TD Cowen to $390 and BofA Global Research to $405.

Apple is down 0.1% this morning as it continues to struggle to climb above the all-time highs hit late last month. The iPhone maker reports earnings early next month, but investors will be keeping an eye on results out tomorrow from its major supplier TSMC, which is up 0.3% before the bell. In terms of the read-across for Apple, TSMC is forecast to see sales slide but demand for the iPhone is expected to remain more resilient. For TSMC, investors will hope that new demand for artificial intelligence can help counter the anticipated fall in earnings and provide a new catalyst going forward. 

Payments companies remain in play, with Visa up 0.1% and Mastercard up 0.5% ahead of results due out next week. Both recently hit fresh highs. PayPal is up 0.2% and at its highest level in over two months, with the stock due to report at the start of August.

AT&T is up 4.9% after closing at fresh lows yesterday, with the telecoms giant at levels not seen for three decades as concerns about the impact of historical lead sheathed cable networks continues to hang over the industry. Verizon is up 4% after rebounding from its lowest level since 2010. Both of them are scheduled to report earnings next week, when their primary job will be to address the fears sweeping the markets. AT&T said yesterday that less than 10% of its nationwide network had lead-clad cables but this failed to prevent its share price losing further ground. Barclays said the selloff looks overdone while TD Cowen said the update was ‘highly constructive’. Still, others see a significant risk. Bloomberg Intelligence has calculated the industry could face a bill of $43 billion to cleanup the cable, and said it could take up to five years to sort out in the courts to suggest the overhang could be here to stay for some time.

Johnson & Johnson is down 1.2% after a US jury ruled it must pay $18.8 million to a man in California that claimed he developed cancer because of exposure to the company’s baby powder, providing another blow to the legacy of lawsuits J&J is trying to defend itself against.

Carvana is up 22% and at levels not seen since August 2022! The used car retailer announced record adjusted Ebitda in the third quarter of its financial year as it almost doubled the amount of money it made on each sale compared to the second, installing hopes it is firmly on the path to profitability. It also struck a deal with bondholders to restructure its debt, eliminating about 83% of its debt due in 2025 and 2027 while reducing interest payments over the next two years. That should reduce its total debt by over $1.2 billion.

Rocket Lab USA is up 0.6% and at 15-month highs after deploying seven satellites into orbit for NASA yesterday, representing its seventh successful mission of the year and 39^th since inception. The launch was made from New Zealand. It managed to recover the Electron’s booster that forms its reusable rocket programme after it splashed down.

Opendoor is down 0.7% after being downgraded to Underperform from Hold by Gordon Haskett.

Let’s turn to the earnings due out later…

Tesla is up 0.5% and at a 10-month high ahead of earnings out after markets close. Tesla delivered a record number of vehicles in the second quarter as price cuts and other incentives keep demand growing, but the number one question this week is what impact this has had on its profitability. Margins are expected to bottom-out in the second quarter. The outlook is rosy for now, with markets anticipating further growth in deliveries and a recovery in margins in the second half, but Tesla will need to keep up with these expectations if it wants to keep on the right trajectory. You can find out everything you need to know in our Tesla Q2 Earnings Preview.

Netflix is up 1.5% and at fresh 18-month highs ahead of results out after the closing bell. Subscriber growth is back on the right path and investors will want to know how its new dual-strategy to revive growth through a crackdown on password sharing and its new ad-supported tier is faring. The fact Netflix has two substantial new catalysts to help keep subscriber numbers climbing to new record highs suggests there is an opportunity for a beat this quarter. On the other hand, a miss would suggest the new plan isn’t taking-off as quick as markets have been banking on this year. Earnings are forecast to decline for a fourth consecutive period in the second quarter but markets believe it will start to reap rewards in the second half and that EPS will begin to grow again, partly helped by easier comparatives from what we saw in the back-end of 2022 – enough so that it is forecast to report record annual earnings in 2023 despite the pressure seen on the bottom-line in the first half. All of that has the potential to keep providing Netflix shares with momentum, but only if it can keep up with market expectations. Markets have bought into Netflix’s new strategy and now it is time to start delivering. You can find out everything you need to know in our Netflix Q2 Earnings Preview. Wells Fargo said it may be worth snapping-up Netflix shares if there is any pullback in wake of today’s results due to its long-term prospects. ‘We actually think investors would buy a pullback on the long-term outlook in the event Netflix has short-term pressure on the print,’ said analyst Steven Cahall, who also flagged buyside expectations are ‘very high’.

IBM is at a one-month high before the bell and also reports later. Wall Street forecasts IBM’s revenue will come in flat from last year at $15.5 billion in the second quarter. Consulting and software are growing, but being countered by ongoing weakness in demand for infrastructure hardware. Still, IBM is suffering from a broader slowdown in demand for mainframes and is being hit as companies pullback or delay spending on big IT projects. Red Hat will continue to shine, but it is not immune to the brakes coming down on the topline. Adjusted EPS is expected to drop over 13% to $2.00 as costs continue to rise and revenue stagnates. We should get more insight into its deal announced last month to buy Apptio.

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