Reddit Stocks: What meme stocks are trending today? – September 21, 2023

US futures

• Dow Jones Industrial Average is down 0.6%
• S&P 500 is down 0.9%
• Nasdaq 100 is down 1.3%

US futures are down today, with the S&P 500 and Nasdaq 100 hitting their lowest level in almost a month and the Dow Jones Industrial Average at a two-week low, as stocks remain under pressure by the ‘hawkish hold’ by the Federal Reserve yesterday.

A busy start to the economic calendar today means it is fairly quiet going forward, headlined by a speech from the European Central Bank president Christine Lagarde and US existing home sales.

Federal Reserve: Rates to be higher for longer

The Federal Reserve left rates unchanged yesterday but signalled another hike is likely to come before the end of 2023.

The takeaway message is that while we may be approaching peak rates, they will be held there for longer than previously thought. The Fed’s latest projections is that there will be only two rate cuts in 2024, down from four at the previous meeting.

“Ultimately, incoming data remains key and the threat of further hikes continues to be dangled by a committee which is ‘prepared to adjust the stance of monetary policy as appropriate’. Higher for longer is here to stay,” our analyst Matt Simpson said.

BoE presses pause, but willing to hike again

Meanwhile, the Bank of England held interest rates steady following 14 consecutive hikes today. Markets had expected a another increase until the latest UK inflation figures showed it dropped to its lowest level in 18 months and came in much cooler than anticipated earlier this week.

Notably, five members including governor Andrew Bailey voted to hold but four members pushed for another increase. The BoE signalled that this is more of a pause and that it will be willing to raise rates in the future if inflation doesn’t fall as hoped. The fact the economy is slowing down, with the BoE slashing its GDP growth forecast for the third quarter to just 0.1% from 0.4%, is another consideration.

US initial jobless claims

US initial jobless claims rose 201,000 in the week to September 16. That was an deceleration from the 220,000 increase we saw the week before and was a much milder increase compared to the uptick of 225,000 forecast by economists.

That suggests the labour market is still proving more resilient than expected.

Oil prices fall for 3^rd successive day

The recent rally in oil prices continues to stoke concerns that inflation could make a comeback, but we have seen conditions temper this week with prices trading down for a third consecutive session today. Brent almost hit $95 a barrel earlier this week but has fallen back toward $91.50, while WTI has moved back below $88.50 today after breaching over $90 a few days ago.

Bitcoin sinks back below $27,000

Bitcoin is down 1.6% today and has fallen back below the $27,000 threshold it managed to breach for the first time in September earlier this week, with the cryptocurrency trading around $26,695 this morning. The 20-day moving average appears to be holding Bitcoin back over the past four sessions, suggesting there will be some resistance to returning back above $27,000.

Cryptocurrency stocks are following lower this morning, with Marathon Digital and Riot Platforms down around 4%.

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. Visa
4. C3.ai
5. Jacobs Solutions
6. Apple
7. Arm
8. Instacart
9. Advanced Micro Devices
10. Intel

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. Tesla
4. Lucid Group
5. Palantir
6. Cisco
7. NVIDIA
8. Marathon Digital
9. IonQ
10. Travere Therapeutics

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.

Klaviyo IPO: Hit or miss?

Email marketing specialist Klaviyo became the latest company to test appetite in the IPO market when it completed its public listing yesterday.

Klaviyo priced its IPO at $30 per share and initially popped to as high as $39.50 when it started trading, but swiftly lost momentum to end the day much closer to its initial price at $32.76. The stock is down 1.1% before the bell today at $32.40. That means Klaviyo is currently worth around $9.9 billion on a fully diluted basis. Notably, Klaviyo was initially aiming to sell its IPO shares at $27 to $29 per share before upping it after seeing strong demand.

Klaviyo provides email marketing services to over 130,000 e-commerce brands that leverages its own customer data, so clients don’t have to rely on third-party providers to segment customers. It turned out a small $15.4 million net profit in the first half of 2023, having reported losses in 2022.

You can find out more in Everything You Need to Know About the Klaviyo IPO.

Instacart stock to sink below IPO price

Instacart shares are down 0.3% at $30.02 and set to open close to the IPO price of $30 today, sparking fears that it set the bar too high with its IPO valuation.

The grocery tech stock spiked to as high as $42.95 in initial trading when it joined the stock exchange on Tuesday, but it swiftly reversed course and has remained under pressure ever since. It closed down 10.7% yesterday at $30.10.

Instacart came to market with one of the most reasonable valuations we have seen for many years, but it is still boasting a premium over its rivals. Instacart has some impressive pandemic-induced growth and 18-months’ worth of profit under its belt, but the brakes are coming down on growth, competition is intensifying and it will swiftly re-enter the red – which may be why its valuation is being tested.

You can read our analysis in Will Slower Growth and Losses Test Instacart’s Valuation?

Arm stock tests IPO price

British semiconductor firm Arm is also struggling to keep up the momentum since completing its blockbuster IPO last week and is on course to lose ground for a fifth consecutive session today – and it has only been trading for six!

The stock is down 3.6% at $51.02 today, only marginally above its IPO price of $51. The company has earned a premium valuation, trading at over 100x earnings. But this is underpinned by its new strategy and hype around AI rather than the business today, which is struggling to grow. That raises questions about whether Arm will be able to stay above its IPO valuation.

You can read our analysis in Can Arm Stock Maintain or Grow its Premium Valuation?

US chip stocks sink to 4-month low

Another reason why Arm is finding it difficult to gain ground is the ongoing rout being seen in the wider space, with the Philadelphia Semiconductor Index sinking to its lowest level in almost four months yesterday. The index of chip stocks is now down over 12% from the peaks we saw on the last day of July.

Within that, NVIDIA is down 2.3% and at a five-week low while AMD is down 2% and set to open at its lowest level since mid-May.

Intel fails to impress with Innovation conference

Another chipmaker, Intel, is down 1.1% and set to open at its lowest level since the start of September, building on the losses seen yesterday when it failed to impress the markets at its Innovation conference.

Evercore ISI described the event as a disappointment as there was a lot of hype among investors beforehand, with the lack of news on customers for its new 18a node chips potentially the root cause. Intel has accelerated its schedule for the new node and is now racing to beat companies like TSMC and Samsung. Bloomberg Intelligence said that Intel could start to outpace both companies if it can deploy the 18a node at scale in 2024.

Cisco to buy Splunk for $28 billion

Cisco is down 4.5% and at its lowest level in over a month after announcing it will buy Splunk for $157 per share, giving an enterprise value of $28 billion. Splunk shares are up almost 20% at $143.11 on the news, marking an 18-month high.

“We're excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability,” said Cisco CEO Chuck Robbins. This will mark Cisco’s biggest-ever acquisition and help strengthen its cybersecurity profile.

Splunk’s president and CEO Gary Steele will report to Robbins once the deal is complete and said the two companies, together, will “form a global security and observability leader that harnesses the power of data and AI”.

Cisco said the deal should boost cashflow and margins in the first full year of ownership and could close in the third quarter.

Is Google preparing to dump Broadcom?

Broadcom is down over 6% and at their lowest level in almost three months this morning following reports that Alphabet’s Google has considered dropping the chipmaker as its supplier of AI chips from as early as 2027, according to The Information.

That is because Google is looking to develop its own chips in-house if it goes ahead with the plan in an effort to save billions of dollars in annual costs. That is part of a broader push by mega tech stocks like Apple and Amazon that have increasingly looked to develop their own custom chips – a risk that is also facing companies like Arm.

Meanwhile, Marvell Technology is up 3.7% after the report said Google could switch to its chips that connect servers to ethernet switches from products it currently buys from Broadcom.

Will China hold-up VMware-Broadcom merger?

Meanwhile, VMware shares are down 3.6% after reports suggested Chinese regulators have paused their review of its proposed $61 billion merger with Broadcom, according to Dealreporter, as it considers remedies that have been offered.

The report said it was not unusual for the regulator to pause the review when advanced talks on remedies are being held. Still, that appears to have injected fresh fears that China remains a hurdle, with regulatory approvals already secured from almost everywhere else. Broadcom and VMware are hoping to close the deal before the end of this year.

FedEx stock pops on big beat

FedEx shares are up 4.8% at $262 and at multi-week highs after smashing profit expectations in the latest quarter thanks to its cost-cutting initiatives and after gaining ground on rival UPS and reaping rewards from the collapse of bankrupt Yellow Corp.

The delivery giant said adjusted EPS jumped to $4.55 per share from $3.44 the year before, blowing the $3.73 forecast out of the water. That was all the more impressive considering sales were down 6% at $21.7 billion, which fell just short of estimates. That bottom-line improvement is down to cost-cutting, with FedEx working on stripping $6 billion of annual costs out by fiscal 2027.

FedEx Ground won business after rival UPS was hit by industrial action, while its Freight arm benefited from the hole left by the collapse of Yellow Corp, and FedEx is confident it can keep hold of the new business going forward.

FedEx said it is “well-positioned” for the busy holiday shopping season but still tempered its full year outlook, narrowing its adjusted EPS target to the lower-end of its range to $17.00 to $18.50 and predicting sales will be broadly flat, having previously hoped for low-single-digit growth.

Still, several brokers became more bullish in wake of the update and raised their target price on the stock, including Bernstein to $305, BofA Global Research to $330, Goldman Sachs to $291, Raymond James to $279, JPMorgan to $315 and Morgan Stanley to $205.

Is the strike in Hollywood coming to an end?

Film and entertainment stocks like Warner Bros Discovery and Paramount are both up around 1% today amid reports that the Writers Guild of America has received a new offer from studios, raising hopes that an agreement can be struck.

The guild is expected to be respond to the latest offer today, lifting hopes that the strike action that started in early May could be nearing its close.

CrowdStrike’s new goals impress Wall Street

CrowdStrike saw its target price raised by several brokers after outlining new targets at an analyst day yesterday, sending the stock 1.3% higher before the bell at $165.95.

Guggenheim said the new targets were “surprisingly strong”, while BMO said the targets set for the next five to seven years are “fairly aggressive”.

Those to raise their target price this morning include Piper Sandler to $210, JPMorgan to $190, Jefferies to $170, Barclays to $200, Guggenheim to $191, Mizuho to $195, Wedbush to $200 and Truist Securities to $200.

Apple stock hits 1-week low

Apple shares are down 0.9% and set to open at a one-week low.

There was news yesterday that Apple has been working with Goldman Sachs to launch a stock trading platform for iPhones before delaying the launch after markets turned south during 2022, according to unnamed sources speaking to CNBC. The two companies already work together on a number of financial services, including Apple’s credit card, savings account and its buy now, pay later offering. The report said the status of the stock trading project today is uncertain but that it could still go ahead.

Can Tesla stock hold above $258?

Tesla shares are down 2.5% at $265. The stock has slipped back below the 50% retracement from the lows we saw in early 2023, but appears to have found some support in premarket trade from the 20-day and 50-day moving averages that have converged around $256. Any slip below here could open the door to $245, which would need to hold in order for Tesla shares to avoid setting a new lower-low.

VinFast deliveries rise as it eyes international expansion

Vietnamese electric carmaker VinFast is down 0.8% this morning after releasing its first set of results since going public, revealing it a big jump in deliveries.

VinFast said it delivered 9,535 electric vehicles in the second quarter, marking a huge jump from less than 2,000 in the previous quarter and the year before. That led vehicle sales to rise 147% from last year to VND7.5 billion, equal to about $314.6 million. The company continues to lose money on every vehicle it sells and reported a net loss equal to $526.7 million, although this was about 8% narrower than the year before. VinFast said it is aiming to deliver 40,000 to 50,000 vehicles over the full year, suggesting the ramp-up should continue.

Meanwhile, the stock is also responding to news it is planning to ship its first vehicles to Europe this year after securing regulatory approval, CEO Le Thi Thu Thuy told Reuters.

Unnamed sources added more colour and suggested around 3,000 of its VF8 crossovers will be delivered to France, Germany and the Netherlands in the fourth quarter of 2023 from its factory in Vietnam. It plans to launch the VF6, VF7 and VF9 in Europe next year. VinFast has already entered the US but has had a tough time after being forced to recall vehicles because of malfunctioning software.

VinFast went public just over a month ago and has had a tough start to life as a public company. The stock went public via a SPAC and opened at $22 and initially soared to as high as $93 within a couple of weeks of listing, but it has been under severe pressure in September and is now trading just above $17 per share.

UAW strike continues to hit US automakers

Ford, General Motors and Stellantis are down 1% to 2.5% today as the strike action by the United Auto Workers at three plants enters yet another day, with time running out for the ‘Big Three’ to avoid industrial action be expanded to more factories.

The strikes began at three plants, one at each company, last week and the union has threatened to expand the scope if an agreeable deal isn’t reached, or at least some “significant progress” is made, by noon tomorrow.

Notably, Stellantis and General Motors have both recently furloughed some staff at other factories because the strike action is having a knock-on effect on their wider operations.

Will Grab buy foodpanda?

Grab is trading down 1.5% amid reports that it could be interested in buying foodpanda after Delivery Hero confirmed it has been holding talks about offloading the brand’s operations across southeast Asia, including Singapore, Malaysia, the Philippines, Thailand, Cambodia, Myanmar and Laos.

Tech in Asia said Grab is on of those interested in foodpanda, which could demand a price tag of over $1 billion, in order to cement its market-leading position in Singapore.

C3.ai stock hits 4-month low

C3.ai shares are down over 5% and set to open at their lowest level in over four months as the stock continues to see its value unravel after popping this year thanks to the hype around artificial intelligence.

The stock is down over 40% since AI and tech stocks came under pressure at the start of August but is still trading over double what it was worth at the start of 2023. Investors have already grown impatient after C3.ai failed to show it was benefiting from a tangible tailwind from AI in its latest quarterly results despite management boasting about its prospects throughout this year.

Bernstein hikes target price on Jacobs

Jacobs Solutions is in play after Bernstein hiked its target price on the engineer to $205 from $150 this morning, implying the stock could rise by over 50% in the coming 12 months. The stock has ripped over 20% higher since bottoming-out at the end of May. The stock closed at $133.17 yesterday.

Notably, that hike puts Bernstein’s target way above the average across Wall Street, which sits at $157, according to data from Refinitiv.

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