Reddit Stocks: What meme stocks are trending today? – September 28, 2023

US futures

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

 

US futures are shaky this morning as another spike in oil prices stoked fresh fears that inflation could make a comeback, which in turn is reinforcing the idea that interest rates will have to be kept higher for longer. Meanwhile, the latest US economic data showed the economy keeps growing and that the labour market remains resilient.

As September draws to a close, this is set to be the worst month of 2023 for both the S&P 500 and the Nasdaq 100, while all three indices are set to lose ground over the quarter for the first time this year.

 

Markets digest US data dump

US GDP grew 2.1% in the second quarter of 2023 compared to the first. That accelerated slightly from the previous reading of 2% and was bang on forecasts supplied by economists.

Meanwhile, initial jobless claims rose 204,000 in the week to September 23. That represented a mild uptick from the revised 202,000 rise we saw in the previous week but was much softer than forecasts for a rise of 215,000. That suggests the labour market is still more resilient than economists thought as fewer people are claiming unemployment benefits.

Notably, we have speeches from several Federal Reserve members today, headlined by chair Jerome Powell. There is also pending home sales data due out.

 

Oil prices hit fresh 11-month highs

Oil prices briefly hit fresh 11-month highs today as markets worried about a tighter market following a much sharper slump in US inventories yesterday. Brent and WTI are now both down around 0.3% today at $93.80 and $92.50, respectively.

Prices popped after EIA crude oil stockpiles in the US declined by 2.17 million barrels in the week to September 22, which was a surprise considering economists had only expected a drawdown of 320,000 barrels.

That is reinforcing expectations that the oil market could keep tightening this year in light of extended production cuts from Russia and Saudi Arabia. The elevated price has opened the door to a potential return to $100 a barrel.

 

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. Meta
6. Apple
7. Rivian
8. Micron
9. Peloton
10. Amazon

 

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. Palantir
4. Peloton
5. Chico’s FAS
6. Tesla
7. Carnival
8. GameStop
9. Amazon
10. Micron Technology

 

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:

Winners	%	Losers	%
Chico's FAS	62.7%	MSP Recovery	-11.5%
Peloton	13.6%	Workday	-10.8%
DigitalBridge Group	8.9%	CarMax	-10.7%
GameStop	6.8%	Cheche Group	-5.4%
Aurora Innovation	4.6%	Vitesse Energy	-5.4%
Sunnova Energy	4.0%	Accenture	-5.2%
Redfin	3.7%	Concentrix	-4.5%
Jabil	3.6%	XP	-4.2%
Neumora Therapeutics	3.3%	AutoNation	-3.9%
Angi	3.1%	Viking Therapeutics	-3.9%

 

Top US stocks to watch

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

 

Tesla stock hits September-low on 2024 fears

Tesla shares are down 0.6% and at their lowest level since late August as markets become worried that expectations for 2024 are too high. That comes after Deutsche Bank warned yesterday that it believes Tesla will deliver fewer vehicles than markets anticipate going forward.

Analyst Emmanuel Rosner said he thinks Tesla could miss expectations in the third quarter and estimated it will deliver 440,000 vehicles. Currently, the consensus is expecting a higher figure of over 460,000.

The analyst also 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. He blamed a slower ramp-up at its newer factories in Germany and the US as the root cause of his more pessimistic estimates.

 

Wall Street likes Rivian ahead of delivery update

Rivian shares are up 0.9% at $23.25 after storming higher for three consecutive sessions, with Wall Street now warming to the company’s valuation following the heavy selloff seen over the past few months.

Baird said it is its new “bullish fresh pick” ahead of its update on deliveries next week, when it expects it to top forecasts. “We see Q3 deliveries as a near-term catalyst and expect sentiment to improve as Rivian continues to realise cost benefits from an improving supply chain and the use of in-house components,” said analyst Ben Kallo. Baird has an Outperform rating and a $30 price target on Rivian. Bank of America also said it sees considerable upside potential for the stock from here.

Currently, the average target price across Wall Street stands at $29, according to data from Refinitiv, suggesting there is over 26% potential upside.

Rivian, which announced plans to sell various features used in its cars through subscription models this week, is forecast to sell 14,973 vehicles in the third quarter, according to consensus numbers from Bloomberg. That would be more than double what we saw the year before and mark a new quarterly record!

 

Lucid Group opens factory in Saudi Arabia

Lucid Group is up 0.7% after it started assembling electric vehicles at its new factory in Saudi Arabia yesterday. That represents its first overseas factory, which will initially aim to produce 5,000 vehicles a year with the hope of eventually expanding that to around 155,000.

Vehicles produced at the site will be sold both domestically and exported overseas.

 

 

 

Apple stock breaks support

Apple shares are trading slightly lower at $170.30 today and on course to lose ground for a third consecutive day. The stock has slumped below the $171 floor that has held for over four months and is now at risk of slipping toward the 200-day moving average, which could provide a potential safety net at around $166. The stock has traded comfortably above the moving average for six months.

Some of the first users of the new iPhone 15 Pro and Pro Max are complaining devices are getting to hot when in use, according to reports from Bloomberg, which may trigger fears that its flagship product could have some faults or issues.

Meanwhile, there has also been news that the iPhone is losing market share in Japan as its devices get more expensive, allowing Alphabet’s Google to gain ground with its cheaper Pixel device. Data from Counterpoint Research shows Apple’s slice of the Japanese smartphone market slid to 46% in the second quarter of 2023 from 58% a year earlier, while Google’s share has risen to a record 12% from only around 2% a year ago.

 

Meta showcases new AI tools and smart glasses

Meta shares are up 0.7% following its annual Connect conference yesterday, when the social media giant unveiled new generative AI assistants, an updated version of its virtual reality headset and new smart glasses as part of its broader push into the digital world.

The new smart glasses, designed by Ray-Ban, will be priced at $299 and hit the shelves in October and will include a new AI assistant. Notably, its AI assistants are learning using information taken from Bing, the search engine trying to be revived with AI tools by Microsoft. The glasses can be used to livestream broadcasts and take photos that can land directly on to Facebook and Instagram.

The new Quest headset will also start shipping next month, boasting its first generative AI products capable of generating text and images. Meta currently has over a 90% share of the global mixed-reality headset market and is now working to unleash more services and content on its users.

 

Amazon stock hits 3-month low on FTC fears

Amazon shares are down 0.7% and set to open at their lowest level in over three months as markets worry about a lawsuit launched by the Federal Trade Commission this week.

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.

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.

 

Micron sinks as it starts long recovery journey

Micron Technology is down 2.9% and at September-lows as it continues to feel the pain from the imbalance within the memory chip market, but signalled that it is starting to see a recovery that should continue over the next two financial years.

Revenue slumped almost 40% from last year in the fourth quarter to $4.01 billion, but this was ahead of the $3.92 billion forecast. The adjusted loss per share of $1.18 was bang on estimates. However, it was the outlook for an adjusted loss of around $1.07 in the first quarter that upset the markets, given Wall Street was anticipating a much smaller loss of around $0.98.

On a brighter note, Micron said revenue in the first quarter will be around $4.4 billion, which was rosier than the $4.2 billion expected by analysts and suggesting that Micron is starting to find some much-needed momentum, even if easier comparatives start to help.

CEO Sanjay Mehrota said Micron has taken “decisive actions on supply and cost” and signalled that its customer’s burgeoning inventories have now unwound, apart from some segments such as data centres. Micron is also hoping that higher prices will boost its performance as demand starts to rebound, but investors are convinced we are still far away from a full recovery as sales continue to fall and it remains in the red.

Wall Street welcomed signs of a recovery but said the immediate outlook was more disappointing than hoped. Morgan Stanley said its analysts “just don’t see that Goldilocks scenario playing out for the industry as a whole” as structural imbalances will keep plaguing the industry for years. Still, several analysts flagged they expect to see a big improvement in both growth and earnings in the second half of the new 2024 financial year.

Another reason markets are becoming more optimistic for the new financial year is that Micron is planning to start selling high bandwidth memory chips to NVIDIA, which will incorporate them into its rapidly-selling AI chips. Mehrotra said he expects sales of the new memory chip to start in “early 2024”. NVIDIA shares are up 0.3% before the bell today.

 

Cloudflare strikes AI deals with NVIDIA and Microsoft

Cloudflare is down 0.1% after striking several deals with a number of big name companies, including NVIDIA and Microsoft.

The company released a flurry of statements yesterday. One announced a deal to use NVIDIA’s technology, likes its GPUs and Ethernet switches, to improve its AI infrastructure for customers and to bring them new tools, like generative AI apps. Another covered a deal to work with Microsoft to help allow AI models to run over different platforms. It is also working with Databricks and Hugging Face on other AI collaborations. It has also secured access to Meta’s AI coding tool known as Llama 2, which is raising hopes that it will lead to more engagement for Cloudflare’s platform.

 

Accenture disappoints with outlook

Accenture is down 4.9% and at three-month lows after missing expectations and delivering a disappointing outlook as higher interest rates and persistent inflation weigh on demand.

The IT services firm’s revenue in the fourth quarter rose 4% to $16.0 billion but fell short of the $16.08 billion expected by analysts. Adjusted EPS of $2.71 was better than the $2.65 estimate. However, it was the outlook that is weighing on the shares today. Accenture said it is targeting annual adjusted EPS of $11.97 to $12.32 per share in the new financial year, below the $12.40 that Wall Street was looking for.

Vital Knowledge said the outlook was a “bit soft” while Wedbush described it as “conservative”. “This isn’t a bad report, but the knee-jerk reaction is  likely to consider it disappointing given the bookings shortfall and the modest miss on guidance,” Vital Knowledge said.

 

Workday slumps as it cuts subscription outlook

Workday shares are down 10% and at their lowest level in over three months after warning subscription revenue will grow slower than previously expected over the next three years. It said it now expects subscription sales to grow 17% to 19% in the next three fiscal years, including the current one that ends in December. It had previously targeted growth of over 20%.

Piper Sandler and Bloomberg Intelligence both said the cut may represent a more conservative stance from Workday’s new chief financial officer, who is dealing with tougher macro headwinds.

 

CarMax profits hit in tough used car market

CarMax is down 12% and at four-month lows after profits fell more than anticipated in the latest quarter thanks to a combination of higher interest rates on car loans and lower prices.

Revenue was down 13% in the to $7.1 billion but came in just ahead of the $7.0 billion forecast. Adjusted EPS of $0.75 fell short of the $0.77 forecast. Higher interest rates are making financing car purchases more expensive, while lower prices – which fell 7.8% in the six months to the end of August compared to the year before – is also weighing on profitability.

 

AutoNation ignites bidding war for Pendragon

AutoNation is falling today and on course to open at its lowest level in three months as it feels the pressure in wake of the disappointing results out from CarMax, but investors are focused on its plan to buy UK car dealership Pendragon.

AutoNation has launched a 32p per share takeover for Pendragon, valuing it at around £447 million. That is competing with an existing deal on the table from Lithia Motors, which is trying to buy its dealerships for £280 million to leave Pendragon focused on its Pinewood software business. Another bid, also worth 32p per share, has been tabled by Hedin Mobility and PAG International.

Pendragon is now analysing the offers to decide what to do next.

 

Can Disney and Netflix get Hollywood actors back on side?

Disney, Netflix and Warner Bros Discovery are up 0.1% to 0.3% this morning amid news that studios will resume talks with striking Hollywood actors next week, on October 2, in the hope of resolving the dispute in wake of the new deal signed to get writers back to work.

The SAG-AFTRA union for actors has 160,000 members, which followed writers in striking back in July as they push for better pay and conditions as well as safeguards against new technology like AI. Writers are now back after a deal was struck last weekend, which may give a new sense of urgency to make an agreement with actors to get Hollywood up and running again.

That comes as SAG-AFTRA also threatens video game studios like Activision Blizzard, EA and Take-Two Interactive with strikes by voice actors and motion capture actors unless they strike a new deal that provides better pay and conditions.

 

 

 

Can Carnival keep turning the ship around?

Carnival is down 1.9% as investors prepare for another solid set of results from the cruise line operator on Friday as the travel industry remains buoyant. Carnivalhas been one of the best performers in the S&P 500 this year as the travel industry continues to roar back to life. While consumers are having to cope with a cost-of-living crisis, holidays and travel remain a high priority for people after years of being locked away during lockdown. Carnival shares are up almost 80% since the start of 2023.

The cruise liner is set to report its fourth year of losses this year, but sales are set to hit an all-time high and losses are set to be almost negligible, setting it up for a big recovery in 2024 so long as the travel industry remains resilient.

Quarterly revenue is expected to be up 57% from the year before at $6.75 billion as more people book trips at higher prices and occupancy rates keep improving. Adjusted Ebitda – its headline measure – is expected to come in at $2.11 billion, marking a seven fold increase from the year before. Markets may get excited considering analysts predict it will report adjusted earnings of $0.76 per share – which would be its first quarterly profit in three-and-a-half years! However, be wary as analysts see it slipping back into the red for the next three quarters and don’t see it sustaining a move back into the black for some time. With that in mind, liquidity remains strong and it has the resources it needs to make its comeback.

Carnival may have popped this year but it remains well-below its all-time highs and remains a strong recovery play. Demand has never been stronger and it remains on the path back to profitability. Inflationary pressures are easing, although the recent rise in oil prices may be a headwind, and prices remain elevated.

 

Palantir wins $250 million AI contract

Palantir is up 2.1% on news it has won a new $250 million contract from the US Department of Defense to conduct R&D work on AI and machine learnings, according to media reports. The three-year deal will build on work Palantir has already been doing since 2018.

 

Peloton jumps on Lululemon partnership

Peloton shares are up almost 10% and on course to book their biggest daily gain in over seven months today after announcing it has struck a deal with athleisure firm Lululemon, which is trading marginally higher today.

The exercise equipment firm will provide its fitness content through Lululemon’s Studio Mirror, helping expand its potential user base. Meanwhile, the pair will also work together on new apparel that Peloton can sell.

Notably, Lululemon said it will stop making the Studio Mirror before the end of this year. That means the deal with Peloton will keep serving existing Studio Mirror owners, with Lululemon shifting the focus to its app and encouraging users to join Peloton. The hope is that Peloton will see a bump in subscribers once the Studio Mirror is shelved.

Wall Street welcomed the deal but didn’t get overly excited. Vital Knowledge said it was pleased to see both companies refocusing on their strengths but said the deal is “not a monumental announcement for either company”. Bloomberg Intelligence said the deal broadens Peloton’s potential user base but that the deal doesn’t change its cautious view of the “weak” home fitness market and said “peloton’s path to sustainable profitability and free cashflow is still unclear”.

 

GameStop appoints Ryan Cohen as CEO

GameStop shares are up 7.9% after the video game retailer and meme stock favourite appointed Ryan Cohen as its chief executive and chairman. Cohen was already executive chairman after taking it on after previous CEO Matt Furlong was let go.

Cohen is one of GameStop’s biggest shareholders and appears to be taking on more responsibility for its turnaround.