Reddit Stocks: What meme stocks are trending today? – October 4, 2023

US futures

• Dow Jones Industrial Average is up 0.2%
• S&P 500 is up 0.2%
• Nasdaq 100 is up 0.4%

US futures are trading higher on signs that the US jobs market could finally be starting to feel the pressure from the Federal Reserve’s interest rate increases, while the recent spike in treasury yields also eased, with the 10-year and 30-year yields pulling back after hitting their highest level since 2007 yesterday. Attention now turns to PMIs out shortly.

ADP employment cools

ADP employment data showed just 89,000 jobs were created in September. That marked a significant deceleration from the previous reading of 177,000 and was way below the average economist forecast for 153,000.

That suggests the jobs market could finally be starting to feel the strain from the Federal Reserve’s hiking cycle, although it is in contrast to the data we saw yesterday when US job openings unexpectedly rose in August to 9.61 million, well ahead of the 8.8 million expected.

ISM services PMI preview

The key data to watch today is the ISM services PMI, which is expected to ease slightly to 53.6 from 54.5. The services sector in the US accounts for around 75% of the US economy, so stronger-than-expected growth could add to the higher rates for longer narrative.

Will OPEC meeting stabilise oil prices?

Oil prices are continuing to slide today as OPEC+ prepares to meet to discuss output and strategy. Brent is down 2% at $88.79, marking one-month lows, and on course to suffer its biggest daily fall in two months, while WTI is down 2.2% at $86.49 and at the lowest level we have seen in more than three weeks.

Oil prices have been under pressure over the past week as markets grow concerned that the demand outlook could falter in a higher for longer interest rate environment. That seems to be overriding theories that the oil market will remain tight this year after Saudi Arabia and Russia, two of the largest producers, recommitted to extend production cuts until the end of the year. As a result, OPEC+ is expected to keep its oil output policy unchanged, according to unnamed sources from the oil cartel speaking to Reuters.

We also have EIA crude oil stocks change today, which is grabbing more attention than usual as stockpiles continue to decline. Inventories are expected to have fallen by 2.17 million barrels in the week to September 29.

Has gold found a floor at 7-month low?

Gold has lost ground for seven consecutive session, marking its longest losing streak in years, but is on the rise today, albeit by a mild 0.1% at around $1825. The metal has been hurt by the higher interest rate environment and surge in treasury yields.

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. Visa
3. Tesla
4. C3.ai
5. Netflix
6. Novavax
7. AMD
8. Citigroup
9. Rivian
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. MSP Recovery
2. Nikola
3. Palantir
4. Tesla
5. Apple
6. IonQ
7. Plug Power
8. SoFi
9. FREYR Battery
10. Marathon Digital

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.

IPO stocks struggling to gain ground

The IPO market has come back to life over the past month following a flurry of big-name listings. While it is clear companies are becoming more confident about facing the scrutiny of the public markets following a volatile few years, the jury is still out over whether there is appetite among investors.

The $140 billion bubble at VinFast has burst. The Vietnamese electric vehicle stock opened at $22 per share when it went public on August 15 and then swiftly spiked to as high as $93. Today, it is down 0.3% at just $9.30! That is a mighty bubble that quickly inflated and then burst within just a matter of weeks – and many investors will have been burned in the process.

Meanwhile, British semiconductor maker Arm is managing to hold its premium valuation and is up 0.4% at $51.76, just above its listing price. The stock still trades at over 100x earnings after convincing investors it has a bright future in AI, but that looks very stretched based on the business it is today and we could see it continue to be tested going forward.

Instacart has become an early casualty after falling below its IPO price within just seven days of listing, with the grocery tech and delivery firm up 0.6% today at $26.70 – below its $30 listing price. Wall Street has warned it sees limited upside potential, which may prevent it making gains anytime soon.

Email marketing specialist Klaviyo is down 0.5% at $31.10 and also flirting with its IPO price.

The next big-name IPO to test the waters will be German sandal maker Birkenstock, but it could be at risk of following a similar path as it aims for an elevated valuation multiple.

Read our insight in our IPO Stocks Outlook.

Tesla and NIO set to be caught-up in EU’s anti-subsidy probe

The European Union has formally launched its investigation into electric vehicles that are made in China and whether they benefit from subsidies that help them undercut European carmakers, which will focus on companies producing cars in China and exporting them to the bloc like Tesla and NIO.

The probe is not news considering it was announced last month. It has been launched as the EU worries that Chinese state subsidies are giving producers and unfair advantage over European companies. Ultimately, the investigation could result in the EU imposing countermeasures if it believes it needs to protect its own automotive market.

Tesla relies on Shanghai to produce the cars it sells in the EU despite opening a new plant in Germany, which has ramped-up slower than anticipated.

Rivian suffers biggest daily fall in 2 months

Rivian shares are up 0.9% today after suffering their biggest daily fall in over two months yesterday. The electric vehicle maker has lost around 8% in value since releasing its latest production and delivery figures.

The company delivered 15,564 vehicles in the latest quarter, ahead of the 14,973 forecast by analysts. That was more than double what it produced the year before and was up about one-fifth compared to the previous quarter. It said it remains on course to deliver 52,000 vehicles over the full year, but that may have left some analysts disappointed considering the consensus stood at 53,654. The fact Rivian shares had risen over 18% in the week running up to the delivery numbers being released also set a high bar.

Apple stock downgraded as Cook sells shares

Apple shares are down 0.5% at $171.62 after filings made yesterday revealed CEO Tim Cook sold 511,000 shares for around $41 million, marking his biggest sale in over two years. He still owns just under 3.3 million shares in the iPhone maker.

Adding to that pressure is KeyBanc Capital, which downgraded to Sector Weight from Overweight amid concerns it is still trading at a premium when sales growth is slowing.

Analyst Brandon Nispel forecast that US sales “are likely to struggle” following the launch of the new iPhone 15 and said its ambitions to accelerate growth overseas “may be aggressive”. Despite the challenging outlook, Apple still trades at a “large premium” to the Nasdaq and may find it more difficult to justify this to markets, the analyst said.

Notably, reports suggest demand for the new iPhone 15 has been better than expected, but revenue is only forecast to grow because more consumers are buying the more expensive Pro Max, which was the only model to see its price hiked this cycle, and volumes are expected to remain broadly flat from the iPhone 14. Notably, KeyBanc’s warning about the US came on the same day as Bloomberg Intelligence said it also believes iPhone unit sales could stagnate in the US next year as consumers wait to upgrade, and cut back on digital services such as iCloud and AppleTV.

Meta set to cut jobs from metaverse division

Meta shares are up 0.4% at $301.98 on expectations that it will outline plans to cut jobs at its metaverse unit today, according to exclusive reports from Reuters citing unnamed sources.

The social media company is thought to have told staff yesterday and that final decisions would be communicated today. Notably, the report said the FAST unit that has around 600 employees that have been trying to develop custom chips in-house for Meta’s devices could be the primary target after failing to compete and forcing it to turn to external suppliers like Qualcomm. Meta is not the only company that has so far struggled to make their own chips in-house, with Apple also having to rely on Qualcomm for smartphone chips longer than it was hoping.

Meta has faced increasing pressure as its metaverse ambitions continue to cost billions of dollars each year with little signs of a payoff anytime soon, although it has stirred some excitement with the pending launch of its new smart glasses.

JPMorgan lowered its target price on Meta this morning to $400 from $425.

What will price rises mean for Netflix stock?

Netflix shares are up 0.4% this morning. The streaming giant initially soared 4.5% yesterday after the Wall Street Journal reported that the company plans to raise the price of its ad-free service a few months after the strike action being taken by actors in Hollywood ends, but swiftly reversed course and closed down for the day.

Netflix has been focused on boosting revenue by cracking down on password sharing and launching the new ad-tier, but now appears to be looking at raising prices to cover increasing costs. The report did not state how much prices will increase but said they will start with rises in the US and Canada.

Actors in Hollywood remain on strike despite the fact writers are back to work after agreeing a deal with studios. Netflix is waiting for Hollywood to get back into full swing to ensure it has a strong enough content slate to draw-in audiences.

The tight battle between buyers and sellers yesterday reflects a debate. The optimist will see price increases as an easy way to lift revenue by squeezing more out of existing users, while the pessimists will be worried that higher prices could pressure user growth and cause more cancellations.

Intel to spin-off programmable chip unit

Intel shares are up 2.5% after announcing plans to spin-off and separate its programmable chips division in the hope of replicating the success of its spin-off of Mobileye back in 2022.

The unit, named Programmable Solutions Group, will become a standalone business at the start of 2024. That will allow Intel to raise new funding for the unit and give PSG more autonomy and flexibility to grow. Intel said it plans to launch an IPO for PSG “over the next two to three years” but may seek funding from private investors in the meantime.

Intel spun-off Mobileye through an IPO last year, which has been a big success. Mobileye went public at $21 per share and has since rallied over 89% to linger near $40 today. Mobileye is up 0.6% today.

Other chipmakers are trading lower today, with NVIDIA and AMD both up around 0.7% this morning.

US banks slide ahead of earnings season

Citigroup is up 0.2% before the bell at $39.95. The bank slipped to its lowest level since mid-2020 yesterday. Most major banks have underperformed this year and Citigroup has been among the worst performers, having fallen 13% since the start of 2023.

The recent decline comes ahead of US banks reporting third-quarter earnings, with Citigroup among the first batch of big players scheduled to report on Friday October 13. Citigroup is forecast to report the biggest year-on-year drop in earnings this quarter, suggesting it could continue to underperform. Citigroup is currently undertaking a major restructuring as it tries to simplify the business.

Morgan Stanley trimmed its price target on Citigroup to $43 from $45 yesterday.

One rival that has had an even tougher time in 2023 is Bank of America, which is down 23% year-to-date. The bank slumped to its lowest level in almost three years yesterday and is up 0.4% today. Wells Fargo is also rebounding and is up 0.2% after hitting five-month lows yesterday.

JPMorgan, the largest US bank, continues to significantly outperform and is expected to keep shining compared to its rivals this earnings season. The stock is up 0.4% in premarket trade after testing three-month lows, but is still up over 5.5% this year.

Novavax’s Covid-19 jab gets US approval

Novavax is up 0.4% after popping over 8% yesterday, when the US Food & Drug Administration gave its approval for the company’s updated Covid-19 vaccine. That is a big deal considering it is Novavax’s only commercial product and that it is hoping new orders for the updated version can help it stay afloat.

Judge throws out case against IonQ

Quantum computing company IonQ is trading 0.7% higher after a US judge dismissed a lawsuit tabled by investors that alleged the company and the special purpose acquisition vehicle (SPAC) it merged with back in 2021 artificially inflated its share price, according to Bloomberg Law.

Investors had accused the companies of misleading investors about its technology and concealing information that a related third-party was driving bookings growth. The judge said those making the claims failed to prove their case.