Reddit Stocks: What meme stocks are trending today? – October 5, 2023

US futures

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

US futures are down today as treasury yields and a strong jobs market hits sentiment. US treasury yields have eased since hitting fresh 16-year highs yesterday, but the elevated levels are still concerning investors that it could sap energy out of the equities market as markets adjust to higher for longer interest rates.

Initial jobless claims

US initial jobless claims rose by 207,000 in the week to September 30, marking a slight acceleration from the 204,000 rise we saw the week before. That was, however, a milder increase than 210,000 pencilled-in by Wall Street.

That suggests the labour market remains resilient, with unemployment claims coming un under 210,000 for a third straight week. That will be unwinding the hopes seen yesterday when we saw those soft ADP numbers, which 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. However, the ADP reading was in contrast to the figures we saw earlier this week when US job openings unexpectedly rose in August to 9.61 million, well ahead of the 8.8 million expected.

All eyes now turn to the closely-watched non-farm payrolls report out tomorrow, when economists anticipate growth will slow to 170,000 from the previous expansion of 187,000.

The economic calendar for the rest of today is headlined by speeches from several Federal Reserve members, including Tom Barkin, Mary Daly, Loretta Mester and Michael Barr. In Canada, there is the Ivey PMI for September.

Oil prices sink to 5-week low

Oil prices remain under pressure. Brent suffered its heaviest daily fall in almost five months yesterday and is down another 1.6% today and holding just above $84 a barrel, while WTI is down 1.7% and has slipped below $82. Both are at five-week lows.

“Concerns over the macroeconomic outlook and, therefore the demand outlook, as well as a stronger US dollar and the largest builds in gasoline inventories in almost two years, sent oil prices tumbling,” our analyst Fiona Cincotta said about yesterday’s selloff. “The oil market brushed off the OPEC+ meeting’s more upbeat outlook towards demand and the prospect of tight supply as the group made no changes to the oil output policy”.

“The recent rally across the summer in crude oil prices has been on the narrative of tighter supply and the resilient global economy. However, recent US data has shown some signs of the economy cooling which is unnerving the oil market,” Cincotta added.

You can read Fiona’s analysis on oil prices in her Two Trades to Watch.

Is gold about to bounce back?

Gold prices have declined for eight consecutive sessions, marking its longest losing streak in years, but is holding steady today at around $1,825 an ounce. The metal is now the most oversold it has been in over a year and is lingering at six-month lows.

“With the sharp drop in bond yields on Wednesday, and a bigger sell-off in oil prices this week (which is disinflationary), there are now solid reasons for some potential bargain hunting. So far, however, the bulls are nowhere to be seen,” said our analyst Fawad Razaqzada.

You can read Fawad’s more in-depth analysis in Gold is Poised for Oversold Bounce.

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. Visa
5. Rivian
6. Disney
7. Amazon
8. AMD
9. Tilray
10. Grupo Televisa

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. Rivian
2. Tesla
3. Nikola
4. Array Technologies
5. MSP Recovery
6. Palantir
7. Apellis Pharmaceuticals
8. VinFast
9. Amazon
10. AMD

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.

Top oversold stocks in the S&P 500 to watch

The S&P 500 rebounded from a four-month low yesterday, which saw it briefly slip into oversold territory for the first time in a year. We have filtered through the most oversold US stocks based on their RSI reading and picked out four of the biggest and most notable names to watch -  payments firm Block, drinks giant Coca-Cola, fast-food chain McDonalds, and United Airlines.

Notably, all four are highly sensitive to consumer spending, which is expected to start slowing as stimulus-boosted savings dwindle, student loan repayments restart and higher for longer rates and inflation keep stretching household budgets.

Find our fundamental and technical analysis on these four stocks in Top 4 Oversold Stocks to Watch.

Constellation Brands raises outlook

Constellation Brands is down 0.6% and testing three-month lows after lifting its full year profit forecast after reporting stronger sales than anticipated thanks to higher prices and the popularity of its array of alcoholic beverages.

The company said it is now aiming for annual comparable earnings of $12.00 to $12.20 per share, up from its previous goal of $11.70 to $12.00. That came as quarterly sales increased 7% from last year to $2.84 billion, just ahead of the $2.82 billion forecast. Quarterly adjusted EPS rose to $3.70 from $3.17 the year before, smashing the $3.39 forecast by Wall Street.

Conagra price hikes boost profits but not sales

Conagra Brands is down 1.6% and at three-and-a-half-year lows after higher prices and easing cost pressures allowed it to return to profit in the first quarter of its financial year, although there are signs that volumes are being hit as consumers become more cost-conscious.

Net sales were flat in the quarter as higher prices countered lower volumes, but higher price tags helped it deliver EPS of $0.67 compared to the $0.16 loss we saw the year before. ConAgra reiterated hopes of delivering 1% annual organic revenue growth and adjusted EPS of $2.70 to $2.75 over the full year. That compares to the $2.77 delivered in the last financial year.

When will the UAW strike end for automakers?

Ford and General Motors are down 0.3% while Stellantis is up 0.1% as the strike action by the United Auto Workers continues for its 20^th day, although there are hopes that some progress is being made in negotiations.

Ford and the UAW have narrowed their differences in the latest talks and talks with Stellantis and other automakers have been active in recent days according to unnamed sources speaking to Reuters. UAW president Shawn Fain is expected to update union members on progress this Friday, but it is not known if he will call for more strike action at other factories or whether enough progress has been made to stop the UAW expanding industrial action.

Tesla stock surges toward major trendline

Tesla shares are down 0.4% this morning at $260.14 after jumping 5.9% yesterday amid the broader rally in tech stocks, recouping the ground lost this week after it posted weak delivery figures and gaining more ground after hitting a two-week high.

The electric vehicle maker has surged past the 50-day moving average that held the share price back for three consecutive sessions and is now back on course to keep climbing toward the September peak at $278. That would put it in touching distance of the falling trendline that has proven to be the ultimate ceiling for the stock for almost two years!

Rivian stock crashes on convertible note

Rivian shares are down over 9% and giving back all the gains booked yesterday after announcing it plans to sell $1.5 billion of green convertible loan notes that will be due in 2030. That will be weighing on the mind of investors that will be worried the loan notes will ultimately lead to them being diluted if converted.

The notes will be senior and the buyers are also being given the option to buy an additional $225 million of notes within 13 days of the original offer being launched.

Truist Securities said the move will provide more cash and extend Rivian’s runway to profitability. Bloomberg Intelligence said the timing makes sense considering the sharp rise in its share price since it last issued convertible notes back in March, but warned it thinks Rivian will need to “raise capital well beyond this issue before 2025 without a significant improvement to its cash burn rate”.

Truist Securities also said it sees an “increasingly positive setup” ahead of the company’s third-quarter results out next month. Rivian provided a preliminary revenue figure for the third quarter of $1.29 billion to $1.33 billion, which met analyst expectations.

VinFast rebounds from lows as revenue jumps

Vietnamese electric vehicle maker VinFast is up over 10% before the bell and rebounding from all-time lows today after reporting its first set of results since it went public, revealing a jump in deliveries and a surge in revenue.

The company delivered 10,027 electric vehicles in the third quarter, up from negligible numbers the year before and from the 9,535 it shipped in the second. E-scooter deliveries almost trebled from the previous quarter to 28,220. As a result, total revenue soared to an equivalent of $319.5 million. Still, it remains loss-making. In-fact it is posting a negative gross margin of 29.9% on each car it makes and its net loss in the quarter came in at an equivalent of $622.9 million.

The company has given investors a rollercoaster ride since going public in August, but one that most will have found stomach-churning. The stock opened at $22 per share when it listed and then swiftly spiked to as high as $93 before freefalling to today’s price at just $8.88 before the bell.

UK to probe Amazon & Microsoft cloud dominance

Amazon and Microsoft are both down 0.2%. UK regulators has opened an investigation into the pair’s dominance in the cloud computing market amid suspicions they may be abusing their position at the cost of consumers.

Telecoms regulator Ofcom has provided evidence that the biggest players have made it difficult for customers to use multiple suppliers or switch to rival services and the Competition & Markets Authority is now looking into it. That represents another regulatory probe for Big Tech, which is facing increasing pressure about their size, scale and power in key markets from around the world.

NVIDIA rattles Samsung stock

NVIDIA is up 0.2%. South Korean tech behemoth Samsung slumped over 1% in the most recent session and hit a six-week low after Yonhap Infomax said it is struggling to secure an order for high-bandwidth memory chips from NVIDIA because the yields are not good enough.

Samsung has supplied samples to NVIDIA, which is reported to be unwilling to make a formal order until the yield improves. Until then, NVIDIA will keep using SK Hynix as its exclusive supplier, the report said, and it is thought to have asked the company to accelerate supply of high bandwidth-memory as it races to build more advanced chips to capitalise on rising AI demand. SK Hynix popped over 4% as a result.

Disney stock tests pandemic-induced lows

Disney shares are trading flat this morning at $79.28 and poised to open at their lowest level in three-and-a-half years, with the House of Mouse dangerously close to slipping to the low we saw when the eruption of the pandemic sank the stock to $79.07. A slip below here would see it hit levels last seen back in 2014!

The stock is on course to lose ground for a third consecutive week and has plunged almost 60% since peaking at all-time highs back in 2021. Disney has fallen out of favour as investors pile on the pressure to get its streaming operations profitable, fret about a pullback in consumer spending hitting demand at its theme parks and resorts just as it has announced a huge lift in the amount it plans to invest in its sites, ongoing strikes by actors hurting its content slate and the trouble with what to do with its legacy TV networks.

Citigroup workers brace for layoffs

Citigroup shares are down 0.1% and lingering at its lowest level in over three years after informing workers yesterday that it will be taking action on headcount this November as part of the bank’s major restructuring. It said existing roles may change or be eliminated while new roles could be created once the review is communicated later this year.

Citigroup CEO Jane Fraser, which is yet to get the backing of the markets for the major overhaul considering the slump in its share price under her watch, has been ramping-up the reorganisation that includes offloading non-core assets and focusing on the most profitable parts of the business. An update on the restructuring is expected when it releases fourth quarter results early next year.

Tilray surprises with wider loss

Cannabis and drinks company Tilray is up 0.5% after reporting a sales beat in the latest quarter but also a wider loss.

Revenue rose 15.5% from last year to $176.95 million and came in ahead of the $173.75 million forecast, but its adjusted loss per share widened to $0.10 from $0.08. That was a disappointment considering analysts expected its loss to narrow to $0.05. Adjusted Ebitda – its headline measure – fell 15% to $11.4 million and also came in shy of the $11.6 million forecast.

Tilray reiterated its plan to deliver annual adjusted Ebitda of $68 million to $78 million.

Grupo Televisa stock hits all-time low

Grupo Televisa is up 2.7% at $3.00 and rebounding from all-time lows. The Mexican multimedia company is down 37% in 2023.

BofA upgraded the stock to Buy yesterday after the recent selloff, which has pushed the RSI into oversold territory. It has a $4.70 price target on the stock. It agreed there are challenges but said the valuation already reflects this. UBS also cut its price target to $3.40 from $6.00.

Will the DWAC merger ever happen?

Digital World Acquisition Corp is up 0.6% this morning The stock has grabbed attention after the special purpose acquisition vehicle and former president Donald Trump’s technology company added a termination agreement to their merger plans, raising doubts about whether their merger will ever be completed.

DWAC and Trump Media & Technology Group have struggled to complete their merger following a multitude of headwinds. This week, the pair agreed either of them could terminate the deal from October 31 to November 21 if either “no longer believes in good faith” that the deal is best for shareholders.