Reddit Stocks: What meme stocks are trending today? – September 26, 2023

US futures

• Dow Jones Industrial Average is down 0.4%
• S&P 500 is down 0.5%
• Nasdaq 100 is down 0.5%

 

US futures are trading lower and reversing the gains booked yesterday. Markets are still repositioning as they digest the higher for longer rate narrative from the Federal Reserve, which in turn is also stoking recession fears. The threat of a US government shutdown at the start of next month is adding to anxiety.

Both the US dollar and treasury yields have dropped after hitting fresh highs yesterday but remain elevated, with US Dollar Index dipping from an 11-month high and 10-year treasury yields pulling back after hitting the highest level in 16 years!

The US economic calendar is fairly quiet today. The housing industry is the one to watch today ahead of new home sales data for August and the S&P/Case-Chiller home price figures for July. There is also CB consumer confidence and a speech from Federal Reserve’s Michelle Bowman. API crude oil stocks change, which is being closely watched amid fears of tightness in the oil market, caps off the day.

 

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. C3.ai
3. Tesla
4. Visa
5. Apple
6. Amazon
7. Target
8. Netflix
9. Disney
10. Arm

 

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. Immunovant
3. Nikola
4. Roivant Sciences
5. Sirius XM Holdings
6. Tesla
7. Lucid Group
8. Palantir
9. IonQ
10. Fisker

 

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	%
Immunovant	65.0%	United Natural Foods	-20.7%
Pliant Therapeutics	20.0%	MSP Recovery	-14.5%
Roivant Sciences	17.5%	Greenfire Resources	-13.5%
Adaptive Biotechnologies	13.8%	Sana Biotechnologies	-10.4%
Pagaya Technologies	6.3%	Sirius XM	-10.2%
Aurora Innovation	6.1%	MarketWise	-5.7%
Dole	5.8%	MDC Holdings	-5.6%
Lumen Technologies	5.0%	TD Synnex	-5.3%
Fisker	4.5%	Dave & Buster's	-5.0%
OPKO Health	4.4%	Madrigal Pharmaceuticals	-3.0%

 

Top US stocks to watch

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

 

Will video game makers be next to face strike action?

Video games companies such as Activision Blizzard, Electronic Arts and Take-Two Interactive could be the next segment of the entertainment industry to face disruption from strike action after union SAG-AFTRA – which has already facilitated strike action by actors in Hollywood– threatened voice actors and motion capture performers will walk out if a new deal isn’t struck.

SAG-AFTRA said over 98% of members have voted to strike in absence of a new deal, although the turnout was less than 27.5%. Talks with gaming companies will continue today. The existing deal expired almost a year ago and has been extended on a monthly basis ever since. The union is pushing for higher wages, medical cover and better conditions, while also seeking to protect workers from the threat of AI.

SAG-AFTRA also represents many actors in Hollywood, which remain on strike even after writers struck a tentative new deal with film studios over the weekend. Executives from Disney, Netflix, Warner Bros Discovery and NBCUniversal (part of Comcast) helped broker the deal with the Writers Guild of America on Sunday. Still, Hollywood won’t erupt back into life just yet as writers are only making a partial return to work until the deal is ratified, with the two sides nailing down the final details. The studios still need to get actors back on side, but are likely to be more incentivised to strike a deal now that they have their writers back. Other stocks to keep an eye are on streaming giants like Amazon and Paramount, as well as any others that rely on content.

 

Tensions between US automakers and unions heats up

One industry still reeling from strikes and tense relations with unions is the US automotive industry. The United Auto Workers union expanded strike action against General Motors and Stellantis after the pair failed to make progress with talks last week. The pair are down 0.4% to 0.8% this morning.

Notably, president Joe Biden and his predecessor Donald Trump, who is eyeing a return to the White House at the next election, are both set to speak to workers from the automotive industry in Michigan, and both are expected to show support for the strikes despite the threat it poses to the wider economy. Biden is set to visit the picket line today, with Trump following on Wednesday.

General Motors is now facing more potential disruption after Canadian union Unifor said it wants a better deal for its members after striking a deal with rival Ford. Talks between the union and General Motors will begin today.

Meanwhile, Ford is down 0.3% after landing itself in hot water after announcing it is halting construction of a $3.5 billion battery manufacturing factory in Michigan, casting huge doubt over thousands of jobs. The plant was set to employ 2,500 people and produce enough batteries to power hundreds of thousands of electric vehicles each year.

Ford said it is “pausing work and limiting spending” on construction on the Marshall project until it knows it can operate the plant. Ford was planning to licence technology from Chinese firm CATL for the plant to work but the concern is that Republican politicians are asking questions about US automakers sourcing batteries from China and allowing US subsidies to flow through to foreign entities.

The UAW decided not to take further strike action against Ford over the weekend after noting significant progress was being made in talks, but its president Shawn Fain said Ford’s decision shows it is “doubling down” on a race to the bottom. “Closing 65 plants over the last 20 years wasn’t enough for the Big Three, now they want to threaten us with closing plants that aren’t even open yet,” he said on social media platform X.

Buckle up, it looks like there could still be a potentially long and rough ride before we see a resolution.

 

 

Cisco struggles to recover after announcing Splunk deal

Cisco shares are down 0.4% this morning. The networking giant took a heavy tumble and gapped lower after announcing it is buying cybersecurity outfit Splunk at a valuation of $28 billion last week.

Cisco is set to complete its biggest-ever acquisition by buying Splunk for $157 per share. Splunk shares popped higher thanks to the big premium but have struggled to climb above $145 since the deal was announced, signalling there is doubt on both sides.

Cisco, which has made a name for itself supplying the hardware needed to run datacentres and IT systems, is shifting toward higher-margin and faster-growing software and believes Splunk can help it achieve that quicker.

You can find out more, including our technical analysis, in Everything You Need to Know About the Cisco-Splunk Deal.

The Cisco-Splunk deal is one of the biggest in the cybersecurity space despite a flurry of multi-billion dollar deals in recent years, with several big players having bought their way into the space. For example, back in 2022, we saw Microsoft buy a company that detects cyber threats named Miburo while Alphabet closed its acquisition of cybersecurity firm Mandiant.

This shows there major tech companies have an appetite for smaller players that have carved-out a position in the market and the Cisco-Splunk deal could signal there is more to come, especially as demand for cybersecurity continues to rise. The deal has led to rumours that other tech players such as Datadog, CrowdStrike and Dynatrace could be takeover targets in the future.

 

Chinese stocks suffer on economic health concerns

Chinese companies listed on American exchanges are trading lower today, with Alibaba, JD.com, Pinduoduo and Baidu trading 0.3% to 2.6% lower before the bell today. The recent improvement in data out of China has provided hope that the economy has bottomed-out, but a shaky property market and rising geopolitical tensions are weighing on the outlook.

 

Target stock hits 3-year low

Retailer Target is flat today at $112.30 after hitting its lowest level since May 2020, having seen almost $60 billion wiped-off its valuation since the start of 2023. Stifel cut its target price on Target this morning to $130 from $145.

The stock has underperformed the broader retail space this year, having seen sales drop due to an overexposure to general merchandise that has fallen out of favour as consumers are forced to spend more on necessities. Target slashed its full year outlook and missed expectations when it released its last set of results in August, while Walmart delivered a beat and raised its guidance to reinforce fears that Target needs to up its game.

US consumers have continued spending and helped keep the economy chugging along but the outlook for consumer spending looks challenging. Rates will be higher for longer, stimulus-ladened wallets are shrinking, student loan repayments kick back in next month and this holiday shopping season is expected to see the slowest growth in retail sales in five years, according to forecasts from Deloitte.

 

Bar is high ahead of Costco earnings

Costco shares are flat ahead of fourth quarter earnings out after markets close today.

The company continues to shine at a tough time for the retail sector, with sales and profits continuing to grow as its membership model and focus on value resonates with customers, and this trend should continue when it reports results tomorrow. The stock is up 0.2% this morning.

Costco should see inflationary pressures ease going forward and is likely to be among the first to lower prices to solidify its value offering, which should keep memberships and sales growing. Renewal rates across the world remain at all-time highs and new memberships are rising at a high single-digit rate.

Costco shares are up 22% in 2023, slightly outperforming the wider retail sector. However, further gains could be hard to come by despite its impressive performance considering the premium on its valuation multiple, which is trading at 36x forward earnings – representing an 80% premium to the industry average!

You can find out what you need to know, including all the consensus figures to look out for and our latest technical analysis, in our Costco Q4 Earnings Preview.

 

 

Amazon has “newfound urgency” to catchup in AI

Amazon shares are down 0.4% and giving back some of the gains made yesterday, when it snapped a seven-day losing streak as markets embraced news it is investing up to $4 billion into Anthropic and supplying it with its own chips to power the company’s AI tools.

Anthropic will be using Amazon chips to build and train its models and Amazon Web Services will be its primary cloud provider. Anthropic will release its new products to AWS customers early and they will be accessible through Amazon’s new Bedrock service that pools together useful tools from different platforms.

Wedbush said the move “signals a newfound urgency in Amazon’s strategy to further integrate generative AI”. Bloomberg Intelligence said the deal may not make a financial impact for Amazon Web Services in the near future, but that it “shows it’s taking Microsoft’s perceived AI leadership seriously”, adding that news Amazon chips will power Anthropic’s AI models “stands out” because most companies are currently relying on chips made by NVIDIA.

 

Visa and Mastercard both test key levels

Visa and Mastercard are holding steady after losing ground for five consecutive sessions, marking their longest losing streak in a year and sending the pair to fresh two-month lows. The payments giants have been under pressure over the past three weeks as markets become more concerned about the health of the economy and consumer spending as recession fears creep back into markets.

Visa shares tested a key level yesterday, holding above the rising and supportive trendline that has held firm throughout the whole of 2023. A move below $233, as it is in premarket trade, could therefore prove significant.

Mastercard shares are also testing a similar trendline that has been in play for six months, signalling it could also be on the verge of breaking below a key threshold at around $400.

 

Tesla stock hit by EU subsidy probe

Tesla shares are down 0.7% amid reports that its exports of electric vehicles made in China to the European Union are being investigated as part of wider probe by the European Commission into whether Chinese companies are benefiting from subsidies that put domestic automakers at a disadvantage.

While Chinese companies are the primary target of the probe, EU executive vice-president Valdis Dombrovskis said it will also look into “other producer’s vehicles if they are receiving production-side subsidies”. Tesla’s factory in China is its largest, but a large chunk of cars produced there are exported to other countries and regions, including the EU. The investigation may heighten pressure on Tesla’s factory in Germany to ramp-up.

 

Fisker to deliver 300 vehicles per day

Smaller electric vehicle outfit Fisker is up over 5% this morning after announcing plans to be selling 300 vehicles a day later this year. That guidance came as Fisker announced it has now produced 5,000 Ocean SUVs and delivered over 900 of them to customers, with “several hundred more expected to be delivered this week”.

 

Draftkings pops on upgrade

Gambling outfit Draftkings is up 3.6% at $28.35 after JPMorgan upgraded the stock to Overweight, setting a new price target for the end of 2024 of $37. That replaced its target for the end of 2023 of $26.

“Draftkings has a strong moat (product, scale, brand) that should allow it to compete against new entrants like Penn Entertainment’s ESPNBet and Fanatics, much like it competed against Caesars,” said analyst Joseph Greff.

 

Apple stock stuck rangebound

Apple shares are down 0.4% at $175.30. The iPhone maker has been stuck rangebound in recent weeks, having reliably bounced back after testing below $174 and finding resistance above $179. The stock has tried and failed to make a move above $176 for three consecutive sessions.

The shutdown of an assembly plant in southern India owned by supplier Pegatron has entered its third day following a recent fire, Reuters reported citing unnamed sources. Operations at the factory, which is Pegatron’s only one in the country, are unlikely to restart today, the report said.

Meanwhile, the European commissioner for the internal market, Thierry Breton, has called on Apple to open up its ecosystem to rivals following a meeting with CEO Tim Cook. “The next job for Apple and other Big Tech, under the Digital Markets Act, is to open up its gates to competitors”, Breton told Reuters. “Be it the electronic wallet, browsers or app stores, consumers using an Apple iPhone should be able to benefit from competitive services by a range of providers”.

 

 

IPO stocks Arm and Instacart still struggling

The newest additions to US markets are still struggling to find some momentum since going public this month, with both chip designer Arm and grocery tech firm Instacart finding it difficult to build on their IPO prices.

Arm went public this month at $51 per share and initially popped to as high as $69 within a couple of days, but it has been much harder since then and we saw the stock fall to as low as $50 yesterday before bouncing back. The stock is down 0.5% today at $54.19. You can read our analysis in Can Arm Maintain or Grow its Premium Valuation?

Instacart went public at $30 and tested $29 yesterday before recovering to close marginally above its listing price. The stock is trading marginally lower at $30.30 in premarket trade. You can read our insights in Slower Growth and Losses to Test Instacart’s Valuation.

 

September to be worst month for NVIDIA stock in 18 months

NVIDIA shares are trading slightly higher before the bell. The stock has been under pressure for three consecutive weeks and, as September begins to draw to a close, is on course to report its biggest monthly drop since April 2022.

NVIDIA shares are down 14.5% this month alone, but has found some support from the 100-day moving average that has hugged the share price for three consecutive sessions.

The combination of a weaker share price and rising estimates thanks to the tailwind being provided by AI means NVIDIA’s forward price-to-earnings ratio has fallen to its lowest level in around 10 months at 28.9x. That peaked at over 66x earlier this year. Still, NVIDIA is trading at a premium of about 27% over its rivals.

 

Nike stock hits 11-month low ahead of earnings

Nike shares are trading lower before the bell after hitting fresh 11-month lows yesterday, when it was downgraded to Hold by Jefferies over concerns about the outlook for consumer spending.

That has soured the mood ahead of what is already set to be a challenging quarter for the athleisure giant. Nike has said it expects to deliver another year of “profitable growth” but it may be a tough start to the year. Revenue is forecast to rise 2.5% from last year to $13.00 billion, which would represent the slowest growth in over a year, while adjusted EPS is expected to decline for a third consecutive quarter, this time by 20% to $0.74.

However, Wall Street believes this will be the worst quarter and expects revenue growth to accelerate, fuelled by the recovery in China and its direct-to-consumer business. North America remains soft, so keep an eye on commentary here, but it appears China and other markets like Latin America are keeping the growth engine running.

Analysts also believe its bottom-line will rise by double-digit percentages over the next three quarters. Nike says it is on the “front foot” and competing from a “position of strength” amid the uncertain economic outlook.

Nike is aiming to deliver mid-single digit revenue growth over the full year as its digital business powers ahead and gross margins should improve as cost pressures subside. That suggests the weakness in the first quarter could provide an opportunity should investors grow confident that this will be another year of progress. Nike still trades at a premium to its rivals and, while well-earned, this may prove a limiting factor.