Reddit Stocks: What meme stocks are trending today? – August 17, 2023

US futures

• Dow Jones Industrial Average is trading marginally higher
• S&P 500 is up 0.3%
• Nasdaq 100 is up 0.4%

US futures are trading higher as the digest earnings out from heavyweights like Walmart and Cisco, as well as the FOMC minutes that were released yesterday that signalled there is scope for more rate hikes. The majority believe rates could rise given inflation is still above target and the economy remains resilient. The minutes also highlighted that the economy is expected to slow and unemployment rise.

Bets on a pause this September and expectations for them to stay at current levels for the rest of the year have been left broadly unchanged, with markets and the Fed both awaiting more data.

With that in mind, we discovered this morning that US initial jobless claims rose 239,000 in the week to August 12, easing from the 250,000 rise we saw in the previous week. That was just below the 240,000 increase that was expected by economists.

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. Target
4. Visa
5. US Steel
6. C3.ai
7. Walmart
8. Apple
9. Advanced Micro Devices
10. Cisco

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. Nikola
2. Hawaiian Electric Industries
3. Tesla
4. Walmart
5. IonQ
6. CVS Health
7. Arhaus
8. Alight
9. J&J
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.

Walmart stock: Big beat and outlook upgrade

Walmart shares are down 0.8% after beating expectations in the latest quarter and raising its outlook for the rest of the year, further demonstrating why it is the number one retailer in the US as shoppers continue to visit for its broad range of products, large grocery offering and its focus on value. However, a high bar before the update meant it was hard to impress.

Food continued to be the main driver of growth as shoppers continue to spend more money on necessities, but Walmart said it was pleased that general merchandise sales were higher than anticipated. The reduction in inventory is also helping reduce the amount of discounts needed. Sales were up 5.7% at $161.6 billion in the second quarter, ahead of the 4.3% increase forecast by analysts. Adjusted EPS of $1.84 also grew from $1.77 the year before, defying expectations for the first drop at the bottom-line in a year!

Walmart said it is now anticipating annual net sales to rise 4% to 4.5% and earnings to be in the range of $6.36 to $6.46. That improved from its previous goal to grow sales by around 3.5% and post earnings of $6.10 to $6.20.

Tapestry stock: Outlook disappoints

Tapestry shares are down 0.2% and at a 10-month low after it delivered disappointing sales in the latest quarter and its guidance also failed to impress, mainly thanks to lower demand for luxury goods in the US.

Tapestry, which has been grabbing headlines recently after agreeing to buy Capri Holdings, said net sales were flat from last year in the fourth quarter, although net income grew thanks to better margins as cost pressures eased. Still, the performance allowed it to post record annual EPS over the full year, helping it raise its dividend by 17%.

Still, its outlook to deliver net sales of around $6.9 billion in the new financial year was just shy of the $6.93 billion forecast by analysts, while the adjusted EPS range of $4.10 to $4.15 was also short of the $4.24 estimate.

US Steel stock: Is ArcelorMittal interested?

US Steel shares are up 0.5% this morning as the bidding war for the steelmaker heats up amid reports that Luxembourg-based steel manufacturing giant ArcelorMittal is considering entering the race and placing a bid for the US company. Reuters said ArcelorMittal is talking to investment bankers about making a potential offer.

There are currently two interested parties that we know of. Cleveland-Cliffs was the first to emerge and tabled a $7.3 billion deal, half in cash and half in stock, but this was rejected by US Steel. Since then, a private company named Esmark has stepped up and placed a higher bid of $7.8 billion, which is also all in cash. A new bidder could see the price tag rise further. US Steel is conducting a review, which it has invited interested parties to take part in, to find the best outcome.

While Esmark has the higher offer, questions have been raised about how it would finance the all-cash deal. The CEO, James Bouchard, has said he has $10 billion in his bank account to fund the deal and said he is working with an unnamed international bank that would be willing to loan him funds if needed, although provided no more details. Cleveland-Cliffs is arguing that it can afford its offer because of the stock-based element, and has won the support of the United Steelworkers union, which has said it is only willing to back the Cleveland-Cliffs proposal.

Interestingly, ArcelorMittal’s entry into the race could see it return to the US just three years after it disposed of its assets in the country. The president of the US Steelworkers union, Tom Conway, described the reports ArcelorMittal could place a bid for US Steel as “foolish” as it reiterated its support for Cleveland-Cliffs.

Bilibili stock: Earnings beat

Bilibili is up 5.5% after growing faster than expected and having a tighter grip on costs than anticipated during the latest quarter, which overshadowed its decision to trim its sales outlook for the rest of the year.

Revenue rose 8% from last year to RMB5.3 billion and came in just ahead of the RMB5.2 billion forecast, while its adjusted net loss of RMB964.1 million was smaller than the RMB1.04 billion expected by analysts. That loss was less than half the size of what it produced last year. Conditions for mobile games remains challenging but is being countered by strong growth in advertising and value-added services, which homes its subscriptions and live streaming platform.

Bilibili said it now expects annual revenue to come in a range of RMB22.5 billion to RMB23.5 billion, down from its previous range of RMB24.0 billion to RMB26.0 billion, although it blamed this on the delayed launch of some gaming titles and the loss of revenue from some intellectual property it has sold rather than any deterioration in outlook.

Cisco stock: Hits the right notes

Cisco is up 2.3% and testing 16-month highs after reassuring investors with its outlook, committing to accelerating returns to shareholders and leaning into new prospects stemming from AI.

Revenue rose 16% year-on-year in the fourth quarter to $15.2 billion and adjusted EPS jumped 37% to $1.14. That was ahead of the $15.0 billion in sales and earnings of $1.06 forecast by Wall Street. That meant it reported an 11% rise in annual revenue and a 16% rise in earnings.

Cisco said it plans to step-up buybacks and that it is starting to see traction from large cloud computing companies that are upgrading equipment to handle AI. CEO Chuck Robbins said Cisco is “laser-focused on leading and winning in this space.” It also continues to grow recurring subscription-based revenue, which provide more reliable income streams than its bread and butter of selling networking gear for computer systems.

The outlook for earnings in the first quarter of the new financial year of $0.79 to $0.84 came in soft versus the $0.99 pencilled-in by analysts, but its guidance for the full year met expectations.

Tyson Foods stock: Will it sell Chinese poultry business?

Tyson Foods is in play amid reports that it is planning to sell its poultry business in China, according to Reuters citing three unnamed sources. It has hired Goldman Sachs to advise on the sale and some private equity firms have been identified as potential bidders. The potential valuation is not known, but the unit generates about $1.1 billion in annual sales, according to one of the sources.

Notably, agricultural firm Cargill sold-off its own poultry arm in China back in May to a private equity firm for an undisclosed fee, with the industry finding conditions more challenging in the country as lower demand during the pandemic and higher feed costs thanks to the war in Ukraine squeezed margins.

Ball Corp stock: To sell aerospace arm to BAE Systems

Ball Corp has agreed to sell its aerospace business to London-listed BAE Systems for $5.5 billion in cash, raising funds that will help Ball Corp reduce debt.

Ball Aerospace is a leading provider of mission critical space systems and defence technologies. Ball Corp has around $9.7 billion in debt, so the sale will allow it to make a serious dent, although it also plans to return some of this to shareholders and invest to improve organic growth.

BAE is hoping the addition can help it secure more federal work in the US. BAE said this will accelerate growth and improve margins in its first full year of ownership. The deal is being funded through a mixture of cash on hand and new external debt. BAE said the underlying economic consideration is actually $4.8 billion because it is designed as a stock purchase agreement that offers tax benefits.

Applied Materials stock: Q3 earnings preview

Applied Materials is up 0.7% ahead of quarterly results out after markets close today. The company, which makes fabrication equipment used to make semiconductor chips, is expected to report its first drop in quarterly sales and earnings in four years.

The bulk of the equipment made by Applied Materials finds its way into foundries that produce chips for a wide array of companies that design them. However, demand for devices has been unwinding since exploding during the pandemic and this is prompting companies to curtail investment in new equipment. Investment by memory chip makers is running at its lowest level in over a decade, Applied Materials said in the last quarter, when it also said foundry customers are also ‘trimming their spending plans for the year’. That may be hurting new sales, but the company’s service division should remain in positive territory given companies still need to maintain their existing equipment.

As a result, quarterly revenue is forecast to be down 5.6% from last year at $6.15 billion, in-line with the company’s guidance. Adjusted EPS is seen dropping 10.8% to $1.73, in the middle of the company’s guidance range of $1.56 to $1.92.

That sets a challenging outlook over the next 12 months, although Applied Materials has said it expects to outperform its rivals and gain market share during this time and that the long-term investment case – underpinned by semiconductors forming the foundation of the global digital economy – remains intact. The eruption of interest in AI also provides scope for a major new catalyst as companies start to update their DRAM used in servers.

The outlook for the fourth and final quarter will be key in deciding how markets will respond, so keep an eye on how it compares to estimates. Wall Street is looking for revenue of $5.86 billion and adjusted EPS of $1.60.

NVIDIA stock: Is it worth $800?

NVIDIA shares are up 0.9% at $438.58 as brokers continue to encourage investors to take advantage of the recent pullback and buy ahead of its next set of quarterly results. Rosenblatt Securities hiked its price target to $800 from $500, setting one of the highest targets on Wall Street, and said that it believes demand is running about 50% of supply to keep it very busy going forward.

Piper Sandler also raised its view, although to a more tempered $500, and said it is expecting a beat across the board when NVIDIA releases results next week, while seeing potential for guidance to be upgraded again. Oppenheimer also upped its view to $500 from $420.

That comes in the wake of equally bullish views issued this week by Morgan Stanley, which has NVIDIA as a Top Pick, and Wells Fargo. They both raised their target price to $500.

NVIDIA reports results on Wednesday August 23 and is forecast to report revenue of $11 billion, which would mark a new quarterly record as the new demand from AI takes off. That would be up 65% from the year before and mark a significant jump from the $7.2 billion in sales we saw in the previous quarter. Adjusted earnings are forecast to quadruple from the year before!

Apple stock: iPhone still outperforming rivals

Apple shares are up 0.1%. The stock is down over 10% since peaking at all-time highs before its most recent results and is lingering around levels not have not been seen for almost three months!

Research firm Counterpoint forecast that global smartphone shipments will be down around 6% this year and hit its lowest level in a decade as consumers become more hesitant to upgrade. However, it said Apple could become the number one player globally in terms of annual shipments for the first time ever! Smartphone sales have been in decline for some time, but iPhone sales have proven far more resilient and has helped Apple convert more users of rival Android models.

We discovered today that Foxconn has started producing the new iPhone 15 in India, marking a significant shift as Apple tries to reduce its dependency on China. Unnamed sources told Bloomberg that shipments will begin a few weeks after they start being shipped out of China later this year and that the plan is to increase production swiftly.

Tesla stock: Revamped Model 3 to be unleashed in China

Tesla shares are up 0.6% and rebounding from two-month lows after Bloomberg reported that production of the newly-revamped Model 3 in China could start as soon as next month, according to unnamed sources. It should hit showrooms later this month, with mass production starting in September. The car has been described as sleeker as the previous model, and it is expected to be priced less than current iterations when output ramps-up, in a further effort to make its cars more affordable to rejuvenate demand. It made another cut to prices in China earlier this week.

Tesla introduced cheaper versions of its Model S and Model X in the US this week that offer shorter range.