Morning Market Feed May 7th, 2024
Markets continued the strong push they made on Friday as bonds came down down slightly with the 10-year now at about 4.49%. Despite these market gains Gamestop seemed to not be as back as the traders thought, or maybe Palantir stole the spotlight. Let’s just dive straight into it and see what yesterday brought.
S&P500 +1.03% Dow Jones +0.43% Nasdaq +1.10% Russell2000 +1.29%
(Indices returns as of May 6th market close)
- We are sooo not as back as hoped
So yesterday I said that Gamestop (GME) pushed up 30% sparking bullish sentiment around the stock. The stock had a hard time staying up however as it was down 7% before the market open. Traders did manage to get the stock positive briefly before it plummeted about 20% peak-to-trough. As the stock fell over 10% it became easier to manipulate as it gets short-sale-restricted at that point, it’s a bit of a technical story but it comes down to a stock being easier to bid up in order for short sellers to not be able to push it down to much. The stock eventually came back to be flat on the day, still quite impressive.
- Palantir with high hopes
Before the markets opened, shares of Palantir (PLTR) were up 3% already. As there was no news, this was due to investors getting aroused by the idea of the profits they would make from the upcoming earnings report. Basically putting everything on black. See the logo, get it? Get it?! Okay bad joke, I’m sorry.
But as earnings came out, they weren’t as favored anymore after-hours as the stock has done an oopsie of 8.37%. Without the incredibly strong run yesterday, the stock would be down about 0.9% from Friday’s close, but what happened, well not to waste too much time. Revenues beat slightly, as EPS matched. Full-Year guidance was raised by about 2%. Cash from operations decrease YoY, (got to name the negatives, sorry) and net dollar retention keeps coming down slowly as well, now being 111%. Although up from the prior two quarters, not a great number for this business, this number used to be a lot higher. Stock-Based-Compensation was also quite elevated. The good things were very rapid growth. Margins expanded and revenue grew 21%. This number was kept down due to the government side of the business as commercial growth came in much stronger. This side of the business is seen as most important for the future of the company, so good thing it keeps setting the pace for the company.
- Putting the hood back on
Robinhood (HOOD) had less favorable news as reports appeared that the retail investing favorite is being investigated by the SEC. The stock dropped 7% in pre-market trading but came back to being positive for most of the day. It couldn’t stay green though. You might have the question “What is the investigation about?” And that is what I will explain next.
The SEC is going to crypto brokers like they are their biggest fans, except for the fact that they are not. Instead of bringing gifts, they bring lawsuits. The SEC alleges that Robinhood sold securities on their platform that should have been registered with the SEC, something they also sued Coinbase and Binance for. Coinbase responded by saying that trading crypto is more like trading baseball cards. Good to know for crypto’s next use case, but not ideal for Robinhood as these lawsuits are quite serious.
- Howard Schultz has some advice for Starbucks executives
Howard Schultz, the founder of Starbucks, expressed some frustrations towards the current executives of the company he left a year ago. Schultz also stepped down from the board in September. In a letter, Schultz wrote that the company should be focused on being experiential, not transactional. Ouch. He recommends the executives to be more in touch with the customers and baristas of the business. This is also what Schultz famously did in 2008 when the business seemed to be in a tough spot.
Maybe Schultz has to come back a third time, as the stock is now down 30% since March last year, when he left the business as CEO.
- So what about today?
Today we will see earnings from a few interesting companies, we will also get numbers from the Economic Optimism Index, which are expected at 44.1, and FED member Kashkari is expected to speak.
As for the earnings, we expect the happiest place on earth to report, as well as one of the retail favorites Celsius Holdings. Let me put the earnings under one another with the expectations:
- Disney (DIS) $1.10 EPS on $22.121 billion of revenue
- Arista Networks (ANET) $1.74 EPS on $1.551 billion of revenue
- Datadog (DDOG) $0.34 EPS on $589.983 million of revenue
- Coupang (CPNG) $0.05 EPS on $6.946 billion of revenue
- Electronic Arts (EA) $1.52 EPS on $1.777 billion of revenue
- Celsius Holdings (CELH) $0.20 EPS on $390.375 million of revenue
- Toast (TOST) $0.05 EPS on $1.044 billion of revenue
That was it for today, I think you should be up to speed for the day to come and I hope to see you again tomorrow!
