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    Home Unlabelled Stocks - r/Stocks Daily Thread on Meme Stocks Saturday - Mar 06, 2021

    Stocks - r/Stocks Daily Thread on Meme Stocks Saturday - Mar 06, 2021

    March 06, 2021

    Stocks - r/Stocks Daily Thread on Meme Stocks Saturday - Mar 06, 2021

    r/Stocks Daily Thread on Meme Stocks Saturday - Mar 06, 2021

    Posted: 06 Mar 2021 02:20 AM PST

    The familiar "Rate My Portfolio" sticky can be found here.

    Welcome traders who just can't help them selves discuss the same exact stock that's been discussed 100s of times a day. I get it, you want to talk about what's popular, what's hot, and that 1.. single.. stock you like.. well here you go! Some helpful links just for you:

    An important message from our mod u/TCGYT regarding meme stocks.

    Lastly if you need professional help:
    * Problem Gambling: Call/Text: 1-800-522-4700 or chat online now.
    * Crisis Hotline (24/7): 1-800-273-TALK (8255) (Veterans, press 1) or Text "HOME" to 741-741

    submitted by /u/AutoModerator
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    Breaking: US Senate votes to pass 1.9T pandemic relief bill, positive outlook on equities

    Posted: 06 Mar 2021 09:33 AM PST

    https://www.cnbc.com/2021/03/06/covid-stimulus-update-senate-passes-1point9-trillion-relief-bill.html

    ​

    The US Senate just passed the 1.9T pandemic relief bill after negotiating with a centrist Democrat for the final vote to break the 50-50 tie.

    After a month of a downtrend in equities, on Friday, markets rallied into the green. I expect that this bill will likely be a catalyst that kicks markets off next week further into green territory as more households, especially those who are making less than 70k per year can anticipate a 1400 check in the coming weeks.

    submitted by /u/investstayhumble
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    I've never seen a stock react so poorly to good news like BB does

    Posted: 05 Mar 2021 10:13 PM PST

    I swear almost every day I see some article about how BB has gotten some award or recognition for its software. Then there's the Amazon/IVY contract which will surely bring revenue. Also talk that their software will be used for drones. What that means, I don't know- sounds like money though! Oh, almost forgot, partnership with Bidu for driving software in China. None of this seems to make the stock move.

    I don't get it. It's maddening. You have stupid news like SPCE announcing a "flight window" for their overpriced "space flights" and the stock moves like crazy. You have partnerships with legit, in Amazon case, trillion dollar company, and the stock sits right at $10.

    What's it going to take for this thing to start moving? It's absolutely infuriating.

    submitted by /u/just_lick_my_ass
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    “We are not in a bubble” – Cathie Wood

    Posted: 06 Mar 2021 03:56 AM PST

    The following is my summary of Cathie Wood's thoughts on recent market volatility, as presented in her latest video on the Ark Invest YouTube channel (~42 min) – I strongly recommend you check it out.

    The minimum expected rate of return for a stock to enter an ark portfolio is 15% CAGR. Cathie contends that she sees the recent volatility as a gift to gain alpha over the intended 15% return in many of her high conviction names.

    She mentions that at Ark, they have a five year time horizon, and it is counter productive to compare its performance with a benchmark (like the s&p) over a shorter period. She further adds that many stocks in traditional indices today are a potential value trap, and that ark etfs "are a good hedge against broad based benchmarks."

    She reiterates that "we are not in a bubble" – and that the seeds of their 5 innovation platforms were planted in the dot com bubble, and are now ready for prime time, in a period of reality. Fear of a bubble likely stems from benchmark sensitivity and backward looking institutional investors. Furthermore, intuitions should be worried about their own strategies as "creative disruption will impact nearly 50% of the s&p500".

    To Cathie, interest rates going up suggest that 'real growth is going to pick up' – and that she understands the concern over her own stock picks potentially underperforming as a result. However, she believes that that the market has assumed that interest rates will stabilize at a 4 to 5% range - which inversed (1/4 or 1/5) gives a normalized p/e of 20 or 25; so markets didn't actually misprice assets to begin with. She thinks that nominal growth however, will not be at 4 to 5%, but instead around 2-3%, which can lead to greater valuation support for companies that can grow more rapidly.

    Rotation from growth to value was also expected on her part. She repeats that value will face massive headwinds going forward. Energy and financial stocks have done amazing in the past month - which is a good thing as the bull market is broadening out unlike the dot com bubble, where 'too much capital chased too few opportunities, too soon'. Energy and financial sectors booming will likely be short lived as they are both ripe for massive disruption.

    submitted by /u/ShubhamG77
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    Wall Street Week Ahead for the trading week beginning March 8th, 2021

    Posted: 06 Mar 2021 04:25 AM PST

    Good Saturday morning to all of you here on r/stocks. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead.

    Here is everything you need to know to get you ready for the trading week beginning March 8th, 2021.

    Stocks face the crosscurrents of higher interest rates and fiscal stimulus in the week ahead - (Source)

    The Covid-19 aid package is on track for final congressional approval in the week ahead — and it could be a double-edged sword for markets.

    The legislation should be greeted by optimism around the powerful lift it could give the stock market and the economy, but it could also be met with concern about what a historically large stimulus package could do to inflation and interest rates.

    Stocks were mixed in the past week, with the Dow and S&P 500 higher, but the Nasdaq was dragged lower by interest rate-sensitive tech names. The benchmark 10-year Treasury yield has continued to press higher, revisiting its recent high of 1.61% on Friday, before trading at 1.54% in late trading. Yields move opposite price.

    One wild card for stocks could be how interest rates behave around upcoming Treasury auctions.

    There is a $38 billion 10-year auction on Wednesday and a $24 billion 30-year bond auction on Thursday.

    Traders are watching these closely, after a historically weak 7-year Treasury note auction in February sent rates higher, even for the 10-year.

    "We're a little more cautious on them, just given what we saw in the 7-year and some Japanese selling pressure," said Ben Jeffery, strategist on the U.S. rates strategy team at BMO Capital Markets.

    He said Japanese institutions could be less interested in participating before the end of their fiscal year on March 31.

    Stimulus coming

    The Senate was expected to approve its version of the $1.9 trillion stimulus package and send it to the House for a vote during the week. Otherwise, the market is watching key inflation reports with the consumer price index expected Wednesday and the producer price index, scheduled for Friday.

    "I think the markets will be watching closely the progress on the stimulus package," said Michael Arone, chief investment strategist at State Street Global Advisors. "I think they'll continue to watch the 10-year Treasury move and we're going to get CPI data. That's going to inform on those moves."

    He expects stimulus to remain a factor that could sway markets.

    Inflation has been a worry for markets, since rising inflation could crush margins and corrode earnings power. For bond investors, it would erode value and make interest payments worth less.

    "As long as the rise in Treasury yields matches the pick-up in inflation, I think the market will be able to handle that. I think the challenge is when yields get notably above inflation...I like to see them closely matched," said Arone.

    He said the market is concerned that the next stimulus package could overheat the economy and create inflation, particularly as it comes on the heels of the package approved in December.

    "I think it lends to the conversation, 'do you really need another $1.9 trillion?' Arone said. "We're going to pour more gas on the fire, and with this $1.9 trillion that's what the market is concerned about."

    Consumer inflation is expected to remain somewhat muted for February, after the 1.4% rise year-over-year in core CPI in January. But the pace of inflation is likely to pick up notably in March and April, since the comparisons to last year, when the economy was shut down, will likely look extreme.

    Choppy to continue

    Strategists expect the push-pull between interest rates and stocks to continue.

    On Friday, rates were higher after a strong February jobs report and stocks were also higher. The economy added 379,000 jobs in February, about 160,000 more than expected.

    "I don't think 1.5%, 1.6% on the 10-year is terribly troublesome for the market," said Liz Ann Sonders, chief investment strategist at Charles Schwab. She said the speed of the move was troubling.

    The rotation out of tech and growth into more cyclical names in the financial, energy and industrial sectors continued in the past week.

    Energy was up more than 10% with oil prices, which were at a near two-year high. Financials saw the next strongest move, gaining 4.3% for the week.

    "I think we're in a choppy consolidation phase," said Sonders.

    "You're seeing some extreme historical spreads between what energy and financials are doing recently versus tech and consumer discretionary," she said.

    Sonders added that even if the consolidation phase is close to ending, that suggests there could be more downside for some frothy names. "The good news here is I think it's becoming a better environment for active stock pickers," she said.

    The Nasdaq Composite was down more than 10%, as of Thursday from its Feb. 12 high. But on Friday, the index turned around, gaining about 1.6%. That's a positive sign for the market, particularly since it happened as rates moved higher.

    The S&P 500 was up 0.8% for the week, and the Dow was up 1.8%. The Nasdaq, meanwhile, was down 2%.

    "I think ultimately the higher quality segments that got hit in tech and communications probably did need to see a valuation reweighting," Sonders said. "Arguably, we had some micro bubbles in the market, and they may need to suffer more downside."

    She said investors may want to adjust the allocation of their holdings regularly instead of waiting to adjustments around the calendar

    "If you get a two three week, four five day surge in a particular sector, pare some back," Sonders said, nothing that's the opposite of what most people do.

    This past week saw the following moves in the S&P:

    (CLICK HERE FOR THE FULL S&P TREE MAP FOR THE PAST WEEK!)

    S&P Sectors for this past week:

    (CLICK HERE FOR THE S&P SECTORS FOR THE PAST WEEK!)

    Major Indices for this past week:

    (CLICK HERE FOR THE MAJOR INDICES FOR THE PAST WEEK!)

    Major Futures Markets as of Friday's close:

    (CLICK HERE FOR THE MAJOR FUTURES INDICES AS OF FRIDAY!)

    Economic Calendar for the Week Ahead:

    (CLICK HERE FOR THE FULL ECONOMIC CALENDAR FOR THE WEEK AHEAD!)

    Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:

    (CLICK HERE FOR THE CHART!)

    S&P Sectors for the Past Week:

    (CLICK HERE FOR THE CHART!)

    Major Indices Pullback/Correction Levels as of Friday's close:

    (CLICK HERE FOR THE CHART!)

    Major Indices Rally Levels as of Friday's close:

    (CLICK HERE FOR THE CHART!)

    Most Anticipated Earnings Releases for this week:

    (CLICK HERE FOR THE CHART!)

    Here are the upcoming IPO's for this week:

    (CLICK HERE FOR THE CHART!)

    Friday's Stock Analyst Upgrades & Downgrades:

    (CLICK HERE FOR THE CHART LINK #1!)
    (CLICK HERE FOR THE CHART LINK #2!)

    Jobs Market Gets Reopening Boost

    US payrolls grew at a solid clip month over month in February, as progress in the vaccine distribution process appeared to boost growth by enabling more of the economy to reopen. Our opinion has always been that until we have achieved widespread vaccine distribution, the in-person segments of the labor market will be slow to recover losses from a year ago. We are becoming increasingly bullish on the prospect for a 2021 economic reacceleration, and we are heartened that the hardest hit segments of the jobs market may be beginning to reflect that view.

    The US Bureau of Labor Statistics released its monthly employment report this morning, revealing that the domestic economy added 379,000 jobs in February, exceeding Bloomberg-surveyed economists' forecasts for a 200,000 gain. Large seasonal adjustments to the data did serve to boost the overall number by roughly 140,000, while January's jobs gain was revised significantly higher from 49,000 to 166,000. Colder weather than normal may have also played some role, though the worst of the freeze experienced by middle America occurred just after the report's observation window closed. The unemployment rate fell to 6.2% from 6.3%, and was paired with an unchanged labor force participation rate of 61.4%.

    "Last month on jobs day, we noted our optimism around an improving trajectory for vaccinations and the implications that may have for future jobs reports," explained LPL Financial Chief Market Strategist Ryan Detrick. "This has played out so far, and we expect continued vaccination progress to become more evident in the jobs numbers as the recovery reaccelerates."

    Average hourly earnings rose 0.2% month over month and 5.3% year over year, continuing to signal that lower-wage workers have endured the worst of the pandemic's job losses. Inflation expectations have been in particular focus for the market lately, however inflation risks from a tightening labor market are not of major concern for now in our opinion. We expect overall average hourly earnings to remain steady or even reverse as lower wage workers are rehired in service sector jobs, and we still have lots of slack in the labor market as we hover well below 2020's peak employment.

    The composition of February's report importantly signals a reversal of COVID-19-driven trends seen in recent months. Retail trade gained 41,100 jobs while the leisure and hospitably industry gained 355,000—two segments that have been hardest hit throughout the pandemic. Meanwhile, professional and business services added 63,000 jobs and government jobs fell by 86,000.

    As seen in the LPL Chart of the Day, the jobs recovery in the leisure and hospitality sector has generally plateaued following an initial bounce. This segment of the labor market is highly dependent on in-person interaction, and has understandably suffered in a work-from-home environment. Unsurprisingly, service sector jobs have strongly correlated with broader trends in COVID-19 cases. The leisure and hospitality sector alone still accounts for about 3.5 million of the 9.5 million jobs lost compared to the February 2020 peak. And while we do caution against reading too far into one month's numbers, we are excited to see this decimated sector tick notably higher in February.

    (CLICK HERE FOR THE CHART!)

    We have not had to look hard to find evidence that vaccines are having an impact. Nationally, seven-day averages for new cases have fallen to below early 2020 peaks, significantly below the highs of late 2020. Perhaps most crucially, the portion of the population most vulnerable to severe symptoms has largely already received at least one dose of the vaccination. A third vaccine was granted emergency use authorization in March, and this week President Biden estimated we would have enough supply of vaccinations to cover every adult by the end of May 2021. Once people can become comfortable with the virus trends, we expect widespread hiring in in-person industries to snowball quickly. February may have signaled a start to this trend.

    Anatomy of a Bond Market Sell-off

    Coming into 2021, one of our higher-conviction ideas was that we would see rising long-term interest rates in the United States; it's one of the reasons we recommended suitable investors consider an underweight to interest rate sensitive fixed income. However, we didn't expect interest rates to move this high, this fast. The 10-Year Treasury yield started the year at 0.91% and ended the month of February at 1.41%, down from an intraday high of 1.61%. As such, core fixed income assets are off to one of their worst starts ever (remember that as yields go up, prices go down).

    "Core fixed income assets aren't off to a very good start this year, but we don't think investors should abandon high-quality fixed income assets as they play an important role in a diversified portfolio" says LPL Financial Chief Market Strategist Ryan Detrick.

    So what is driving interest rates higher? Changing expectations

    Inflation and growth expectations are important factors into the fundamental outlook for interest rates. Broadly speaking, what we've seen in the bond market this year is a re-pricing of both higher inflation and higher growth expectations. Inflation expectations have steadily moved higher, and market-based gauges of inflation expectations are the highest they've been since 2011. We don't expect much higher inflation expectations from here, but we are watching how additional fiscal stimulus flows into the economy. Additionally, it seems increasing economic growth expectations have picked up recently as well. An increase in growth expectations may put pressure on the Federal Reserve (Fed) to move away from its low interest rate policy sooner than expected, which has put upward pressure on longer-dated Treasury yields.

    An unfortunate byproduct of those higher expectations is that we've seen an increase in the volatility of the 10-Year Treasury. As shown in the LPL Chart of the Day, daily percentage changes for the 10-Year Treasury yield are above historical norms (each vertical line on the chart represents the one day percentage change in the 10-Year Treasury yield). As shown, over the past several months, yields have regularly moved 10-20% in either direction on any given day. We think this is due to the changing interest rate dynamic and believe that interest rate volatility will subside the further we get into this new interest rate regime.

    (CLICK HERE FOR THE CHART!)

    S&P 500 Seasonal Pattern Suggests Weakness Likely Ending Soon

    In the above chart we have plotted five different S&P 500 seasonal patterns along side 2021 through today's close. "All Years 1949-2020" and "All Years 1988-2020" represent longer-term and mid-term baseline patterns. "All Post-Election Years" includes every year that was a post-presidential-election year regardless of outcome. "1St Year Democratic President" applies to this post-election year and so does "Post-Election Year After Incumbent Party Loss."

    When comparing 2021 to these various past seasonal patterns, this year's performance is above average, and the S&P 500 is currently experiencing some of the weakness present in the other five patterns. Historical weakness (shaded in light blue) is most visible in the three post-election year patterns in February lasting until early to mid-March depending on the post-election year pattern. All three historical post-election year patterns suggest that current weakness could be ending soon.

    (CLICK HERE FOR THE CHART!)

    Historic Surge for the Energy Sector

    The energy sector has certainly been on a wild ride over the course of the past year, perhaps the wildest of all of the S&P 500 sectors. The outbreak of the pandemic in 2020 caused such a demand shock that oil futures traded for a negative value for the first time in history, implying that someone would pay you to take delivery of their oil!

    Well, that's in the rear-view mirror for the energy market now. Year to date, the S&P 500 energy sector is up over 29% as of March 2, according to data from FactSet, more than double the return of the financial sector, the second strongest sector thus far in 2021. As shown in the LPL Chart of the Day, the S&P 500 energy sector is trading at a blistering 30% above its 200-day moving average, the most ever using data back to 1990. While this might seem bearish on the surface, previous surges above 20% have historically bought above average returns over the next year rather than below average.

    (CLICK HERE FOR THE CHART!)

    "The case can be made that energy could be a bit stretched in the near-term, but momentum often breeds more momentum," added LPL Financial Chief Market Strategist Ryan Detrick. "Energy has been unloved for quite some time, but we may be in the early innings of a larger rally for the energy sector as the global economy continues to improve."

    A confluence of events may be spurring the boom in the energy sector. An expanding global economy, a historic winter storm that shut down major oil producing states like Texas and Oklahoma, and an output agreement from members of OPEC+ have sent oil prices soaring to their highest level since early 2019. It's not just oil, either. Copper and lumber have surged past their 2019 highs as well. It's no secret that inflation expectations have been on the rise, and the surge in commodity prices are likely adding further credence to the market's view of higher inflation.

    We have continued to warm up to the energy sector, including upgrading our view on oil in January and then our upgrade from negative to neutral in our February Global Portfolio Strategy publication.

    (CLICK HERE FOR NEXT WEEK'S MOST NOTABLE EARNINGS RELEASES!)
    (CLICK HERE FOR NEXT WEEK'S HIGHEST VOLATILITY EARNINGS RELEASES!)
    (CLICK HERE FOR THE MOST ANTICIPATED EARNINGS RELEASES BEFORE MONDAY'S MARKET OPEN!)

    Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:

    Monday 3.8.21 Before Market Open:

    (CLICK HERE FOR MONDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

    Monday 3.8.21 After Market Close:

    (CLICK HERE FOR MONDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES LINK!)

    Tuesday 3.9.21 Before Market Open:

    (CLICK HERE FOR TUESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

    Tuesday 3.9.21 After Market Close:

    (CLICK HERE FOR TUESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

    Wednesday 3.10.21 Before Market Open:

    (CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

    Wednesday 3.10.21 After Market Close:

    (CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

    Thursday 3.11.21 Before Market Open:

    (CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

    Thursday 3.11.21 After Market Close:

    (CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

    Friday 3.12.21 Before Market Open:

    (CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

    Friday 3.12.21 After Market Close:

    ([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())

    (NONE.)

    AMC Entertainment Holdings, Inc $8.05

    AMC Entertainment Holdings, Inc (AMC) is confirmed to report earnings at approximately 4:15 PM ET on Wednesday, March 10, 2021. The consensus estimate is for a loss of $2.89 per share on revenue of $155.19 million and the Earnings Whisper ® number is ($4.23) per share. Investor sentiment going into the company's earnings release has 25% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 925.71% with revenue decreasing by 89.28%. The stock has drifted higher by 244.0% from its open following the earnings release to be 71.3% above its 200 day moving average of $4.70. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, March 3, 2021 there was some notable buying of 108,187 contracts of the $1.00 put expiring on Thursday, April 1, 2021. Option traders are pricing in a 22.3% move on earnings and the stock has averaged a 7.0% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    JD.com, Inc. $90.62

    JD.com, Inc. (JD) is confirmed to report earnings at approximately 5:50 AM ET on Thursday, March 11, 2021. The consensus earnings estimate is $0.19 per share on revenue of $33.90 billion and the Earnings Whisper ® number is $0.25 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 57.78% with revenue increasing by 38.27%. Short interest has decreased by 18.6% since the company's last earnings release while the stock has drifted higher by 2.4% from its open following the earnings release to be 17.3% above its 200 day moving average of $77.28. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, February 17, 2021 there was some notable buying of 7,146 contracts of the $135.00 call expiring on Friday, March 19, 2021. Option traders are pricing in a 8.2% move on earnings and the stock has averaged a 7.4% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    DocuSign $204.31

    DocuSign (DOCU) is confirmed to report earnings at approximately 4:05 PM ET on Thursday, March 11, 2021. The consensus earnings estimate is $0.22 per share on revenue of $407.65 million and the Earnings Whisper ® number is $0.29 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat The company's guidance was for revenue of $404.00 million to $408.00 million. Consensus estimates are for year-over-year earnings growth of 120.00% with revenue increasing by 48.29%. The stock has drifted lower by 16.6% from its open following the earnings release to be 3.3% below its 200 day moving average of $211.25. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, March 5, 2021 there was some notable buying of 2,182 contracts of the $220.00 call expiring on Friday, April 16, 2021. Option traders are pricing in a 10.7% move on earnings and the stock has averaged a 9.9% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    XPeng Inc. $28.03

    XPeng Inc. (XPEV) is confirmed to report earnings at approximately 4:00 AM ET on Monday, March 8, 2021. Investor sentiment going into the company's earnings release has 64% expecting an earnings beat. The stock has drifted lower by 23.2% from its open following the earnings release. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, February 25, 2021 there was some notable buying of 18,718 contracts of the $25.00 put expiring on Friday, March 19, 2021. Option traders are pricing in a 16.1% move on earnings and the stock has averaged a 33.4% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    Tattooed Chef Inc. $19.12

    Tattooed Chef Inc. (TTCF) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, March 10, 2021. The consensus earnings estimate is $0.03 per share on revenue of $39.05 million and the Earnings Whisper ® number is $0.04 per share. Investor sentiment going into the company's earnings release has 90% expecting an earnings beat. The stock has drifted lower by 0.1% from its open following the earnings release. On Thursday, January 21, 2021 there was some notable buying of 2,046 contracts of the $40.00 call expiring on Friday, January 21, 2022. Option traders are pricing in a 17.1% move on earnings and the stock has averaged a 13.8% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    Niu Technologies $33.55

    Niu Technologies (NIU) is confirmed to report earnings at approximately 2:00 AM ET on Monday, March 8, 2021. The consensus earnings estimate is $0.09 per share on revenue of $95.16 million and the Earnings Whisper ® number is $0.11 per share. Investor sentiment going into the company's earnings release has 70% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 18.18% with revenue increasing by 23.57%. Short interest has increased by 170.9% since the company's last earnings release while the stock has drifted higher by 2.1% from its open following the earnings release to be 27.3% above its 200 day moving average of $26.35. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, February 25, 2021 there was some notable buying of 10,356 contracts of the $35.00 put expiring on Friday, March 19, 2021. Option traders are pricing in a 20.3% move on earnings and the stock has averaged a 4.9% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    CarParts.com, Inc. $16.16

    CarParts.com, Inc. (PRTS) is confirmed to report earnings at approximately 4:00 PM ET on Monday, March 8, 2021. The consensus estimate is for a loss of $0.10 per share on revenue of $91.97 million and the Earnings Whisper ® number is ($0.07) per share. Investor sentiment going into the company's earnings release has 76% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 85.71% with revenue increasing by 46.08%. Short interest has decreased by 5.5% since the company's last earnings release while the stock has drifted higher by 14.9% from its open following the earnings release to be 26.4% above its 200 day moving average of $12.78. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, January 27, 2021 there was some notable buying of 3,469 contracts of the $20.00 call expiring on Friday, March 19, 2021. Option traders are pricing in a 23.1% move on earnings and the stock has averaged a 13.0% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    DICK'S Sporting Goods, Inc. $71.69

    DICK'S Sporting Goods, Inc. (DKS) is confirmed to report earnings at approximately 7:30 AM ET on Tuesday, March 9, 2021. The consensus earnings estimate is $2.21 per share on revenue of $3.05 billion and the Earnings Whisper ® number is $2.98 per share. Investor sentiment going into the company's earnings release has 71% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 67.42% with revenue increasing by 16.92%. Short interest has decreased by 21.0% since the company's last earnings release while the stock has drifted higher by 21.5% from its open following the earnings release to be 31.9% above its 200 day moving average of $54.34. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, February 1, 2021 there was some notable buying of 522 contracts of the $100.00 call expiring on Friday, June 18, 2021. Option traders are pricing in a 10.3% move on earnings and the stock has averaged a 7.7% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    ContextLogic Inc. $17.77

    ContextLogic Inc. (WISH) is confirmed to report earnings after the market closes on Monday, March 8, 2021. The consensus estimate is for a loss of $2.13 per share on revenue of $736.10 million and the Earnings Whisper ® number is ($1.89) per share. Investor sentiment going into the company's earnings release has 79% expecting an earnings beat On Friday, February 26, 2021 there was some notable buying of 5,486 contracts of the $15.00 put expiring on Friday, April 16, 2021.

    (CLICK HERE FOR THE CHART!)

    Stitch Fix, Inc. $73.00

    Stitch Fix, Inc. (SFIX) is confirmed to report earnings at approximately 4:05 PM ET on Monday, March 8, 2021. The consensus estimate is for a loss of $0.22 per share on revenue of $512.37 million and the Earnings Whisper ® number is ($0.06) per share. Investor sentiment going into the company's earnings release has 58% expecting an earnings beat The company's guidance was for revenue of $506.00 million to $515.00 million. Consensus estimates are for earnings to decline year-over-year by 300.00% with revenue increasing by 13.41%. Short interest has decreased by 58.5% since the company's last earnings release while the stock has drifted higher by 43.1% from its open following the earnings release to be 74.0% above its 200 day moving average of $41.96. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, March 1, 2021 there was some notable buying of 708 contracts of the $90.00 call expiring on Friday, April 16, 2021. Option traders are pricing in a 23.7% move on earnings and the stock has averaged a 16.9% move in recent quarters.

    (CLICK HERE FOR THE CHART!)

    DISCUSS!

    What are you all watching for in this upcoming trading week?

    I hope you all have a wonderful weekend and a great week and month ahead r/stocks.

    submitted by /u/bigbear0083
    [link] [comments]

    Tesla closes below $600 for the first time since December

    Posted: 05 Mar 2021 07:01 PM PST

    "Tesla finished below $600 for the first time since Dec. 4, and has lost 15% on the year.

    The sell-off comes amidst a bigger drawback in tech stocks, which are valued based on the presumption of heavy growth in future cash flows.

    Competition and parts shortages are also playing a part.

    Shares in Tesla were down as much as 8% Friday morning. They've since recovered to finish down -3.78% as markets showed a dramatic bounceback late on Friday, but the stock has still lost more than 15% of its value the year, and finished below $600 for the first time since Dec. 4.

    FED FEARS

    On Thursday, Fed Chairman Jerome Powell said that "upward pressure on prices" and "transitory increases in inflation" might be coming to the U.S. as the economy reopens following a year of Covid restrictions that hit businesses across the board.

    The market is now worried that interest rates will climb, and the feds won't take aggressive policy actions or even be able to control it. Bond yields are surging.

    This is causing a broader correction in tech stocks, which are valued based on the presumption of heavy growth in future cash flows. As inflation goes up, the value of those future cash flows declines. As CNBC previously reported, the Nasdaq 100 list of the largest 100 non-financial stocks on the exchange, is down about 8% from historic highs reached three weeks ago. This is affecting most tech giants. For instance, Apple dropped from approximately $129 to $121 year-to-date, and Netflix has dropped from around $523 to $516. But Tesla's drop is more precipitous, so far.

    Bulls acknowledge competition

    Some of Tesla's biggest and most vocal backers have cashed out a chunk of their shares, and begun to acknowledge the onslaught of electric vehicle competition as a real challenge to Tesla at long last.

    For example, Ron Baron sold 1.7 million worth of Tesla shares and invested in two of the company's biggest potential rivals, GM-owned Cruise and Amazon-backed Rivian, while paradoxically saying he expects Tesla shares to rise, eventually, to $2,000. Former Tesla board member Steve Westly said on CNBC's Power Lunch this week that while he remains bullish, "Tesla is not going to be king of the hill in electric forever." He added, "They're getting competition from all sectors. They're going to have to double down to compete." Indeed, automakers including Ford and Volkswagen have seen early success with sales of their electric vehicles including the Mach E and ID.3 up against Tesla models in the US and Europe. Meanwhile, forthcoming EV's, including the all electric version of Ford's F-150, the Lucid Air, Rivian's electric SUVs and trucks, and others are stirring excitement. Just yesterday, Porsche showed off the production version of its Taycan Cross Turismo, and said it would start sales in the US this summer. It's a $90,000 EV wagon, a more affordable, practical take on Porsche's performance EV, the Taycan.

    Part shortages

    Semiconductor shortages have caused most auto makers to temporarily close some lines at their factories, and Tesla is no exception. Tesla CEO Elon Musk acknowledged the company's Fremont, California, plant shut down temporarily due to "parts shortages" in a tweet on February 25. He said it was shut down for just two days, but did not make clear whether partial shut-downs on some lines would continue. Tesla had previously warned, in its Q4 2020 earnings call and filing, that chip shortages could hamper their vehicle production goals in the first half of 2021. CFO Zachary Kirkhorn said on the call with investors, that for the first quarter of 2021: ″[Model] S and X production will be low due to the transition to the newly re-architected products. Additionally, we are working extremely hard to manage through the global semiconductor shortage as well as port capacity which may have a temporary impact." If Tesla does not produce a high volume of vehicles, due to parts shortages or lag times shipping parts from overseas to its U.S. plants, the company would not generate as many regulatory credits that it wants to. Tesla sells these environmental credits to other automakers, which is how it has historically achieved profitability.

    Steeper expenses

    Controlling costs has been on CEO Elon Musk's mind on and off for years. In December 2020, he wrote in e-mail to all Tesla employees: "Investors are giving us a lot of credit for future profitability but if, at any point, they conclude that's not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!" But at the same time, Tesla is on an expansion tear that will cost it handsomely. The EV maker is building factories in Austin, Texas, in Brandenburg, Germany and expanding its footprint in China. It has also embarked on revamping aspects of its Fremont facilities, including the paint shop, the area of the factory where its cars are painted. Musk also has ambitions for Tesla to mine its own lithium, domestically. And to ramp up production of Tesla's own battery cells at a pilot plant also in Fremont. Besides these efforts, the company is in the midst of costly recalls and could face more-- whether voluntary or mandatory. Most significantly of these voluntary recalls, in China and in the US, Tesla is recalling Model S and X vehicles experiencing touchscreen display failures."

    Tesla closes below $600 for the first time since December

    submitted by /u/_bono983
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    Tesla breaks a record: The biggest six-week drop in value ever

    Posted: 06 Mar 2021 01:51 AM PST

    "Tesla and founder Elon Musk are renowned for notching firsts. In 2012, the EV-maker unveiled the first-ever premium all-electric sedan, the Model S. Six years later, Musk's SpaceX launched the world's most powerful rocket, the Falcon Heavy. That milestone marked another first, since the Falcon carried the Tesla Roadster into space, making the pioneering EV the first auto ever to orbit the Earth.

    Recently, Musk has set supersonic financial records. Tesla's moonshot from a market cap of $30 billion in mid-April of last year to $849 billion on Jan. 26 dwarfs the leap of any other young comer on the rise in a nine-month span. By early January, Tesla's rise had lifted Musk's net worth to $185 billion, placing the Tesla founder on a new pedestal as the world's richest person.

    Musk just achieved a new financial first––for the stock losing the most value ever in a brief period. Since that late January peak, Tesla's valuation has cratered by 36%, dropping by $305 billion to $544 billion at mid-morning on March 5, as its shares tumbled from $883 to $566. No company in the annals of equity markets has ever dropped on a scale remotely that big in just five and a half weeks. Tesla's $300 billion–plus descent exceeds the market caps of all but the 16 most valuable companies in the S&P 500. Tesla dropped by far more than twice the combined market caps of Ford and General Motors, and by $100 billion more than that of the world's second most valuable automaker, Toyota.

    It may reassure Tesla bulls that it's been a highly volatile stock in the past: It has seen big drops and then always recovered to shoot beyond previous peaks. From mid-February to mid-March of last year, it shed half its value and in the first two weeks of September, fell 34%, only to roar back on both occasions. The September slump shaved $186 billion from its valuation, but Tesla got it all back, and $400 billion more in the months ahead. Sure, you'll hear, Tesla will suffer big bumps along the way, but its long-term trajectory will trace a sharp upward climb. Still, the 34% decline means that Tesla's shares need to rebound 56% to regain their old peak of $883 (and valuation of $849 billion). Overnight, investors decided that Tesla will earn a lot less than they foresaw as recently as late January.

    What's driving Tesla's big pullback?

    Let's assume shareholders will want at least a 10% annual return in exchange for what can be counted on as a wild ride. To get there as of late January, Tesla needed to be worth $2.2 trillion by early 2031. At a premium price-to-earnings multiple of 30, Tesla would be generating $73 billion in yearly GAAP net earnings. That's $5 billion more than Apple, by far the biggest profit spinner in the S&P, made last year.

    Now, shareholders have lowered the bar––but that bar remains dauntingly high. Using the same formula, the bogey is now $1.44 trillion 10 years from now, and earnings would need to reach $48 billion. To get there, Tesla's 2020 profits of $721 million have to grow at an annual pace of around 50%. That Tesla suffered such a huge fall, so fast, highlights the extreme uncertainty in assessing what it's really worth. In reality, investors have little or no idea how much Tesla will earn in the future. Will the number be $60 billion in 2031 or $10 billion, something lower than that or something in between? Making any reasonable estimate requires so many assumptions that the exercise is futile. What remains is a super-sexy product, a charismatic CEO, a cult following, and a great narrative. What also remains is a still-giant valuation that can only go higher if great numbers start coming in, and fast. Otherwise, Tesla is sitting on an air pocket whose deflation would set new records unlikely ever to be equaled."

    Tesla breaks a record: The biggest six-week drop in value ever

    submitted by /u/_bono983
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    Why the hell are people so afraid of a little inflation?

    Posted: 06 Mar 2021 06:31 AM PST

    Yes inflation will probably go up, it was 0.62% last year even with the feds injecting a shit ton of money into the economy to stave off deflation. But it's probably going to return to the normal 2 percent target rate, meanwhile people are acting like we are going to become super-venezuela.

    Im used to irrationality, especially when it comes to stocks. But jesus christ. This shouldn't be enough to change anyone's long term investing strategy.

    submitted by /u/Vinniam
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    If you were one of those people who sat on the sides throughout 2020 because you missed the bottom, do not make the same mistake twice!

    Posted: 06 Mar 2021 11:20 AM PST

    I know many people had money during 2020, saw the crash but thought it was going lower so they didn't buy in. Then when it started going up they still didn't buy because they missed the bottom or they became convinced a second crash was coming and the lows would be revisited and they'll have their chance to buy.

    Well we know how that turned out.. they might just be thinking this recent correction is the infamous second crash they've been predicting all these months.

    I know there's a lot of uncertainty going on in the markets recently and you'll find plenty of doom and gloom stock market articles on the internet if you look for them.. You might be looking at this recent correction combined with reading doom and gloom headlines and gleefully rubbing your hands thinking to yourself "I knew my time would come, now I just need to wait a little bit more and then I'll buy, probably close to the bottom".

    But this will almost certainly be a terrible mistake, and it would be the same terrible mistake you made last time. I get it, psychologically you want to buy at the cheapest possible price so you get the biggest return AND you lower your downside loss potential. It's very attractive and the temptation to try and time the market sucks you in, you become so fixated on not losing money and buying the cheapest price that you end up never making money either because you never pluck up the courage to actually buy in the first place.

    I have a friend who pulled his money out of the S&P in 2008 at around the 1000 point market (a 30% loss) to try and buy in lower, and while the market did in fact go lower, he was unable to time the bottom because he waited too long and was too greedy. To this day he still has not bought back in... Not because he thinks the price is going back to 1000, but because he is so bitter that he made this mistake he just cannot bring himself to pay the now 250% - 300% increased price.

    At first he waited, then he waited some more and after a few years he lost interest because the price was so much higher than when he sold, especially when the price went past the previous ATH, he completely gave up on the stock market as being a viable investment and instead put his money in a savings account. I've not seen or spoken to him for a few years but I know him, there's no way he would have bought into the market, he was too bitter.

    So what's the moral of this story / rant? Don't be like my old friend... Don't try to time the bottom. Don't be greedy. Just accept the discount that's on offer and buy in, then if it drops more, buy some more using your salary. Because if you don't, you're very likely to be stuck in the perpetual cycle of waiting for a correction that you end up inevitably missing the timing anyway.

    And I know there are some people who will read this, or posts like it, and they'll tell themselves they are right and they can time the bottom but however strong your conviction, just know that you are almost certainly going to miss the bottom, so why bother trying?

    submitted by /u/Redditor45643335
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    I read some Reddit comments that there’s a paid subscription that tracks Congress/senate insider trading in real time, anyone has a link?

    Posted: 05 Mar 2021 06:55 PM PST

    I swear I saved the link somewhere but I can't seem to find it, this wasn't one of those free sites that lag 30 days, it tracks politician trading in real time, does anyone remember this or have a link? There was a scandal where senators sold off all of their positions right before March 2020. This is very illegal/unethical, but hey if us small guys can take advantage of it then why not?

    Thanks in advance.

    submitted by /u/scarberia123
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    Always trade the plan. Patience prevails and would’ve saved an $1100 loss

    Posted: 06 Mar 2021 06:18 AM PST

    So I've got a decent option strategy that I use on QQQ and SPY that I've back tested and to prove consistent returns, what backtesting doesn't show is emotion.

    The setup was placed Monday, put credit spreads on QQQ needing it to close above 305. This was based on historical and current data, stimulus news and where the charts sat, it was a good trade.

    The week goes through, we break 305, so I exit and replace the trade -$400 loss for a 300 close. Which is fine as the gains will be $800.

    My dumb ass decides to sit and watch the market and not walk away for a few hours. QQQ breaks 300, 299, 298. I didn't like it. It came back to 301 and I sold out at a -700 loss.

    Qqq finished the day at 308.

    My original plan, backtested, proved that this is successful 98% of the time. Guess what, it would have been successful and a clean $500 gain. Now I'm sat on an $1100 loss because I didn't grip myself and trade the plan.

    Anyway, the funds this freed up enabled me to buy a tonne of HEXO, NIO, ENVB, and ANTX, some with options which are now ITM. It's a shame but here we are.

    Trade the plan, have patience.

    submitted by /u/TittiesnSteins
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    PSA: Why Treasury Rates matter for your Fundamental Equity Valuations

    Posted: 05 Mar 2021 06:21 PM PST

    FYI This is going to cover some very fundamental stuff that I'm sure a lot of you already know, however since there's plenty of casuals and new joiners, I figured it might be worthwhile to give a primer on.

    Here's a simple question: What is a stock worth right now and why?

    There's lots of ways to answer this question, many (revenue multiples, earnings multiples, etc) are short hand or simplified ways of describing the same thing.

    The foundation of modern finance answers this with: The Present Value of all Future Cash Flows

    Regardless of whether you're talking about equity in a growth tech company, a value oriented utilities operator, or even a distressed oil company, the answer can be broken down further into two components or sets of assumptions:

    1. What are those future cash flows this company will produce for this equity share I'm buying?
    2. What discount do I give them to calculate their value today?

    Future Cash Flows:

    The first component I imagine everyone is conceptually super familiar with. Everyone see's headlines about revenue growth or earnings growth and some kind of % figure that gets them excited. So when it comes to the value of equity, which do we care about?

    The answer here is less commonly thrown around. The cash flows we calculate into for an equity valuation are the Free Cash Flow to Equity, or FCFE.

    In short, FCFE is how much cash is available to all shareholders AFTER all expenses, reinvestment, and debts have been paid. A comparison for personal income would be, this is like calculating how much you have left each month from your paycheck after you take out taxes, pay for groceries, pay that student loan bill, pay rent, and pay for that oil change on your car.

    So how do you calculate a company's FCFE? Thankfully lots of companies do this already in their non-GAAP calculations, but if they don't it's relatively simple on your own.

    FCFE = CFO - Capital Expenditures + Net Debt

    Thankfully CFO is a standard GAAP accounting figure you'll always have. Capital expenditures are generally straight forward but can be disguised. And net debt is the net change in debt balances, if you issue more debt, more cash is coming in the door, that's considered that higher cash flow to the shareholders.

    So this gives you an idea of excess cash that theoretically is coming back into your pocket as an owner of the equity. But you can't do this for infinite years right? At some point you have to just create a final value at some point in the future. This is called our "Terminal Value" and it represents some generic assumptions about growth and costs of capital to give you an idea of what all the years beyond that are worth. The formula is pretty straight forward. If I want build a 5 year model, I will include my terminal value in year 5. The formula for figuring this out is as follows:

    Terminal CF = yr 5 FCFE * (1+g) / (WACC - g)

    Now there's a couple ways to think about this, but the easiest way is to simply view it as the value of all cash flows AFTER year 5 at an assumed growth rate (g) and assumed cost of capital (WACC). This value is calculated as if you existed in year 5 already and assumed long run growth rate is also the same as the long run rate of growth in the economy. If you subscribe to Damodan's school of valuation (widely viewed as the authority on equity valuation modeling), there is an argument for g being the nominal gdp growth rate.

    Now that we've put together the string of cash flows, what is the actual value of what you're receiving?

    Discount Rates:

    This is the second component of the answer fewer people on here seem to incorporate when thinking about stocks. The idea here is that there is some inherent discount you need to apply to something you're going to receive in the future. It's a little bit longer but stick with me.

    Let's take a step back and think about what that means. If I say I'm going to give you $100 tomorrow, generally you're pretty safe in assuming that's the same as having $100 today right? Cool that's fairly easy. Now what if I tell you I'll give you $50 in 10 years and $50 in 20 years. Are you going to value that the same as scenario 1? No right? Because if you get $100 tomorrow there's still 10+ years of time to do more productive things with that money than you would have in scenario 2 (i.e. invest it etc).

    So how does this apply to valuations? Think of all those cash flows we talked about before. The value of "buying the thing that gives you those cash flows" is basically all of them summed up right? Wrong. Remember those cash flows are in the future... And things in the future are intrinsically worth less than they are today.

    So how do we figure out what they worth today? Well that brings us to one of the most fundamental formulas in all of finance:

    FV = PV (1+r)^t

    That is, for a given rate of growth (r) and a given amount of time (t), we can figure out what the future value of any amount will be. If we know our future values, but not our present, then we can just flip this around and solve it the other way:

    PV = FV / (1+r)^t

    We already know FV is just the cash flows we talked about above already. So what is the 1/(1+r)^t? That's what we call our discount factor and this is where we are finally getting to the topic of this post's title. t is super easy, years are years unless you're some sort of time traveler. The real question here is "HOW DO WE KNOW WHAT RATE TO USE?". The answer in finance to discount your cash flows by the company's Weighted Average Cost of Capital or WACC. The concept here is that cost of capital comes in two broad components, cost of debt, and cost of equity. Cost of debt is sort of self explanatory. You have some debt, you owe interest on it each year, there's some marginal tax benefit by interest payments lowering your tax obligations, etc. But let's ignore this for a second and pretend we're looking at a company with zero debt.

    What the fuck is "cost of equity" and what does it mean? It's far less tangible of a concept because there are no explicit interest payments that you can point to as "costs" like there are for debt. Instead some nobel prize winning financial economists (Jack Treynor [mentor of Fischer Black], William Sharpe [known for the Sharpe Ratio], and Merton Miller [known for Modigliani-Miller Theory]) captured essence of determining an equity share's "cost" through a theory called the Capital Asset Pricing Model or CAPM for short. This was a formula designed to determine what "cost" should be assigned to an asset based on a risk free rate of return, a market rate of return, and the inherent correlation of your asset with that market. You can see where I'm going with this. The formula is as follows:

    R(E) = Rrfr + B*(ERP)

    R(E) here represents the expected return of an asset. This can also be called your expected return on an equity or to the company issuing this equity it is the "cost" to them that's expected in return for the investor buying their equity.

    Rrfr is just shorthand for the expected return on a risk free asset. You wouldn't ever buy into an equity share with the expectation that it gives you less than what the most risk free asset is right? Cool. So in the broad scheme of things there's a couple of things you could use for this, but one of the most common is the 10 year US Treasury yield (or some other duration US Treasury note/bill/bond). The US Government is widely believed to be the most risk free counterparty in the world. It's the nature of being a reserve currency.

    B is your assets beta to the market. There's a lot we can unpack with this but for an oversimplification, let's think of it as for every 1% the broad market changes, how much does your equity change by?

    And finally, ERP. This is the Equity Risk Premium. There's several ways to approach this but the simplest is to think of it as the general expectation of investors as to how much the broad market should outperform risk free assets. People purchase equity shares with the expectation of higher returns than safer assets? Seems reasonable.

    Let's try this out with the broad market. Let's assume beta (B) is 1.0, the risk free rate is 1.0% and the ERP (expected spread between risk free and market) is 8%.

    R(E) = 1.5% + 1.0*(8%) = 9.5%

    That's a fairly reasonable rate. The sanity check here is comparing it to cost of debt. Because equities are lower in the capital structure, their cost should explicitly always be higher than the cost of debt. In the broad market companies are borrowing at less than 9.5% so that rough eyeball test checks out. If you invest in the broad equity market, your expectation is for companies to deliver 9.5% in value to you each year.

    This finally brings us back to the topic of this post. You can see, wayyyy down in the granular details of a valuation, the equity markets fundamental valuation are inherently baselined on risk free rates. Now let's combine this with what we talked about above and see why such small changes in that tiny rate can have such large outcomes in valuations.

    Case Study: QuantumScape Corporation (NYSE: $QS)

    I'll be honest, the reason I chose this is largely because it's one of the extreme examples that demonstrates how such small changes can make disproportionate impact. Also it seems to be a fan favorite whenever I see it mentioned.

    For a case study I want to do a super rudimentary valuation. For disclosure, this is not a robust valuation or financial advice. I'm going to eliminate as many factors as possible and try to keep it just to what we talked about and help illustrate things. I'm not putting this here as DD or an opinion on this stock.

    First things first, lets get some cash flows. For this we're not going to do anything fancy. When they were acquired by the [insert s word thing that shall not be named] they gave management forecasts and we're just going to take them at face value and extrapolate. Their projected first revenues will come in 2024 but it's nothing really material (14m FY24, 39m FY25, 260m FY26) until we get to FY27 (3.2bn). But remember, we don't care about revenues because as equity holders that's not what we receive. Looking at management's forecast, their Free Cash Flow doesn't turn positive until FY28 when it makes up ~8.5% of revenues. So lets use this and use some really wild assumptions. I'm going to say revenues go up by 75% each year after that and FCF margins stay the same at 10% (pretty insane growth assumptions given such a capital intensive manufacturing company).

    ​

    2028 2029 2030 2031 2032 2033
    Revenues ($m) 6500 11,375 19,906 34,836 60,963 106,685
    Free Cash Flow ($m) 565 1,138 1,991 3,484 6,096 10,669

    Now we need to find our terminal value as if it is at the end of 2033 looking forward. Let's assume a relatively high steady state growth of 5% (3% real growth and 2% inflation). So our figure in year 5 is 106*(1.05)/(.19-.05) = $133.3 billion

    At first glance impressions are easy to be "holy fuck, they're going to have $100 billion in revenue? they're generating cash flows of $150 billion?!? they're only at $15 billion market cap?? sign me the fuck up! buy buy buy!". But let's take this all the way with step 2 of answering our "What is this worth today?" question.

    So for this part we need to make a lot of assumptions. And this is important because equity analysts express their views often the most through not assumptions on how a company's cash flows look, but how to think about those cash flow value in present dollars.

    Continuing our simplification, let's keep assuming no debt involvement here (mainly bc this post is fucking long) and let's jump back to using CAPM. Let's use the below values:

    Rrfr: 1.0%

    Beta: 2.0

    ERP: 10%

    Using these we can see this stock's cost of equity is ~21.0%. It seems high, but this is expected from something with such fantastic growth being priced in to have such a high beta. TSLA for example has a beta of 2.0 and realistically a stock growing at 75% yoy in an economy growing at 3% nominally would likely have a beta much higher than that.

    So using our formula's above we can now now solve for our discount factors (the 1/(1+r)^t numbers to multiply our cash flows by).

    ​

    Year FY2028 FY2029 FY2030 FY2031 FY2032 FY2033
    t 8 9 10 11 12 13
    WACC 21.0% 21.0% 21.0% 21.0% 21.0% 21.0%
    Discount Factor = 1 / (1.21)8 = 1 / (1.21)9 = 1 / (1.21)10 = 1 / (1.21)11 = 1 / (1.21)12 = 1 / (1.21)13
    (DF) 0.22 0.18 0.15 0.12 0.10 0.08
    PV CF ($m) 141 205 296 428 619 10,686

    The sum of all the PV CF should give us what we think this stock is worth today (since no debt, this would be same as market cap, ignoring any cash balances they currently have). So we get $12.4bn. Compared to a current $15 billion market cap that's another 20% drop WITH some pretty damn rosy assumptions (and low yields). Fuck.

    But that's not all.

    Now let's dial in new more realistic assumptions. Let's think of pre-covid life and what the norms back then were. 10 year interest rates were between 2-3% in 2018/2019 and inflation was tipping on the hot side of 2% going into end of year 2019, so a 10 year treasury at 2.5% seems a realistic norm and with a higher vol/growth stock like this we can be more realistically at a beta of 2.25. And finally let's keep our ERP and g (macro assumptions) the same.

    Our cost of equity is now 25% which makes our discount table look like this:

    Year FY2028 FY2029 FY2030 FY2031 FY2032 FY2033
    t 8 9 10 11 12 13
    WACC 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
    Discount Factor = 1 / (1.25)8 = 1 / (1.25)9 = 1 / (1.25)10 = 1 / (1.25)11 = 1 / (1.25)12 = 1 / (1.25)13
    (DF) 0.17 0.13 0.11 0.09 0.07 0.05
    PV CF ($m) 109 153 214 299 419 5,718

    With just a slight change in treasury yields and a slightly more realistic shift in beta, we're now talking about a market cap of $6.9bn or a 55% FURTHER DROP from current prices. Start shifting those 75%/yoy growth assumptions towards something that decelerates (a more complicated n-stage DCF that's too much to get into here) and you drop even further. A 10% deceleration yoy would bring this present value more in the $4 billion range.

    I'm sorry for being so long winded here, but I felt it was important to explain. In a nutshell that folks, is the power of compounding and why small shifts in a seemingly benign rate can shift massive changes in values for these growth stocks that are primarily basing their value on cash flows happening 10-15 years from now.

    submitted by /u/MentalValueFund
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    DO you guys think the huge market bounce back on Friday afternoon signalled the bottom? Or could Monday continue to show declines for market

    Posted: 06 Mar 2021 08:26 AM PST

    Things were at a pretty big decline for the market especially tech until Friday afternoon when it had that huge spike back up again. Could that have been the bottom? Or will Monday continue the decline?

    submitted by /u/Lochtide77
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    Past weeks helped me realize the importance of having cash and not be fully invested

    Posted: 06 Mar 2021 01:32 PM PST

    I came into the stock market about 2 months ago. I didn't have much money anyways so I just threw in every bit into stocks thinking every dollar would be used to its fullest.

    The past couple weeks I sat there watching my stocks dip to extreme lows with no cash on hand.

    Turns out money sitting on the sideline can be extremely useful even if it's not "actively growing".

    I think switching to a healthier 80/20(cash) will allow me to take advantage of corrections when it happens in the future.

    submitted by /u/Klauslee
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    Under $100b high-growth stocks on your watchlist after correction?

    Posted: 06 Mar 2021 08:56 AM PST

    1. CHWY - more pets + continued shift towards online spending = more volume for operating leverage leading to profits

    2. MTCH - more engagement as the economy reopens + grow ARPU internationally

    3. PINS - solid social media platform + more users = attract more ad spending

    4. PTON - disruptor in online fitness and not a fad from my view. Down ~40% from ATH.

    5. SQ - Cash App + Sellers recovering with reopened economy

    6. TDOC - disruptor in telehealth. Down ~40% from ATH

    Notable exceptions since I already own: ETSY and ROKU

    submitted by /u/ricke813
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    More reason to be bullish on F.

    Posted: 06 Mar 2021 08:59 AM PST

    A new affordable, true compact truck, built on the bronco platform. This along with the Mach-e starting to take away market share from Tesla gives me even more hope that Ford has a very bright future. I like the company and like the stock. https://www.google.com/amp/s/www.cnbc.com/amp/2021/03/04/ford-quietly-begins-production-of-new-small-pickup-in-mexico.html

    submitted by /u/aceswild16z
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    Quest Diagnostics ($DGX) DD - An Undervalued Dividend Payer

    Posted: 06 Mar 2021 01:10 PM PST

    *long post*

    Hi guys!

    Today I'm going to be talking about a pretty boring dividend payer: Quest Diagnostics. They've seen a good run-up during COVID and they showed up on a PE screener I ran recently, so I figured them check it out.

    Business

    Quest is the world's leading provider of diagnostics and testing. They actually end up serving about the equivalent of one-third of the American adult population every year which I find staggering. They've seen a spike in revenue (see revenues section for more detail) during COVID as they were the first actor in the testing space. Normally, I'd go into more detail by breaking down their various business segments, but Quest only operates in one segment so this section will end up being short.

    Growth Strategy

    TTM Revenue 12/31/10 -> 12/31/20

    As you can see, after 9 years of stagnation, Quest finally got a major pickup from COVID. Now, they have to take this opportunity to continue growing. They document some of these strategies in their recent 10K. To cut through the corporate jargon, I'll summarize the 4 points:

    1. Strategic Acquisitions: Besides providing an opportunity to grow, acquisitions allow Quest to extend its footprint further. Personally, I think an attempt to break into foreign markets could be good if done right, however, this would be very difficult due to varying regulatory standards.
    2. Partnering with Others: The idea here is simple. By partnering with health plans, IDNs, etc, they can increase market share and become a go-to provider for advanced diagnostics tests. They've been successful in implementing this thus far as evidenced by a 2020 Anthem partnership.
    3. Provide more Tests: Nothing much to add here, it's pretty self-explanatory. By offering more solutions, they can drive growth through more facets.
    4. Increase usage of their consumer solutions: Quest saw large growth in their QuestDirect platform. QuestDirect is a consumer-initiated testing platform. This means that you can order tests to do at home or a Quest Patient Center or you can ask questions online.

    Revenues

    TTM Revenue 12/31/15 -> 12/31/20

    Quest has grown revenue 22.12% YoY, 27.57% over the last 3 years, and 26.03% over the last 5. Just by looking at the chart, you can tell that a large portion of growth came from the pandemic, but quantifying that makes that fact even more apparent.

    Moving to Net Income, you're met with the same story on a more drastic scale. YoY, Quest has increased net income by 66.28%. Quest has grown net income by 85.71% over the last 3 years and 101.41% in the last 5 years.

    Margins

    Quest currently has a net margin of 15.16%. This is encouraging compared to their historical margins. 3 years ago, their margin was 10.43% and 9.42% in 2015. Comparing that with its competitors, Labcorp has a net margin. of 11.13%, Buffett favorite Davita has a net margin of 6.70%, and Abbott had a net margin of 12.99%.

    Assets/Liabilities

    Total Assets 12/31/15 -> 12/31/20

    Total Liabilities 12/31/15 -> 12/31/20

    As you can see, both Total Liabilities and Total Assets have increased about the same amount over the last 5 years. The only difference here is that they have significantly more assets than debt. They have a current Debt/Equity ratio of 0.59x and interest payments are well covered. To look a little deeper, subtracting long-term debt of 4.01B from total liabilities of 7.22B and we see that Quest has 3.21B in short-term liabilities. Quest only has 1.16B in Cash on Hand which means that there's 2.05B in short-term liabilities that aren't covered by cash. While this isn't amazing, it's expected and I would be very surprised if this wasn't the case.

    Free Cash Flow

    Quest has grown Free Cash Flow by 71.94% over the last 3 years and 184.41% over the last 5. This is promising as it implies they'll be able to continue dividend growth. Speaking of dividends....

    Dividends

    Quest currently pays a 1.92% annual dividend ($2.24 quarterly) which is well above the average health care dividend yield of 1.54%. On top of that, it's a consistent dividend. Quest has a 22.64% payout ratio and had grown its dividend for 9 years prior to COVID. They lowered their dividend 1-cent to $2.21 focus their capital on testing, however, they are back to growing with the next yield being $2.24, 2 cents above their previous highest yield in 2019.

    Quest's next ex-dividend yield is April 6th.

    Price Ratios/Other

    This section aims to go over all of the relevant ratios and percentages that didn't fit anywhere else. I'll show the ratios on the chart below, and then I'll break them down.

    ​

    Ratio Quest Labcorp DaVita Abbott "Good Value" for Sector
    PE Ratio (TTM) 11.20x 9.82x 14.32x 31.78x <15
    P/B Ratio 2.29x 2.44x 7.25x 6.23x <2x
    P/S Ratio 1.69x 1.67x 1.14x 6.05x <2x
    P/FCF Ratio 10.05x 15.36x 9.55x 45.58x <15x
    ROE 23.04% 19.47% 39.81% 19.37% >20%
    PM/RG Ratio (My personal creation) 0.58x 1.99x 30.73x 4.30x <2.5x

    PE Ratio

    I said a "good" number for this sector may be under 15x. The problem is this number cannot be universally applied. While Abbott does supply testing solutions, they are also a supplier of drugs that has grown revenue significantly faster than others and have seen more consistent growth since their spin-off of Abbvie than many others in the testing space, including Quest.

    That being said, Quest has the second-lowest PE in the testing space and looks pretty attractive from this angle.

    P/B Ratio

    I said a good P/B Ratio for this sector was under 2. Other than Abbott, many testing providers have exhibited choppy growth and a temporary boost as a result of COVID, so I'd like to see them trading pretty low compared to book value. Interestingly, none of the major testing providers were below 2x. This could mean 1 of 2 things.

    1. Many companies in the testing sector are overvalued compared to book value.
    2. My P/B number was unreasonable and arbitrary.

    I'm inclined to believe the latter, but I'd be interested to see what you guys think.

    P/S Ratio

    I said a good P/S Ratio was 2x (same as my P/B threshold), and this time, some companies actually qualified. In fact, most of them did with DaVita trading at a low 1.14x P/S Ratio, Labcorp coming in with a 1.67x P/S Ratio, and Quest coming in closet third at a good 1.69x. Overall, P/S Ratios look good all-around.

    P/FCF Ratio

    I'm pretty new to using this ratio, but I identified under 15x to be a good multiple. When I Google what a good p/fcf ratio is, the consensus is 20x, but since many of these companies have stagnating revenues, so I decided to hold them to a higher standard. The only two qualifiers here are DaVita and Quest with DaVita coming in at an impressive 9.55x and Quest coming in at a cool 10.05x. So far, these numbers are looking good for Quest.

    ROE

    I was looking for an ROE higher than 20% here, and we again saw Quest and DaVita being the only qualifiers with Quest coming in at 23.04% and DaVita producing an impressive 39.81% ROE. If you're going to have potentially stagnating revenues, you should really be good at efficiently generating capital, and that's what Quest is.

    To break down Quest's ROE further, let's look at their historical ROEs:

    Quest Ratio 2010 2015 2017 2018 2019 2020
    ROE 18.51% 15.73% 16.10% 14.05% 15.47% 23.04%

    Looking at this chart, we're told a different story. Quest historically never broke 20%, it was only because of COVID that they recently broke through. That means that next year (2022), we could see a return to 15-16% ROEs. Let's compare this trend with DaVita's historical numbers:

    DaVita Ratio 2010 2015 2017 2018 2019 2020
    ROE 17.82% 5.17% 12.98% 3.70% 24.65% 39.63%

    While it looks like DaVita had an ROE of above 20% before COVID, this drastic 2019 move can be attributed to UnitedHealth Group's acquisition of DaVita, not an improvement in the underlying business.

    The takeaway here is that these high ROEs are likely temporary, and they will go back to historical levels once COVID is no longer a threat.

    PM/RG

    This is a ratio I thought of myself this last week and I'm excited to see what you guys think of it. I wanted to find a ratio that could measure how rational price movements were, however, I couldn't find one. I ended up creating a pretty simple ratio to measure it. While I may change it up in the future, I think it works for now.

    The Ratio works by dividing the price percentage movement over some period by the revenue percentage movement over the same period. So, for example, if ABC's price went up by 50% over the last year and their revenues only went up by 25%, they'd have a PM/RG of 2x.

    I decided to measure price and revenue movements from 1/1/2020 -> now. I put an ideal PM/RG ratio down as being <2.5x. Normally, I'd want to see it be under 2x, however, since testing stocks have been a big beneficiary of COVID, I decided to give a little more leeway. The only two companies that qualified here were Labcorp and Quest. Labcorp had a PM/RG of 1.99x and Quest 0.58x.

    I'm very surprised with Quest's PM/RG. They only appreciated 58% compared to revenue. To me, this could be a potential indicator that Quest has been undervalued by the market.

    DCF Valuation

    Assuming a -1% 5yr Revenue CAGR, an 8% Discount Rate, a 22.4% EBITDA Margin, and a Terminal Revenue Multiplier of 3.8x, Quest's fair value is $188.48 (a 59.8% upside from the current price of $117.96). Let's go over some other scenarios to give ourselves a range.

    Bullish Valuation

    I think I find it highly unlikely Quest will be able to capitalize on the recent increase in revenues to continue growing, but that'll be what I'm assuming in this scenario.

    With a 1.5% Revenue CAGR, an 7% Discount Rate, a 22.4% EBITDA Margin, and a Terminal Revenue Multiplier of 3.8x, Quest has an implied Fair Value of $225.89 (91.5% upside from the current price of $117.96).

    Again, this scenario is VERY improbable, but I figured I'd include it just for an idea of the theoretical max FV.

    Bearish Valuation

    I'd peg this as unlikely, but plausible.

    Assuming a 5yr Revenue CAGR of -2.5%, a 9% discount rate, a 20% EBITDA Margin, and a 3.5x Terminal Revenue Multiplier, Quest has a Fair Value of $151.86 (28.7% Upside from the current price of $117.96).

    PE Valuation

    I use the PE Valuation as a way to sanity check my DCF Fair Value. Using an average 1 year PE of 14.51x and a current TTM EPS of $10.47, we get a Fair Value of $167.83 (43.10% Upside from the current price of $117.96). As we can see, the PE Valuation is pretty in line with the DCF Valuation we came up with above.

    Risks

    1. Regulation: A large part of the Biden Administration's agenda was based on making healthcare more affordable. While it could be all talk, the Democrats having majority control of the Senate and the House make any regulation Biden proposes is fairly likely to be passed. This could drive down profitability throughout the Healthcare sector.
    2. Competition: This is going to be a risk no matter what sector you're in. There are a lot of large testing providers, so there's always a chance margins are driven down by a competitor's more effective and cheaper test.
    3. Failure to produce new tests: The title is pretty self-explanatory. If Quest stops being able to license and create new tests, their revenue growth will slow/stop. The FDA being overwhelmed by COVID treatment/vaccine cases could make this risk a reality.
    4. Failure to defend IP: If Quest fails to protect their Intellectual Property and they lose the rights to exclusively market their tests, competition will be driving down margins more aggressively than before.

    Conclusion

    I'm bullish on Quest. They're significantly undervalued and even with declining revenues being assumed over the next 5 years, they're still trading >35% below Fair Value. Compared to competitors, they've appreciated very little and their safe dividend makes this a good long-term hold. I plan on initiating a position on Monday and have a timeline of 1-3 years.

    submitted by /u/zainjavaid
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    Bullish on Moderna

    Posted: 06 Mar 2021 09:12 AM PST

    Hi,

    I definitely feel like the pull back this week now has Moderna trading at a tasty discount longer term. It's not so much about covid vaccines now as much as what we've gained through the development of MRNA vaccines. Looking forward, some very promising cancer treatments/vaccines in the works. This is more of a tech-based medical company than anything. I think they're going to be one of the best performers through this decade.

    submitted by /u/jcamp028
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    Market Theory for back half of the year

    Posted: 06 Mar 2021 05:54 AM PST

    Hey folks, for those that didn't read the first post a couple of days ago

    first theory

    I had another prediction in r/stocks a little over a week ago that a market correction was still to continue.

    I'm hardly the only person that had identified these possibilities, but I do want to continue updating yall with my plan going forward.

    Prediction through year end: The selling from this correction is likely over now. May get a couple of dry heaves next week but the heavy selling (-3+% in a given day is likely done). I am waiting to see at least two days of stability in the next week or two. For example, a Green Day like Friday is not stable. Yes it was up which is good, but far from showing footing.

    I believe that as the market digests this quick uptick in yields we will settle in and stocks will grind higher towards retesting highs in some names. Many of the momentum names that had eye popping speculative valuations likely won't be back to highs this year as folks are spooked.

    Highs on solid names will be retested by mid May / early June timing as optimism around economy heating up (double edged sword here) and vaccine rollout continues to build. As things reopen I believe the economy is going to run way too hot and inflation will pick up more than expected. I don't think the fed will have to do anything drastic but the realization that the economy is overheating will cause additional pressure on certain equity valuations yet again. To me, if we retest highs in May I think there is substantially more risk to the downside (10-15% correction again) than to the upside (4-5%)

    Once we get within 1-2% of highs in May I will be building back to roughly 1/3-1/5 cash in my trading portfolio.

    Hope all of you have some dry powder around and are able to pick up some really solid companies that went on sale in the last week or two!

    Happy hunting.

    submitted by /u/rpoh73189
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    Given fears of inflation, will the $1.9t stimulus be good for stocks?

    Posted: 06 Mar 2021 09:31 AM PST

    A little counter intuitive - I would expect a huge stimulus to be a boost to consumer spending, business top lines and economic growth - and therefore boosting the stock market. I have however read a lot of commentary stating that this stimulus will only drive the economy hot and send yields higher and conversely stocks lower. Insanely counterintuitive.

    Can someone explain to me what the likely outcome of the stimulus will be?

    submitted by /u/mrbeanny
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    Recently switched from robinhood to fidelity. Whats the best way to track/visualize my portfolio?

    Posted: 06 Mar 2021 11:17 AM PST

    I used to use robihood to quickly check my portfolio and check individual stocks. I thought the ui was pretty good for quick intuitive views. The view in fidelity is awful, and it also doesnt reflect the prices and dates I actually purchases things because they were transferred over. I tried sigfig but it pulls the data straight from fidelity so it also has no start dates or prices. I tried ticker but it seems wildly manual- I have to manually put in stock splits even? Anyway, any suggestions?

    submitted by /u/Thewhyofdownvotes
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    How much equity to live off the market?

    Posted: 06 Mar 2021 09:59 AM PST

    I am sure we all have different objectives with stocks, but let's say you want early retirement, how much do you think is the minimum equity for retirement?

    I was looking at NUSI as a potentially good retirement fund. Gives a monthly dividend totalling 8.5% a year, so essentially 18c per stock per month, and is hedged against risk.

    So now, let's say you want approximately 2K net income per month to live, but that also increases with inflation (2K today may be ok, but in 30 years it surely won't be).

    This means you would need approximately 11K Nusi stocks in order to provide a 2K$ dividend per month.

    Then, the stock itself is increasing faster than inflation, meaning it's most likely safe in the long term.

    This would mean that 300K is probably about enough? I guess if you want to be safe in case of some sort of crash, probably safer to wait for at least 400K.

    submitted by /u/Floofyboy
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    Noobie here, have a couple questions on stock dividends and dividend reinvestment programs

    Posted: 06 Mar 2021 10:46 AM PST

    Complete novice trying to get a better understanding of stocks. Just have a few questions on stock dividends and dividend reinvestment programs

    1. Are these the same things? I've been assuming that they are different but the end result is the same right?

    2. How common are stock dividends? I don't really hear many companies offering pure stock dividends, they all seem to offer cash dividend with a reinvestment option.

    3. Are stock splits the same as stock dividends?

    submitted by /u/nsdel
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    Selloff? Are you kidding?

    Posted: 05 Mar 2021 10:18 PM PST

    I understand. The market dropped over 2.5 percent last Wednesday. Which means some people will sell on Thursday. But how new are you to the stock market that you think that lower prices mean more selling?

    The selloff is real. I'm not disagreeing with that. When prices are down as low as 15 percent on tech stocks, how are you not buying half your net worth of these securities?

    Do you really think these companies are worth this little? I'll respond in the comments to any questions.

    submitted by /u/Lmao--Zedong
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