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KEY POINTS
OVERALL MARKET
The NASDAQ stayed above water in a mixed market, with median prices of homes at record highs.
We ended the day with a mixed market. Both the S&P and DOW indices finished in the red, with the NASDAQ barely finishing above the green.
With uncertain and confusing Fed comments in the past week, investors look for more economic indicators to clarify the market's future. New data from the Commerce Department came out today. It tells us home buying has slowed, while the median price is as high as ever, another victim of supply chain issues and inflation. This serves as a reminder to the financial market that inflation is ever-present, possibly causing investor hesitation today. GET THE DAILY MARKET RECAP
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Started as a student loan platform, SoFi (SOFI) is now a challenger bank aiming to replace traditional banks with its one-stop-shop consumer finance products.
Today's winner stock of the day is another suggestion by Stock Card’s VIP members. SoFi Technologies (SOFI) is a SPAC IPO that finished Wednesday up by more than 2%. In the past, SoFi was known only for school loan services. With their new CEO Anthony Noto in charge, the business pivoted to create a challenger bank offering a one-stop-shop technical platform for all your financial needs, from investing to loans to financial education, and more.
The company has reported seven quarters of faster year-over-year growth in member base. What distinguishes SoFi from other banks is its ability to acquire users at a much lower cost. Users may join SoFi to trade crypto and then graduate to get a loan or open an account. We've seen a similar low-cost customer acquisition from Square (SQ). With almost no physical presence this new generation bank has much lower operating costs. You can see the evidence of it in its rapidly improving Adjusted EBITDA (Earnings before Interest, Tax, Depreciation, and Amortization). Despite all positive signs, let's not forget thatSoFi’s plan for future growth relies on generating more revenue from their existing customers down the road. While they want to bring more people into the service, they ideally want to benefit from being a “one-stop-shop” for their paying customers. Upselling more products to the existing base may not be as easy as everybody assumes and end up taking too long or too much. One thing that makes me worried about SoFi is that it is diversifying to new financial products too fast. Each of the companies product offerings can be an independent company by itself with regulatory challenges and operational complexities. It also makes it hard to understand SoFi's operation well enough to jump in now. I could be regretting it later, but this stock is still a watchlist candidate for me. WHAT'S DOWN?
Clover Health (CLOV) is slowly gaining ground but has a long way to go to reach its record high.
The second SPAC IPO suggested by VIP users is Clover Health (CLOV). Yesterday, the company saw a 20% jump in its share price, followed by another +9.5% today. Today though, we are stepping back to look at the bigger picture. Relatively speaking, this jump is only a fraction of the ground needing to be recovered from CLOV’s downtrend.
June 8th was the height of the short squeeze craze, with Reddit traders sending the value up to $22 before a massive sell-off led to a drop to $13.85 today. The gains we saw today come from discussions surrounding an SEC filing by the company acknowledging the possibility of a squeeze. Aside from the short squeeze drama, Clover's product is interesting. It uses data and machine learning to assist physicians to make better decisions when they are diagnosing. The company works with 2K physicians so far. It also uses the same data and AI technology to provide a more accurate and less costly Medicare Advantage health insurance plan in 34 countries and has about 60K users. Of course, the market opportunity in the U.S. The Medicare market is quite large. And, Clover's plan is currently addressing the needs of only 3 million patients. This means there is a large market opportunity, and at the same time, it means Clover still has a lot of work to do to grow and expand its share in the market. With 2K doctors and 60K Medicare Advantage members, it almost feels it was too early for Clover to go public and it still needed more time to establish its business. But, I guess, that's what SPAC mergers are for. You go public and get access to capital much sooner than a traditional IPO. For me, it just feels too early to assume Clover can take over shares from the likes of UnitedHealth (UNH). If it does, it would be an excellent investment for a long time. I rather wait a bit to let Clover grow a bit more before jumping in. WANT TO RECIEVE THIS DAILY STOCK MARKET RECAP REPORT IN YOUR MAILBOX?
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KEY POINTS
OVERALL MARKET
The NASDAQ hits a new record as the Fed's Chairman reiterates the Fed's focus on supporting the economy as needed.
The market closed in the green today once again, with the Nasdaq index reaching a new all-time high.
Federal Reserve Chairman Jerome Powell told the House Select Subcommittee that we are still far from being out of the woods for economic recovery. Once again, he pledged to use the Fed's tools to control rising inflation and other economic turbulence as the economy reopens and returns to normal. That was enough to send the market upward for one more day this week. CALL TO ACTION
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Canada passes its sports betting bill as DraftKings (DKNG) continues its relentless growth.
Today was a big day for sports betting in Canada, as the C-218 bill cleared the Senate to be passed into law. Once the Governor-General gives his royal assent, the lucrative sing-game betting industry can be legal in Canada.
The news is undoubtedly exciting to DraftKings Inc (DKNG) stockholders. DraftKing is a leader in sports betting and fantasy markets, and it is one of the latest suggested stocks by our VIP community. The stock was up more than 2% today after the Canada news. Aside from the growth opportunity in Canada, DraftKings has seen fantastic growth as new states in the U.S. open to sports betting too. No wonder why DraftKings hasa 253% revenue growth since last year. I am adding to my Watchlist to monitor and learn about the stock a bit more. WHAT'S DOWN?
Positive money flow into Redfin (RDFN) stock may mean a buy-the-dip opportunity for investors.
For the loser stock of the day, let's discuss the technology-powered real estate company Redfin (RDFN). I looked at the stock in January when it was hovering around $80 per share, and even at that price,, the stock seemed quite overvalued. Shares soared to near $100 in Feb. However, as of today's market close, the stock is hovering around $60 per share. I have had the stock on my watchlist for a chance to pick up shares at a lower price. So, let's discuss whether it's time to buy Redfin's shares.
First of all, the company has grown its market share to 1% of the U.S. real estate market. Redfin's ability to reduce friction from the home buying and selling process and save its users a significant amount of money in their real estate transactions are two of the most important reasons for its market share gain. Since Feb's high, what drove the price down is the acquisition of RentPath to expand into the rental market. Expanding into the market's new segments is a good thing as it allows Redfin to serve its existing user base better and acquire new users. Additionally, the general sentiment about the real estate market getting into a bubble and the upward trend not being sustainable could have been the downward trend. Now the stock is hovering under the average price target by financial analysts. I also noticed positive money flow into the stock, which means there is new interest in Redin stocks. This can be a beaten-down stock worthy of your investment if you are willing to take the risk of additional volatility that may come from the real estate market's cyclicality. WANT TO RECIEVE THIS DAILY STOCK MARKET RECAP REPORT IN YOUR MAILBOX?
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OVERALL MARKET
The market closed in the green today, rebounding from last week’s Fed comments.
The stock indices rallied as the week began, with the S&P 500, the Dow, and the NASDAQ indices all ending the day in the green.
Last week was tough on the market, as investors grappled with the Fed’s comments on possible interest rate hikes as soon as next year. While investors seemed skeptical last week of the Fed’s stance on “transitory” inflation, the DOW saw its best day since March this afternoon. There was an interesting discussion on CNBC about the possibility of a much faster rise in interest rates by the Fed. The gist of the argument was that the Fed is only managing the message, and investors should be ready for a much faster rollback of the Fed's favorable policies. CALL TO ACTION
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Raven Industries (RAVN) soars after CNH Industrial (CNHI) announced it is acquiring the company.
Today's winner of the day is a company from our Future of Food portfolio. I added Raven Industries (RAVN) to the Future of Food because of its focus on autonomous agriculture machinery at $33 per share. I held the stock even after shares dropped under our buy price. Today, the stock price jumped nearly 50% after the news broke that CNH Industrial (CNHI) plans to acquire the company. Considering that Raven's market capitalization is only about $2 Billion, I would have loved to let the company continue on its path and grow. The autonomous vehicle industry is expected to grow 63% per year in the next few years. Raven could have continued to grow with the market, so it's bittersweet to see the company being acquired. But, a new 100% gain in less than three months is nothing to complain about. I don't plan to sell the stock just yet. After an acquisition announcement, sometimes it's possible for other acquirers to step foot forward and bump the acquisition price even higher. As it stands today, the acquisition is supposed to close in Q4, I'll be monitoring for additional upside from possible alternative acquisitions. WHAT'S DOWN?
Roblox (RBLX) is under heavy fire this month, as metrics and lawsuits frighten investors.
One of the most suggested stocks by Stock Card’s VIP users is Roblox (RBLX). Clicking “Our Strategy” on any Stock Card takes you to the VIP section. Here, you get a chance to suggest the stock to us if one of the portfolio publishers hasn't yet researched the stock for his or her portfolio. That's how VIP users suggested Roblox.
This recent gaming IPO has been a major player for years, but it wasn’t public until March of this year. Since then, the share price had been steadily rising until Reddit’s Wallstreetbets forum got a hold of it as its next favorite meme stock. This was timely, coinciding with a strong financial report released in May indicating a 140% increase in revenue in comparison to last year’s first quarter. The stock was boosted to $100, but as of closing time today, the price finished at $82. It’s not a surprise that the price would consolidate slightly, but the company reported a 1% drop in its active players, along with a drop in revenue. This may have spooked investors who were expecting a continuing trend in growth. This isn’t the only trouble facing the company this month as its share price slowly deflated. A litigation lawsuit filed by several major music publishers put Roblox on the spot for copyright infringement. The publishers accused Roblox of knowingly allowing its userbase to upload and play copyrighted songs without permission or an agreement for compensation. The company quickly released a response, claiming that it diligently dealt with all copyright issues. While Roblox is the strongest it’s ever been as a company, its userbase is depending on new and fresh content to keep them returning. Generally, the price hype post IPO came courtesy of a strong year for online gaming companies. I'd be a buy if I see a few quarters of stable growth in daily active users. For now, this one goes to my watchlist. WANT TO RECIEVE THIS DAILY STOCK MARKET RECAP REPORT IN YOUR MAILBOX?
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OVERALL MARKET
Quadruple Witching Day for the market brought all indices into the red.
The stock market indices closed in the red today, with the DOW falling over 500 points, having its worst week since October.
The markets’ movements may be due to comments from Jim Bullard on CNBC. The St. Louis Federal Reserve President mentioned that interest rate hikes might come even sooner than the 2023 estimates from Wednesday’s Fed's report. The Fed is becoming more specific about its strategy to combat the rising inflation, but investors are still uncertain of what the future holds. Another factor for today’s volatility is the so-called “quadruple witching.” This event is a quarterly occurrence and is aptly named. Four financial contracts for index futures and options and stock futures and options expired today. This is a significant cause of market movement, as more than $818 Billion worth of single stock options contracts expired today. I've never heard of the term before, but thanks to Landon, one of our contributors, I learned about it today. Thanks, Landon! WHAT'S UP?
Gun and ammo stocks see a continued upward rally as ammo shortages continue.
2020 may be over, but the signs of fear and uncertainty still show in the market. Smith and Wesson Brands Inc (SWBI) showed up on the winners and losers page on Stock Card with a more than a 17% jump. It is a company that has thrived throughout the pandemic. Demand for weapons and ammunition has yet to slow down as people flock to stores to make sure of their personal safety and protection. Yesterday’s earnings report showed a 67% increase in sales over last year’s same quarter.
It’s not a surprise that the gun and ammo manufacturer sees a great year. Like many other parts of the economy, the shortage of ammunition has been an issue since last year, and there’s no end in sight. Sturm Ruger & Co Inc (RGR) is also another beneficiary of the ammo shortage. It is an arms manufacturer specializing in rifles, pistols, and revolvers. RGR stock saw roughly a 3% gain today. Fear is one of the strongest market mover forces, which is why you see a steady upward trend for both stocks. WHAT'S DOWN?
Despite the recent performance, investing in GRAVITY (GRVY) is a bet on a one-hit-wonder video game studio.
GRAVITY (GRVY) is a video game company made famous for its title series Ragnarok. The Korean-launched MMORPG has since been followed by spin-offs and follow-up versions for several gaming platforms. I noticed it today on Stock Card’s Biggest Losers’ list. The stock took a 9% dip throughout today.
Video game stocks have had an excellent pandemic year. GRAVITY, for example, had more than 20% gain in May alone, after 40% Y-o-Y revenue growth in Q1. Despite the outstanding performance, the biggest red flag for me is the dependence on the Ragnarok brand. GRAVITY has yet to release a new IP, which begs the question: can it retain it's userbase even with a new franchise? A game can only hold so much replayability, so the company must follow up its success with another quality release. Although GRAVITY may not have attempted to branch out yet, things are looking pretty good for now. The newest game from the studio, Ragnarok X: Next Generation, generated over 2 million pre-registrations leading up to its release. Many video game studios end up being a one-hit-wonder who get acquired by larger studios for their talent. So the stock may be a good fit for a bet in the gaming industry. I prefer to focus on gaming companies with more revenue optionality rather than one franchise. WANT TO RECIEVE THIS DAILY STOCK MARKET RECAP REPORT IN YOUR MAILBOX?
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OVERALL MARKETThe stock market indices finished Thursday with mixed results one day after the Fed's discussed the possibility of two interest rate hikes in 2023. The weekly new jobless claims report came out, and there was a 37K increase compared to last week's figure. Overall, the market is still trying to figure out whether the market is up for a correction due to forces such as inflation, or it can continue to rally thanks to the re-opening. THE MOST SUGGESTED STOCKToday, I'm looking at one of the most suggested stocks by Stock Card VIP users. You may know that Stock Card VIP users have access to the "Our Strategy" section on each Stock Card. In this section, they can see two things:
WHAT'S UP?Upstart Holding (UPST) stock analysis: The good stuff Upstart Holding is a new IPO from Silicon Valley in the financial technology sector that happens to be profitable. It uses artificial intelligence to better match customers who look for a loan with lenders who would provide it. Of course, when you combine silicon valley, fintech, and profitability, you'd expect overvalued stocks. Indeed, with financial ratios such as price to earnings ratio or price to sales ratio, the stock is overvalued. The question is whether the overvaluation was justified. The company has high growth potential because it applies better technology in the financial sector. On the company's website, it claims that it's AI technology has been able to assess the creditworthiness of applicants better than traditional models, resulting in 26% more borrowers getting approved and yielding 10% lower average APRs for the approved loans. My husband and I just went through a mortgage application, and I know first-hand how inefficient and frustrating the mortgage underwriting process is. So that's certainly a reason to be excited about its future. Going through its operational metrics, its revenue is expected to grow by $163% in the current fiscal year. The majority of loans that Upstarts processes are originated by its 12 bank partners, who originated about 170K loans in the first quarter of 2021. It's important that the company is only focused on personal loans and still has a large expansion opportunity to other credit products such as car loans or mortgages. That means the growth opportunity is quite large. WHAT'S DOWNUpstart Holding (UPST) stock analysis: The good stuff Now, let's turn our attention to some of the risks and shortcomings of Upstart. Inherently, all new IPOs are risky. In addition, the lack of operational information history makes our analysis harder than more established companies. That's why you see several grey areas on the company's Stock Card. The other challenge is that the company is entirely dependent on one of its partner banks for most of its revenue. At the end of 2020, Cross River Bank (CRB) originated 67% of all the loans facilitated by Upstart and represented 63% of its total revenue. This means Upstart still has a long way to sell its product to other banks in the U.S. We also can't forget about the competition. Artificial intelligence and modernization of banking infrastructure are a priority for almost all banks and credit unions. Upstart is not the only vendor in this market. Click on Credit Services' collection on the left-hand menu of Upstart's Stock Card, or type in credit services in the search bar, and 142 stocks appear on the list, Upstart being only one of them. It's not easy to develop a well-performing AI model to assess consumer creditworthiness, but Upstart isn't alone. We have seen how Lendingclub (LC) stock has struggled in the last few years, and these two companies offer a similar product. The last concern I have is that acquiring customers is quite expensive in the financial services industry. For example, upstart is entirely reliant on Credit Karma for more than 50% of its traffic. Put all the good and bad together, and I prefer to watch the stock for a few more quarters before jumping in. Upstart Holdings (UPST) stock analysis shows a fintech company with a large market opportunity but too much reliance on a few key partners to grow customers and revenue. Upstart is one of the so-called hidden gem smaller stocks that have created many conversations on social media, including Twitter. And, some risk-taker investors may jump in if they are comfortable with volatility. I prefer to watch it for a few more earnings releases before jumping in. Want to receive this daily stock market recap report in your mailbox?Sign up for a free account on Stock Card's website to get the daily market recap reports in your inbox:
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