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.
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.
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