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The Market is Worried About Inflation and Possible Geopolitical Risk From The Growing Tension Between the U.S. and China
The stock market indices ended Tuesday in the red. One of the economic reports we discussed yesterday came out refueling investors' worries about inflation. The S&P CoreLogic CASE-SHILLER INDEX report came out and indicates a 12% jump in home prices in February.
We've discussed that information quite extensively in the last few episodes. The piece of information that grabbed my attention is BlackRock's warning on the lack of attention to the U.S.-China tension and the technical decoupling of the two economies. BlackRock believes investors are ignoring such an important factor, and that could take them off guard.
President Biden has continued with President Trump's tough stance on China, and the tension between the two countries has increased. Possible cyberattack or geopolitical unease in emerging countries could be the potential risk to the market that investors ignore at this point.
We need to consider other possible factors that may drag down the market, at least in the short term.
Why is Apple's (AAPL) Stock Fairly Priced, and Is It Time to Buy?
Today, I looked at my Stock Card feed and noticed Apple's (AAPL) stock is reasonably priced. If you go to the company's Stock Card and click on "fair share price," you can see the analysts' price target for Apple is $157.55 per share, which is relatively higher than the current $126 per share.
Moreover, looking at its price-to-earnings ratio of 28.53, Apple is priced at the same level as its relative sector.
The stock is off of its 52-week high of $145 per share partially due to the legal battle with Epic games over its App store fees.
If you like Apple for its small 0.66% but stable dividend, this may be an excellent time to pick up a few shares.
IAC/InterActive (IAC) Dropped More Than 37% After Its New IPO Vimeo (VMEOV) Didn't Get The Customary Warm Welcome New IPOs Look For
On top of the biggest losers for the day, I noticed IAC/InterActive (IAC). Shares were down more than 37%, which is quite unusual for a well-managed company such as IAC.
It is the parent company to several internet brands, including investors' favorite Investopedia. It is also the parent company to YouTube challenger Vimeo (VMEOV), who just went public under the VMEOV ticker. The problem is that the new IPO didn't get the usual warm welcome IPOs get these days.
Take the analysts from KeyBanc. They don't quite believe Vimeo can sustainably achieve its long-term revenue target of 30%. Unlike YouTube, the company makes money from enterprise clients who use the platform to publish their video content.
The IPO price fell more than 17% in the after-hours, and IAC's stock got hammered. This seems to be a rather over-exaggeration on behalf of investors. Vimeo was about 9% of IAC's 2020 revenue, and it's the 11th IPO spin-off from IAC, which includes Match Group (MTCH), Expedia (EXPE), among many other successful IPOs.
I'd expect IAC to do just fine despite the disastrous Vimeo's IPO.
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