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The Consumer Confidence Report boosted the market into the green today, but only slightly.
All three indices finished Tuesday in the green, but only barely.
This may be due in part to the new Consumer Confidence Report released today. This report gives us an idea of how consumers see the state of the economy. The report shows growing labor market optimism and a purchase-oriented attitude going forward.
The S&P was split roughly 50/50 between gaining and losing stocks today, with not much market breadth as you would expect for ending 4 days in a row positive. This is indicative of investor interest surrounding more specific stocks, than the market as a whole.
Cerevel Therapeutics (CERE) jumps 136% after announcing positive trial results for their breakthrough schizophrenia treatment.
Cerevel Therapeutics Holdings Inc (CERE) was one of the biggest gainers on Stock Card’s winners and losers lists today. Cerevel is a neuroscience research and development company with plans to revolutionize medical treatment for mental diseases.
Yesterday, it reported positive clinical trial results for the drug CVL-231, which combats schizophrenia. This once-daily medicine has much fewer side effects than other treatments, so it’s not a surprise that the company’s shares shot up 136% today.
Cerevel has multiple compounds currently going through clinical trials and more in the pipeline, so the stock can keep growing. But, at the same time, it has the risk of crashing if there is bad news from any of the trials.
When it comes to drug development stocks, what matters is whether the company has enough cash available to keep at its trials without running out of money. Also, drug development stocks are typically risky bets with extreme volatility. So if you invest, be ready for high volatility.
The so-called “Amazon of Africa,” Jumia Technologies (JMIA) is struggling with its operations, giving investors a chance to buy the dip.
For the loser stock of the day, let's talk about the “Amazon of Africa,” as they call this next company. Over the course of last year, Jumia Technologies (JMIA) share price shot up over 398%. Today, we’re taking a look at the stock because of it’s 21% drop this quarter. It’s currently hovering quite lower than its all-time high. Even over a few months, such a high price jump is hard to sustain for any company. This is even more difficult if you struggle to turn a profit, like Jumia.
Despite being widely used in 11 African countries, the company has high overhead costs, such as upkeeping warehouses. Therefore, Jumia is transitioning its business model. This includes expanding into the third-party and dropshipping market and investing in infrastructure for pick-up locations. May’s earnings report reassured investors that they have a strategy to become profitable.
Moreover, its new FinTech division JumiPay is expected to increase profits and encourage customers to purchase more from within the Jumia ecosystem.
While this transition may look promising, it puts the company through a rough patch. I worry the company is stretching too thin geographically and across several business units, attempting to expand and evolve so much of its strategy at once. As an example, revenue was down 13% last year partially due to these growing pains.
Nevertheless, Jumia is on track to be a massive player across the African market. The challenges to scale operations is such a big hurdle that it would be hard for other players to achieve what Jumia has already done. So, my strategy is to bet small and steady when I find the stock beaten down.
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