Gamestop (GME) Shares Surge More Than 100%

If you thought the ongoing situation around GameStop’s (GME) stock was over, then think again. The stock was on fire today, soaring over 100 percent, and being halted twice in the process. The market closed at 4 p.m. ET on February 24, and in the hour leading up to the closure, GameStop (GME) exploded. The stock shot up over 100%, ending the day at a valuation of $91.71. GME had seen a small rise throughout the day, catapulting after 3 p.m. ET. The sudden spike was enough to cause GameStop (GME) to be halted twice. It’s also noteworthy that Reddit is down at the time that this article is being written. If you’re unaware of the relevance, Reddit is home to r/WallStreetBets, the subreddit community that’s been a driving force behind the GameStop (GME) stock’s volatility over the past several weeks.

It’s likely that a high surge in traffic caused the website to temporarily crash. The GameStop (GME) situation first blew up back in January when the stock hit an all-time high following a short squeeze. The fallout included Robinhood restricting users’ ability to trade, as well as legal hearings. We'll continue to update this story as new information becomes available. The jump in GameStop also comes a day after the company announced its chief financial officer would resign next month to help "accelerate GameStop's transformation," which could fuel investors who believe in the long-term value of the retailer and its ability to shift from relying on physical stores to an e-commerce sales model. AMC, another "meme stock" involved in the trading frenzy last month, also jumped around 18% on Wednesday. Redditors on WallStreetBets cheered as GameStop soared. Posts on the subreddit included diamond emojis (a reference to holding a stock long term) and titles like "NEXT STOP IS THE MOON BABY" with rocket emojis, representing a belief that the stock will continue its upward trajectory. Some GameStop investors have talked publicly about not selling their positions in the company during last month's trading frenzy because they believe in its long-term potential. Around 4pm, the entire Reddit site was down for many users, though the company did not identify the cause of the outage. Within about half an hour, Reddit said it had identified the underlying issue and "systems are beginning to recover."

Stocks Lifted by President Joe Biden’s Stimulus Plan Hopes

Stocks advanced on Thursday, ahead of speeches by President-elect Joe Biden and Federal Reserve Chair Jerome Powell. Biden is set to unveil his economic goals and plans for further U.S. stimulus, and Powell is anticipated to reinforce that the Fed isn’t taking its foot off the gas anytime soon. All the market has cared about for months has been the twin tailwinds of massive fiscal and monetary policy support, and Thursday’s remarks are likely to keep spirits bullish. The Dow Jones Industrial Average rose 112 points, or 0.4% on Thursday afternoon, while the S&P 500 was up 0.2% and the Nasdaq Composite added 0.4%.

The small-cap Russell 2000 jumped 2.2%. Cyclical and economically sensitive sectors of the market were outperforming growth and defensive areas. The gains came after CNN reported that President-elect Joe Biden, who is due to speak in Wilmington, Del., will outline a $2 trillion proposal that will include more direct payments to American families and significant state and local funding. The yield on the 10-year U.S. Treasury rose on Thursday, to about 1.10%. The need for more stimulus was apparent following Thursday’s jobless claims release. Some 965,000 Americans filed for first-time unemployment insurance, far more than forecasts for 812,000. The gains came after CNN reported that President-elect Joe Biden, who is due to speak in Wilmington, Del., will outline a $2 trillion proposal that will include more direct payments to American families and significant state and local funding. The yield on the 10-year U.S. Treasury rose on Thursday, to about 1.10%. The need for more stimulus was apparent following Thursday’s jobless claims release. Some 965,000 Americans filed for first-time unemployment insurance, far more than forecasts for 812,000.

 

“In the markets, the bigger the proposal’s price tag, the better for equities and the U.S. dollar. There has been a paradigm shift lately in dollar dynamics, where promises of astronomical spending now boost the reserve currency as the rosier outlook for growth overshadows deficit concerns. If all the spending supercharges the economy, the Fed could reign in its generous QE [quantitative easing] program sooner,” said Marios Hadjikyriacos, investment analyst at XM. Fed Chair Powell is participating in an online conversation with Markus Brunnermeier, director of Princeton’s Bendheim Center for Finance. Topics will include the central bank’s new policy framework and its crisis response. The Nikkei 225 and Hang Seng each rose 0.9% on Thursday, and the Stoxx Europe 600 added 0.7%. Shares of Chinese technology firms Alibaba (BABA), Baidu (BIDU), and Tencent (TCEHY) gained 4.1%, 7.2%, and 4.2%, respectively. The U.S. Treasury reportedly blocked an attempt by the Pentagon to force the divestiture of Chinese internet giants by American investors. Spaceflight company Virgin Galactic (ticker: SPCE) jumped 13.9% after ARK Investment Management filed with the Securities and Exchange Commission to launch a space-exploration exchange-traded fund. ARK didn’t identify what companies it would hold in the fund. Delta Air Lines (DAL) stock was up 3.3% after the company reported revenue of $3.5 billion, missing expectations for $3.6 billion, and an adjusted loss per share of $2.53, which was larger than forecasts for a $2.50 loss. BlackRock (BLK) was down 3.6% after the asset management giant reported a fourth-quarter profit of $10.02, beating forecasts for $9.19, on sales of $4.5 billion, against estimates of $4.3 billion. Intel (INTC) rose 4.2% after getting upgraded by at least four different firms following Wednesday’s announcement of a CEO change. Marathon Oil (MRO) jumped 7.7% after Truist upgraded the stock to Buy from Hold. Nordstrom (JWN) fell 1.2% after Telsey Advisory Group downgraded the stock to Market Perform from Outperform. FuelCell Energy (FCEL) stock dropped 10.3% after getting cut to Underweight from Neutral at JPMorgan. Beyond Meat (BYND) stock jumped 10.8% after Yum Brands’ Taco Bell said it would begin testing a plant-based protein from the company. Yum stock (YUM) rose 2%.

Tesla Stock Rocketed Higher : Here's What Investors Should Know

Shares of Tesla (NASDAQ:TSLA) finally began trading on a split-adjusted basis Monday morning, completing a stock split that was announced on Aug. 11. The lower price represents a forward stock split in which shares split 5-for-1. Tesla stock opened the day trading at about $445 one-fifth of what the stock was trading at before the split. If the electric-car maker's stock split has grabbed your attention and you're now taking a closer look at the growth stock, here's a quick overview of important factors investors should keep in mind. First and foremost, investors should note that while Tesla shares are more affordable after the split, the split does not make the stock a more attractive investment than it was at its much higher pre-split price of $2,225. Why is this the case? Simply because both price and ownership in the company on a per-share basis were divided by five. Put another way, each Tesla share is now assigned only one-fifth of the ownership in the company that was allotted previously.

On the flip side, of course, a stock split doesn't make Tesla stock any worse of an investment either. A stock split is simply a nonfactor when it comes to making investment decisions and should have no impact on an investment thesis. Nevertheless, some investors may be more interested in Tesla stock now simply because shares have become more affordable. Some retail investors could have been in a position in which it was more difficult to spend $2,225 on a single share. Or perhaps there are other investors who have coincidently become more interested in Tesla stock recently. For those investors, let's take a quick look at the automaker and the catalysts that could help the stock over the long haul. First, there's Tesla's recent launch of its Model Y. Debuting in March, the Model Y is Tesla's second-most affordable vehicle yet. With a starting price of about $50,000, the new vehicle gives the automaker a smaller SUV that is much more affordable than its larger Model X SUV. Model X pricing comparatively starts at $80,000.

The automaker has big expectations for the Model Y, with management saying that it believes deliveries could eventually surpass those of the Model 3, which is Tesla's best-selling car by far. Specifically, Tesla CEO Elon Musk has said he believes annual Model Y deliveries could eventually grow to 1.25 million. With total Tesla vehicle deliveries estimated to come in at about 500,000 this year, the Model Y has the potential to be a huge catalyst for Tesla. Second, there's Tesla's fast-growing energy business, which includes sales of energy storage and solar panels. While revenue from the segment only accounts for about 6% of total revenue today, Musk believes Tesla Energy will eventually rival its automotive business. Finally, Tesla hopes its vehicle software will eventually bring in far more revenue for the company. Management has indicated two ways it plans to improve monetization of the software. First, it will continue raising the price for its driver-assist technology as it improves (the company believes the software will eventually get to the point where Tesla can release an over-the-air update that makes its vehicles self-driving, helping it command a much higher price tag). Second, Tesla plans to eventually launch a ride-sharing network that will operate with self-driving Tesla vehicles. Despite these exciting potential catalysts for Tesla stock, investors should keep in mind the automaker's pricey valuation. Today, Tesla has a market capitalization of $426 billion even though trailing-12-month sales and net income are just $25.7 billion and $368 million. This means that investors have already priced in a wildly optimistic growth story for the company over the next decade. It's always possible, of course, that Tesla executes so well that even the rosy outlook priced into the stock today proves to be an underestimate of the company's potential. But investors should bear in mind the risks of the underperformance the stock could endure if investor expectations prove too optimistic.

Walmart, Home Depot May Show Retail Strength Amid Pandemic

As the coronavirus pandemic lingers, virus-wary consumers are sticking with their favorite retailers while consolidating their shopping trips. This trend is benefitting some of the largest US retailers which are bucking the general economic downturn. This week, investors will get a deeper look into their financial performance when some of the biggest US retailers release their second quarter earnings reports. Home Depot: Store Modernizations, Upgraded Digital Options Home Depot (NYSE:HD) is scheduled to report Q2 2020 earnings on Tuesday, Aug. 18, before the market opens. Analysts are expecting a projected EPS of $3.6 on sales of $34.08 billion. Home improvement companies have outperformed the broader market this year as Americans put additional money into enhancing where they live as they shelter in place. Shares of the Atlanta-based retailer have surged about 30% this year, compared with the gain of just a little over 4% for the broader S&P 500 Index. The stock closed on Friday at $280.55 after hitting a record high earlier in the week. These positive growth trends were behind an impressive Q1 earnings report in May when sales rose more than expected and customers, on average, spent 11% more at HD stores than they did during the same period a year earlier. Analysts expect this trend to continue as a growing number of people leave big cities and move into the suburbs, a way of fleeing crowding which exacerbates the COVID-19 crisis. Just before the deadly pandemic hit, Home Depot was reaping the rewards for its $11-billion spending to modernize the company’s stores, upgrade digital options and enhance offerings for its key trade customers.

Sales from Home Depot’s digital platforms grew by about 80% in the first quarter as customers opted for online shopping over in-person browsing during the pandemic. As well, the strength of the US housing market should also help Home Depot thrive once the COVID-19 outbreak is contained, as lower borrowing costs boost home sales, making it easier for homeowners to increase spending on renovations. Walmart: Expanding Customer Base America’s biggest retailer, Walmart (NYSE:WMT) will also report second quarter earnings on Tuesday, Aug. 18, before the open. Consensus anticipates EPS of $1.25 on revenue of $135.29 billion. At a time when people are mostly staying home and consuming more mundane, daily staples, Walmart’s large brick-and-mortar presence has likely helped the Bentonville, Arkansas-based retailer to further expand its customer base and appeal. Hefty investment in e-commerce, steps toward growing its health care business and some added benefits for its 1.5-million strong workforce are a winning combination that has positioned the mega retailer to supply large swaths to the nation as governments and other businesses grapple with how to respond to the unprecedented health and economic threat. With the expectation the retail giant will report strong quarterly earnings and growing online sales, investors have pushed WMT shares higher by 12% this year. The stock closed up 0.6% on Friday at $132.60. As the coronavirus pandemic forces more consumers to pivot to online shopping, media reports indicate the retailer might soon launch a membership service called Walmart+, which would to compete with Amazon's (NASDAQ:AMZN) Prime. The lingering public health crisis offers a window of opportunity for Walmart to entice, and potentially lock-in, the swelling number of online shoppers through a membership program with speedy delivery and other perks. According to Bloomberg, citing a survey from Credit Suisse analysts and researcher Numerator, five million customers could join Walmart+ off the bat. The potential audience for the service could be as large as 20 million, the report says. Amazon’s Prime program, by contrast, has more than 118 million members in the US, according to Consumer Intelligence Research Partners. Bottom Line While both retailers are forecast to show improvements in their sales, their bottom-line profitability might get squeezed by the costs associated with higher worker pay and benefits, along with protecting customers during the coronavirus pandemic. That said, comparable sales and each vendor's online expansion will be the two critical numbers investors should focus on.