Ticker Reports for November 13th
Rocket Lab is the Right Stock for the Right Time
Rocket Lab USA Inc. (NASDAQ: RKLB) stock is up more than 40% the day after reporting a record number of launches for its Electron rockets in the prior quarter. The Electron rocket provides launch services that allows commercial and government customers to deploy satellites and other payloads into space.
For the quarter ending October 31, 2024, the company conducted 12 launches, which helped fuel its total revenue of $104.8 million, which beat analysts’ expectations of $102.7 million.
The company also announced $55 million in new contracts, which increased its backlog to $1.05 billion. The company also increased its revenue guidance for the fourth quarter to a range of $125 to $135 million, which would be another record number.
Another positive takeaway from the earnings report was Rocket Lab’s update on demand for its Neutron rocket. The company says it has signed an agreement for multiple launches in 2026 and is still on track to conduct the first test launches for Neutron in late 2025.
The Neutron rocket is a reusable launch rocket that can deploy medium-size payloads of up to 13,000 kg into low Earth orbit.
The Space Race is Accelerating
RKLB stock was already up 9% since the relief rally started after the U.S. presidential election. The solid earnings report is further evidence that even though the stock is up more than 250% in the last six months, it’s just getting started.
That’s because the United States is entering a new space race. That means there will be billions of dollars flowing into aerospace stocks from the public and private sectors. And Rocket Lab is well positioned to capture its fair share of that revenue.
The incoming Trump administration has big plans to cut wasteful spending in the Federal government. However, it’s hard to imagine those cuts will apply to funding for space programs.
That’s why it’s important to note that the Electron and Neutron rocket launches are only the first phase of the company’s vision. That will include the company’s selection by NASA to conduct a study to retrieve samples from Mars. The company’s larger goal is to have its products launched from space with its own satellite constellation.
There’s Still Time to Get In
RKLB stock is now trading at an all-time high. However, the spike in RKLB stock may not be sustainable for a few reasons.
First, Rocket Lab has a short-interest ratio of over 19%. That’s important because it means that the current price action may be due, in part, to short sellers having to cover their positions. Squeezes can last longer than expected, but they can reverse as quickly as they start.
Second, this company is still not profitable. In the current quarter, Rocket Lab posted a net loss of $51.9 million or 10 cents per share. This beat expectations of an 11-cent per share loss, which reflects increased research and development costs.
It's also important to note that the current stock price exceeds even the most bullish analyst forecast heading into the report. That came from Citigroup Inc., which raised its price target on RKLB stock from $7 to $13 on November 6.
At the same time, Rocket Lab has a healthy balance of cash and cash equivalents of $292.5 million, which means investors shouldn’t have any immediate concerns about the company needing to raise capital.
This is where the words of legendary basketball coach John Wooden come to mind. You’ll want to be quick, but don’t hurry to go all in on RKLB stock. It’s unlikely that this stock is going back below $10. But a likely pullback will give you time to add to your position.
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SoundHound AI Will Advance By Triple Digits in 2025: Here's Why
SoundHound AI (NASDAQ: SOUN) will advance by triple digits in 2025 because it is the leading play on conversational AI. The company is well-positioned in a world where AI is rapidly advancing and AI-enabled services are expected to dominate, providing a suite of services and apps that connect brands of all varieties with people meaningfully.
SoundHound’s 2024 results takeaways are that this company is gaining traction with more than 200 brands using its products, including companies like Hyundai (OTCMKTS: HYMTF), Snap (NYSE: SNAP), and Pandora, and growth is accelerating. Not only is growth accelerating for this tech stock, but it is accelerating at a hyper-growth pace and is expected to continue accelerating in 2025. Trends, including persistent outperformance and guidance increases, suggest the outlook for 2025 is also cautious, providing fuel for a sustained rally that will include an analyst upgrade cycle
SoundHound Outperforms High Bar: Market Yawns
SoundHound AI had a stunning Q3 marred only by the analysts and market expecting strength and whisper figures aligned with the results. However, the company’s revenue growth accelerated to 88.6%, with revenue of $25.09 million outpacing the consensus reported by MarketBeat by nearly 900 basis points. Strength was seen in all end markets as scaling and penetration combined to drive growth.
The sales mix is critical to the outlook, and diversification and concentration have improved significantly compared to last year when the bulk of revenue came from a single client. This year, revenue gains are spread between a wider selection of clients. The largest client only contributed 12% to the revenue compared to 72% last year, with significant sales in automotive, restaurants, financial services, and insurance; all industries forecasted to make significant productivity gains with AI.
The company continues to post GAAP and adjusted losses, but the burn is offset by investment. Its operations include scaling capability, improving the breadth of offerings, and acquiring new clients, which are paying off in revenue gains and increased business momentum. The takeaway is that Q3 losses were less than expected, with the adjusted loss of $0.04 being $0.03 better than forecasted.
SoundHound Raises Guidance: Guidance is Likely Cautious
SoundHound issued favorable guidance for the year and next, expecting growth to accelerate sequentially to 95% in Q4 and over 100% in 2025. The guidance is likely cautious because of the increasing momentum; as it is, the company has increased the guidance every quarter this year and will likely outperform and raise guidance again at the end of the fiscal year.
Factors in favor of increasing the guidance include several new client wins in Q3 and deepening penetration of existing clients, including Chipotle Mexican Grill (NYSE: CMG) and Casey’s General Stores (NASDAQ: CASY), which are both growing their operations. Factors favoring future guidance increases also include easing monetary headwinds and a business-friendly administration, which is expected to create economic tailwinds.
The price action in SoundHound is bullish despite the post-Q3-release pullback. The pullback shaved 10% off the price in pre-opening trading and may take the market even lower. However, the market for SOUN stock is still above critical support targets and will likely trigger a rebound when it is touched. The critical support target is near $6.45, and highs that were set in July 2024; if that level is broken, a move to $5 or lower is possible. The more likely scenario is that this market will confirm support at $6.45 or higher and consolidate near that level before regaining upward momentum later this year or in early 2025. The critical resistance is near $10; when that is broken, a move to $14.00 is likely to come quickly.
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Celsius Holdings: Big Drop, Big Opportunity? Analysts Say Yes
Celsius Holdings Inc. (NASDAQ: CELH) delivered a poor earnings report on November 6. Investors had been forewarned that the company was likely to miss on the top and bottom lines, but the size of the miss was enough to send shares lower.
Celsius delivered revenue of $265.75 million, which was lower than analysts’ expectations of $267.54 million and 30% lower than the $384.8 million the company reported in the same quarter in 2023. Earnings were worse, with the company’s earnings coming in flat, missing expectations by three cents.
At the end of the trading session on November 8, CELH stock was down 8.9% for the week and approximately 47% in 2024. Consumer staples stocks have been under pressure in 2024, and that’s been particularly reflected in the entire energy drink sector. Even sector leader Monster Beverage Corp. (NASDAQ: MNST) is down about 6% for the year.
But Celsius is the worst performer by far. This comes after several years when the company, which touts its “healthy” energy drinks, outperformed the sector. However, that drove up the company’s valuation, which may be coming back to haunt investors.
Convenience Store Traffic Is Weighing on Sales
The revenue shortfall for Celsius was largely due to what it referred to as “supply chain optimization” by its largest distributor, PepsiCo Inc. (NASDAQ: PEP). Celsius warned of this prior to the earnings report, but the extent of the shortfall was revealed during earnings.
The concept illustrates the consumer’s key role in the company’s results. Last year, Pepsi overordered Celsius products to keep up with strong demand. However, with that demand tailing off, Pepsi is taking steps to right-size its inventory.
One of the key areas that Celsius is reporting weakness in convenience stores which accounts for approximately 62% of energy drink sales. Traffic is down in 2024 and therefore sales are down.
The story gets worse for Celsius because the company was successful at raising prices as consumer were willing to pay a premium for a product that was seen as having healthy, if somewhat exaggerated, benefits. Those benefits are taking a back seat to a stressed consumer as well as more competition in the energy drink sector.
The Case for and the Case Against
There were some bright spots in the company’s earnings report. First, management reports a tighter correlation between sell-in and sell-through, which supports their belief that the situation is nearly behind. With Pepsi having an 8.5% stake in Celsius, which amounts to $550 million, both sides are incentivized to return to growth.
Second, Celsius still registered a 46% gross margin for the quarter. This is a profitable company and is becoming more profitable every year.
Third, international growth was a bright spot in the report, with international sales beating expectations and increasing year-over-year. Finally, the company has a strong balance sheet with approximately $900 million of cash or cash equivalents and virtually no debt.
But there are some short-term concerns. While the inventory situation may be getting better, it’s likely to still impact revenue for at least the next quarter or two. Also, at over 40x trailing twelve-month earnings and 39x forward earnings, CELH stock remains expensive, particularly as revenue is under pressure.
Is CELH Stock a Buy? Analysts See 80% Upside Potential
Analysts have been quick to lower their price targets for CELH stock. That said, the Celsius analyst forecasts on MarketBeat show that none of the analysts who lowered their price targets have downgraded the stock. The consensus price target is $54.40, which offers investors an upside of over 80%.
The stock does look to have found a bottom near its closing price on November 8. However, the options chain suggests that there is more bearish sentiment in the short term, which can make it a difficult stock to trade. As a long-term investment, investors may be about a quarter or two away from taking a position.
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