Ticker Reports for November 22nd
Tesla Investors Continue to Profit From the Trump Trade
Tesla Inc. (NASDAQ: TSLA) stock has been up 56.2% since Donald Trump was elected president of the United States. But the recent move of 6.6% the week of November 18, 2024, has investors thinking that the stock may be going to $400 or even higher.
News broke that the Trump administration is planning to prioritize the creation of a regulatory framework for fully self-driving vehicles (i.e., autonomous vehicles) at the federal level as opposed to leaving it up to individual states.
The significance to Tesla is that a federal framework could provide Tesla with an easier path for rolling out its autonomous Cybercabs. For existing Tesla owners, this would create a process to sell software across state lines.
Tesla’s Drive to an Autonomous Future
It’s no secret to TSLA shareholders that Tesla founder and chief executive officer (CEO) Elon Musk has made autonomous technology and AI development a cornerstone of Tesla’s business strategy moving forward. In theory, this news makes Musk’s vision much more likely to become a reality.
But investors have wondered how long that might take, particularly for a stock that’s trading at 171x forward earnings. Four years may be long enough. A Trump administration is likely to make the standards for autonomous driving less restrictive. Tesla’s full self-driving (FSD) technology is currently at Level 2 and would likely only have to achieve Level 4 before it could get regulatory approval for its Cybercabs.
Musk Keeps on Winning
Another bit of news that’s helping to prop up TSLA stock is that the incoming Trump administration is widely expected to cancel the Biden administration’s $7,500 EV tax credit. This was put in place to encourage electric vehicle (EV) adoption in the United States. However, ending the subsidy was one of Trump’s core campaign pledges.
Here again, Tesla would likely be a beneficiary because of the company’s position in the U.S. EV market. That is, it’s the market share leader and is one of the only companies that is profitable. This puts the company in a position to produce EVs at a lower cost, which would negate the current subsidy.
Politics Make Strange Bedfellows
Some critics suggest that recent successes may be tied to Elon Musk’s endorsement of Trump’s campaign. Musk, previously popular among the political left, has drawn attention for his evolving views on topics like free speech.
You can’t buy shares in a person, but at least some of the bullish sentiment in TSLA stock since the election is investors using Tesla as a proxy for their belief in what the next four years will mean for Tesla to make good on the idea that it’s more than a car company and should be valued on par with other technology stocks. It is, but that’s not showing up in the financials yet.
Buy the Rumor, Sell the News
Since closing at a price of around $347 on November 18, Tesla stock has sold off to around $329 but has recovered much of that loss. That was to be expected as investors digested the rumor and realized that the payoff to any of this week’s news is still several years away.
Analysts have been raising their price targets for TSLA stock since the company’s earnings report in October. However, it wasn’t until the latest news that one analyst, Dan Ives of Wedbush, stuck his neck out and is now calling for Tesla stock to climb to $400. That would be 16% higher than its price as of this writing. It’s also notably a 73% gain from the consensus price of the analyst forecasts on MarketBeat.
In the final analysis, an investment in Tesla at this moment is an investment by proxy in Elon Musk. Musk’s star may never shine brighter, but like all stars, it will fade...in time. Tesla has always been a heavily traded stock, and that’s likely to continue. Whether the Musk factor is worth paying 171x forward earnings for TSLA stock as an investment is a question only you can answer.
50-year Wall Street legend: "Sell this tech stock NOW"
Something very strange is happening to U.S. stocks following President Trump's victory...
And this could spell disaster for some of America's favorite tech companies.
MicroStrategy's Stock Dip vs. Coinbase's Potential Rally
Most of the stock market’s attention has been directed to cryptocurrency, the hottest and most popular niche of the technology sector today. The idea behind most decisions is that, as the price of Bitcoin keeps rallying near an all-time high of $100,000 per coin, most—if not all—of the names related to cryptocurrencies will rally along with Bitcoin. That’s the one flaw most investors are coming to realize today.
For better or for worse, there is a major divide in the cryptocurrency stock universe today, even after signs from the gold market gave way to a buy signal for Bitcoin and its verticals. Shares of MicroStrategy Inc. (NASDAQ: MSTR) have plummeted by as much as 18.2% in a single day, shedding more than 25% of the company’s market capitalization in the process.
Beyond the MicroStrategy dip, there is one major discrepancy to give investors another way into a potential cryptocurrency-related rebound, this time in the middleman between Bitcoin supply and those looking to get a piece of the popularity and action. This is where shares of Coinbase Global Inc. (NASDAQ: COIN) come into play, as the stock declined by over 7.6% when Bitcoin traded at new all-time highs in the same day.
Why MicroStrategy Stock Is Falling: Challenges Behind Its Decline from Glory
There is justifiable merit behind the parabolic price action in MicroStrategy stock, as its CEO, Michael Saylor, made some smart moves with the company’s capital. Reinvesting any and all free cash flow, mostly into Bitcoin holdings, enriched the balance sheet when and if the price of Bitcoin took off, as it does today.
However, markets are worried that Saylor might become blinded to his hot hand, thinking that whatever happened in the past could continue in the future. The fear arises from the fact that MicroStrategy is continuing to dilute shareholders, this time by raising up to $3 billion to buy more Bitcoin.
This is where investors need to weigh the pros and cons of being diluted in exchange for gaining leverage into having more Bitcoin on the balance sheet. So far, this exchange has proven profitable, judging by the 705% rally the stock delivered over the past 12 months, even after this week’s sharp selloff.
One problem, however, might be that Saylor is raising all of this money to buy Bitcoin at its all-time highs, sort of like buying back stock when it trades at massive valuations; at some point, the returns just won’t make sense. And they don’t make sense for Wall Street analysts, as the consensus price target has fallen behind at $331.1 a share.
From where it trades today, MicroStrategy stock faces a potential downfall of 14.6%, considering the current targets, which might be too much risk for investors to bear.
Coinbase Operates in a League of Its Own: Wall Street’s Take on Its Unique Vertical
Unlike MicroStrategy, which bets on Bitcoin through its balance sheet, Coinbase's advantage is that it will do well no matter where the price of Bitcoin goes—or at least that may be the thinking behind Wall Street's price targets.
Whether Bitcoin is at an all-time high sand on the rise or coming into headwinds and potential selloffs, traders will be there to take advantage of this volatility. The trading activity will be a fee source for Coinbase moving forward. Leaning on this belief, those at Needham & Company decided to reiterate their "Buy" rating on Coinbase.
The surprise came from their price targets, though. Although they were previously at $290 a share, renewed market activity and attention around Bitcoin call for a valuation closer to $375 a share. Coinbase would need to rally by as much as 28% from where it trades today, not to mention a new 52-week high, to prove these new views right.
However, another tailwind is adding to Coinbase stock's potential upside, and this one is coming from a new potential role in the United States economy. News broke out stating that Coinbase's CEO Brian Armstrong is a potential candidate to oversee all things cryptocurrency in the United States for the new administration.
This appointment would give Coinbase access to the information and prowess it needs to become a power player in global financial markets if accepted and formalized. Investors can liken this situation to when the government calls on a big investment bank like Goldman Sachs Group Inc. (NYSE: GS) to oversee and advise.
More than that, BlakcRock Inc. (NYSE: BLK) has already shown interest in Bitcoin by adding it to its asset management program and opening a new exchange-traded fund (ETF). This means that, as Bitcoin becomes more widely accepted by Wall Street, regulations and oversight would have to follow, and that's where Coinbase comes into play.
This is a completely different picture than the risks and volatility coming out of MicroStrategy stock right now, and that investors can take advantage of that distinction before the rest of the market realizes that it's there for the taking.
![[Urgent] Starlink Set For The Largest IPO In History?](https://files.admin.agorafinancial.com/images/shutterstock_2144758071.jpg)
[Urgent] Starlink Set For The Largest IPO In History?
He turned PayPal from a tiny, off-the-radar startup… to a massive $64 billion giant.
Then, he did it again with Tesla… which is up more than 19,500% since 2010.
For perspective, that turns $100 invested into almost $20,000!
And now, Elon could be set to do it for the third and final time… with what might be his biggest breakthrough yet.
And for the first time ever, you have the rare chance to profit BEFORE the upcoming IPO.
Netflix Ventures Into Live Sports, Driving Stock Momentum
Netflix (NASDAQ: NFLX) recently jumped into the ring of live sports broadcasting with the Mike Tyson vs. Jake Paul boxing match. This new offering from Netflix marks a significant shift from its established on-demand content model. While the event drew record-breaking viewership, it also exposed meme-worthy technical vulnerabilities.
Undeterred by technical issues, Netflix is doubling down with upcoming live broadcasts of NFL games on Christmas Day (featuring a Beyoncé halftime performance), 52 weeks of live WWE action, and a new John Mulaney stand-up special. Will these high-profile events prove a knockout success, or will technical glitches deliver a technical knockout to Netflix's ambitions?
A Record Number of Viewers and Technical Hiccups
The Tyson-Paul spectacle attracted a staggering 108 million global viewers, becoming Netflix’s most-streamed sporting event to date. At its peak, the fight drew 65 million concurrent streams, demonstrating the platform’s potential to capture a massive live audience.
However, the undercard was marred by widespread streaming issues, with viewers reporting buffering and access problems. The resulting #NetflixCrash trend on social media sites, coupled with over 500,000 outage reports, underscored the challenges of managing such high-volume live streams. Netflix has acknowledged these issues and expressed confidence in resolving them before their next major test: the Christmas Day NFL doubleheader. This high-stakes event will be a crucial test of Netflix’s ability to deliver a seamless viewing experience for an even larger audience.
Wall Street Weighs In: Stock Surge and Analyst Upgrades
Netflix's earnings report for the third quarter of 2024, released in October, created a surge in investor confidence. This is partly attributed to the company's strategic shift towards live events. The financial markets responded positively to Netflix's live sports debut, propelling the stock to a new all-time high. This move has further strengthened the company's financial position.
The company’s earnings report exceeded Netflix’s analyst community’s expectations, posting diluted earnings per share (EPS) of $5.40 against a consensus estimate of $5.09 and achieving revenue of $9.82 billion, slightly above the anticipated $9.77 billion. This strong financial performance provided a solid backdrop for the market's positive reaction to the Tyson-Paul fight. The company added 5.1 million subscribers during the quarter, achieving a total of 282.72 million subscribers globally and a year-over-year membership growth of 14.4%.
The fight's record-breaking viewership prompted several analysts to raise their price targets for Netflix, indicating a bullish outlook on the company's live sports potential. Wedbush raised its target to $950, emphasizing the “massive opportunity in live sports” and forecasting significant growth in advertising revenue from this new revenue stream. Jefferies set a target of $1,000, expressing confidence in Netflix's ability to overcome the technical challenges experienced during the fight. These optimistic projections hinge on expected increases in subscribers and average revenue per user (ARPU), driven by the appeal of live events like sports.
However, it's essential to place these upgrades in context. While the short-term market reaction is positive, the long-term financial implications of Netflix's live sports venture are still subject to many factors and still need to be fully understood. The cost of acquiring and broadcasting live sports rights can be substantial, potentially impacting Netflix’s profit margins. Additionally, competing streaming services are aggressively pursuing live sports content, creating a competitive entertainment sector that will require Netflix to continually innovate and invest to maintain its strategic edge.
Financial Fair Play: Balancing Costs, Revenue, and Risk
While the Tyson-Paul fight generated significant buzz and positive market momentum, the financial implications of live sports streaming warrant closer examination. Acquiring rights to premium live events comes at a considerable cost, and the technical challenges encountered during the fight highlight the need for ongoing investment in streaming infrastructure.
This raises concerns about potential impacts on Netflix’s profitability. Furthermore, the potential for future technical disruptions poses a significant risk to subscriber retention and overall stock performance. Analysts have yet to provide detailed financial projections for Netflix’s live sports ventures, making it difficult to assess the potential return on investment.
Subscriber Showdown: Will Live Sports Alienate or Attract?
A key question for Netflix is whether its push into live sports will resonate with its existing subscriber base. While some viewers may be thrilled with the addition of live events, others might prefer the traditional on-demand model. A potential risk is that a focus on live sports could alienate a portion of Netflix's current subscribers, offsetting any gains from new viewers attracted by live content. Balancing the preferences of its diverse subscriber base will be crucial for Netflix’s long-term success.
A Cautious Outlook of Optimism
Netflix’s live sports debut, while generating impressive viewership and positive market sentiment, remains an optimistic gamble. The technical challenges, financial uncertainties, and potential impact on existing subscribers necessitate a cautious approach for investors.
While the Tyson-Paul fight provided a valuable proof of concept, the upcoming NFL games will be the true test of Netflix's ability to deliver a consistently high-quality live streaming experience. Investors should carefully monitor the performance of these upcoming events, analyze the financial data as it becomes available, and consider the broader competitive terrain before making any investment decisions.
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