Ticker Reports for December 12th
4 Social Media Stocks to Soar as TikTok's Future Hangs in Balance
How business used to be done has changed, and the share of transactions, marketing, and sales done in the new digitized economy is growing. Gone are the days of door-to-door salesmanship, unless it is to sell a power-washing or solar panel service, which has several limitations as far as efficiency and scalability are concerned. Today’s business environment is headed to—and focused on—online sales since that is where the attention is.
A license to market and sell a product has been given to pretty much anyone with a relative level of expertise in a given field or topic, and monetization measures have been made easier and more accessible than ever before. This is why more and more businesses will have to switch to doing everything online, from backend operations to advertising and sales funnels.
This is why it is important to keep in mind the technology stocks that currently dominate the space and the ones catching up quickly for future portfolios. Stocks like Meta Platforms Inc. (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL), and even Reddit Inc. (NYSE: RDDT) or Spotify Technology (NYSE: SPOT) will see a larger share of online business activity in the coming years, as the cycle that goes from advertising to becoming a marketplace accelerates in those as well.
The Dominance of Leading Social Media Platforms Continues to Grow
According to recent measures by Statista, as of April 2024, the leaders in the social media market share shouldn’t come as a surprise. Measured through monthly active users (MAUs), the leader was Facebook with 3 billion, followed by YouTube with 2.5 billion and Instagram with 2 billion.
This is also where most of today’s business is done; Facebook serves as its own marketplace, charged with payment systems, marketing tools, and the ability to run advertising campaigns and other strategies. When it comes to YouTube, the trend remains there as well, in the sense that businesses and individuals can have a production team make high-quality videos to then migrate an audience to their own websites or other traffic sources, turning views into sales.
Instagram is essentially interchangeable with YouTube. The only major difference is that Instagram caters to shorter content, where businesses can make their “elevator pitches.”
This is where Meta and Google dominate the market, and Wall Street knows all about it.
As of October 2024, analysts at Pivotal Research decided to keep their Buy rating on Google stock and also placed a $225 price target on the company.
To prove these views right, the stock would have to stage a rally of up to 21.5% from where it trades today, not a common expectation for a $2.2 trillion behemoth.
Then the same applies to Meta Platforms stock, as analysts from the UBS Group also kept their Buy rating on the stock with a $719 price target as of October 2024 as well.
This view, which hasn’t changed since then from UBS, calls for up to 16% upside from today’s stock price, which already staged a one-year 86.1% rally.
Now, a new development could help these names gain even more market share: the Chinese-based platform TikTok, which has up to 1.5 billion MAUs. The United States government is back to pursuing a potential ban of the platform, stating that it is giving China access to private data and intelligence within the population.
Based on the nature of TikTok’s content, it would be safe to assume that these 1.5 billion MAUs could make their way into the next best thing, YouTube “Shorts” and Instagram “Reels,” boosting profits and reach for both Google and Meta.
These are the safe ways to play the social media space, but other high-reward market areas come from the exchange of a little bit more volatility.
High-Growth Potential: Double-Digit Upside in Emerging Social Media Platforms
The surge in active users on Reddit and Spotify, combined with emerging monetization opportunities, has prompted Wall Street analysts to issue upgrades and boost valuations for these platforms.
Even after a massive 138.1% rally over the past 12 months, Spotify stock is ready to stage another double-digit rally in the coming quarters.
At least that’s the expectation of those at Canaccord Genuity Group, which reiterated a Buy rating as of December 2024 alongside a $560 share price target.
This new boost would call for up to 19% upside from where Spotify stock trades today, a view that will probably keep an uptrend as the company delivers more quarterly expansions in user count and monetization avenues.
When it comes to Reddit, institutional investors at FMC LLC decided to boost their positions by 302.8% as of November 2024, bringing their net holdings to a high of $801.4 million today, or 6.9% ownership in the company. One reason for the buy could be the upside called for by analysts at Wells Fargo.
As of December 2024, their latest view was an Overweight rating in the stock, this time calling for a $206 share price target for the name. This positioning and view on the company would imply a net rally of up to 27.5% from where it sits today, even after an impressive 161.2% rally over the past 12 months.
Nvidia is Pivoting to Solve Big Tech's $1 Trillion Problem
Taiwan Semiconductor, a partner of Nvidia's for more than two decades, has seen its shares explode as much as 4,744%.
Now, if you're like everybody else, you want to know what Nvidia's doing next … and who they're going to partner with …
Intel Stock: A Value Play in the Quantum Computing Space
More and more market participants are becoming aware of the quantum computing trends popping up in the technology sector right now. What used to be the hot topic of artificial intelligence has now shifted into the next frontier for the industry. The capabilities and profit potential aren’t known yet, as the technology is still new.
However, one thing is certain, most – if not all – stocks dealing with supporting the future of this technology will likely see their stock prices rally significantly from where they trade today. Still, not all stocks are made equal in this niche, as names like Nvidia Co. (NASDAQ: NVDA) already trade at high premiums relative to their historical averages, so that most of the upside still due to come from supporting quantum computing might already be priced into the stock today.
Unlike Nvidia, other names in the market offer a more sensible entry into the quantum computing future, such as Alphabet Inc. (NASDAQ: GOOGL) or even Advanced Micro Devices Inc. (NASDAQ: AMD), which offer a much more attractive valuation relative to Nivida and other leaders. However, none of these stocks offer the sort of value—or catalysts—that can be found in shares of Intel Co. (NASDAQ: INTC) today, which makes it the best buy.
Intel Stock’s Exposure to Quantum Computing Can Propel it Higher
Intel is known for having one of the leading extreme ultraviolet (EUV) lithography for chipmaking. These technologies will become all the more important once the new United States administration takes office and places its announced additional curbs on technology.
These restrictions would narrow the supply of chips and semiconductors away from China and Taiwan, making the world more dependent on American-made chips. This trend will definitely help Intel, as it has been building factories across Arizona and Ohio with government funding behind it, given how important the company is to the supply chain.
When it comes to quantum computing exposure, Intel has developed its Tunnel Falls chips alongside another product line called Tangle Lake. While Google got the head start in announcing its first quantum computer, Willow, Intel will be tasked with supplying some of the chips needed to keep making such computers.
There have been signs of potential institutional accumulation in Intel from such trends, as pointed out by the volume profile in the stock showing that most of the past 12 months’ volume concentrated around the $22 to $22.50 per share range.
Apart from volume readings, investors can check the institutional ownership reports for Intel, showing those at State Street boosting their positions in Intel stock by as much as 2.8% as of November 2024, bringing their net holdings to a high of $4.6 billion or 4.6% ownership in the company.
Wall Street Anticipates Intel Stock Rally Driven by Key Catalysts and Strategic Developments
From these recent institutional positionings, or accumulations, in Intel stock, Wall Street analysts might have arrived at a few reasonable catalysts to explain what's happening behind the scenes here. One of the drivers is already clear: Chinese export curbs will prioritize American chips for markets, but there's a lot more to it.
Intel's CEO, or former CEO Pat Gelsinger, has recently stepped down from his role and suddenly retired. While this might have been a bearish point for the stock in recent weeks, the uncertainty is probably already priced in by now, considering that Intel stock now trades at only 39% of its 52-week high prices.
More than that, when the new management head is inevitably announced, the certainty will likely propel the stock higher to a more fair valuation. Even better yet, there might be a catalyst to get investors a higher price before a CEO is announced.
Another industry giant wants to buy Intel. Qualcomm Inc. (NASDAQ: QCOM) approached Intel over the past two quarters, reaching with a takeover bid. Considering where Intel trades today, acquiring the company's future expected earnings at this price would be a no-brainer.
According to Wall Street analysts, earnings are expected to swing from today's net loss per share of $0.46 to achieve net earnings per share (EPS) of up to $0.29 12 months from now. This type of swing would ultimately justify the current $30 a share consensus price targets analysts have placed on Intel stock, if not more.
With a 50% upside potential riding on its back, Intel stock still commands a forward P/E ratio of 21.4x today, which is awfully close to Nvidia, Advance Micro Devices, and others. As the market is trying to say, this means that they are willing to pay the same premium for Intel as its competitors today, despite the stock trading so cheaply.
There's always a reason behind that behavior, and connecting it with the recent accumulations can lead investors to conclude that Intel stock might be the best buy in the future of quantum computing.
Tesla's next leg up.
If you held shares of Tesla throughout 2024, you know It's been a year of extreme highs and lows…
But according to our one expert, new yearly highs are on the horizon…
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Which is why we're emailing you now…
You see, most people will simply buy shares of Tesla ahead of the election…
But as they say "There is more than one way to skin a cat"
In fact, we've found another way to play shares of Tesla.
Can SentinelOne Rebound in 2025 After CrowdStrike's Slip-Up?
In 2024, it seems to be a year of the haves and the have-nots in the cybersecurity industry. Bigger firms have tended to get bigger, while smaller ones have tended to lose value. Among eight large-cap cybersecurity stocks, including Palo Alto Networks (NASDAQ: PANW), the average 2024 return is 27% as of the Dec. 10 close. Meanwhile, within a group of four small and mid-cap stocks that includes SentinelOne (NYSE: S), shares are down an average of 17%.
So, can the smaller SentinelOne turn things around in 2025 after falling 13% in 2024? I’ll break down where exactly SentinelOne fits within the cybersecurity industry. I’ll give an overview of the company’s financial trends and its battle with a key competitor, as well as provide my overall view of SentinelOne.
Endpoint Security Is SentinelOne’s Middle Name
SentinelOne works largely in three key parts of the cybersecurity ecosystem. They are endpoint, cloud, and identity. Endpoint security protects individual devices, like cell phones and laptops, with stored data. Cloud means protecting environments where organizations store data. Users access the data remotely via endpoint devices. Identity protection means preventing unauthorized users from getting credentials. They could use these to sign into an app with sensitive data. All these areas serve as different entry points that bad actors can use to perform a cybersecurity attack. Thus, it is important to ensure that they are all protected.
The company drives the business through its Singularity Platform, which combines protection from all three vectors and uses AI to detect and respond to cyber threats. However, SentinelOne does specialize in endpoint security through its Singularity Endpoint product. SentinelOne's focus has led to partnerships with other cybersecurity firms. Users can mix and match these to meet their needs. SentinelOne's focus on endpoint security makes CrowdStrike (NASDAQ: CRWD) and Microsoft (NASDAQ: MSFT) its top rivals.
SentinelOne has been growing quickly, with over 30% growth in recent quarters, excluding the last one. It has also made continual progress in its profitability, increasing margins over time. Last quarter, its adjusted operating margin increased six basis points from the previous year to -5%.
Additionally, it achieved positive free cash flow on a trailing twelve-month basis for the first time in the company’s history. Still, it's not ideal to see that the company’s year-over-year revenue growth rates are essentially in line with CrowdStrike’s over the past two quarters. CrowdStrike’s total revenue is nearly five times higher than SentinelOne's.
Can the CrowdStrike Outage Light a Match Under SentinelOne?
One of the main hopes of SentinelOne bulls is that the company can capitalize on the well-publicized CrowdStrike outage. There is evidence that this is happening. CEO Tomer Weingarten said in the latest earnings call that the company has a "record pipeline." In Q3, it had "a record number of wins against [its] closest competitor," likely CrowdStrike.
At the same time, the impact on the company’s financials isn’t immediate. The CrowdStrike outage happened on July 19, so by the end of the company’s third quarter on October 31, it had only about three months to capture any resulting business. While Q3 earnings, released on December 4, showed 28% sales growth, this increase was lower than in previous quarters.
However, cybersecurity systems are sticky and complex, and it's not easy to change providers quickly. Thus, observers should give SentinelOne more time to prove it can really take advantage of the CrowdStrike outage. Still, the endpoint and new business segments saw accelerated growth last quarter.
The company said that customers are very focused on cost savings going into next year. The company’s industry-leading adjusted gross margin of 80% can give it an advantage here. It may have more wiggle room to compromise on price while keeping its margins high.
SentinelOne: Promising Future, But Near Term Is Uncertain
I see SentinelOne as a company on a strong, long-term path. There isn’t much to indicate the firm can’t achieve its goal of profitability soon. It has made consistent progress toward that goal. However, the comment about customer cost savings points to an overall slowdown in the cybersecurity market.
Certain measures indicate SentinelOne may be significantly undervalued compared to CrowdStrike. Its forward price-to-sales ratio is less than half that of CrowdStrike’s. Still, seeing more evidence of SentinelOne taking business from CrowdStrike is warranted. By next quarter, it should be much clearer if the company capitalized on the CrowdStrike outage.
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