There is a lot going on in the middle of the main earnings season of the year to divert investor attention from fundamentals. The frenzy over GameStop (NYSE 🙂 and similar high-short stocks is the only market situation that cannot be ignored right now.
The rally was triggered by private investors organizing on social media sites, such as Reddit, to find stocks recommending hedge funds to sell, then raising their values ??to create a short squeeze.
This so-called retail investor movement against the Wall Street establishment gained momentum last week when Tesla (NASDAQ 🙂 founder Elon Musk sparked the wave of GameStop stock by tweeting "Gamestonk !!" and a link to the WallStreetBets Reddit thread. Musk has long been demanding the SEC ban on short-selling, a practice that once damaged Tesla stock.
This campaign of social media-inspired retail investors is likely to continue to occupy markets for the next week, when many mega stocks will also reveal their final earnings. Here are the three stocks investors should be looking at as the week progresses:
1. GameStop
This is not the kind of stock that long-term investors would normally rely on. have aimed. However, the current activity around this physical video game seller has become a big indicator of a potential stock market bubble during the pandemic that has attracted an army of stay-at-home young investors in search of the next great money-making idea.
Shares of GameStop, based in Grapevine, Texas, and other heavily short-short stocks rose again Friday after Robinhood, the most popular platform for retail investors, said it resumed limited trading in previously limited securities.
Profits pushed GameStop's rally to over 400% this past week and to over 1,600% this month as an army of private investors turn each other through social media platforms and decided to enter short positions in hedge funds. creating tightness that could hurt the fund's interests. The stock closed at $ 325 on Friday with a market capitalization of $ 22.66 billion. Anyone can guess how this insane buying activity will end, but GameStop is not the stock that serious investors should consider taking a position.
The company has closed its stores because it wants to turn its business around when online games go digital. Bloomberg estimates that sales will decline by 18% this fiscal year.
2. Amazon.com
Online retail juggernaut Amazon.com (NASDAQ 🙂 is expected to report fourth quarter earnings after the market on Tuesday 2 February is closed. The consensus is that the world's most valuable e-commerce company by market cap will crush expectations based on its strong earnings momentum.
Sales are expected to increase 37% to $ 119.68 billion from the same period a year ago, generating earnings per share of $ 7.16. Amazon benefited from the shift to online shopping during the COVID-19 pandemic. A surge in sales in the fourth quarter would indicate that consumers were buying more online over the holidays, even as the pandemic continued to rage.
However, Amazon warned in October that adjustments to its operations and increased spending as a result of CPVID-19 will continue to weigh on profitability per share. Amazon shares closed at $ 3,204.40 on Friday, virtually unchanged for the past three months, after a surge since the dip in March.
3. Alphabet
Alphabet (NASDAQ :), Google's parent company, will also report fourth quarter earnings on Tuesday after the market closes. Average earnings per share are $ 15.7 on revenues of $ 52.89 billion.
Google's stock has underperformed for the past year amid concerns that the recession caused by the coronavirus will force companies to cut back on digital ad spend, harming Internet content and information beast. But the company surprised investors in October when it far exceeded analyst expectations. The stock closed at $ 1,827.36 on Friday, up about 25% over the past 12 months.
The world's largest Internet company has been trying to move away from search ads for years by investing heavily in cloud services, digital video, consumer hardware and riskier long-term betting, such as driverless cars.
With earnings uncertainty, multiple antitrust lawsuits in recent months have increased the risk of regulatory action against the company accused by public attorneys general of a monopoly in search and online advertising.
