OP Wire 4/24 (OP – Lite)

U.S. Stock Futures Rise Ahead of Key Tech Earnings

U.S. stock futures edged mostly higher on Wednesday as investors braced for a flurry of earnings reports from major technology companies and digested a mix of corporate updates. In the previous session, market sentiment was bolstered by robust performances from chipmaking stocks like Nvidia and Micron Technology, as well as a landmark achievement from streaming giant Spotify, which reported its first-ever quarterly profit exceeding one billion dollars.

Aerospace conglomerate GE Aerospace and life sciences firm Danaher also contributed to the positive market sentiment after raising their full-year earnings projections and surpassing Wall Street estimates, respectively. However, budget airline JetBlue saw its shares plummet by over 18% following a downward revision to its annual revenue forecast.

Overall, the equities market found support from tepid U.S. business activity data for April, fueling optimism that the American economy may be gradually slowing down, potentially alleviating inflationary pressures.

Tesla Sparks Excitement with Accelerated Timeline for Affordable Models

Tesla grabbed headlines as it announced an accelerated timeline for the release of “more affordable” versions of its electric cars, propelling its shares higher in premarket trading. Despite reporting first-quarter results below Wall Street estimates, Tesla’s move to expedite the launch of new models ahead of schedule injected optimism among investors. The company’s decision to include a cheaper model in its upcoming lineup marked a significant development, especially amid concerns about flagging consumer demand and intensifying competition in the EV market.

Meanwhile, mega-cap companies such as Meta Platforms, Microsoft, and Alphabet are set to unveil their latest quarterly earnings reports, adding to the market’s anticipation and intrigue.

U.S. Senate Approves TikTok Divestment-or-Ban Bill

In a significant development, the U.S. Senate voted in favor of a bill that could lead to the ban of TikTok in the United States if its Chinese owner ByteDance fails to divest the app within the next nine months to a year. The legislation, already passed by the U.S. House of Representatives, is poised to be signed into law by President Joe Biden. With TikTok boasting over 170 million users in the U.S., the move reflects growing concerns over data privacy and national security implications associated with its Chinese ownership.

Despite TikTok’s assurances regarding user data protection, the impending ban has sparked debates over government control of social media platforms, with stakeholders expressing concerns about setting alarming precedents.

Oil Prices Rise Amid Economic Data Focus

In European trade, oil prices climbed higher as market focus shifted from geopolitical tensions in the Middle East to upcoming economic indicators and interest rate cues. Data from the American Petroleum Institute revealing a draw in U.S. oil inventories further supported prices, indicating potential tightening in U.S. markets ahead of the summer season. Official inventory data due later in the day is anticipated to provide further insights into market trends and dynamics.

$SPOT- JPMorgan raised the firm’s price target on Spotify to $365 from $320 and keeps an Overweight rating on the shares. The analyst says the company’ “Year of Monetization” started off with strong execution in Q1. Gross margin strength is being driven by Music and Marketplace gains, Podcast improvement and Advertising, with additional cost efficiencies helping to drive significant operating income growth and meaningfully higher free cash flow in 2024, the analyst tells investors in a research note. The firm says that as Spotify continues to add more value to the product offering, pricing will become an increasingly important revenue driver. JPMorgan is confident in the company’s ability to accelerate revenue growth while meaningfully increasing profitability, and believes Spotify maintains long-term pricing power.

$DASH- Jefferies analyst John Colantuoni raised the firm’s price target on DoorDash to $151 from $140 and keeps a Buy rating on the shares. The firm believes DoorDash’s guided FY24 GOV/EBITDA conservatively, leaving room to raise numbers throughout the year, the analyst tells investors in a preview note for the U.S. Internet group.$BA- The company said it’s “Undertaking comprehensive actions in our commercial business to strengthen quality and safety.”

$TSLA- Roth MKM analyst Craig Irwin keeps a Neutral rating and $85 price target on Tesla after its Q1 earnings miss while noting that the stock’s valuation now looks “even more stretched”. The company has shifted the focus to a pull-forward in low-cost vehicle production to as early as late-2024, vs. prior expectation of the second half of 2025, noting that it will use existing production lines and believes the new vehicles will allow for annual production of around 3M vehicles before additional capex, the analyst tells investors in a research note. The planned unveiling of RoboTaxi at the August 8th Analyst Day could also backfile, with the management continuing to talk up autonomy in spite of the “too slow” progress, the firm added.

$AAPL- Apple saw sales of its iPhones fall 19.1% in the first three months of the year, CNBC’s Ryan Browne reports, citing data from Counterpoint Research. Meanwhile, Huawei saw a 69.7% surge in smartphone sales in the country during the same period, Counterpoint said.

Hey OP…. BABA, AAPL, and DIS all paid yesterday. Today will be interesting in TSLA. I’ll be looking to short pop. See you all in chat 

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