Market Update: Mixed Futures, Tesla Shareholder Vote, and Key Stock Movements
June 16, 2024
Futures Mixed
U.S. stock futures hovered around both sides of the flatline on Friday, as investors digested recent developments. The benchmark S&P 500 and the tech-heavy Nasdaq Composite closed at record highs for the fourth consecutive session on Thursday, driven by a Labor Department report showing a surprise decline in producer prices for May. This data eased some concerns about inflation, despite the Federal Reserve’s tempered outlook for interest rate cuts, now projecting only one reduction in 2024, down from the three forecasted in March.
Tesla Shareholders Approve Musk’s Pay Deal
Tesla shareholders have overwhelmingly approved CEO Elon Musk’s $56 billion compensation package and the company’s reincorporation from Delaware to Texas. Announced at an event in Texas on Thursday, the decision was significantly supported by retail investors, offsetting opposition from some institutional investors and proxy groups. Despite this approval, an ongoing appeal of a Delaware judge’s earlier ruling to void Musk’s pay package is expected to continue for months.
Adobe Lifts Annual Guidance
Adobe has raised its annual earnings guidance following better-than-expected second-quarter results, which sent its shares soaring by over 14% in extended hours trading. The company reported adjusted earnings of $4.48 per share on revenue of $5.31 billion for the three months ended May 31, surpassing analyst expectations. CEO Shantanu Narayen attributed the positive outlook to the company’s innovative AI approach and expanding customer base. Adobe now forecasts full-year earnings per share between $18.00 and $18.20, with revenue projected between $21.40 billion and $21.50 billion.
Roaring Kitty Doubles GameStop Holdings
Keith Gill, also known as “Roaring Kitty,” has seemingly doubled his holdings in GameStop, increasing his shares from 5 million to just over 9 million. This update, shared on Reddit, shows Gill now holds 2.1% of GameStop’s 426 million outstanding shares. He also no longer appears to own the 120,000 strike call options previously disclosed earlier this month.
Oil Slips but Remains on Track for Strong Week
Crude prices fell on Friday but remained on pace for their best week in over two months, with both benchmarks up more than 3%. This positive performance is driven by optimistic demand growth forecasts from OPEC and bullish summer fuel demand predictions from Goldman Sachs, despite a more bearish outlook from the International Energy Agency.
$TSLA- Goldman Sachs keeps a Neutral rating on Tesla with a $175 price target after shareholder proposals to re-approve Elon Musk’s 2018 performance award and to reincorporate in Texas both passed. The vote will help to reduce “key person risk” in the near-term, which is consistent with the move in shares on Thursday, the analyst tells investors in a research note. Moreover, the firm believes investors will expect key artificial intelligence-related projects to be a focus at Tesla, and these are an important part of the stock’s valuation multiple. Goldman points out that Tesla showed a slide yesterday implying three future new vehicles, which one likely to be a robotaxi given the company’s past commentary. Meanwhile, the Biden administration last month proposed tariff increases under Section 301 on China-made electric vehicles to 102.5% from 27.5%, which could pressure Tesla’s margins, the firm contends.$ZM- Morgan Stanley analyst Meta Marshall lowered the firm’s price target on Zoom Video to $68 from $72 and keeps an Equal Weight rating on the shares. The firm’s lower target represents a mark to market of its multiple, as the analyst notes that the multiple remains a discount to peers, but “more in-line with communication software.”
$COST- Loop Capital analyst Laura Champine raised the firm’s price target on Costco to $940 from $890 and keeps a Buy rating on the shares. The firm is more positive on the company’s growth and expense leverage potential after another round of store visits, noting that its management team is focused on value and volume, with increasing store level adjustments to maximize relevance club by club, the analyst tells investors in a research note. Costco’s core comps growth was 7% in May, above its 6% estimate, with core comp growing faster in international markets and driving the upside, the firm added.
$AAPL- Erste Group analyst Hans Engel upgraded Apple to Buy from Hold, saying the company benefits from a very high level of customer loyalty. Ongoing innovations in Mac products and high-end iPhones will lead to a continuation of Apple’s long-term growth trend, the analyst tells investors in a research note. The firm also believes artificial intelligence integration with Open AI will lead to rising software and hardware sales.
$BABA- Ant Group spent a record $2.9B on research in 2023, as the Alibaba affiliate develops its BaiLing large language model, Bloomberg’s Xinyi Luo reports, citing the company’s 2023 sustainability report.
$MSFT- Tigress Financial analyst Ivan Feinseth raised the firm’s price target on Microsoft to $550 from $475 and keeps a Buy rating on the shares. Through the ongoing integration of generative AI functionality throughout its software stack and products, Microsoft is “increasingly positioned to lead the AI revolution,” according to the analyst, who notes that the firm’s increased price target represents a potential return with dividends of over 25% from current levels.
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