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by Steven Magallanes
Wednesday, June 5, 2024
π¦ GitLab’s Weak Results Were Priced In; Time to Buy the Dip?
GitLab’s (NASDAQ: GTLB) post-release plunge was not as large as it could have been, but the weaknesses were already priced in. The stock price fell 15% the week before after results from MongoDB (NASDAQ: MDB) and UiPath (NYSE: PATH) undercut the outlook for AI and IT spending this year. The takeaways, however, are that the tech sector is growing, albeit at a less robust pace than prior forecasts, and AI is leading the technology industry, setting these businesses up for long-term success. GitLab Had a Solid Quarter, Guides for Growth GitLab had a solid quarter with revenue of $169.2 million, growing more than 33% YoY and outpacing the consensus by 180 basis points. .
Equity markets advanced to set a new high on renewed hopes the FOMC would cut rates this year. The ADP report spurred the hope, which was weaker than expected. The caveat for traders and investors is that at 152,000, the ADP report aligns with economic growth, if not robust labor market conditions, and it is unlikely that the FOMC will move to act. At best, the Fed will continue with policy as-is and wait and see what happens next.
The FOMC meets in less than one week and will dictate the next market move. The FOMC is unlikely to make a rate cut at this meeting but may indicate the timing of the first cut. The risk for the market is that the FOMC will keep a hawkish tone and may even indicate a willingness to hike rates if needed. In that scenario, the S&P 500 can continue to rise as earnings grow. When the earnings growth stops, expect the market to crash.
GitLab’s (NASDAQ: GTLB) post-release plunge was not as large as it could have been, but the weaknesses were already priced in. The stock price fell 15% the week before after results from MongoDB (NASDAQ: MDB) and UiPath (NYSE: PATH) undercut the outlook for AI and IT spending this year. The takeaways, however, are that the tech sector is growing, albeit at a less robust pace than prior forecasts, and AI is leading the technology industry, setting these businesses up for long-term success. GitLab Had a Solid Quarter, Guides for Growth GitLab had a solid quarter with revenue of $169.2 million, growing more than 33% YoY and outpacing the consensus by 180 basis points.
Nvidia's stock price has more than doubled this year after more than tripling in 2023 and it's now the third most valuable company in the S&P 500. Nvidia's stock rose again Wednesday to surpass $3 trillion in market value.The company is also about to undergo a stock split that will give each of its investors nine additional shares for every one that they already own.The chipmaker has seen soaring demand for its semiconductors, which are used to power artificial intelligence applications. The company's revenue more than tripled in the latest quarter from the same period a year earlier. Nvidia, which has positioned itself as one of the most prominent players in AI, has been producing some eye-popping numbers.
Tesla’s (NASDAQ: TSLA) stock is under pressure and at risk of a deep implosion. The company’s high valuation alone makes it a target, and there are many risks for investors. Among them is the upcoming vote on CEO Elon Musk’s compensation package and a sluggish EV market. EV sales are slowing globally and significantly impact current operations and plans. The takeaway is that Tesla is amid a major turnaround, focused on the future, while faced with near-term obstacles that could derail the market and send the stock price down by 25% or more. The Future of Elon Musk’s AI Dreams Are in the Balance Tesla shareholders face a critical vote on June 13th. Elon Musk’s $56 billion controversial pay package is among the items for approval.
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Discount retailer Dollar Tree says it's looking at strategic options for the Family Dollar stores that it owns, including a possible sale of the segment.Dollar Tree said Wednesday that alternatives also include a spinoff or other disposition of the business.Dollar Tree acquired Family Dollar nearly a decade ago for more than $8 billion after a bidding war with rival Dollar General.But the company has had difficulty incorporating Family Dollar into its business and recently announced that it would close nearly 1,000 stores, with most of them being Family Dollar locations.Last year Dollar Tree launched a comprehensive review of Family Dollar, which included the planned closure of about 970 underperforming Family Dollar locations.
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