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There May Be No Tesla Killer! Plus Amazon, Nvidia, Micron, Netflix
The good news is S&P 500 is trending higher; the bad news is it like to fall to around 2,745. It’s no big deal in the grand scheme of things. But it would seem for now we are putting higher-highs and higher-lows. That is good.
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Micron’s stock gapped higher, to only to give those gains back by day’s end. It was another perfect fill the gap scenario. The stock managed to stabilize by days end, pretty much closing at the base of the gap. Shares topped out around $63.50 at the open and the rest of the day was lower from that point on.
Could shares continue drift lower, filling the gap to around $54, sure. But the longer-term setup in the chart, for now, continues to indicate a move higher. But next week will be the real deal when the company reports results on March 22.
It wasn’t just shares of Micron that reversed today, Skyworks shares fell back to support around $112.
The overall semiconductor ETF ($SOXX) is looking a bit weak too, and I think it could be set to fall further in the coming days, perhaps to $189. Nothing huge, but that is where support lies, and that is likely where it is to fall.
Intel saw the same fill the gap type of pattern as Micron, and it likely tells us the moves today where more sector-based profit taking and less about the individual stocks.
At least somebody out there sees Roku the same way, I do. Roku is no Netflix.
Technology shares also pulled back today, with Microsoft falling below support at $95.70. I think the risk to the downside could be as much a $91. But it is too soon to tell if it was just a one-day pullback or more down days to come.
I’m beginning to get the feeling that some of these technology stocks are overextended, especially given some of the latest price target revisions. It just feels like analysts are beginning to look new ways to support their valuations and price objectives.
Yesterday, Jefferies put a $300 price target Nvidia noting the newest Steven Spielberg movie as a catalyst for virtual reality headsets. Of course, Nvidia makes the graphics processing units that used in virtual reality headsets, and of course, that means Nvidia will benefit.
I’m not even sure what this movie even is, and the rationale seems like a bit of stretch to me. It is a long path before Nvidia see any benefit. But what do I know, maybe the movie will be a big hit, and I’m going to run out and buy a VR headset. Probably not likely.
Today was Amazon’s turn, Jefferies sees the stock hitting a $1 trillion market cap by the year 2022. First off, that is about 29 percent away from today’s valuation, at its current pace, why not late 2018 or 2019? It sounds like Amazon doesn’t have much upside from here, based on that target. Second, they put a price target of $1,850 on the stock, raising it from $1,750. They noted that they see advertising revenue hitting $22 billion by 2022, up from $4 billion today. Is there any business Amazon can’t do? Or should we just model in the potential for every business line Amazon is in and they could get into, and then assume it will grow exponentially for years? $4 billion today, would need to increase to $6 billion in 2019, to $9 billion in 2020, to $13.5 billion in 2021, to $20.25 billion in 2022. That is a growth rate of 50 percent per year for four years straight! But then again, I have no idea; I’m the dummy that said Amazon was overvalued at $1,500, now it is at $1,588, nearly 6 percent higher.
Netflix pullback again, and closed today around $315. I think it could fall to roughly $295, over the short-term.
Tesla shares traded down slightly today. News came after hours, that Volkswagen secured $25 billion in battery supplies for the year 2022. Of course every time a car company announces they are going to launch an EV, it is the next Tesla killer? Why? How? There seems to be this idea, people buy Tesla’s merely because they make EVs. I guess nobody buys a Tesla just because they like how it drives, handles, or looks? It is only to save the environment, like the electricity used to power the battery pack doesn’t come from someplace on the electric grid.
Tesla must live in an EV bubble, that now Volkswagen will soon enter. Big deal. Right, cause Audi’s are crushing it with North American sales now? Audi A8 Sales down 53 percent in 2018, Audi A7 sales down 46 percent, Audi A6 down 24 percent. Audi A3 down 29 percent, Audi A4 GREW by 2 percent. Audi A5 grew by 447 percent because they sold only 637 in 2017, and that increased to 3,487 this year. The SUV segment was better with Q5 sales up 24 percent, and Q7 sales up 6 percent. But let’s face facts, Audi is not killing it now, so EV or no EV is not going to result in the next Tesla killer from Volkswagen, let alone 2022.
Just like the Chevy Bolt was a Tesla killer, right? Remember that? In 2017, Chevy sold a total of 23,297 bolts. Tesla delivered 15,200 in the fourth quarter alone. Chevy Bolt’s MRSP $36,620, Model S MSRP 74,500. Hmmm.
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Michael Kramer and the clients of Mott Capital own shares of SWKS, NFLX, TSLA
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Tags: #sp500 #technology #micron #intel #skyworks #semis #amazon #nvidia #netflix #tesla