TFT #80: Oracle's Earnings Soar, Adobe Disappoints, Real Estate Faces Reckoning, and More
Hello Reader,
In this issue, we cover Oracle's remarkable earnings report, highlighting a robust resurgence, contrasted with Adobe's stumble, sparking concerns over its future trajectory. Additionally, the real estate sector encounters pivotal changes with a groundbreaking settlement poised to redefine commission practices, among other developments.
Let’s get into it.
Oracle's Stock Surges: Booming Gen2 AI Infrastructure and Optimistic Revenue Outlook Drive Investor Confidence
Oracle's ($ORCL) stock surged by 10.6% following its latest earnings report, defying previous downward trends in the last two quarters. Investors, previously apprehensive due to past performance, found reassurance in Oracle's Q3 (Feb) earnings, which boasted a decent EPS beat and in-line revenue, alongside Q4 guidance matching expectations.
The standout performer was Oracle's Remaining Performance Obligations (RPO), soaring 29% year-on-year to a record $80 billion, driven by substantial new cloud infrastructure contracts. Oracle attributed this to soaring demand for its Gen2 AI infrastructure, outpacing supply despite rapid datacenter expansions.
Long-term outlook commentary buoyed investor confidence, with Oracle anticipating accelerated revenue growth as supply constraints ease and cloud service demand intensifies. The company aims to achieve a $65 billion revenue milestone by FY26, reflecting a 6% Compound Annual Growth Rate (CAGR) from FY23.
Argus upgraded Oracle to Buy from Hold, citing management's optimistic revenue acceleration outlook into FY25 and beyond. Forecasts anticipate a 10% average EPS growth over the next two years, underscoring Oracle's resilience and potential for sustained growth.
ORCL earnings catalyzed a breakout in the stock price. Presently, there exists a significant gap that the price is poised to close, thus anticipating a retracement towards lower support zones around $119 and potentially $114. However, if the price demonstrates stability above these levels and manages to surpass the all-time high around $130, it is likely to target higher resistance levels at $132, $138, $145, and $150.
Real Estate Shake-Up: $418 Million Settlement Alters Commission Landscape
In a landmark move, the National Association of Realtors (NAR) has struck a $418 million deal to settle litigation over commission rules, potentially reshaping the American real estate market.
The agreement signifies a significant shift for homeowners and buyers, promising changes in how agents communicate about commissions, which could lead to lower fees. Analysts at William Blair anticipate that these changes could exert pressure on buyer agents, potentially driving down overall commission rates.
Under the settlement, NAR members and industry stakeholders are released from liability in multiple lawsuits challenging the industry's commission structure. Notably, offers of broker compensation on multiple listing services (MLS) will be prohibited, with compensation discussions moving off MLS platforms. Additionally, buyer agents will be required to enter into written agreements with clients starting in July 2024.
While the settlement aims to enhance transparency and consumer choice, it could disrupt real estate platforms reliant on current commission structures. Stocks of Zillow Group Inc. (ZG) and other real estate companies tumbled following the announcement, reflecting investor concerns over potential revenue impacts.
The transformative settlement underscores the evolving dynamics of the real estate sector, with ramifications for industry players and consumers alike.
Micron: Analysts Bullish as AI Exposure Fuels Optimism
Micron's ($MU) prospects brighten as analysts foresee a rebound driven by artificial intelligence (AI) exposure. Stifel upgrades Micron to Buy with a price target of $120, citing tightening DRAM supply and potential recovery into the 90s by mid-year. Analyst Brian Chin expects leverage to return for Micron, highlighting its significant profits from DRAM historically.
Citigroup raises Micron's target to a $150 price target, emphasizing its AI exposure. Analyst Christopher Danely sees Micron deserving a premium valuation, given its increasing AI presence. With AVGO and AMD experiencing a surge in multiples due to AI exposure, Danely maintains Micron as a top pick, expecting strong fiscal-second quarter results.
Micron's stock rises ahead of earnings (March 20), fueled by anticipation of growth in the AI sector. Analysts anticipate upside surprises and increased guidance fueled by robust DRAM pricing and shipments of High Bandwidth Memory, particularly with Nvidia AI systems. Despite recent fluctuations, analysts foresee potential for a bounce-back, underlining optimism surrounding Micron's AI-driven growth trajectory.
MU is currently maintaining stability above $90 and within the mid-channel range. Presently, the technical indicators suggest a bullish sentiment. Should this region persist as a support, there is potential for the price to advance and challenge upper resistance levels at $95, $98, $101, $105, $109, and $112. However, the trajectory may be influenced by the content of the earnings report scheduled for release next week on March 20.
Copper Prices Surge: Analysts Predict Record Highs by 2025
Copper ($COPX), often regarded as a barometer of global economic health, is surging to 11-month highs, defying bearish expectations. With positive economic indicators globally, including robust demand and supply disruptions, analysts anticipate a sustained upward trajectory for copper prices.
Amidst a backdrop of increasing demand for commodities and concerns over inflation, copper's recent performance stands out. Technical analysts note a strong foundation built over the past eighteen months, suggesting a potential prolonged uptrend.
Against this backdrop, analysts predict a substantial price rally for copper, with projections exceeding a 75% increase over the next two years. Factors contributing to this bullish outlook include supply disruptions and heightened demand driven by the transition to green energy.
Investors are closely monitoring the copper market, anticipating potential ramifications for inflation and broader economic trends. With supply constraints expected to persist, the race is on to meet growing demand, setting the stage for copper's ascent to record highs by 2025.
(Disclaimer: COPX is one of the stocks/ETFs we are currently trading/investing)
Adobe Stock Tumbles on Lukewarm Guidance Despite Strong Q1 Earnings
Adobe ($ADBE) witnessed a sharp decline in its stock price after posting its Q1 (Feb) earnings report, despite beating EPS estimates. The tech giant's stock plummeted by 14% as investors expressed concerns over its tepid guidance for the upcoming quarter, marking the first time it fell below $500 since late September.
While Adobe showcased impressive performance in its digital media and experience segments, with revenues surging by 12% and 10% respectively, the focus shifted to its guidance figures. Although the company reported 11% revenue growth to $5.18 billion, its Q2 revenue forecast of $5.25 billion to $5.3 billion fell short of expectations, signaling a potential slowdown in growth.
Analysts noted Adobe's cautious outlook, with concerns lingering about its ability to fully capitalize on opportunities in artificial intelligence (AI). Despite recording record revenue and harnessing AI for innovation, CEO Shantanu Narayen's announcement of a modest growth forecast failed to appease investors, prompting a significant sell-off.
With Adobe's premium valuation and pressure to demonstrate sustained growth, the company faces scrutiny until it can showcase clear momentum fueled by AI advancements.
From a technical standpoint, ADBE shares appear vulnerable, as the recent breakout downwards indicates bearish momentum. While a rebound could occur given the substantial 13% decline in a single day, sustained movement below $500, with a further breach of $480, could signal a continued downward trend. In such a scenario, we may anticipate price testing lower support levels at $457, $436, $417, and potentially reaching as low as $396.
(Disclaimer: ADBE is one of the stocks/ETFs we are currently trading/investing)
Under Armour Names Kevin Plank CEO Amid Investor Concerns
Under Armour ($UAA) has announced the appointment of Kevin Plank as its new President and CEO, effective April 1st, succeeding Stephanie Linnartz, who is stepping down. Plank, the founder of Under Armour in 1996, will transition from his role as Executive Chair of the Board to lead the company once again, while Linnartz will continue as an advisor until April 30, 2024. Concurrently, Dr. Mohamed A. El-Erian, an independent director since 2018, will assume the role of non-executive Chair of the Board.
TAG's Cristina Fernández expressed surprise at Linnartz's swift departure after just a year in the role, noting her progress in organizational transformation despite challenging market conditions. However, investors seem disconcerted by Plank's return, evident in the stock's 13% decline. While Plank's prior leadership saw impressive returns, some investors may prefer an outsider to drive a fresh perspective amidst Under Armour's struggles. Linnartz's initiatives, including organizational restructuring and enhanced focus on marketing, had shown promise, raising questions about the timing and direction of leadership changes.
Stripe's Milestone: $1 Trillion Payment Volume Highlights Strong Growth Trajectory
Stripe (not yet a publicly traded company), the payments infrastructure giant, revealed its robust financial performance in its annual letter, with its total payment volume (TPV) surpassing a monumental $1 trillion mark in 2023. This achievement, coupled with a remarkable 25% TPV increase year-on-year, underscores the company's exceptional growth trajectory.
The letter outlines Stripe's fee structure, starting at 2.9% with an additional 30-cent charge for domestic card transactions, indicating substantial revenue gains despite potential volume discounts. Moreover, the company emphasizes its cash flow positivity in 2023 and anticipates a similar outlook for 2024, diminishing the necessity for immediate capital infusion through an IPO.
Notable highlights include 100 companies processing over $1 billion annually through Stripe, affirming its ability to retain large clients. Additionally, Stripe anticipates its "Revenue and Finance Automation" offerings to achieve a $500 million annual run rate, hinting at a diversified revenue stream beyond its core payment services.
Despite a subdued venture capital landscape, Stripe notes a surge in startup formation, further solidifying its position as a key player in the entrepreneurial ecosystem. As Stripe continues to innovate and expand its offerings, its $65 billion valuation reflects its pivotal role in shaping the future of digital payments.
领英推荐
Cardlytics' First Positive EPS Since 2019 and Lucrative American Express Deal Propel Shares
Cardlytics ($CDLX) is experiencing a surge in its stock price following its Q4 financial results, marking the company's first positive non-GAAP EPS since Q4 2019. With shares up by 51% and boasting a staggering 240% growth over the past year, Cardlytics is defying market expectations.
The turnaround is attributed to a restructured cost framework and successful renegotiation of partner contracts, leading to improved profitability. In addition, Cardlytics settled a significant litigation matter with Shareholder Representative Services (SRS), removing a major overhang and further bolstering investor confidence.
Looking ahead, Cardlytics anticipates continued momentum in FY24, buoyed by a new partnership with American Express (AXP). The agreement allows Cardlytics to provide its marketing platform to AXP, enabling advertisers to target card-linked offers to specific AXP cardmembers.
While challenges persist, including a modest full-year revenue increase of 4% and a net loss of $135 million attributed to past acquisitions, Cardlytics' adjusted EBITDA improvement signals a promising trajectory toward profitability and growth. As the company eyes a 9% to 14% revenue jump in Q1 2024 and aims to breakeven on an adjusted EBITDA basis, investors are optimistic about its future prospects.
Other News You’ll Probably Like
Here Are Some SharperTrades Heat Of The Week
Here Are Some Recent Wins
Victor V.: "Yes learning a lot!" (Day Trading 101 course)
Andrea A C.: "I am learning a lot" (Understanding Options course)
Mandeep V.: "very interesting and knowledgable" (Basic Stock Option Strategies course)
Tristin B.: "This teacher is amazing" (Crypto Trading 101 course)
Ethan C.: "Great introduction into learning and mastering candlesticks" (Guide to Stock Trading course)
Remember, you CREATE your own wins!
Have any wins to share? Reply back and let me know.
That’s going to wrap up this week.
Catch you next Friday!
Cheers,
Trading Team
@SharperTrades
Also when you’re ready, here are five ways we can help you…
1. Get on top of swing trading with real-time alerts on any device here.
2. Get on top of option trading with real-time alerts on any device here.
3. Get the complete guide to crypto trading here.
4. Get in on real-time live discussions with the pros here.
5. Get the complete roadmap for successful trading here.
6. Track billionaires and institutions? Join DarkOption Flow.
Share the Knowledge
If you know someone who could benefit from this information, feel free to forward this email to them. And if they too want to receive tips and news like this every Friday, they can sign up here.
Trading Risk Disclaimer All the information shared is provided for educational purposes only. Any trades placed upon the reliance of SharperTrades, LLC, and/or DarkOption Flow are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward in trading stocks, cryptos, commodities, options, forex, and other trading securities, there is also a substantial risk of loss. All trading operations involve a high risk of losing your entire investment. You must therefore decide your own suitability to trade. Trading results can never be guaranteed. SharperTrades, LLC and DarkOption Flow are not registered as investment advisers with any federal or state regulatory agency. This is not an offer to buy or sell stocks, cryptos, forex, futures, options, commodity interests, or any other trading securities. SharperTrades, LLC and DarkOption Flow are not brokers and do not accept deposits. Purchases should not be considered deposits. The technical solution offered by the DarkOption Flow platforms is provided by a third party.