Morning Market Feed, June 4th
We saw the return of GameStop as monday and Celsius fell around 5% while interest rates took another leg down. We also saw some economic data coming in which was a bit counter to one another and I will explain the consequences of it, so let’s dive straight into it!
- Keith Gill doubles down
You may have seen the news already, but Keith Gill, the person behind X account Roaring Kitty and DeepFuckingValue on Reddit, seems to have doubled down, to say the least. And even as I don’t want to spend too much energy on the meme stocks, this position is quite noteworthy. This is for 2 reasons, but first, let’s see the position because it consists of 5 million shares at an average price of $21.274. But besides this, the shared screenshot shows 120.000 call options at $20 which will expire on June 21st. This means a total position of $181.4 million with the options making up $65.7 million of that.
What I want to highlight here is that it is not verified that this is in fact his holding, as it is vastly larger than the capital he would have under any of his net worth estimates, but then again, the internet can’t really see into his portfolio. The second thing is the jump in the value of this trade. The options part of the trade is verified to be real due to the immense volume of the options chain, it’s simply unclear if it truly belongs to Gill. But these options multiply in value on price moves based on the premiums.
- ELF was upgraded
I have made my opinion known about the latest earnings release of ELF Beauty. But in case you missed it, I found them great, except for the guidance, which was simply bad. I do have to mention with it that ELF guides low, to beat and raise, and this is what they have always done. It does however make it difficult in an environment where all competitors seem to struggle. But going back to it, ELF Beauty didn’t get an official upgrade, what did happen is that ELF Beauty was added to a “Best-of-Breed Bison Initiative” by D.A. Davidson, as the firm recognizes a sustainable competitive moat.
I do think ELF has a unique way of marketing which helps them start with massive demand in new markets, but it is something that I am very cautious about, even as the stock is on my watchlist because we can not ignore the massive growth numbers the company posts, especially the introductions into new markets are impressive. What should be questioned is if a make-up, or cosmetics brand can really be seen as having a moat, because switching brands is so easy. The source for the article can be found here.
- Economic Data
There were two types of manufacturing PMIs, first, the S&P Global Manufacturing PMI was released which came in at 51.3 as 50.9 was expected. The number over 50 suggests growth, and under 50 a decrease in manufacturing. So this means that the manufacturing grew slightly according to this survey. But we also had the ISM manufacturing PMI. The approach is slightly different and the ISM PMI is seen as more important. With that said, the number was expected at 49.6, with the same going at the above or below 50. Economists were therefor already expecting a minor slowdown, but the the number came in at 48.7.
The issue here is that we have opposite numbers, one giving a slight increase, and the other a slight decrease. The slight decrease may increase the anticipation for rate cuts, while the slightly stronger number may anticipate rates to stay higher for longer.
For today, we are expecting JOLTs Job Openings, and be ready for this number to move the market. Investors are on their toes about the economy and looking for catalysts as we are possibly missing one at the moment. This causes markets to look like they want to roll over. The forecasted number for the Job Openings is 8.34 million, this would be the lowest number since February ‘21, but as mentioned previously JOLTs Job Openings have never been above 8 million prior to the covid crash, and following recovery. But with that said, let’s see what the number will do, and see if markets can make a renewed push higher.
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