By Philip van Doorn
Also: competition in the EV space, meme stocks, inflation, retirement planning and crypto coverage
Corporate-earnings season has just begun, and the fourth-quarter results that will pour in over the next two weeks could be critically important for investors, as Tomi Kilgore explains.
Mark Hulbert looks at an important trend that hopefully won’t reverse this earnings season.
More coverage as earnings season begins:
EV market in flux
Tesla (TSLA) is making moves to maintain its leading market share for electric vehicles. The company’s fourth-quarter discounting was announced as a temporary move to improve sales when prospective buyers were likely to wait until 2023 for new federal tax credits to kick in. But now Tesla has started a new round of price cuts of up to 20% on Model 3 and Model Y cars.
Claudia Assis takes a closer look at what the price cuts might mean for Tesla’s financial performance.
More coverage of developments in the EV market:
Meme stocks heat up again
For those of you who thought the meme-stock craze might have ended when the long bull market fizzled early last year, the wild action continues. Consider Bed Bath and Beyond (BBBY): The company may file for bankruptcy, but its share price has risen 88% this year.
According to the latest information available from FactSet, half of the Bed Bath & Beyond shares available for trading have been sold short. Such a high percentage of traders betting on the share price falling has set up a short squeeze — a scramble to buy the stock to cover their short positions, which sends the shares soaring.
In his daily email to clients on Jan. 13, Matthew Tuttle of Tuttle Capital Management wrote that people who had made money shorting stocks during 2022 were getting cold feet and that the “piling into meme stocks” was a bullish sign for the market overall. He then added a note of caution in light of the Federal Reserve’s tightening of monetary policy to fight inflation.
Here are six popular meme stocks sorted by percentage sold short, showing price changes for three periods through Jan. 12:
Company Ticker Short interest/ percentage of float 2023 price change 2022 price change Price change from end of 2021 Carvana Co. Class A CVNA 58% 69% -98% -97% Bed Bath & Beyond Inc. BBBY 50% 109% -83% -64% Beyond Meat Inc. BYND 40% 34% -81% -75% Coinbase Global, Inc. Class A COIN 27% 34% -86% -81% GameStop Corp. Class A GME 23% 12% -50% -44% AMC Entertainment Holdings Inc. Class A AMC 22% 23% -85% -82% Source: FactSet
Despite the impressive returns for the first half of January, the longer-term numbers show what losers these stocks have been. Jumping on a heavily shorted stock hoping for a quick gain requires excellent timing.
Inflation is not cool, but it is cooling
U.S. consumer prices fell 0.1% in December from the previous month — their first sequential decline since 2020.
This set up expectations that the Fed will further slow its interest-rate increases on Feb. 1.
Then again, some investors were disappointed with the data, and prices of certain food items are expected to continue to soar.
Here’s an investment idea for a continuing high-inflation environment in 2023.
A slowing real-estate market and a bounceback play
Real-estate transaction volumes shrank dramatically from their record 2021 levels as the Fed raised interest rates in 2022.
During any housing-related slowdown, investors will send shares of home builders lower. Last year, the S&P Composite 1500 home-building industry group fell by a weighted 24%, with dividends reinvested, according to FactSet. But so far this year, this group of stocks has risen 9.6%. Here’s why these stocks may have more room to run.
More housing and related coverage:
Crypto world keeps spinning
In this week’s Distributed Ledger column, Frances Yue rounds up events in the world of virtual currencies, including the effect of inflation on bitcoin’s price and the inability of Sam Bankman-Fried to follow his lawyers’ advice and keep quiet.
Do you have a retirement account? Here’s when the IRS wants to get paid.
Regulations for retirement-account withdrawals, deadlines and penalties have been changing, and you may well be affected. Here are the new rules and here’s advice about what to do if you have forgotten to take your required minimum distribution.
More on retirement saving and planning:
Speaking of the IRS — did you neglect to file?
Andrew Keshner writes the Tax Guy column. This week, he helps a reader who didn’t report noncompensation income for 2019. Here’s how to correct a nonfiling mistake with the IRS and limit the pain.
Don’t steal the government’s money
Lukas I. Alpert writes the Financial Crime column. Here’s the story of a man who misused millions of dollars of federal COVID-19 aid and received harsh punishment.
Read on:Holy high rollers — prosecutors take down phony pastors who targeted immigrants in $28 million Ponzi scheme
The next big tech wave may be AI
You may have heard of OpenAI’s ChatGPT, and you can try the technology yourself here. The initial rollout of this new artificial-intelligence technology has been so successful that Microsoft (MSFT) is considering a new $10 billion investment in OpenAI, according to a Bloomberg report, after providing $1 billion in seed money in 2019.
Jurica Dujmovic reports on how Google might make use of similar technology to overhaul its search engine and on how AI is changing the way movies are made.
More tech news:
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-Philip van Doorn
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