News and Views

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Nvidia Corp.’s (NVDA) stock has soared over the past few months, significantly outperforming the S&P 500 and rising by approximately 135.3% in comparison to the S&P’s gain of about 3.7%. Hedge funds and institutions were both actively buying the stock in the first quarter, resulting in this technology company being added to the WhaleWisdom WhaleIndex on May 18, 2020.

Nvidia is a multinational technology company and the inventor of the graphics processing unit (GPU), a chip that’s popular in both gaming and professional markets. The company’s product line generates graphics on everything from business workstations and personal computers to mobile devices. While Nvidia saw a dip in performance in March and early April related to the coronavirus pandemic, the company has emerged stronger and has even started to utilize its GPU technology to assist research analysis on the coronavirus.

Hedge Funds and Institutions Are Active

Nvidia has received positive attention from both hedge funds and institutions and has been added to the WhaleWisdom WhaleIndex. Hedge funds increased their aggregate 13F shares held to approximately 166.2 million from about 151.1 million. Of hedge funds, 71 created new positions, 117 added to an existing one, 39 closed out their holdings, and 107 have exited. Institutions increased their aggregate holdings to about 422.4 million from 407.5 million.

(WhaleWisdom)

Encouraging Multi-year Estimates

Analysts expect to see earnings rise over the next three years, with increases in growth from 2021 to 2023 spanning from approximately 40.7% to 20.3%. These year-over-year estimated increases could bring earnings to $9.87 per share in 2022, up from $8.15 for 2021. The company will report its second-quarter 2021 results on August 19, 2020. Analysts estimate the company earned $1.97 per share, on revenue of $3.65 billion.

Analysts See Growth Potential

Rosenblatt Securities maintains a Buy rating on Nvidia, recognizing the potential for growth in gaming and data center niches. Nvidia is actively trying to acquire control over ARM Holdings from Softbank, which may bring along opportunities to increase Nvidia’s overall value. Cowen & Co.’s analyst, Matt Ramsay, views the datacenter as Nvidia’s largest franchise, with the potential for increased revenue in 2021. Cowen maintains an Outperform rating on the stock. However, Morgan Stanley’s analyst, Joseph Moore, recently expressed some uncertainty over the deal to acquire a majority position of ARM Holdings and maintains Nvidia’s stock at a market weight position.

Favorable Outlook

The future holds promise for Nvidia, as the company continues to weather the pandemic and maintain positive momentum. With primarily favorable estimates from analysts, along with institutions and hedge funds buying, other investors have good reason to remain optimistic.

Square Makes Uphill Strides

Posted on August 3rd, 2020

Square, Inc.’s (SQ) stock has seen relatively steady growth over the past few months, after a short-term dip in price in March 2020. The payment solutions company continues upward movement on the WhaleWisdom Heatmap, despite being negatively impacted by the current coronavirus pandemic.

Square not only provides mobile payment solutions but also offers data analytics and other financial and marketing services to customers as the company appeals to many small businesses, it’s not surprising that the stock saw a dip in price in March 2020. However, despite the business challenges that the company and its customers have faced during the pandemic, the equity continues to march higher. Square has outperformed the S&P 500 in 2020, increasing by approximately 107.6% in comparison to the S&P 500’s gain of about 0.5% through late July.


Hedge Funds and Institutions Are Actively Buying

Both hedge funds and institutions were actively buying the stock in the first quarter, and as a result, it has climbed on the WhaleWisdom Heatmap to a ranking of forty-four. Looking at the first quarter activity by the top hedge funds, the aggregate 13F shares held jumped to about 109.5 million from 97.7 million, an increase of approximately 12.1%. Of the hedge funds, 43 created new positions, 59 added to existing holdings, as 45 exited the stock while 45 reduced their stake. Echoing the sentiments of hedge funds, institutions were also active. Overall, institutions increased their aggregate holdings by about 7.7% to approximately 274.7 million from 255.1 million.

 

(WhaleWisdom)

Conservative Estimates

Despite investor optimism, as Square prepares to report results on August 5th, analysts are looking for the company to have lost $0.05 per share on revenue of $1.13 billion. However, despite the expected loss, analysts predict that the company will earn $0.26 per share this year and rise nearly four-fold by 2021 to $0.97 per share.

 

(WhaleWisdom)

Analysts Have Skepticism Amid Strong Stock Performance

Cowen Inc.’s analyst, George Mihalos, downgraded Square to Market Perform from Outperform. Also, Bank of America’s analyst, Jason Kupferberg, spoke out about Square’s recent 56% rally, viewing it as hard to justify. Kupferberg called out the rally in part, due to the risk that many of Square’s small business customers could fold due to the pandemic.

Cautious Optimism

Square’s recent growth and more long-term estimates are certainly encouraging for already optimistic investors. However, the fate of many small businesses negatively impacted by the pandemic still heavily influence Square’s future. Time will tell as to whether the company’s forward momentum can continue.

Facebook Makes a Comeback Amidst Pandemic

Posted on July 27th, 2020

Facebook Inc.’s (FB) stock has risen steadily over the past four months, outperforming the S&P 500 and rising by approximately 12.4% in comparison to the S&P’s decline of about 50 basis points. Hedge Funds were actively buying the stock in the first quarter, causing this social network company’s ranking to elevate to sixteen on the WhaleWisdom Heatmap.

Facebook has encountered some lost advertising revenue in recent months due to the impact of the coronavirus pandemic on many customer businesses, as well as political drama. It appears there is still considerable interest from customers looking to stay connected with family, friends, and colleagues during a time of social distancing. Overall, the company seems to be weathering the storm.

Hedge Funds Are Active

Hedge funds were buying the shares in the first quarter, helping it to rise on the WhaleWisdom Heatmap. During the quarter, the aggregate 13F shares held by hedge funds increased to approximately 696.7 million from about 667.2 million. Of hedge funds, 70 created new positions, 230 added to existing ones, 66 exited, and 208 reduced their holdings. In slight contrast, institutions decreased their aggregate holdings to about 1.84 billion from 1.86 billion.

(WhaleWisdom)

Positive Estimates for Facebook

Analysts appear optimistic about the company’s second quarter revenue outlook on July 29. Based upon input from thirty-four analysts, year over year revenue growth for the second quarter is estimated at 2.8%, with revenue for the period climbing to approximately $17.4 billion. However, earnings are forecast to have plunged by 31.2% to $1.37 per share. JPMorgan Chase & Co.’s analyst, Doug Anmuth, has a favorable outlook for Facebook and raised the price target to $290 from $245 while maintaining an Overweight rating on the shares. Anmuth believes that online advertising spending will come back, though perhaps not quite to pre-pandemic levels. Stephen Ju of Credit Suisse Group also raised the price target for Facebook up to $305 from $258. Additionally, Baird & Co.’s analyst, Colin Sebastian, believes that Facebook will see a recovery in advertising spending; Sebastian has an Outperform rating on the stock with a $300 price target.

Favorable Outlook Ahead

Facebook demonstrated true upward momentum over the past four months, following a rocky start to the calendar year 2020, related primarily to the impact of the pandemic on its advertising revenue. Though there may still be both peaks and valleys ahead for the social media giant, analysts’ estimates are favorable, and investors have good reason to remain optimistic about the equity.

Booking Begins a Steady Recovery

Posted on July 20th, 2020

Booking Holdings, Inc. (BKNG) has traveled along a rocky path in 2020. However, despite being deeply impacted by the coronavirus pandemic’s whirlwind, the online travel company was added to the WhaleWisdom Whale Index on May 18, though not yet on the WhaleWisdom Heatmap.

Booking owns and operates several travel fare search engines, providing customers with deals on everything from hotel rooms and car rentals to airline tickets. Booking is often known for its namesake, Booking.com, but it operates several other businesses such as Priceline.com and OpenTable.

 

Hedge Funds Are Buying

Booking appears to have faced the pandemic’s interference with the hospitality and travel industries head-on and is on track to ride out the storm. Hedge Funds were actively buying the stock in the first quarter, and the aggregate 13F shares held by hedge funds increased to approximately 14.1 million from 13.1 million, an increase of about 8.1%. Overall, for hedge funds, 56 created new positions, 88 added to existing holdings, 61 closed exited, and 96 reduced their position. In contrast, Institutions decreased their aggregate holdings by about 0.6% to 37.6 million from 37.9 million.

(WhaleWisdom)

Positive Estimates

Analysts expect to see an initial decline in revenue for 2020, but also anticipate a three-year positive trend to follow, beginning with year over year growth of about 66.2% for 2021. These year-over-year estimate increases could bring growth to over $16 billion in revenue and earnings per share at $129.86 by the end of 2023, up considerably from its forecasted value of $14.37 by the end of 2020.

Amidst the Current Clouds, Analysts Predict Sunny Skies Ahead

Morgan Stanley’s analyst, Brian Nowak, has a favorable outlook for Booking’s stock and raised the company’s price target to $1,560 from $1,030. BTIG Investment Banking’s analyst, Jake Fuller, cited a consensus calling for a V-shaped recovery and gave Booking a Neutral rating. Wedbush Securities’ analyst, James Hardiman, also has a Neutral rating on Booking and predicts that the company will recover into a stronger position over the next few years.

Optimism Beyond 2020

While 2020 has had its share of tough months for Booking, analysts are optimistic about the future. Customer demand for travel and restaurant dining will return, and while the pace may be slow, it seems inevitable that the use of Bookings’ various reservation tools will occur. Booking has gained some upward traction in recent months and holds promise beyond 2020 for patient investors.

Baidu Takes a Positive Turn in 2020

Posted on July 13th, 2020

Baidu, Inc.’s (BIDU) stock has rebounded in recent months after a rocky start to 2020. The Chinese technology company was recently added to the WhaleWisdom Whale Index. Though not on the WhaleWisdom Heatmap, Baidu’s increasing profits and addition to the Index may indicate a potential turn around for the technology company.

Baidu is a leading Chinese technology company specializing in internet search services and one of the largest providers of artificial intelligence (AI) products in the world. The company appears to have faced and moved beyond the negative impact of China’s economic slowdown and other business challenges related to the coronavirus outbreak. The pandemic also places unique opportunities for the company as industries such as healthcare may be seeking out AI to streamline processes.

Mixed Results from Hedge Funds and Institutions

Baidu has caught the attention of hedge fund managers. Looking at first quarter activity by the top hedge funds, the aggregate 13F shares held improved to about 73.9 million from 73.5 million, an increase of approximately 0.6%. Of the hedge funds, 21 created new positions, 51 added to an existing holding, 37 exited, and 56 reduced their stake. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 1.1%, to approximately 183.3 million from 185.2 million.

(Whale Wisdom)

Positive Multi-year Estimates

Analysts expect to see earnings initially fall in 2020, but also anticipate a rise in 2021 and 2022 of approximately 28.1% and 21.3%, respectively. These significant year-over-year estimated increases would bring earnings to $10.23 per share in 2022, up from $6.59 for 2020.

 

Favorable Forecasts

With Baidu’s July announcement that it will construct new infrastructure for a future smart economy, excitement builds, and Baidu is seen as a significant driver for China’s future economic development. Baidu plans to increase investments in areas such as cloud computing, AI, blockchain, and data centers. Even more impressive is that under the new infrastructure, Baidu has set the goal of five million intelligent cloud servers by 2030, with about five million trained AI professionals supporting them.

Mizuho Financial Group’s analyst, James Lee, has a favorable outlook for Baidu’s stock, likely recognizing that the demand for internet, cloud computing, and AI technology continues to be high. Lee maintains a buy rating on shares with a $175 price target.

Positive Outlook

Baidu’s recent profit growth and future estimates are certainly encouraging for investors, especially after a rough start to the year. Baidu also appears well-positioned to act upon new demand for its technology, though time will tell as to whether the forward momentum continues.