Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
Access both platforms from your single Saxo account.
London Quick Take – 23 Oct - Tesla profits plunge, oil prices jump and meme stocks get clobbered in major speculative unwind
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
What’s going on? The fake meat company has had a torrid few years since peaking during the pandemic boom, but retail investors seem to be lining this one as a short squeeze.
Apparently sparking the move, on Monday Roundhill Investments added BYND to its Roundhill Meme Stock ETF. Adding to the momentum, on Tuesday announced increased availability of its products at Walmart.
FactSet data showed more than 63% of the shares available for trading were sold short. Retail traders appear to be targeting other stocks on the back of this move, hitting up other potential short squeeze targets.
Krispy Kreme – rallied 24% early on Wednesday before finishing the session +8%. It had been part of the summer ‘new’ meme mania and is among the 25 most shorted companies in the Russell 3000. GoPro - another of the new class of meme stocks – rallied 22% in the early part of Wednesday’s cash session in New York before winding up with a modest 5% gain. 1-800 Flowers – soared earlier this week after a tweet from an influential account talking about a potential short squeeze on a stock with c80% short interest, no debt until 2027 and “decent cash balance”. It fell by 15% yesterday.
Insanely volatile - ones to trade perhaps but not own.
Another AI deal, this time between Anthropic and Google owner Alphabet said to be worth in the high tens of billions...another circular deal as Alphabet owns 14% of Anthropic. Alphabet bucked the downtrend in tech yesterday.
Applied Digital rose after announcing a $5 billion AI factory lease from a “US based investment grade hyperscaler” at its Polaris Forge 2 campus, but ended the day lower amid the broad unwind for these types of names. AST SpaceMobile fell sharply after announcing new share issuance and plans to raise more debt. On the plus side, Intuitive Surgical leapt 14%as its Q3 earnings beat and analysts raised their price targets on the medical robotics stock.
More on Tesla earnings here.
Chart: Gold, daily, $4k key.
Key Points
- Tesla shares drop as profits slide and margins halve
- Wall Street ends lower amid broad unwind in speculative and momentum stocks
- Lloyds profits fall by a third but shares hold up
- Oil prices jump as Washington imposes sanctions on Russia's Rosneft and Lukoil
Tesla shares fell after-hours as the company’s bumper revenues failed to cover up some nasties under the bonnet. Kicking the tyres on this one is not hard – margins halved to 5.8% from 10.8% a year ago, so a 12% rise in revenues was wasted. Profits fell 29% year-on-year to $1.8bn, below expectations. Deliveries were up to a record last quarter but Tesla is not a car company anymore. Hefty investment in robotics and AI needs to prove itself sooner rather than later.
Oil shot higher as the US slapped sanctions on Russian oil majors Rosneft and Lukoil, marking a strategic shift that underlines Washington’s increasing frustration at Moscow. There was also a 19th round of EU sanctions on Russia. Brent (continuous contract) pushed up aggressively to retake the 20-day simple moving average at $65.
Trump is also considering restricting exports to China of items using U.S. software—like laptops and jet engines—due to Beijing's rare earth export curbs, Reuters reports. This proposal matches Trump's October 10 threat of 100% tariffs and controls on "critical software."
On Wall Street yesterday the major indices fell as tech took a hit on the trade war news while unwinding of some hot momentum stocks hit sentiment. The Dow Jones retreated 0.7% from its record highs while the Nasdaq slipped 0.93% and the S&P 500 was 0.53% lower. The small caps Russell 2k fell 1.45%. Disappointing earnings from Texas Instruments and Netflix weighed, while Tesla is weighing a bit on futures this morning. A big speculative stock and momentum unwind clobbered a bunch of retail stock favourites, among them nuclear energy names like Oklo and crypto names like BitMine Immersion Technologies. More on that below, and see table at the bottom.
The FTSE 100 was egged on a bit more today after it put in a strong shift on Wednesday, with broad-based gains for the larger cap names in the index delivering gain of nearly 1% for the session to take it back close to its record high. Housebuilders and Howden Joinery rallied – think a sense of front-running a major effort by the government on homebuilding as part of the Budget effort to boost the supply side. Gains for BP and Shell on oil’s advance helped lift the index higher to the tune of about 0.3% in early trade on Thursday as European indices trade broadly risk-on.
Lloyds shares were flat after reporting a 36% decline in quarterly profits as the motor finance compensation fiasco ate into earnings. Still, that is in the past (unless there are some more nasties lurking in the closet...) and Lloyds raised its outlook for net interest income.
A slew of updates on the FTSE 100 – Unilever looks positive with FY outlook unch and Rentokil jumped 9% on a 3.4% rise in organic revenue, easily ahead of forecasts as US growth topped expectations.
Gold was more than 8% off its recent high at the lows yesterday, but the rally off the key $4,000 level held and we see price action bumping around the $4,100 level this morning. Look for a retrace of the downshift to about $4,200 to signal technical consolidation rather than liquidation. The September trend line and 20-day SMA hold just, and the key $4,000 fulcrum held yesterday – the 50% retracement of the September rally. If these break down we can spy the 61.8% retracement of the September rally at $3,916 and then the 50-day line back around $3,750. (see chart below)
Speculative unwind
Quantum computing names IonQ, Rigetti and D‑Wave are in talks to give the US Commerce Department equity in exchange for funding, signaling expanded intervention by the government. One of them might make a breakthrough if they are not first swallowed by Microsoft or Google.
But the monster unwind in momentum stocks left these names all sharply lower for the session yesterday and in the after-hours market.
Lessons in vanity: Meme stocks caught some favourable winds this week before whipping up a storm. Beyond Meat shares surged for a third straight day after a parabolic rally, jumping about 1,200% or so in the last few days on huge volumes. Yesterday the stock jumped 112% at one point before – shock – tumbling to finish down 1%. It’s off another 11% in after-hours trade.
Oil shot higher as the US slapped sanctions on Russian oil majors Rosneft and Lukoil, marking a strategic shift that underlines Washington’s increasing frustration at Moscow. There was also a 19th round of EU sanctions on Russia. Brent (continuous contract) pushed up aggressively to retake the 20-day simple moving average at $65.
Trump is also considering restricting exports to China of items using U.S. software—like laptops and jet engines—due to Beijing's rare earth export curbs, Reuters reports. This proposal matches Trump's October 10 threat of 100% tariffs and controls on "critical software."
On Wall Street yesterday the major indices fell as tech took a hit on the trade war news while unwinding of some hot momentum stocks hit sentiment. The Dow Jones retreated 0.7% from its record highs while the Nasdaq slipped 0.93% and the S&P 500 was 0.53% lower. The small caps Russell 2k fell 1.45%. Disappointing earnings from Texas Instruments and Netflix weighed, while Tesla is weighing a bit on futures this morning. A big speculative stock and momentum unwind clobbered a bunch of retail stock favourites, among them nuclear energy names like Oklo and crypto names like BitMine Immersion Technologies. More on that below, and see table at the bottom.
The FTSE 100 was egged on a bit more today after it put in a strong shift on Wednesday, with broad-based gains for the larger cap names in the index delivering gain of nearly 1% for the session to take it back close to its record high. Housebuilders and Howden Joinery rallied – think a sense of front-running a major effort by the government on homebuilding as part of the Budget effort to boost the supply side. Gains for BP and Shell on oil’s advance helped lift the index higher to the tune of about 0.3% in early trade on Thursday as European indices trade broadly risk-on.
Lloyds shares were flat after reporting a 36% decline in quarterly profits as the motor finance compensation fiasco ate into earnings. Still, that is in the past (unless there are some more nasties lurking in the closet...) and Lloyds raised its outlook for net interest income.
A slew of updates on the FTSE 100 – Unilever looks positive with FY outlook unch and Rentokil jumped 9% on a 3.4% rise in organic revenue, easily ahead of forecasts as US growth topped expectations.
Gold was more than 8% off its recent high at the lows yesterday, but the rally off the key $4,000 level held and we see price action bumping around the $4,100 level this morning. Look for a retrace of the downshift to about $4,200 to signal technical consolidation rather than liquidation. The September trend line and 20-day SMA hold just, and the key $4,000 fulcrum held yesterday – the 50% retracement of the September rally. If these break down we can spy the 61.8% retracement of the September rally at $3,916 and then the 50-day line back around $3,750. (see chart below)
Speculative unwind
Quantum computing names IonQ, Rigetti and D‑Wave are in talks to give the US Commerce Department equity in exchange for funding, signaling expanded intervention by the government. One of them might make a breakthrough if they are not first swallowed by Microsoft or Google.
But the monster unwind in momentum stocks left these names all sharply lower for the session yesterday and in the after-hours market.
Lessons in vanity: Meme stocks caught some favourable winds this week before whipping up a storm. Beyond Meat shares surged for a third straight day after a parabolic rally, jumping about 1,200% or so in the last few days on huge volumes. Yesterday the stock jumped 112% at one point before – shock – tumbling to finish down 1%. It’s off another 11% in after-hours trade.
What’s going on? The fake meat company has had a torrid few years since peaking during the pandemic boom, but retail investors seem to be lining this one as a short squeeze.
Apparently sparking the move, on Monday Roundhill Investments added BYND to its Roundhill Meme Stock ETF. Adding to the momentum, on Tuesday announced increased availability of its products at Walmart.
FactSet data showed more than 63% of the shares available for trading were sold short. Retail traders appear to be targeting other stocks on the back of this move, hitting up other potential short squeeze targets.
Krispy Kreme – rallied 24% early on Wednesday before finishing the session +8%. It had been part of the summer ‘new’ meme mania and is among the 25 most shorted companies in the Russell 3000. GoPro - another of the new class of meme stocks – rallied 22% in the early part of Wednesday’s cash session in New York before winding up with a modest 5% gain. 1-800 Flowers – soared earlier this week after a tweet from an influential account talking about a potential short squeeze on a stock with c80% short interest, no debt until 2027 and “decent cash balance”. It fell by 15% yesterday.
Insanely volatile - ones to trade perhaps but not own.
Another AI deal, this time between Anthropic and Google owner Alphabet said to be worth in the high tens of billions...another circular deal as Alphabet owns 14% of Anthropic. Alphabet bucked the downtrend in tech yesterday.
Applied Digital rose after announcing a $5 billion AI factory lease from a “US based investment grade hyperscaler” at its Polaris Forge 2 campus, but ended the day lower amid the broad unwind for these types of names. AST SpaceMobile fell sharply after announcing new share issuance and plans to raise more debt. On the plus side, Intuitive Surgical leapt 14%as its Q3 earnings beat and analysts raised their price targets on the medical robotics stock.
More on Tesla earnings here.
Chart: Gold, daily, $4k key.
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