As the financial world hurtles through notably disruptive times, certain stocks have emerged as central players, captivating the attention of traders and long-term investors alike approaching Monday’s market commencement.
Tesla Under the Microscope (TSLA)
Tesla (NASDAQ:TSLA) took a substantial hit this week, marred by uncertainty and instability as the company gears up for its forthcoming earnings report. The recent frigid weather led to a slew of electric vehicle (EV) owners in the Midwest witnessing their Teslas succumb to the cold, with the extreme conditions exerting undue strain on the car’s batteries, causing them to deplete at an accelerated rate. With EVs facing a heightened degree of skepticism and investor focus shifting to rivals such as Chinese firm BYD Company (OTCMKTS:BYDYY), Tesla stands poised to sustain a significant blow if its earnings fail to meet expectations next week.
As a potential precursor to a lackluster earnings performance, Elon Musk has issued an ultimatum to Tesla’s board, demanding additional control. Holding roughly 12% of the company after offloading a sizeable portion of shares to finance his Twitter/X venture, Musk, the foremost executive, finds himself without the full autonomy he desires. Citing ongoing AI and robotics initiatives at Tesla aligning with the firm’s core automotive endeavors, Musk has placed the board on notice, stating, “I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control […] unless that is the case, I would prefer to build products outside of Tesla.”
Accustomed to the drama, Tesla shareholders brace for a potentially tumultuous ride into the coming week.
Following AST SpaceMobile (ASTS)
AST SpaceMobile (NASDAQ:ASTS) experienced a significant triumph this week, though one that left retail investors perplexed as shares tumbled subsequent to the announcement. After protracting the timeline for months, ASTS unveiled a confirmed strategic investment totaling $206.5 million to propel the celestial firm’s expansion plans as it commences the rollout of its satellite-to-cell service coverage. The investment encompasses convertible notes and non-dilutive acquisitions, coupled with a slated credit withdrawal. Notably, one of ASTS’ newest financial patrons is none other than Google (NASDAQ:GOOG), (NASDAQ:GOOGL). In today’s investment climate, conglomerates like Google have grown increasingly apprehensive about channeling funds into tech startups, particularly those in pre-revenue stages such as ASTS. A nod of approval from Google solidifies ASTS as a vital contender in the space domain hereafter.
However, despite the absence of dilutive elements in the strategic investment, ASTS is embarking on a public stock offering amounting to $100 million. Although the equity offering infuses much-needed liquidity into ASTS’ coffers as it readies its commercial offerings, it dilutes the existing retail shareholders who have exhibited unwavering patience thus far.
After rallying on the initial announcement, shares tapered off post-revelation of the dilutive offering, generating a push-and-pull dynamic that is bound to be engrossing as we monitor the stock on Monday.
Eyeing Spirit Airlines (SAVE)
Spirit Airlines
After the Block: A Glimpse into the Highs and Lows of Mergers and Acquisitions
In some of this week’s top news, regulators blocked a planned merger between Spirit Airlines (NYSE:SAVE) and JetBlue Airways (NASDAQ:JBLU). The deal devastated merger arbitrage investors, who buy shares of soon-to-be-bought companies to capture the difference between market and acquisition pricing to pocket the difference. But the long-term effects of the blocked merger could prove more catastrophic for Spirit than it does for the many investors who saw their planned merger play crumble into dust.
Analysts expect that, in lieu of acquisition, Spirit’s current prospects point to bankruptcy more than any other course of action. Specifically, instead of a bankruptcy consolidation and reorganization, analysts see Spirit liquidating assets and ceasing to exist. Airline analyst Helane Becker summed up the stock’s immediate prospects, saying, “We recognize this sounds alarmist and harsh, but the reality is we believe there are limited scenarios that enable Spirit to restructure. We believe Spirit will first look for an alternative buyer, but another airline may get the same pushback.”
Spirit is pushing JetBlue’s management to challenge the block, so where the airline ends up next is anyone’s guess – making it a top stock to watch for Monday to see how the situation develops.
Spirit Airlines (SAVE) Future Uncertain Post-Merger Devastation
Echoing the “tough times for arb plays” in 2024, iRobot Corporation (NASDAQ:IRBT) shares got trimmed mightily this week as indications point to a potential block in the company’s planned Amazon (NASDAQ:AMZN) acquisition. Shares fell nearly 15% in a single day on the news, marking a nearly 40% loss since January 1st for the robotic vacuum cleaner company.
The European Union block comes from claims that the merger creates an anticompetitive landscape for other robotic vacuum cleaners. The deal’s been on the backburner since August 2022 when Amazon announced they’d buy the company for $61 per share. Since then, the company’s stock is down mightily from the planned purchase price, sitting below $25 per share today.
Realistically, we can expect legal recourse from Amazon’s acquisition team to challenge European decisions. Compared to the Spirit merger, there’s less meat behind this particular decision – but, as the battle’s already raged for years, Amazon might decide the juice isn’t worth the squeeze any longer. Still, if the deal goes through on its original terms, there’s a massive merger upside at play. That may not pan out, though, as many merger arb investors remain spooked after the SAVE fiasco unfolded.
iRobot (IRBT) Acquisition Prospects Jeopardized by EU Block
Apple’s (NASDAQ:AAPL) winning streak is untouchable, and the tech giant’s strong 2024 points to continued strength next week. A major upgrade from analysts at Bank of America reinforces Apple’s solid position going into earnings season. In the upgrade, analysts pointed to artificial intelligence and the company’s new Vision Pro headset as major growth catalysts. In turn, the upgrade included a $225 fair value revision upward, representing nearly 20% upside.
But not everyone is as bullish on Apple’s prospects, creating a bear/bull dynamic that makes Apple another exciting stock to
Apple (AAPL) Receives Bullish Upgrade from Analysts
What to Look Out for This Monday in the Stock Market
Apple Inc (AAPL)
Investors have experienced a series of downgrades of Apple Inc (AAPL) stock lately. This diminishment reflects concerns raised by Piper Sandler and Barclays about a decline in iPhone sales, thus eroding the company’s grandeur. Furthermore, the Apple Vision Pro also faces formidable competition, which could dent its sales forecast. The refusal of various content providers such as Spotify and Netflix to launch apps for the headset exacerbates the apprehensions, as Apple’s in-house apps lack the appeal upheld by media titans like Netflix, casting a pall over the stock.
Boeing Co (BA)
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Boeing Co (BA) witnessed a week of mixed fortunes. However, the announcement of a huge order of 150 Boeing 737 Max jets from Indian airliner Akasa Air prior to the weekend is causing a stir. This comes on the heels of Air India’s procurement of more than 200 Boeing planes, indicating sustained confidence in Boeing’s aircraft, notwithstanding a recent string of issues. Despite a midair occurrence involving a 737 Max raising concerns and chipping away at the company’s stock performance, investors are at a crossroads.
Although Boeing has experienced challenges in 2024, historical evidence shows that major corporations such as Boeing exhibit resilience in the face of adversity. For long-term investors, the current stock price, below pre-pandemic highs, could present an opportune entry point as they weigh their stock picks for Monday.
DraftKings Inc (DKNG)
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DraftKings Inc (DKNG) has seen a promising start to the year with a significant surge in stock value, outperforming the S&P 500. This indicates a strong likelihood of the digital gambling stock continuing its winning streak next week. Although CNBC’s Jim Cramer’s endorsement could evoke trepidation among DKNG enthusiasts, it is grounded in thorough analysis and resonates with bullish sentiments from other analysts. DraftKings’ unrivaled market share emphasizes its ascension above less competitive counterparts.
The robust tailwinds behind DraftKings establish it as a top stock to monitor come Monday.