In the stock market today, investors saw their first real selling pressure in several weeks. On Monday, equities hit the pause button on the current rally, with the S&P 500, Nasdaq Composite, Dow Jones Industrial Average and Russell 2000 all falling on the day.
That said, one day doesn’t make a trend. Monday’s action could just as easily be a blip on the radar amid a continued rally into 2020. It could also be the start of a larger (but healthy) correction. We won’t know until we’re down the road a bit.
But for traders and active investors, Monday’s action is a reminder to either book some gains along the way or raise stop-losses to ensure we keep as much of our gains as possible. Of course, we can also do both.
We’re in that quiet awkward period between two market holidays, where there’s not a whole lot of news or participation in the market. That said, we did see some significant moves during the day, the most significant of which came from Nio (NYSE:NIO).
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The company reported a better-than-expected quarter, losing 33 cents per share, 2 cents better than analysts had expected. Revenue of $257 million beat estimates by more than $23 million, up 25%.
Gross margins were still under pressure, but deliveries were up to 4,799, a 35% increase from the prior quarter. It was likely the outlook that sparked the rally, which at its session high, sent Nio stock higher by 100% on the day. Management expects revenue of roughly $393.2 million and vehicle deliveries of more than 8,000. If it matches those targets, it would present a 53% year-over-year gain for sales and a 66.7% sequential increase in deliveries.
Ultimately, shares ended higher by “just” 57%.
Ironically, the release of Nio’s results came on the same day that Tesla (NASDAQ:TSLA) delivered its first Model 3 units in Shanghai. Granted, it was to Tesla employees, but still, the fact that Tesla is up and running in the country before year-end is impressive.
Despite that, Tesla stock fell on the day. Was it the Nio news, the Cowen analyst note or the simple fact that Tesla stock has been borderline parabolic?
Regarding the middle catalyst — the Cowen note — the analyst says he expects Tesla to deliver 356,000 vehicles this year, missing the company’s own target of 360,000 to 400,000 units. The analyst maintains an “underperform” rating and raised his price target on the stock to $210.
That comes alongside the $4,000 2030 price target that Global Equities Research analyst Trip Chowdhry published on Monday. Tesla ultimately fell 3.6% on the day.
To little surprise, both Tesla and Nio made Monday’s Top Stock Trades column.
Movers in the Stock Market Today
Disney (NYSE:DIS) failed to rally on Monday, despite continued success with its latest Star Wars installment. The film pulled in $135 million over the five-day holiday stretch. Its total now stands at $362 million in North America. Globally, it generated $94 million during the same period, while total box office sales sit at $725 million. Investors will expect Disney to hit $1 billion (again).
On Friday, Piper Jaffray published a bullish note on Apple (NASDAQ:AAPL) due to its 5G potential. On Monday, it was Wedbush’s Dan Ives’ turn, who is a big-time bull. Ives, who has a $350 price target on the stock, said Apple will be the clear winner from 5G and named it his top 5G pick as a result.
Nike (NYSE:NKE) also received some positive coverage on Monday. Consumer Edge Research initiated coverage with an “overweight” rating and $110 price target, representing about 8% upside from current levels.
Sports Hits
NBA TV ratings are down 15% so far through the current season vs. the same period last season. That’s obviously bad news for broadcasters, which are already fighting difficult trends as consumers continue to cut the cord. Obviously injuries to key players doesn’t help, but still, the numbers are troubling at this point.
The biggest one who takes a hit? Disney, which owns ABC and ESPN, and airs a majority of games. Others include TimeWarner’s TNT station, owned by parent company AT&T (NYSE:T).
On the flip side, NFL ratings are set to rise for the second consecutive season. CNBC reported that the league will likely increase negotiations with network partners in 2020. That’s well before current agreements end in 2022. More broad than the NBA networks, NFL coverage providers include: Fox (NYSE:FOX, NYSE:FOXA), ESPN/ABC (Disney), CBS (NASDAQ:VIAC) and Comcast’s (NASDAQ:CMCSA) NBC.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long T, AAPL and DIS.