Super Micro Computer Inc.
Super Micro Computer (SMCI) stock suffered an 8% loss today as investors appear to be getting nervous ahead of NVIDIA’s earnings later this week.
Supermicro Computer is just one of many AI companies that have issued mixed earnings outlooks after their recent earnings calls.
Earlier this month, Super Micro Computer’s earning per share figures came in lighter than expected along with a revenue miss. The earnings disappointment led to a 30% decline in share value over the following six days.
Shares found support at $500, but the ensuing rally had all the markings of a “dead cat bounce”. Today, the stock broke back below $600, increasing investors fears ahead of Thursday’s earnings call from Nvidia. Those fears turned to selling that it likely to take the stock back below $500.
It appears that investors are finally asking themselves if NVIDIA’s (NVDA) expectations are indeed too high (something we covered in this morning’s Monday Morning Buzz)?
Any type of disappointment from NVIDIA’s earnings report on Thursday will likely ripple through the AI and Magnificent Seven companies in the form of panic selling ahead of the holiday weekend and into September’s first week.
As for Supermicro Computer, investors should watch the $500 for any sign of strength as the next level of long-term support for the stock lies at $425 in the form of the stock’s 20-month moving average.
SMCI shares remain long-term bullish with a target of $1,500.
Pinduoduo
Temu parent company Pinduoduo (PDD) dropped almost 30% of its value in today’s trading session as the online retail “portfolio” of companies announced mixed earnings results early this morning.
The company’s results beat their bottom line expectations while missing their revenue target for the quarter. The company also issued a gloomy guidance for their forward looking quarters.
The company’s VP of Finances stated that “revenue growth will inevitably face pressure due to intensified competition and external challenges”. Those challenges are the economic pressures that appear to be increasing in China.
The company also added that “profitability will also likely be impacted as we continue to invest resolutely.”
Shares of PDD saw multiple (3) downgrades today as Wall Street analysts fear lower prices for the tock in the face of these fundamental challenges.
Shares closed right at $100 and below the stock’s 20-month moving average today. Investors may expect some strength to provide shares a lift to $110 – the price of the current 20-month moving average – but that short rally will likely result in selling pressure targeting a move back below the round-numbered $100.
Pinduoduo shares maintain a long-term bearish outlook with a price target of $80.
e.l.f. Beauty
Shares of e.l.f. Beauty (ELF) Beauty dropped 8.6% today as the stock broke back below two critical trend lines.
More than a week ago, the beauty company fell from $190.00 down to $145.00 following a weaker than expected earnings report. That initial move took the stock below its 20 and. 200 day moving averages.
Since then, e.l.f. Beauty found support at $150.00 and managed to rally back above both those moving averages to close at $170 dollars on Friday.
That 20% rally is now at-risk of being revealed as nothing more than a “dead cat bounce”, a growing theme this earnings season.
Today’s selloff was not the result of negative headlines, but exactly the opposite as analysts from Piper issued positive comments towards the stock on Monday.
Those comments weren’t enough to settle investors fears that consumers are still slowing their purchases of discretionary items, including those sold by e.l.f..
Shares of e.l.f. Beauty remain in a long-term bull market trend as they are above their long-term 20-month moving average. That trendline currently resides at $135 and should be considered the stock’s next target price.
