Robinhood Rallies, DOJ Looks to Break Up Google

Author

Adam Garcia
October 09, 2024

Good morning. It's October 9th, and in today’s edition, we’ll take a look at Robinhood and Trump Media’s strong rallies yesterday, the DOJ’s possible move to break up Alphabet, and the premarket surge of Helen of Troy Limited this morning.

Previous Close 📈

Stocks rallied on Tuesday, with the Dow gaining 126 points (0.3%), the S&P 500 rising nearly 1%, and the Nasdaq Composite jumping 1.5%. Tech stocks, including NVIDIA (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO), outperformed, supported by optimism that the Federal Reserve can achieve a soft landing for the economy.

Futures

Futures are slipping slightly as investors are bracing for potential volatility with the upcoming release of Fed meeting minutes and inflation data later this week.

Gold

Gold’s bull run is gaining momentum, and this small-cap stock, trading at $0.25 per share, is ready to capitalize.

With 4 million ounces of gold confirmed at its U.S. project, plus more exploration in the works, the potential for growth is massive.

But opportunities like this don't stay unnoticed for long, and once the market catches on, this gold stock’s price could surge.

Time is of the essence—those who wait may miss out on the biggest gains.

Investors who move quickly could reap significant rewards as gold continues to break records.

What to Watch

Helen of Troy (NASDAQ: HELE) and Byrna Technologies (NASDAQ: BYRN) will announce their quarterly earnings before the market opens today.

Atlanta Fed President Raphael Bostic gave welcoming remarks at 8:00 a.m. Eastern, while Dallas Fed President Lorie Logan will speak at 9:15 a.m. Eastern.

Wholesale inventories for August will be released at 10:00 a.m. Eastern, and Chicago Fed President Austan Goolsbee will provide opening remarks at 10:30 a.m. Eastern.

The minutes from the Fed's September FOMC meeting will be published at 2:00 p.m. Eastern, and San Francisco Fed President Mary Daly will speak at 6:00 p.m. Eastern.

After the closing bell, we will have Applied Digital (NASDAQ: APLD) and Richardson Electronics (NASDAQ: RELL) reporting their results.

Investing

Robinhood Stock Soars Amid Growth in Crypto and Options Trading

Robinhood Markets, the online trading platform, saw its shares jumping as much as 10% in one session yesterday, highlighting the excitement around its strong user growth and revenue increases.

The company has seen its stock price nearly double in 2024, fueled by growing investor confidence and anticipation of its first-ever investor day on December 4.

In the past year, Robinhood has added over one million new accounts, driven by interest in high-profile stocks such as NVIDIA, Apple, and Tesla. Revenue from options trading has risen by 43%, while cryptocurrency transactions saw a staggering 161% growth in the last quarter.

The platform’s appeal to younger, tech-savvy investors and its commission-free trading model have been key to its success.

However, some analysts caution that Robinhood’s valuation, currently trading at over 34 times next year’s earnings, suggests that significant future growth is already priced in, raising concerns about sustaining this momentum.

Potential risks include the cyclical nature of retail trading and the company’s reliance on net interest income from customer cash held in sweep accounts.

Changes in interest rates and market volatility could impact Robinhood’s future performance. While the company has shown strong growth, maintaining it amid market fluctuations remains a challenge.

Technology

Google Faces Potential Breakup as DOJ Proposes Antitrust Remedies

The U.S. Department of Justice (DOJ) indicated Tuesday that it is considering the possibility of breaking up Google as part of its proposed remedies following a ruling that found the tech giant maintains a monopoly in the search market.

In a filing, the DOJ outlined potential measures to curb Google's dominance, including restrictions on its business practices and the promotion of alternative search engines.

The DOJ's suggestions include limiting Google’s agreements with companies like Apple and Samsung, which make Google the default search engine on their devices. It also proposes offering users a “choice screen” to select alternative search engines.

Additionally, the DOJ is exploring structural remedies that could involve separating Google’s products like Chrome, Android, and Play from its search operations to prevent favoritism toward its own services.

This follows an August ruling where a judge concluded that Google violated antitrust laws by maintaining its monopoly through restrictive contracts. While Google has announced plans to appeal, the DOJ's recommendations raise the possibility of far-reaching changes to the company’s business model.

Google has criticized the proposed remedies as excessive, with Vice President of Regulatory Affairs Lee-Anne Mulholland calling them "radical" and cautioning that splitting its products would harm innovation.

Judge Amit Mehta is expected to rule on the case's remedies by August 2025, though an appeal from Google could delay final outcomes for years.

Housewares

Helen of Troy Surpasses Q2 Estimates, Reaffirms Full-Year Forecast

Helen of Troy Limited, maker of consumer brand-name housewares, health and home, and beauty products, reported stronger-than-expected second-quarter earnings, pushing its shares up 10% in premarket trading.

The company posted adjusted earnings per share of $1.21, surpassing analysts' predictions of $1.04. Revenue also beat expectations, reaching $474.2 million compared to the projected $458.86 million.

Although net sales declined by 3.5% year-over-year due to weaker performance in the Beauty & Wellness segment, the Home & Outdoor division saw a modest growth of 0.8%. Gross profit margins dipped to 45.6% from 46.7%, impacted by an unfavorable product mix and rising inventory costs.

Despite the sales decline, Helen of Troy reaffirmed its full-year guidance, projecting net sales between $1.885 billion and $1.935 billion, with an adjusted EPS of $7.00-$7.50, aligning with market expectations.

CEO Noel M. Geoffroy expressed confidence in the company's "Reset and Revitalize" strategy, aimed at strengthening key brands and optimizing marketing efforts.

The company ended the quarter with $20.1 million in cash and $713.2 million in debt, positioning itself for continued growth.

Media & Entertainment

Trump Media Shares Surge Despite Leadership Departures and Legal Disputes

Trump Media’s stock surged nearly 19% on Tuesday, continuing a four-day rally—the longest since June. The stock price jumped to $21.80 per share, following a sharp increase to $22 earlier in the day, nearly 90% above its September low of $11.75. The trading volume exceeded 45 million shares, more than three times the 30-day average.

The stock’s surge follows Donald Trump’s weekend campaign rally in Pennsylvania, which drew thousands of supporters and an endorsement from Tesla CEO Elon Musk. Musk, attending the rally, voiced his support for Trump’s candidacy, stating he "must win to preserve democracy."

Despite the rally, Trump Media faces challenges, including the resignation of its COO Andrew Northwall and multiple employee departures. The company also revealed it is transferring 800,000 shares to ARC Global Investments II following a court ruling over a stock agreement breach.

Despite posting significant losses and modest revenue, Trump Media holds a market valuation exceeding $4 billion, with Trump owning 57% of the company. Analysts suggest the stock is an avenue for retail investors to express their support for Trump or bet on his election chances.

Technology

This fast-rising AI startup is already making waves, delivering ~3.5X ROI to Fortune 1000 clients and securing backing from 7,800+ investors, including tech giants like Google, Amazon, and Meta.

In just three years, the company’s valuation has soared from $5M to $85M, and the growth potential is massive.

As AI continues to transform industries, this startup is positioning itself to lead the charge, offering early investors a chance to profit from its success.

The demand for shares is increasing, and this window of opportunity won’t last long.

Movers and Shakers

WW International [WW] - Last Close: $1.16

WW International, also known as WeightWatchers, is seeing its stock rise by nearly 35% in premarket trading.

The company has introduced a new offering of an affordable weight loss medication, compounded semaglutide.

This drug, which mimics the effects of popular medications like Ozempic and Wegovy, helps control hunger and stabilize blood sugar.

Since these branded drugs are expensive and often not covered by insurance, WeightWatchers is providing a lower-cost alternative through a compound pharmacy, making it more accessible to its members.

This move aligns with the growing demand for weight-loss drugs and could attract more customers, boosting WeightWatchers' business.

My Take: Weight-loss drugs are a major growth market right now. Keep an eye on this stock for future growth.

Clearside Biomedical [CLSD] - Last Close: $1.48

Clearside Biomedical is rallying by more than 30% before the opening bell today.

The company announced positive results from its Phase 2b clinical trial for its drug, CLS-AX, which treats wet age-related macular degeneration (AMD).

The trial showed that 67% of patients did not need additional treatments for up to six months, reducing the treatment burden by 84%.

This means fewer injections are needed, which is a big improvement for patients compared to current treatments that require frequent injections.

The drug was also found to be safe, with no serious side effects reported.

My Take: CLSD is a tiny stock with elevated volatility levels. This news could be a catalyst for the stock to grow significantly. Keep this one on your radar.

Arcadium Lithium PLC [ALTM] - Last Close: $4.24

Arcadium Lithium shares have jumped 32% in premarket trading because Rio Tinto, a major mining company, announced plans to acquire it in an all-cash deal valued at $6.7 billion.

The deal offers a 90% premium to Arcadium’s stock price, meaning shareholders will get much more than the stock was previously worth.

Investors are excited because this acquisition is happening at a time when lithium prices are low, positioning Rio Tinto for significant long-term growth.

My Take: The acquisition has happened at a 90% premium, so it is possible that the stock could have further potential upside. I’d keep a close watch on this one.

Expert Stock Picks

A well-known market expert, with a history of pinpointing stocks that have gained over 1,000%, is revealing his latest recommendations for 2024.

This is a rare chance to get in early on companies that could lead the market in the coming year. With the expert’s proven track record, these picks are too good to ignore.

Want to know which stocks are poised for massive gains in 2024?

Everything Else

  • Bayer faces a setback as a U.S. court has taken up the PCB lawsuit appeal, causing its stock to plunge.

  • Strong quarterly sales from TSMC indicate continued momentum in AI hardware spending.

  • The Chinese equity rally faltered amid concerns over economic recovery and a potential false dawn.

  • Anticipation builds for an ECB rate cut as the majority of economists forecast further easing in monetary policy.

  • Boeing withdrew its latest contract offer amid the ongoing strike, leaving workers and the company in uncertainty.

  • Despite a 36% increase in electric truck deliveries, Daimler Truck's overall Q3 sales dropped 11%.

  • India's central bank held the repo rate steady at 6.50%, highlighting early signs of economic slowdown.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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