Tiny Telecom Stock Surging 200%

All eyes on Powell's speech...

Author

Adam Garcia
August 23, 2024

Good morning. It’s August 23rd, and today we’ll take a look at why Cava and Workday stocks are rallying. Plus, we’ll explore a tiny telecom stock that’s up by more than 200% in premarket trade.

Previous Close 📈

Rising Treasury yields weighed on stocks yesterday ahead of the Jackson Hole speech, with the S&P 500 dropping 0.9%, the Nasdaq Composite falling 1.7%, and the Dow losing 177 points.

Futures

Stock futures are up today as traders anticipate that Fed Chair Jerome Powell might signal an upcoming rate cut at the September meeting.

What to Watch

The major event of the day will be Fed Chair Jerome Powell’s speech at the Jackson Hole retreat, which is scheduled for 10:00 a.m.

New Home Sales for July will also come out at the same time.

A little-known biotech stock with 117X potential is about to explode. Early investors are positioning themselves for massive gains—don’t let this opportunity pass you by.

Entertainment

Anthropic Endorses California AI Bill Revisions, Citing Reduced Innovation Concerns

Anthropic, a San Francisco-based AI company backed by Amazon and Alphabet, expressed cautious support for California's revised AI regulation bill, SB 1047, stating that the benefits likely outweigh the costs.

The bill, advanced by State Senator Scott Wiener, mandates safety testing for advanced AI models and requires developers to implement a "kill switch" to deactivate AI systems if they malfunction.

In a letter to California Governor Gavin Newsom, Anthropic CEO Dario Amodei acknowledged that while there are still concerns about the bill, the revisions have significantly reduced the potential for hindering innovation in the rapidly evolving AI field.

The amended bill removed a provision for a government oversight committee, a change that appeased many tech companies, including Anthropic.

Despite the positive reception from Anthropic, other tech giants like Alphabet's Google and Meta have voiced concerns, fearing the bill could create an unfavorable environment for AI development in California.

OpenAI, another major player in the AI industry, has argued that AI regulation should be handled at the federal level to avoid legal uncertainties.

Technology

Workday Surges 11% Amid Q2 Revenue Beat and $1 Billion Buyback Plan

Workday, the human resource software provider, exceeded Wall Street’s revenue expectations for the second quarter, reporting total revenue of $2.09 billion, slightly above the anticipated $2.07 billion.

The company also announced a $1 billion stock buyback plan, which is causing its shares to surge by nearly 11% in premarket trading.

Despite a cooling labor market, corporate spending on human resources and payroll software has remained strong, particularly among small-to-medium businesses.

However, Workday's outlook was tempered by a forecasted third-quarter subscription revenue of $1.96 billion, slightly below analyst expectations of $1.97 billion, reflecting slower hiring and extended sales cycles due to higher borrowing costs and inflation.

In its post-earnings call, Workday revealed plans to accelerate margin expansion while moderating subscription revenue growth. The company raised its full-year adjusted operating margin forecast to 25.25%, up from 25%, and reported a second-quarter adjusted operating margin of 24.9%, beating the Visible Alpha consensus of 24.6%.

Restaurant

Cava's Stock Hits All-Time High as Steak Launch Drives Q2 Earnings Beat

Cava delivered impressive second-quarter results after market hours yesterday, significantly surpassing Wall Street expectations and pushing its stock to an all-time high.

The Mediterranean fast-casual chain reported a 35.2% year-over-year increase in net sales, reaching $233.5 million, well above the anticipated $219 million. Adjusted earnings per share came in at $0.17, exceeding the expected $0.13, while same-store sales surged by 14.4%, outpacing the 7.45% forecasted by analysts.

The company’s success was driven by increased foot traffic, new menu offerings such as the highly successful grilled steak launch, and a strategic expansion of new locations. CEO Brett Schulman highlighted that the steak launch exceeded expectations, positioning Cava at the intersection of consumers trading down from fine dining but trading up from fast food.

Cava’s stock is rallying by 9% in premarket trading, reaching as high as $111 per share, which set a new record. Shares have now risen 137% year-to-date, significantly outpacing both Chipotle and the S&P 500.

Looking ahead, Cava raised its fiscal 2024 guidance, expecting higher sales growth, more restaurant openings, and improved profit margins. The company plans to open between 54 and 57 new locations this year, up from the previous estimate of 50 to 54, and is targeting a restaurant-level profit margin of up to 24.7%.

As election season heats up, most traders are distracted by the media frenzy. But we’ve identified 5 stocks quietly positioning for serious growth.

These companies are securing multi-billion dollar contracts, innovating in key sectors, and thriving during times of change—regardless of who's in office.

Movers and Shakers

Sequans Communications S.A. [SQNS] - Last Close: $0.54

Sequans Communications' stock is up by nearly 200% in premarket trade today.

The stock is surging due to the announcement of a significant deal with Qualcomm, where Qualcomm will acquire Sequans' 4G IoT technology for $200 million.

This deal not only strengthens Sequans' financial position but also allows them to retain a license to continue using and developing their 4G technology while focusing on advancing their 5G products.

Additionally, Sequans reported a 60.5% sequential increase in revenue for Q2 2024, driven largely by the Qualcomm deal, along with an improved gross margin of 84%.

The substantial cash infusion from Qualcomm and the positive financial results have significantly boosted investor confidence, leading to the surge in Sequans' stock.

My Take: This is a tiny stock with an elevated implied volatility and poor fundamentals. I would suggest to keep it on your wait-and-watch list for now.

Pono Capital Two, Inc. [PTWO] - Last Close: $11.05

Pono Capital Two is surging by 20% so far today.

The stock is flying due to its strategic move to secure a deal with an investor to purchase 1.5 to 1.7 million shares of its Class A common stock.

This transaction is crucial for meeting Nasdaq’s listing requirements and ensuring the successful completion of its upcoming business combination with SBC Medical Group Holdings Incorporated.

The investor has committed to not redeem these shares and will hold them beyond the merger’s closure, indicating strong support for the deal.

My Take: The stock seems to be heading in the right direction, especially if the merger goes through. Keep this one on your radar.

Elevai Labs Inc. [ELABS] - Last Close: $0.23

Elevai Labs is up more than 40% in premarket trading.

Its subsidiary, Elevai Research Inc., announced preliminary positive research data from a study that highlights the potential of Elevai's proprietary exosome technology for skin health applications.

The data shows that Elevai's exosomes, derived from human umbilical cord stem cells (hUMSCs), are enriched with over 800 proteins associated with wound healing, immune modulation, and extracellular matrix (ECM) remodeling.

The data suggests potential for Elevai's technology to be used in medical aesthetics and broader applications.

My Take: This is a very tiny stock which does not have a great history. Exercise caution if you invest in it.

The market's recent plunge is a wake-up call—volatility is here to stay. With treasury notes hitting highs and global interest rates on the rise, your current strategy might not be enough.

It's time to leverage AI analysis to identify the best trades and prepare for the bounce back.

Everything Else

  • Baidu's robotaxi expansion has slowed, with 26% growth in the first half of 2024.

  • Australian wagering firm Tabcorp was hit with a $2.89 million fine over gambling regulation violations.

  • Nestle shares have plunged after CEO Mark Schneider’s abrupt departure.

  • Global wine output has plummeted as climate change continues to impact vineyards worldwide.

  • Uber will offer Cruise robotaxis in 2024 through a new partnership.

  • Thai renewable firm Energy Absolute received a bond extension and its stock is surging.

  • Deutsche Bank settled 60% of the Postbank claims and shares are surging by 4%.

  • Weather challenges in Chile have forced Gold Fields to reduce its annual gold production outlook.

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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