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Mullen Automotive stock has imploded: can MULN recover?

Mullen Automotive (MULN) stock price has crashed this year, as concerns about the company remained. It has plummeted by 99% this year, making it one of the worst-performing companies in Wall Street. 

This crash has brought its market cap to just $13 million, much less than the $240 million it spent buying Electric Last Mile Solutions (ELMS) and the $148 million it bought Bollinger Motors in 2022. 

Tesla wannabe in trouble

Mullen Automotive is one of the companies that sought to become a big competitor to other EV companies like Tesla.

However, like other similar companies, Mullen’s business has struggled, and odds of it filing for bankruptcy are rising.

Tesla’s success has meant that building an EV company from scratch is one of the toughest things. Tesla itself almost imploded several times before it became a profitable company. 

The same is happening with other EV companies. For example, Rivian, an Amazon-backed EV company has lost billions of dollars in the past few years, and was recently bailed out by Volkswagen. 

Lucid Group has also been a cash incinerator in the past few years. It has remained in business mostly because of the funding from Saudi Arabia. 

Other EV companies like Fisker and Lordstown Motors have not been lucky as their cash ran out pushing them to file for bankruptcy.

Mullen Automotive, could, unfortunately, join the club as its business continues to experience major challenges. 

MULN’s bankruptcy risks remain

The most recent results showed that the company had a net loss of over $326 million in the nine months to June 30. While that was a steep loss, it was a big improvement from the $806 million it lost in the same period last year. 

Notably, the company did not record any revenue for the first nine months of the year, an odd situation since it started deliveries last year.

Instead, Mullen Automotive said that it has invoiced its customers for 377 vehicles valued at about $16.8 million. It then deferred the revenue and accounts until the invoices are cleared and the return provision on the vehicles is nullified by the dealer. I believe that this is a big red flag for Mullen. 

Mullen Automotive ended the last quarter with over $3.5 million in cash and equivalents, down from over $155 million in the same period last year. Its restricted cash dropped from $429k to $414k in the same period. 

Therefore, its balance sheet makes it clear that Mullen does not have the funds it needs to continue its operations since it is losing millions of dollars.

The company is pegging its hopes on a $250 million funding commitment from a group of investors. It has received about $50 million, while $150 million of these funds will be pursuant to an equity line of credit. Mullen also received a commitment from an investor for $100 million in financing.

Still, it is still unclear whether these funds will come. And if they did, Mullen still needs much more money, which explains why the stock has crashed to a record low. 

Mullen Automotive stock price analysis

MULN chart by TradingView

The daily chart shows that the MULN share price has been in a freefall this year, and is trading at $1.58. It has remained below all moving averages, while the Average True Range (ATR) has moved flatlined. The ATR is a popular indicator used to measure volatility in the stock market.

Therefore, the path of the least resistance for the Mullen Automotive stock price is bearish, with the next point to watch being at $1. Our base case is where the company files for bankruptcy in the long term as its

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Canoo stock price: Is GOEV a good contrarian buy?

Canoo stock price has imploded, costing long-term investors millions of dollars over time. GOEV shares plunged by over 24% on Friday after it unveiled another round of furloughs as odds of survival remained slim. It has crashed by over 97% this year, bringing its market cap to over $13 million. 

GOEV bankruptcy risks remain

Canoo is a Tesla wannabe that aims to be a big player in the electric vehicle industry. Over time, the company has engineered several vehicles and received orders worth over $3 billion from organizations like NASA and Walmart. 

Canoo’s main difference from Tesla is that its vehicles target businesses, especially those that require last mile delivery solutions. This is a big market as these companies implement transition strategies from internal combustion engines (ICE). 

The company has made a lot of progress in the past few months. For one, it received a special economic zone from Oklahoma state and acquired some manufacturing equipment from Arrival, another Tesla wannabe that collapsed.

The challenge, however, is that Canoo has been a cash incinerator in the past few years. In this, it has lost millions of dollars during the research and development as many other EV companies have done in the past.

There are signs that the company’s end times are nearing as it continued to furlough more staff. In an SEC filing, the company said that it would furlough another ten employees, bringing the total to 50 workers. It is doing that to save its already low finances. 

There are significant risks that Canoo will ultimately file for bankruptcy or sell its business to another manufacturer. Other Tesla wannabes like Fisker Automotive and Lordstown Motors have already done that. 

Read more: Canoo stock analysis: the end is nearing for GOEV

Canoo balance sheet problems

The main reason why Canoo may file for bankruptcy is that it does not have adequate cash on its balance sheet. The most recent results showed that it had just $1.5 million in cash and equivalents. It also had about $3.9 million in restricted cash and $9.9 million in inventories.

These are significantly low numbers for a company that is burning substantial sums of money. Its last quarter results showed that its revenue was just $891,000, while its loss from operations rose to over $59.19 million. Its diluted loss per share was about 31 cents.

Its nine-month loss was over $112 million, an improvement from the $273 million it lost in the same period last year. 

Most EV companies, including companies like Rivian and Lucid are incinerating cash. The difference between them and Canoo is that they have access to capital. Rivian raised cash from Volkswagen, while Lucid is backed by Saudi Arabia, a country with “unlimited” sums of money.

Also, these companies have equity to sell. In Canoo’s case, its equity value has crashed to just $13 million, meaning that it has limited room to raise cash. Canoo has already diluted its shareholders as the number of outstanding shares has risen from 1.3 million in 2019 to 87 million today.

Canoo stock price analysis

GOEV chart by TradingView

The weekly chart shows that the GOEV stock price has been in a strong bearish trend in the past few months. It has now collapsed to a record low, a trend that may continue in the coming months.

The stock has dropped below the important support level at $1.20, its lowest level in March last year. It has also moved below the 50-week and 100-week moving averages, while the Relative Strength Index (RSI) and the MACD indicators have pointed downwards.

Therefore, the stock will likely continue falling, with the next point to watch being at $0.10. The risk, however, is that the stock could go through a short squeeze because of its high short interest.

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Mullen Automotive stock has imploded: can MULN recover?

Mullen Automotive (MULN) stock price has crashed this year, as concerns about the company remained. It has plummeted by 99% this year, making it one of the worst-performing companies in Wall Street. 

This crash has brought its market cap to just $13 million, much less than the $240 million it spent buying Electric Last Mile Solutions (ELMS) and the $148 million it bought Bollinger Motors in 2022. 

Tesla wannabe in trouble

Mullen Automotive is one of the companies that sought to become a big competitor to other EV companies like Tesla.

However, like other similar companies, Mullen’s business has struggled, and odds of it filing for bankruptcy are rising.

Tesla’s success has meant that building an EV company from scratch is one of the toughest things. Tesla itself almost imploded several times before it became a profitable company. 

The same is happening with other EV companies. For example, Rivian, an Amazon-backed EV company has lost billions of dollars in the past few years, and was recently bailed out by Volkswagen. 

Lucid Group has also been a cash incinerator in the past few years. It has remained in business mostly because of the funding from Saudi Arabia. 

Other EV companies like Fisker and Lordstown Motors have not been lucky as their cash ran out pushing them to file for bankruptcy.

Mullen Automotive, could, unfortunately, join the club as its business continues to experience major challenges. 

MULN’s bankruptcy risks remain

The most recent results showed that the company had a net loss of over $326 million in the nine months to June 30. While that was a steep loss, it was a big improvement from the $806 million it lost in the same period last year. 

Notably, the company did not record any revenue for the first nine months of the year, an odd situation since it started deliveries last year.

Instead, Mullen Automotive said that it has invoiced its customers for 377 vehicles valued at about $16.8 million. It then deferred the revenue and accounts until the invoices are cleared and the return provision on the vehicles is nullified by the dealer. I believe that this is a big red flag for Mullen. 

Mullen Automotive ended the last quarter with over $3.5 million in cash and equivalents, down from over $155 million in the same period last year. Its restricted cash dropped from $429k to $414k in the same period. 

Therefore, its balance sheet makes it clear that Mullen does not have the funds it needs to continue its operations since it is losing millions of dollars.

The company is pegging its hopes on a $250 million funding commitment from a group of investors. It has received about $50 million, while $150 million of these funds will be pursuant to an equity line of credit. Mullen also received a commitment from an investor for $100 million in financing.

Still, it is still unclear whether these funds will come. And if they did, Mullen still needs much more money, which explains why the stock has crashed to a record low. 

Mullen Automotive stock price analysis

MULN chart by TradingView

The daily chart shows that the MULN share price has been in a freefall this year, and is trading at $1.58. It has remained below all moving averages, while the Average True Range (ATR) has moved flatlined. The ATR is a popular indicator used to measure volatility in the stock market.

Therefore, the path of the least resistance for the Mullen Automotive stock price is bearish, with the next point to watch being at $1. Our base case is where the company files for bankruptcy in the long term as its

The post Mullen Automotive stock has imploded: can MULN recover? appeared first on Invezz

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3 Tesla wannabe companies that may not survive the EV race

Electric vehicle stocks have diverged this year. On the one hand, we have Tesla whose shares have surged to a record high, giving it a market cap of over $1.4 trillion, and making it the eighth-biggest company in the world. 

Many EV companies, on the other hand, have imploded, with most of them fighting for survival. Some, like Fisker, Proterra, ELMS, Bollinger, and Lordstown Motors, have already filed for bankruptcy. Here are some top EV companies that could file for bankruptcy in the near term as their cash runs out. 

Faraday Future (FFIE)

Faraday Future is one of the top EV companies that may not survive for so long after spending $3 billion in capital in the last few years. 

The most recent results showed that the company’s business continued losing millions of dollars. Its revenue in the last quarter came in at $9 million, while its net loss came in at over $77 million. The nine-month loss was over $234 million.

Therefore, a company losing all this money can only survive if it has a solid balance sheet. Unfortunately, Faraday does not have this luxury, since it ended the last quarter with about $79 million in current assets. Its cash and restricted cash stood at $7.3 million. 

Faraday Future has secured $30 million financing, which will not be enough to fund its most ambitious plans. For example, it is working to launch mass-market vehicles priced at between $20,000 and $50,000. 

Therefore, there is a likelihood that the company will run out of money soon as its business continues. This explains why the Faraday Future stock price has crashed by over 95% this year.

Canoo (GOEV)

Canoo is another vulnerable EV stock that may not be around for so long. Like Faraday, the Canoo stock price has crashed by over 97% this year, bringing its market value to about $13 million. 

Canoo has a large market opportunity, which explains why it has received orders worth over $3 billion from companies like Walmart, NASA, and USPS. The challenge, however, is that the company is running out of cash and is already furloughing employees. 

The most recent results showed that the company had just $5.7 million in cash and short-term investments. These are tiny numbers for a company that is still losing substantial sums of money for all vehicles it sells. 

Mullen Automotive (MULN)

Mullen Automotive stock price has crashed by over 90% this year, dropping its valuation to about $13 million. Its market cap is significantly smaller than what it spent in acquisitions a few years ago. It acquired ELMS for $240 million and $180 it spent buying a 605 stake in Bollinger Motors. 

Like Canoo and Faraday, its biggest issue is that it is burning a lot of money and is taking too long recognizing revenue. In its most recent nine-month results, the company recorded no revenues and made a loss of over $300 million. Its deferred revenue was about $16 million for the nine-month period.

Mullen Automotive has limited cash on its balance sheet, even assuming that the company receives the $250 million it says it has received. 

There are many other EV companies that may not survive in the long term because of their balance sheet woes. Some of the other notable names are Xos Trucks, Dragonfly Energy, Lightning eMotors, Phoenix Motor, and Micromobility.

Some analysts believe that even some well-known EV brands like Rivian and Lucid are only surviving because of their wealthy backers. Rivian has received funding from Volkswagen, while Saudi Arabia backs Lucid.

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US fraud case against Gautam Adani: Will the Indian billionaire face extradition for trial?

The US fraud case against Indian billionaire Gautam Adani has sparked significant legal debate, as prosecutors in Brooklyn aim to build a strong case using documents that may reveal extensive bribery activities.

However, while the case appears to have critical evidence backing it, experts believe the likelihood of Adani being extradited to stand trial in the United States remains slim due to complex international legal challenges.

Adani’s legal team has firmly denied the accusations, calling them “baseless,” and the case is expected to unfold over a lengthy period, with key legal hurdles yet to be addressed.

Indictment against Gautam Adani

In November, federal prosecutors in Brooklyn unsealed an indictment against Gautam Adani, his nephew Sagar Adani, and another Adani Group executive, accusing them of bribing Indian officials to encourage the purchase of electricity produced by Adani Green Energy, a subsidiary of the Adani Group conglomerate.

Additionally, the charges allege that the Adani Group misled US investors about its anti-corruption practices, providing false assurances while allegedly engaging in bribery.

The charges leveled against the Adani executives include securities fraud and conspiracy, with five individuals tied to Azure Power Global, a US-listed company, also facing charges for allegedly violating the US Foreign Corrupt Practices Act (FCPA).

Azure Power, in a statement, confirmed its cooperation with the investigation, claiming that the individuals charged were no longer with the company.

Despite these allegations, the Adani Group has vowed to vigorously pursue all legal avenues to contest the accusations, describing them as unfounded.

While Gautam Adani has not been taken into custody, the case has drawn significant attention in India.

He was publicly seen at least twice after the indictment, including attending a major event on December 9, alongside Indian Prime Minister Narendra Modi.

These appearances have fueled speculation regarding Adani’s status and the potential for legal proceedings, especially as his business empire faces increasing scrutiny.

‘Bribe notes’

The indictment outlines some key evidence that could strengthen the US prosecution’s case, including “bribe notes” found on Sagar Adani’s mobile phone.

Prosecutors also revealed that Gautam Adani emailed himself a copy of a search warrant and grand jury subpoena served to his nephew on March 17, 2023, marking these electronic records as potentially critical pieces of evidence.

Legal experts suggest these materials could play a significant role in demonstrating that both Adani and his nephew were aware of the misleading statements provided to investors, especially regarding the company’s anti-corruption efforts.

Stephen Reynolds, a former federal prosecutor, explained that such corroborating evidence strengthens the prosecution’s position.

“The allegations include references to corroborating material, and that always provides for a stronger case,” Reynolds told Reuters.

Significant legal challenge for prosecution

However, the defense is likely to argue that Gautam Adani had no direct involvement in the misleading statements about the company’s anti-bribery policies, which could provide a significant legal challenge for the prosecution.

In addition to this, securing live testimony from witnesses in India could prove difficult for US prosecutors.

Mark Cohen, a former federal prosecutor, highlighted the potential complications of obtaining witness testimony in India, especially if it could implicate local officials in corruption.

This could require diplomatic intervention from the Indian government, which has shown reluctance in the past to assist with cases that might reflect negatively on its officials.

India’s foreign ministry has already indicated that it has not received any formal extradition request from the US regarding Adani, describing the issue as a matter between private firms and the US Justice Department.

Despite these complications, the US prosecutors are pressing forward.

Drew Rolle, deputy chief of the business and securities fraud section at the Brooklyn US Attorney’s office, emphasized the importance of holding foreign companies accountable when they operate in US capital markets.

“It’s not only a bribery case, it’s an important securities enforcement case,” he stated at a conference on December 6.

Rolle noted that his office has successfully convicted foreign officials in similar cases, underscoring the US government’s commitment to protecting the integrity of its financial markets.

As the case develops, questions remain regarding the likelihood of Adani’s extradition. Legal experts agree that although the evidence against him may be compelling, political and diplomatic barriers could prevent the billionaire from facing trial in the US anytime soon.

For now, the Adani Group remains resolute in its defense, while US prosecutors continue to press their case, signaling that the legal battle could be prolonged and contentious.

With the legal and diplomatic hurdles ahead, the saga surrounding Gautam Adani’s alleged fraud and bribery charges is likely to continue drawing significant attention, not just in India, but also across global financial markets.

As this case unfolds, the broader implications for international corporate governance and the enforcement of foreign bribery laws will be closely watched.

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3 Tesla wannabe companies that may not survive the EV race

Electric vehicle stocks have diverged this year. On the one hand, we have Tesla whose shares have surged to a record high, giving it a market cap of over $1.4 trillion, and making it the eighth-biggest company in the world. 

Many EV companies, on the other hand, have imploded, with most of them fighting for survival. Some, like Fisker, Proterra, ELMS, Bollinger, and Lordstown Motors, have already filed for bankruptcy. Here are some top EV companies that could file for bankruptcy in the near term as their cash runs out. 

Faraday Future (FFIE)

Faraday Future is one of the top EV companies that may not survive for so long after spending $3 billion in capital in the last few years. 

The most recent results showed that the company’s business continued losing millions of dollars. Its revenue in the last quarter came in at $9 million, while its net loss came in at over $77 million. The nine-month loss was over $234 million.

Therefore, a company losing all this money can only survive if it has a solid balance sheet. Unfortunately, Faraday does not have this luxury, since it ended the last quarter with about $79 million in current assets. Its cash and restricted cash stood at $7.3 million. 

Faraday Future has secured $30 million financing, which will not be enough to fund its most ambitious plans. For example, it is working to launch mass-market vehicles priced at between $20,000 and $50,000. 

Therefore, there is a likelihood that the company will run out of money soon as its business continues. This explains why the Faraday Future stock price has crashed by over 95% this year.

Canoo (GOEV)

Canoo is another vulnerable EV stock that may not be around for so long. Like Faraday, the Canoo stock price has crashed by over 97% this year, bringing its market value to about $13 million. 

Canoo has a large market opportunity, which explains why it has received orders worth over $3 billion from companies like Walmart, NASA, and USPS. The challenge, however, is that the company is running out of cash and is already furloughing employees. 

The most recent results showed that the company had just $5.7 million in cash and short-term investments. These are tiny numbers for a company that is still losing substantial sums of money for all vehicles it sells. 

Mullen Automotive (MULN)

Mullen Automotive stock price has crashed by over 90% this year, dropping its valuation to about $13 million. Its market cap is significantly smaller than what it spent in acquisitions a few years ago. It acquired ELMS for $240 million and $180 it spent buying a 605 stake in Bollinger Motors. 

Like Canoo and Faraday, its biggest issue is that it is burning a lot of money and is taking too long recognizing revenue. In its most recent nine-month results, the company recorded no revenues and made a loss of over $300 million. Its deferred revenue was about $16 million for the nine-month period.

Mullen Automotive has limited cash on its balance sheet, even assuming that the company receives the $250 million it says it has received. 

There are many other EV companies that may not survive in the long term because of their balance sheet woes. Some of the other notable names are Xos Trucks, Dragonfly Energy, Lightning eMotors, Phoenix Motor, and Micromobility.

Some analysts believe that even some well-known EV brands like Rivian and Lucid are only surviving because of their wealthy backers. Rivian has received funding from Volkswagen, while Saudi Arabia backs Lucid.

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Bitcoin surges to $106K, up 50% since US election: will the rally last?

Bitcoin’s meteoric rise has captured global attention as it surged past $106,000, marking an unprecedented 50% gain since the US election earlier this month.

The cryptocurrency market has been electrified by speculation that President-elect Donald Trump’s administration will adopt a friendlier stance toward digital assets.

Analysts at Reuters suggest this rally is buoyed by expectations of a pro-crypto regulatory environment and the potential creation of a bitcoin strategic reserve, similar to the United States’ strategic oil reserve.

With the total cryptocurrency market value surpassing $3.8 trillion, questions arise over the sustainability of this extraordinary rally.

Bitcoin rallies 50% post-election

Bitcoin price reached $106,533, before settling at $104,462, a 3.2% gain on Monday.

This significant milestone comes as Trump’s administration signals a shift in the nation’s cryptocurrency strategy.

In his recent remarks, Trump hinted at establishing a Bitcoin strategic reserve, a move aimed at reinforcing US dominance in the digital asset space.

This announcement coincides with the increasing global adoption of cryptocurrencies.

The United States already holds nearly 200,000 Bitcoins, valued at over $20 billion.

Other nations, including China, the UK, Bhutan, and El Salvador, have also amassed substantial bitcoin reserves, further underscoring the growing role of crypto in national financial strategies.

Global interest in crypto grows

The prospect of a Bitcoin reserve is not unique to the United States.

Countries like Russia have shown interest in diversifying their reserves to reduce reliance on the US dollar, which President Vladimir Putin criticized as being wielded for political leverage.

Cryptocurrencies, particularly Bitcoin, are seen as an alternative asset immune to direct control by any single government.

However, the Federal Reserve Chairman Jerome Powell remains skeptical.

Jerome Powell recently compared Bitcoin to gold, highlighting its speculative nature.

Despite this, the momentum in the crypto market suggests a broader acceptance of Bitcoin as a store of value.

Crypto-friendly policies boost market sentiment

The anticipation of crypto-friendly policies has played a crucial role in the current rally. Trump’s pro-crypto stance during his campaign included promises to make the United States a “crypto capital.”

His administration has already taken steps to deliver on these pledges, such as appointing David Sacks, a former PayPal executive, as the White House czar for artificial intelligence and cryptocurrencies.

Moreover, Trump is expected to nominate Paul Atkins, a pro-crypto attorney, to lead the Securities and Exchange Commission.

The inclusion of MicroStrategy, a company with substantial bitcoin holdings, in the Nasdaq-100 Index has further fuelled optimism.

Shares of MicroStrategy have surged six-fold this year, reaching a market value of $94 billion. Analysts believe its inclusion will attract significant inflows, amplifying the company’s ability to purchase more Bitcoin.

Can the rally sustain its momentum?

Despite the bullish sentiment, analysts caution that the establishment of a Bitcoin reserve could take considerable time and may face regulatory hurdles.

Some market watchers also point out that the rapid price increase might lead to profit-taking, resulting in temporary pullbacks.

Nevertheless, the broader market appears optimistic. Bitcoin’s year-to-date gains of 192% reflect its growing appeal among both retail and institutional investors.

With Trump’s administration poised to introduce measures favoring digital assets, the question remains: Can Bitcoin sustain its record-breaking rally, or will it face a reality check as regulatory complexities come into play?

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Tilray Brands stock price has crashed: time to buy the dip?

Tilray Brands stock price has been in a strong downward trend this year and is now sitting near its all-time low as concerns about the cannabis industry remains. It has imploded by over 48% this year, bringing its valuation to about $1 billion.

Other cannabis companies have also crashed this year. The AdvisorShares Pure US Cannabis ETF (MSOS) has crashed by over 46% this year, lowering its assets to about $480 million. Some of the other top laggards are companies like Green Thumb Industries, Truelive Cannabis, and Curaleaf Holdings.

US cannabis regulations hope fall

The main reason why Tilray Brands and other cannabis stock prices have plunged is that hopes of cannabis legislation have remained elusive.

These hopes dimmed after the last general election, in which Republicans won the White House, the House of Representatives, and the Senate.

Historically, Republicans have been relatively conservative on cannabis issues, with many of them being opposed to it. Therefore, the odds are that a cannabis bill that has been in deliberations will not see the end of the day.

The bill aimed to bring a federal regulation on cannabis in line with the Supreme Court ruling. In particular, this bill was focused on banking since most cannabis companies still don’t have access to banking services in the US. Most large banks seek to avoid issues like money laundering and drug trafficking rules.

There are also odds that the much-anticipated cannabis reclassification into a less harmful drug will not happen. This reclassification was championed by Joe Biden and other Democrats earlier this year. 

To be clear: Tilray Brands does not have a large presence in the United States. Therefore, its stock has crashed because the company’s hopes of entering the lucrative market have faded as regulations have remained elusive.

Read more: Tilray Brands stock analysis: attractive risk/reward?

TLRY is not just a cannabis company

Most notably, Tilray is no longer just a pureplay cannabis company as it has entered the alcoholic beverages industry. The most recent results showed that Tilray’s beverage alcohol revenue rose by 132% to $56 million in the last quarter. 

This revenue growth was because the company has made several acquisitions in the past few months. It bought several brands from AB InBev and others from Molson Coors. Its cannabis revenue was $61 million, while its distribution and wellness revenue was $68.1 million and $14.8 million. 

Therefore, this diversification makes it one of the best cannabis-related companies to invest in because a slowdown in the sector will be offset by the alcohol business. 

Most importantly, the company has started to narrow its losses. Its most recent results showed that its net loss was $34 million, an improvement from $55 million in the same quarter in 2023. 

Tilray Brands stock price analysis

The daily chart shows that the TLRY share price has been in a strong bearish trend in the past few months. It has recently dropped below the important support level at $1.45, its lowest level on October 10.

The stock has remained below all moving averages, while the MACD indicator has moved below the zero line. The Relative Strength Index (RSI) has remained below the oversold level at 30.

Therefore, the path of the least resistance for Tilray is downwards, with the next point to watch being at $1. In the long term, however, there is a likelihood that the stock will recover as investors buy the dip and as its diversification strategy pays off. If this happens, the next target to watch will be at $1.45. 

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US market outlook for 2025: can the bull run last?

Few could have predicted the remarkable market performance in 2024.

Starting the year with low equity valuations, recessionary warnings, and cautious investor sentiment, the stage seemed set for challenges.

Yet, a steady stream of interest rate cuts by the Federal Reserve, along with growing confidence in AI’s transformative potential, proved to be the game-changers.

Despite sporadic market jitters—ranging from geopolitical conflicts to Big Tech’s late-year weakness—investors capitalized on every dip.

This resilience pushed the S&P 500 and Nasdaq Composite to their best performances in years.

S&P could go as high as 7,500-8,000 under optimal conditions

Market strategists have differing views on 2025.

On average, the S&P 500 is expected to rise by about 7%, with targets clustering between 6,500 and 6,700, according to Bloomberg data.

However, according to a report by Barron’s, several experts are projecting a more dramatic climb.

John Stoltzfus of Oppenheimer Asset Management forecasts the S&P 500 could reach 7,100, driven by AI’s transformative impact.

Others, like Société Générale’s Manish Kabra, suggest the index might hit 7,500 or even 8,000 under optimal conditions.

“AI is akin to the invention of the car in the 1920s, revolutionizing productivity,” Stoltzfus explains. “Its potential to solve pressing challenges across sectors could significantly boost economic output.”

Deregulation and tax cuts under Trump could boost earnings across sectors

A key driver of bullish forecasts is Trump’s incoming administration, which promises aggressive deregulation and tax cuts.

From slashing corporate tax rates to dismantling restrictive regulations, these policies could boost earnings across sectors.

Industries like financials, energy, and manufacturing are expected to benefit the most.

Deregulation in these areas could reverse decades of sluggish productivity, especially in manufacturing.

For energy, relaxed emissions rules could translate into higher profitability.

The financial sector may see the loosening of restrictions on credit-card fees and “buy now, pay later” services, among others.

Kabra estimates these measures could lift earnings per share by 2%-3%.

Lessons from the dot-com bubble

While the outlook appears promising, some analysts warn of potential risks reminiscent of past bubbles.

The dot-com boom of the late 1990s saw consecutive 20% gains, only to culminate in a painful crash in 2000.

Benjamin Bowler of BofA Securities likens the current euphoria to the intro of a bubble.

“Booms result in bigger busts,” he cautions. High valuations, coupled with rising volatility, could make the market more unpredictable.

Historical data also suggest that back-to-back 20% annual gains are rare.

Only three such streaks exist, with two ending in sharp downturns. Could 2025 mark another turning point?

How Fed’s moves shape the market?

The Federal Reserve remains a wildcard.

With further rate cuts expected in 2025, the Fed aims to balance economic growth against inflation risks.

However, any resurgence in inflation could force a policy reversal, potentially derailing the market’s momentum.

Edward Yardeni of Yardeni Research predicts that dovish monetary policy could push the S&P 500 toward 7,000 but acknowledges the increased likelihood of a correction if inflation heats up.

“Rate cuts are a double-edged sword,” Yardeni notes. “While they boost growth, they also risk overheating the economy and inflating asset bubbles.”

AI revolution: The driving force behind optimism

AI’s growing integration into industries has been a cornerstone of market confidence.

Unlike the speculative frenzy of the dot-com era, today’s AI investments promise tangible productivity gains.

Adam Parker of Trivariate Research emphasizes that the S&P 500’s evolving composition—dominated by tech and high-margin firms—justifies higher valuations.

He points to AI as a catalyst for unlocking efficiencies in data processing, supply chain management, and innovation.

“AI could make today’s valuations look cheap,” Parker asserts.

“The question is whether earnings growth will keep pace with expectations.”

Navigating 2025: Strategies for Investors

As the market prepares for a potentially volatile year, experts recommend strategic positioning:

  • Focus on economically sensitive sectors: Consumer cyclicals, financials, and materials offer growth opportunities as global activity picks up.
  • Consider options for hedging: With rising volatility, options strategies may offer a cost-effective way to mitigate downside risks.

Risks on the horizon: Tariffs, inflation, and recession fears

While optimism dominates, significant risks could disrupt the rally.

Tariffs and trade tensions under Trump’s administration could erode corporate profits.

Additionally, rising unemployment and muted capital spending raise the spectre of a recession.

Peter Berezin of BCA Research highlights these concerns, arguing that tax cuts alone won’t spur business investment.

“We’re on a path to recession regardless,” he contends, citing Trump’s contentious policies as potential headwinds.

The path forward: Embracing discomfort

For investors, navigating 2025 will require a mix of optimism and caution.

High valuations and policy uncertainties make for an unpredictable environment, but the convergence of deregulation and AI-driven growth offers unique opportunities.

“Investing in a bubble demands resilience,” Bowler advises. “Volatility is likely to rise, but so is the potential for substantial gains.”

Whether the market soars or stumbles, one thing is clear: 2025 will be a pivotal year for shaping the future of investing.

The post US market outlook for 2025: can the bull run last? appeared first on Invezz

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These 2 emerging markets stocks could return 50% each in 2025

HSBC says emerging markets could prove to be relatively “less vulnerable” as President-elect Donald Trump proceeds with raising tariffs on foreign goods in 2025.

EMs typically have better growth dynamics than the developed markets which justifies a “small overweight” in their stocks.

The investment firm is particularly bullish on two names: XP and Cemex, each of which, it’s convinced, could rally over 50% next year.

Let’s take a closer look at why HSBC is bullish on these two emerging markets stocks.

XP Inc (NASDAQ: XP)

XP has been cut nearly in half in 2024 but HSBC analysts expect the coming year to be a different story altogether. Their $25 price target suggests a whopping 90% upside from current levels.

HSBC finds XP stock “quite correlated to the policy rates cycle in Brazil” as it has a multitude of offerings, including equities, real estate investment trusts, fixed income, and pension plans.

The investment firm expects the Brazilian firm to benefit as the country’s central bank slams the breaks on raising interest rates in 2025.

HSBC likes XP shares also because the company “continues to show resilient earnings performance.” Its per-share earnings have grown at an estimated compound annualised rate of about 12% between 2022 and 2024.

In November, the Brazilian company said its revenue went up 4.0% on a year-over-year basis in its third fiscal quarter.

A lucrative dividend yield of 4.86% makes XP stock all the more exciting to own for the long term, according to HSBC analysts.

Cemex SAB de CV (NYSE: CX)

HSBC does expect the new US government to weigh on demand for Cemex products.

But the investment firm still recommends owning shares of the Mexican firm as the market is a bit too pessimistic on Cemex.

In fact, the US operations of this building materials company could benefit as Donald Trump raises import tariffs on other countries. That segment will likely make up 35% of Cemex’s EBITDA in 2025, according to HSBC.  

Cemex stock is currently going for 4.6 times its estimated enterprise value to EBITDA for 2025 which translates to a 35% discount compared to the company’s 10-year historical average of 7 times.

Holcim – its primary global competitor is also trading at 8.6 times EV/EBITDA at writing.

“With its strong pricing power and exposure to US infrastructure spending, we see significant rerating potential as Mexican macro concerns ease,” the investment firm told clients today.

HSBC recommends buying Cemex shares and sees upside in them to $9 which indicates potential for a more than 60% upside from current levels.

Much like XP Inc., Cemex is also a dividend-paying stock, with a yield of 1.12%.   

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