Axon Enterprises stock price has retreated for four consecutive weeks as investors started to take profits after having its best year on record. AXON dropped to the key support at $600, down by 15% from its highest level in 2023. So, will the rally continue or will it suffer a harsh reversal this year?

Why Axon Enterprises stock jumped

Axon Enterprises is one of the best-performing companies in the United States, moving from $1.75 in 2001 to $600 today. 

This performance was mainly due to its strong revenue growth, which occurred as security demands rose in the US and other countries. 

Most recently, its annual revenue soared from over $530 million in 2019 to over $1.94 billion in the trailing twelve months (TTM). It has also become a highly profitable company as it moved from a net loss of $60 million in 2021 to a profit of $297 million in the TTM.

For starters, Axon Enterprises is a leading company that provides solutions to law enforcement agencies in the US and other countries. It is the biggest provider of tasers widely used by the police. 

Axon also provides software and sensors that help agencies to capture, store, and analyze video. In addition to tasers the firm also sells body cameras, which are required by law in the United States. It sells its solutions to local governments, the federal government, and private security companies.

Axon’s growth is continuing

The most recent financial results showed that Axon’s business was still doing well. The numbers showed that its revenue rose by 32% in the third quarter to over $544 million, which was higher than its previous guidance and what analysts were expecting. 

Strong product demand and software solutions have helped drive this growth. In the last quarter, its annual recurring revenue rose by 36% to $885 million. The company hopes that incorporating artificial intelligence will help supercharge its growth. 

Axon’s growth has also been because of its Axon Air solutions, including drone services. Its drones are used by the military, first responders, and other non-governmental agencies. The recent decision by the US to ban DJI drones has supported its recovery. 

Altogether, Axon is in fast-growing industries as crime rates and natural disasters continue rising. 

The challenge, however, is that Axon has become a highly expensive company as its market cap surged to over $45 billion. It has a forward PE ratio of 115, making it a more expensive company than NVIDIA and Microsoft. 

This valuation is because the company has sold the AI and robotics narrative. The stock is also slightly higher than the average analyst estimate of $601.

Most analysts have a bullish view of the company, with Morgan Stanley’s view being overweight. Baird, JMP Securities, and Northland Capital have outperform ratings.

Axon Enterprise stock price analysis

Axon Enterprise chart by TradingView

The daily chart shows that the Axon share price peaked at $695 in December and then pulled back to $600. 

On the positive side,it has remained above the 50-day Exponential Moving Average (EMA), a sign that the bullish momentum is intact.

However, the two lines of the MACD have formed a bearish crossover, with the histogram being below zero. Also, the Relative Strength Index (RSI) has moved below the support at 50. 

The other negative is that it has formed a head and shoulders-like pattern, a popular bearish sign. Therefore, after a strong performance in 2024, and with the stock being at unjustifiable levels, there is a likelihood that the stock will pullback this year, possibly moving to $500.

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Chewy’s stock price has delivered strong returns in the past seven months, jumping from a low of $14.7 to $36. This 145% jump was better than most companies in the United States, including the benchmark indices like the S&P 500 and Nasdaq 100. So, is Chewy still a good stock to buy this year?

Chewy is doing modestly well

Chewy is one of the biggest players in the pet industry, where it sells treats, food, toys, and other items online. 

The pet industry is a big one in the United States as millions of people own pets like cats, dogs, and fish. Over 65.1 million households own a dog, while 86.9 million own cats. These numbers are expected to keep growing, creating a huge addressable market. 

The pet food and accessories is also highly fragmented, with many families stocking their supplies from popular brands like Walmart, Target, and even Amazon.

Chewy operates as a specialty company that sells its products online. Over time, its platform has served millions of users, and the management believes it has more room to grow. Chewy’s annual revenue has grown, thanks to its strong demand and higher prices. 

The third-quarter results showed that Chewy’s business added 160k customers, and net sales per active customer rose to $567, an increase from the previous $54. 

Its total sales rose slightly from $2.7 billion to $2.87 billion, a sign that the era of double-digit growth rate is almost over. The autoship sales rose to $2.3 billion from $2.11 billion.

Most importantly, Chewy’s business is growing its margins as the management focuses on profitability. Its goss margin has risen from 26.6% in FY’21 to 29.2% in the trailing twelve months (TTM).

Chewy has also continued to grow its cash flow, an important profitability figure. Its full-year free cash flow has risen from $9 million to over $363 million. 

The company also hopes to become a key player in the pet health industry, which analysts believe will be a key catalyst. Also, the company’s advertising business is growing, offering higher margins. Chewy has also invested in the private-label business that it hopes will keep doing well.

Analysts see little upside for Chewy shares

Wall Street analysts are mildly upbeat about the Chewy stock price. The average estimate by analysts is $36.5, slightly higher than the current $36.5. 

Meanwhile, the average estimate for 2024 annual revenue is $11.8 billion, up 5.88% from last year. It will then make $12.41 billion this year, a  5% increase from last year. 

Chewy’s earnings per share is expected to reach $0.20 in the fourth quarter, bringing its annual figure to $1.27. 

Chewy stock price analysis

The weekly chart shows that the Chewy share price bottomed at $14.7 in 2024. This bottoming happened after the stock formed a falling wedge chart pattern, a popular bullish sign in the market. This rebound was in line with my last CHWY stock forecast.

The stock is approaching the 23.6% Fibonacci Retracement point. It has also moved above the 50-week moving average and hit the 200-week moving average. 

However, the stock has formed a rising wedge chart pattern, a popular reversal sign. A wedge is formed with two rising and converging trendlines. 

Therefore, the stock will likely have a bearish breakout in the next few weeks as long as it remains below the 200-week moving average. If this happens, the next point to watch will be at $30.

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LendingClub stock price recovered strongly after bottoming at $4.90 in 2023 as concerns about its viability continued. LC has soared to $17.50, its highest level since February 2022, bringing its market cap to over $1.97 billion. So, let us explore why the stock is rising, and why technicals point to a 53% increase.

LendingClub’s business is doing well

LendingClub is a leading American company in the personal loans industry. This is a vibrant industry, with a large total addressable market since many Americans use loans to fund their day-to-day operations. 

LendingClub’s business has gone through boom and busts in the last few years. Its revenue moved from over $1 billion in 2019 and fell to $468 million in 2020 as the pandemic hit. It has now rallied to over $1.1 billion. 

The company’s value proposition is that its debt consolidation services help to save Americans substantial costs. Data shows that about 47% of all Americans have over $1.3 trillion in debt, with the average credit card rate soaring to 22%.

Just last week, we reported that default rates on personal loans are surging. More data shows that delinquencies in auto loans has also jumped in the past few months as the Federal Reserve maintained higher rates and the jobless rate rose. 

Economists agree that, while the headline economic numbers are strong, the lower side of the wealth bracket is not doing well. That partially explains why most of these people voted for Donald Trump in the last general election.

LendingClub’s value proposition is that members save about 30% when they use its service to consolidate their credit card. Also, members who consolidate their debt significantly improve credit scores.

The most recent results revealed that LendingClub’s revenue rose to $201 million in the third quarter, higher than analysts expected. The revenue figure was higher than the $187 million it made in the second quarter, and the $200 million it generated in Q3’23.

LendingClub’s revenue happened as its total originations rose to $1.9 billion, in the upper side of its guidance. 

LendingClub has seen higher provisions for credit losses with personal loan defaults rising. Its provision for these losses rose from $35.6 million in Q2 to $47.5 million in Q3. 

Outlook for LC shares

Analysts expect LendingClub’s business will continue doing well as the management continues the turnaround efforts. 

The average revenue estimate among Wall Street analysts is that its 2024 revenue will be $775 million. 

LendingClub will resume its growth in 2025, when its revenue will surge by 20% to $932 million. The company will also become more profitable, with its estimated earnings per share growing from 46 cents in 2024 to 83 cents in 2025. 

Analysts have a mixed outlook for the LendingClub stock price. Those at JPMorgan recently downgraded it from overbought to neutral, citing the disruption by many fintech companies. This was a notable downgrade since JPM upgraded it in 2023.

Piper Sandler and KBW analysts maintained their overweight rating. The average LC stock forecast is $18.6, slightly higher than the current $17.5.

LendingClub stock price analysis

The weekly chart shows that the LC share price has recovered after bottoming at $4.90 in 2023. It formed an inverse head and shoulders chart pattern, a popular bullish sign.

The stock has moved above the 21.6% Fibonacci Retracement level. And most importantly, it is about to form a golden cross as the spread between the 200-week and 50-week moving averages narrow.

The Relative Strength Index (RSI) and the MACD indicators have pointed upwards. Therefore, the path of the least resistance for the LendingClub stock price is bullish, with the next point to watch being the 50% retracement point at $27.3, which is about 53% above the current level.

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The iShares Bitcoin Trust (IBIT) ETF has performed well since its inception in 2024, a trend that may continue due to the ongoing supply and demand dynamics in the crypto industry. It has added over $54 billion in assets and is one of the market’s most highly traded Bitcoin ETFs, with daily volume of over $1.8 billion. 

Grayscale’s BTC ETF is better

While the IBIT ETF is a good option for crypto investors, there are better alternative assets to buy to gain exposure to Bitcoin.

The best option is to buy and store Bitcoin in an off-chain address just as MicroStrategy is doing. By doing that, MicroStrategy avoids paying monthly or annual fees that investors in IBIT pay yearly.

The Grayscale Mini Bitcoin ETF (BTC) is the best Bitcoin fund because of its much lower fees. Unlike the bigger Grayscale Bitcoin Trust (GBTC), the BTC ETF charges a small expense ratio of 0.15%, making it more affordable than other funds from firms like Fidelity, Ark Invest, and Bitwise. 

The IBIT ETF has an expense ratio of 0.25%. As such, you will pay a $250 annual fee to Blackrock, and just $150 to Grayscale. That $100 spread can go a long way, especially when you are holding your assets for many years. For example, excluding the compounding factor, and all factors held constant, the spread will be $1,000 in a decade. 

Ideally, that spread would be worthwhile if one ETF is superior than the other one. However, the two funds are 100% similar since they just buy Bitcoin and use Coinbase as the custodian.

This spread also explains why investors have avoided the SPDR S&P 500 ETF (SPY) and moved to Vanguard’s VOO and Blackrock’s IVV. In 2024, the SPY ETF added over $19 billion in assets, while the Ishares IVV added over $87 billion, and VOO added $118 billion. 

That’s because the SPY ETF charges an expense ratio of 0.09%, while the two funds charge 0.03%. While the spread is small, investors believe that they are much better off allocating funds to the cheaper funds since they all track the S&P 500 index. 

Read more: BlackRock’s Bitcoin ETF experiences record outflow, signaling cooling market

IBIT and BTC have tailwinds

Still, the IBIT and BTC ETFs may continue to do well in the long term simply because of the coin’s supply and demand.

Bitcoin’s supply is falling, and CoinGlass data shows that balances on exchanges have continued falling this year. These balances are plunging as Wall Street continues buying more coins through ETFs. MicroStrategy has also continued falling. 

Bitcoin’s annual inflation has continued rising and currently sits at 1.7%, much lower than the US CPI of 2.7%. That trend will continue because of the rising Bitcoin hash rate and mining difficulty. 

Bitcoin will also continue doing well, as risks to the US economy will accelerate amid the soaring public debt and as countries consider using it as a strategic reserve. 

Most importantly, Bitcoin has a long track record of doing better over time as its price jumped from below $1 in 2009 to a record high of $108,000.

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VeriSign stock price is doing well as it rose for seven consecutive weeks and reached its highest level since December 2023. Most of these gains happened after Warren Buffett accumulated more VRSN shares. So, does it have more upside, or is the rally running out of steam? 

Warren Buffett loves VRSN

VeriSign is a highly critical American company that largely operates behind the scenes to power most websites. 

The company’s popularity among investors is primarily due to Warren Buffett’s Berkshire Hathaway, its biggest shareholder. He recently bought $4 million worth of VRSN stock, bringing his total holdings to 12.8 million shares worth $2.63 billion. 

The other top investors in the stock are Vanguard Group, Blackrock, Ninety One, and Renaissance Technologies. 

Many Americans have not heard of VeriSign, yet it is the backbone of the Internet today. It provides Domain Name System (DNS) solutions that power most websites. Specifically, it powers top-level domains like .com, .net, and .edu, the most popular TLD domains in the world.

VeriSign’s business has grown gradually, although the momentum has slowed in the past few years. Its total revenue rose from $1.29 billion in 2019 to over $1.4 billion in the last financial year. 

The slow growth is largely because the number of websites being created these days is not growing as it used in the past. That trajectory has affected the amount of money it receives from web hosting companies like GoDaddy and BlueHost. 

The most recent results confirmed this, as the number of .com and .net domain names dropped by 2.5% to 169 million. Other data showed that the company processed 9.3 million new domain names, down from 9.9 million a year earlier.

The other big issue is that the renewal rate for these domains has dropped from 73.4% to 72.7%, a trend that may continue as companies find it more difficult to rank on Google. 

This weak growth is also evident in its revenue growth, which has largely stalled. In the third quarter, revenue rose by 3.8% to $391 million, while operating income stood at $269 million. 

VeriSign is overvalued

VeriSign is a great company with a moat that is hard to disrupt. It is also a high-margin company that has an EBITDA and a net income margin of 70% and 55%. Its gross margin stands at over 87%.

However, there are signs that its $19 billion market cap makes it highly overvalued. Its forward price-to-earnings ratio is 25, which is fairly high for a company that is no longer growing as it used to. 

Analysts expect VeriSign’s revenue will be $1.56 billion in 2024 and $1.61 billion in the next financial year. Its earnings per share (EPS) will move from $8.03 to $8.68. 

VeriSign stock price analysis

VRSN chart by TradingView

The daily chart shows that the VeriSign share price formed an exciting chart pattern. It formed an ascending triangle whose upper side was $191.25, the highest swings on July 29, September 30, and October 25. An ascending triangle is a popular bullish sign. 

It made a strong bullish breakout and then retested its upper side, another positive sign. The stock also formed a golden cross as the 50-day and 200-day moving averages cross each other. 

VeriSign has also retested the 61.8% Fibonacci Retracement level. Therefore, the stock’s outlook is neutral for now. More gains may see it rally to $230, the highest level since May 2023. However, it is likely to retest support at $191. 

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