Gold prices clinged on to modest gains on Wednesday as investors waited for the release of US inflation data.
The yellow metal has fallen sharply after Republican Donald Trump’s victory in the 2024 US presidential elections.
The dollar had surged after Trump’s victory as risk appetite improved, dampening demand for gold and silver.
On Wednesday, as traders waited for the release of the US inflation data for October, the dollar paused its rally.
This supported prices of gold.
A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers.
Moreover, “A generally weaker tone around the equity markets is seen as a key factor offering some support to the safe-haven precious metal through the first half of the European session,” Haresh Menghani, editor at Fxstreet, said in a report.
Menghani added:
Any meaningful appreciating move, however, seems elusive in the wake of a bullish US dollar.
Source: Commerzbank Research
At the time of writing, the COMEX gold contract was $2,614.40 per ounce, up 0.3% from the previous close.
US October CPI to rise?
The highly anticipated consumer price index data for October is likely to see an uptick from the previous month in the US.
“The US Dollar is set to rock on intense volatility likely to be spurred by the US inflation report, which could significantly impact the market’s pricing of the Federal Reserve interest rate outlook for the coming months,” Fxstreet said in a report.
As measured by CPI, inflation in the US is expected to increase at an annual rate of 2.6% in October, according to FactSet’s consensus estimates.
This figure would be a tad higher than the 2.4% growth in September.
Analysts with TD Securities, told Fxstreet:
Inflation readings should remain somewhat firmer than the Fed would prefer in the near-term, reversing some recent improvement in the pace of price changes.
How will CPI influence the dollar?
Trump’s tariff hike plans and tax cuts are expected to feed into higher inflation in the US.
This is likely to prompt the US Federal Reserve to keep interest rates elevated, which is expected to boost Treasury yields and the dollar as well.
“Thus, amidst softening labor market conditions and the progress in disinflation, the October inflation report will play a pivotal role in offering fresh hints on the Fed’s next policy move,” Fxstreet said.
Fed policy in focus
The US central bank last week cut interest rates by 25 basis points.
This followed a super-sized cut of 50 bps in September.
However, hotter-than-expected inflation in September and subsequent strength in the labour market led to a smaller cut in interest rates at the November Fed policy meeting.
Markets have now priced in a 62.1% probability of a 25 bps rate cut in December, according to the CME FedWatch tool.
“Our economists have raised their forecast for the bottom of the US key interest rate by 50 basis points to 4%,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report.
“This means that there should only be two further interest rate cuts by the Fed of 25 basis points each after the expected rate cut in December.”
He further added:
Apparently, market participants are acting after the election according to the principle of ‘buy the rumour, sell the fact.
Copper slides
Meanwhile, copper futures slid on Wednesday as the market remained underwhelmed by the recent China stimulus package.
Last week, the People National’s Congress in China approved a $1.4 trillion worth package to finance local government debts.
The market, however, was expecting a focused spending plan and more clarity on sector wise spending.
In addition to the generally unfavourable environment, reports of the sharp rise in smelting capacities in China are also weighing on prices.
During January-September, production of refined copper was over 5% higher than in the same period last year.
Barbara Lambrecht, commodity analyst at Commerzbank, said:
China, which has significantly expanded its capacities in recent years, is now likely to account for half of global supply.
At the time of writing, the three-month copper contract on the London Metal Exchange was $9,118.50 per ton, down 0.3% from the previous close.
The prices have fallen to levels not seen since the middle of September.
US consumer prices rose in October as expected, driven by higher shelter costs, including rents, indicating that the path toward lower inflation has slowed since mid-year.
This could mean the Federal Reserve will be more cautious in cutting interest rates next year.
The Labor Department’s report on Wednesday showed the consumer price index (CPI) climbing 0.2% for the fourth consecutive month, aligning with economists’ forecasts.
Shelter, food prices contributed the most
The main contributor was a 0.4% increase in shelter costs, encompassing rents and lodging prices, which made up over half of the overall CPI rise.
In comparison, shelter costs had risen by 0.2% in September. Food prices also played a role, ticking up 0.2% after a 0.4% increase in the prior month.
Within food categories, grocery prices saw a slight 0.1% increase due to higher costs for bread, dairy products, nonalcoholic beverages, and fruits and vegetables, which offset declines in meat, poultry, and fish prices.
Notably, egg prices dropped sharply by 6.4%.
Energy prices displayed mixed trends: gasoline prices fell 0.9%, continuing their decline, while electricity costs surged 1.2% and natural gas prices rose 0.3%.
On an annual basis, the CPI advanced by 2.6% in the 12 months through October, up from a 2.4% increase in September.
The higher year-on-year figure partially reflects a low reading from the previous year being excluded from the comparison.
This inflation report comes on the heels of former President Donald Trump’s election victory over Vice President Kamala Harris.
Analysts anticipate that if Trump implements his economic agenda—featuring tax cuts and increased tariffs on imports—consumer prices could rise further.
His promise of mass deportations of undocumented immigrants is also expected to tighten the labor market, potentially increasing business costs that would be passed on to consumers.
Despite underlying inflation running slightly warm in October, expectations remain that the Federal Reserve will proceed with a planned interest rate cut in December, marking the third such cut this year.
The Dow Jones Industrial Average edged up on Wednesday as investors aimed to extend a post-election rally following an inflation report that met expectations.
The blue-chip index rose by 258 points, or 0.3%. Meanwhile, the S&P 500 also advanced 0.3%, and the tech-heavy Nasdaq Composite increased by 0.2%.
Rivian, Cava, and Rocket Lab were some of the leading stocks.
“It’s time to stop worrying about the Fed and inflation,” David Russell, global head of market strategy at TradeStation told CNBC.
The major equity averages took a breather on Tuesday after a post-election rally.
After Donald Trump was elected president once again in the 2024 US elections, stocks and the dollar surged. Major equity benchmarks notched up record highs post the election outcome.
The dollar index has reached its peak since April
The dollar index rose 0.4% on Wednesday to 106.50.
This was the highest point since April 16, when the index had touched 106.517.
Expectations of tariffs on imported goods and tax cuts under the Trump regime are fuelling the rise in the dollar.
These measures are likely to keep inflation elevated in the US, which could force the Federal Reserve to keep interest rates higher.
Meanwhile, Bitcoin extended its rally, with the cryptocurrency rising nearly 4% on Wednesday.
Bitcoin breached $92,000 for the first time on Wednesday.
US CPI rises in October
The US consumer price index rose 2.6% in October from the year-ago period. On a month-on-month basis, the index rose 0.2%.
The rise was in line with expectations of the market.
Excluding food and energy, CPI rose 0.3% month over month, also matching Dow Jones estimates.
As the inflation figure was in line with market expectations, bets on another interest rate cut by the Fed in December remained intact.
According to the CME FedWatch tool, traders have priced in an 82.3% probability of the US central bank cutting rates by 25 basis points in December.
Spotify Technologies jump
Shares of Spotify Technologies jumped about 8% on Wednesday.
Total monthly active users for the third quarter came in at 640 million. This was an 11% increase from a year ago, beating FactSet consensus.
However, the company still fell short of analysts’ expectations for its bottom line and topline for the third quarter.
Small caps resume postelection rally
Small-cap benchmark Russel 2000 jumped 1% on Wednesday, after a pause in the previous session on Tuesday.
Small companies, which are more domestic-oriented and cyclical, are expected to perform well under a Trump presidency.
Trump has proposed tax cuts and is also expected to impose tariffs on all goods imported into the US, especially from China.
The index rallied 8.6% last week and it fell 1.8% Tuesday.
Skyworks Solutions dip, Cava surges
The semiconductor company, Skyworks Solutions dipped nearly 4% on Wednesday.
The company’s stock fell despite posting strong earnings as the target price was lowered by JPMorgan Chase & Co. from $120 to $100 in a report released on Wednesday.
Skyworks reported adjusted earnings of $1.55 per share, while analysts polled by LSEG had forecast $1.52 per share.
Meanwhile, Cava, the fast-casual chain, jumped 14% after reporting robust earnings.
Cava announced earnings of 15 cents per share on revenues of $2.44 million. Meanwhile, analysts had expected earnings of 11 cents per share and $2.34 million in revenues, per LSEG.
Following Donald Trump’s recent US election victory, Elon Musk’s support for the president-elect appears to have triggered a departure of some users from X, the popular social media platform he owns.
Bluesky, a social networking alternative, has partly benefited from this shift, with many disillusioned X users turning to it to express their views and engage in a moderated, ad-free environment.
Bluesky, the platform backed by former Twitter CEO Jack Dorsey, announced that it added 1.25 million users in the week following the US election, increasing its total user base to 15 million.
This growth marked a substantial leap from its 13 million users at the end of October.
The influx has propelled Bluesky to become the top-ranked free app on Apple’s App Store.
Even though Bluesky remains much smaller compared to giants like X and Meta’s Threads, the buzz that it has created has caused experts to sit up and take notice.
Invezz takes a look at the factors influencing users’ departure from X and why, despite the encouraging rise in users, Bluesky has a long way to go before it can become a major force in the social media space.
Why are some users turning away from X?
Musk has spent months promoting Trump’s agenda to his 200+ million followers on X, and has been celebrating online since Trump’s victory.
Musk’s support for Trump has polarized X’s user base with the rightward shift driving some users away.
Over 115,000 US users of X deactivated their accounts the day after the election, according to digital analytics firm Similarweb.
Musk’s actions, from restoring previously banned accounts to slashing moderation teams, have emboldened certain groups while alienating others.
This shift has been accompanied by an uptick in sexist and extremist language on X like “your body, my choice”, according to researchers.
In contrast, Bluesky has taken a clear stance against aligning itself with political figures.
On Election Day, the company cheekily noted that none of its team members would be watching results alongside a presidential candidate, subtly referencing Musk’s role on X.
Several notable journalists have announced their departure from X in favour of Bluesky this week, including Charlie Warzel from The Atlantic, Mara Gay of The New York Times, and former CNN anchor Don Lemon.
On Wednesday, the UK newspaper The Guardian also revealed it would cease posting from its official X accounts, describing the platform as “a toxic media platform.”
However, The Guardian did not specify which other platforms it intends to use for promoting its content.
Prominent TV journalist Don Lemon announced his departure from X, attributing it to the platform’s lack of a conducive environment for “honest debate and discussion.”
However, he said he will continue to use other social media, including Bluesky.
Bluesky users report higher engagement levels
Users who have migrated to Bluesky report higher engagement levels on their posts compared to X, even when their follower counts are significantly smaller.
Ed Zitron, founder of media relations firm EZPR told CNN in a report that despite having 90,000 followers on X, the platform’s engagement did not align with expectations.
“With how Bluesky is scaling right now, I don’t see how (X) stays dominant,” Zitron remarked.
New York Times journalist Mike Isaac shared a similar experience, noting on Bluesky how his posts garnered substantially more interactions than they did on X, despite the disparity in follower counts.
Journalists, left-leaning politicians, and public figures have cited a more positive experience on Bluesky, free from the advertisements and contentious atmosphere prevalent on X.
Bluesky’s past spikes and current edge
The recent spike is not Bluesky’s first surge linked to dissatisfaction with X.
In August, after X was banned in Brazil, Bluesky saw an influx of 2.6 million users, 85% of whom were Brazilian.
More recently, when X announced a controversial policy allowing blocked accounts to view public posts, Bluesky attracted 500,000 new users in a single day.
The platform’s invitation-only phase, which ended in February, helped Bluesky fine-tune moderation tools and features, setting it apart from its competitors.
Users enjoy a feed similar to X, with both discovery and chronological views, as well as features like direct messaging and pinned posts.
Comparing the numbers
Despite the outflow of users, X claims to have set records during the US election.
On Election Day, the platform experienced a 15.5% increase in new signups and logged 942 million posts globally.
Similarweb noted that while over 115,000 US users deactivated their accounts the day after the election—the largest single-day exit since Musk’s takeover—X recorded its highest web traffic of the year on that day, with 46.5 million visits on desktop, a 38% jump from its recent average.
Bluesky also reported increased daily visits, which rose to 1.2 million on Election Day and 1.3 million the following day, compared to approximately 800,000 in the preceding days.
“Whether there will be a measurable decrease in the audience for X as the result of politics remains to be seen,” David Carr, Similarweb editor of insights, news and research, said in a blog post Tuesday.
But, he added, “X’s recent daily peak in US traffic doesn’t make up for the erosion in audience the service has seen over the past couple of years since Musk took ownership of the service.”
According to market intelligence firm Sensor Tower, daily active users and time spent on X saw an increase on November 5 and 6 compared to the previous 30 days.
However, by November 10, X’s daily active users had returned to pre-election levels, while Bluesky experienced a 28% rise in users during the same timeframe.
Bluesky’s future: can it dethrone X?
While Bluesky is experiencing a moment in the spotlight, its path to sustained growth is uncertain.
Bluesky remains much smaller than X, which Musk notes is experiencing its own surge in usage, while other competitors have also entered the scene.
Threads, a rival platform from Meta Platforms Inc., has gained 275 million monthly users in under 18 months and may soon introduce ads.
Competing platforms like Mastodon have seen similar bursts of popularity, only to taper off.
Bluesky’s trajectory depends on maintaining momentum and user interest over time.
X CEO Linda Yaccarino has doubled down on the platform’s commitment to providing a space for diverse voices, stating, “X usage is at an all-time high and continues to surge. To all of our users — of every interest, political party, and point of view — You will always have a place to engage and join the global conversation freely and safely.”
Despite such assurances, the departure of high-profile figures and public criticism of the platform’s policies may continue to bolster alternatives like Bluesky.
The Nigerian naira has collapsed, and analysts warning that the worst could happen for the venerable currency. The USD to NGN exchange rate was trading at 1,687 on Thursday, a few points below the all-time low of 1,680. Similarly, the black market naira rate was trading at 1,740.
Budget deficit and dollar liquidity
The Nigerian naira has imploded by over 70% this year, making it the third-worst performing currency globally.
This crash happened as the Nigerian economy grapples with deteriorating fundamentals, including low oil prices, high unemployment rate and inflation, and lack of dollar liquidity.
These prices could continue to fall further after Trump’s re-election because he has pledged to deregulate the industry. Such moves will lead to a sharp increase in US oil production at a time when the country is pumping over 13 million barrels of oil a day.
Nigeria’s economy is mostly dependent on oil, which accounts for over 60% of the GDP. As such, lower oil prices at a time when government spending is increasing has led to more deficit.
Data released this week showed that Nigeria’s budget deficit-to-GDP jumped to 7.5%. Precisely, the deficit jumped to over N4.53 trillion in the second quarter from N3.88 trillion. The deficit widened as the government struggled to raise adequate revenues as oil prices drop and as the unemployment rate remains substantially higher.
At the same time, the measures taken by the government to attract foreign investments are not working out as expected. After last year’s election, the government removed some of the top factors that were dragging FDI to Nigeria.
For example, the government ended fuel subsidies, while the central bank devalued the currency to bridge the gap between the official and non-official exchange rates. Recent data shows that Foreign Direct Investment (FDI) in the country has not been growing. FDI dropped by 65.3% in the second quarter.
Meanwhile, the Nigerian economy is relying mostly on the World Bank financing, with the International Monetary Fund (IMF) staying aside. The IMF is often seen as an ideal partner because it guarantees that foreign companies will be able to take the money out of the country.
Analysts are pessimistic about the Nigerian naira
The deteriorating currency has hit many Nigerians and companies hard. Just a few months ago, the top six biggest Nigerian companies reported a whopping $385 million in losses. Some of the top firms that reported these losses were Airtel. Nestle Nigeria, Nigeria Breweries, and Cadbury Nigeria.
Most of these firms will likely remain under pressure as they start to pay off their dollar debt. Analysts believe that a wave of bankruptcies or Nigerian exits cannot be ruled out as the naira plunge accelerates.
In an interview, one analyst from VerivAfrica estimated that the USD/NGN exchange rate will surge to 2,000 in 2025. With the naira trading at 1,687, that movement implies a 18.5% increase from the current level.
The key challenge for the naira is that the more it crashes, the more many Nigerians are losing confident in it. As such, as we have seen with Zimbabwe’s currency situationodds of the naira bouncing back are getting limited by the day.
The daily chart shows that the USD/NGN exchange rate has been in a tight range in the past few months. It has risen slightly above the 50-day and 100-day Exponential Moving Averages (EMA), which is a bullish sign.
The pair has also formed an ascending triangle pattern, which is a popular bullish sign. Therefore, the path of the least resistance for the pair is bullish, with the next point to watch being at 1,800.
As the cryptocurrency industry looks to a potential Donald Trump-led US for clearer regulations and promises of global crypto dominance, the British government is preparing to outline its own plans for sector regulation.
Citing sources familiar with the plans, a report by Bloomberg said the Treasury is preparing two legislative proposals: one for stablecoins, which are tokens pegged to more stable assets like the US dollar, and another to create an exemption for staking services, allowing them to avoid current financial regulations.
Plans for stablecoins and staking services legislation
The stablecoin legislation will enable the Financial Conduct Authority to engage with the industry on regulatory guidelines, Bloomberg said.
Stablecoins are digital tokens tied to the value of traditional, less volatile assets such as the US dollar.
Meanwhile, staking—where investors lock their tokens to support blockchain operations in exchange for a small return—is expected to be reclassified.
This reclassification would prevent it from being categorized as a collective investment scheme, which would otherwise subject it to additional regulatory scrutiny.
The FCA plans to publish a roadmap for its plans to regulate the cryptocurrency sector “shortly,” a spokesperson for the regulator told Bloomberg, outlining the timeline for the consultation on stablecoins and the broader regulation of the industry.
The government will also provide an update on the progress of the digital securities sandbox, a real-world testing environment for blockchain innovation, jointly managed by the FCA and the Bank of England, according to sources cited by the news agency.
Trump’s US: a growing threat to the UK’s crypto ambitions
The UK government had initially planned to pass crypto legislation during former Prime Minister Rishi Sunak’s tenure, as part of his 2022 pledge to turn the UK into a global crypto hub.
However, the sudden election call and subsequent change in leadership under Labour’s Keir Starmer delayed the move, pushing the legislation into 2024.
The UK’s delay in cryptocurrency regulation has created uncertainty among crypto firms.
Trump has committed to making the US the global crypto capital by firing US Securities and Exchange Commission Chair Gary Gensler, establishing a government-owned Bitcoin reserve, and requiring all Bitcoin mined in the country to be produced on US soil.
This pro-crypto stance, paired with clearer rules, has made the US an increasingly attractive jurisdiction for crypto startups.
UK regulators, however, face the challenge of catching up with international competitors like the EU, where regulations are expected to come into full effect by the end of the year.
Crypto sector urges swift action from the UK
The prolonged lack of regulatory clarity has made many crypto companies hesitant to invest in the UK.
As European competitors move ahead with their regulatory frameworks, industry leaders are urging the government to take swift action.
“The UK has a real opportunity to capitalize on a second-mover advantage, but only if it can mobilize,” said Laura Navaratnam, UK policy lead at the Crypto Council for Innovation, in the report.
“We are a little bit further than even the Treasury and the regulators would’ve ideally wanted.”
The Treasury had previously committed to providing more specific crypto guidelines by early 2024, and industry groups are keen to see this promise fulfilled to maintain the UK’s position as a leader in the digital assets space.
Klarna, the Swedish Buy Now Pay Later (BNPL) company, has filed to go public in New York, a move that will make it one of the biggest IPOs in recent years.
The company will join Affirm, the American BNPL giant that went public in 2021. After its initial surge, Affirm stock crashed to $8.52 in 2022 as most technology companies plunged. Since then, the company has crawled back to $54, with its market cap jumping to over $17 billion.
It is unclear how much valuation that Klarna will receive when it goes public. What is clear, however, is that Klarna will not be the $46 billion it received in private funding a few years ago. Like most fintech companies, including publicly-traded ones like PayPal and Block have had to go through a valuation reset in the past few years.
Revolut IPO could be next
Klarna’s filing to go public could open the opportunity for more technology companies to launch their Initial Public Offers (IPO) in the coming months.
Besides, interest rates are falling in the US and other countries, making it an ideal period to go public. The Federal Reserve slashed interest rates by 0.25% last week, and is on track to deliver more cuts in the coming meetings.
One of the top companies that could decide to launch its initial public offering, either in the United States or in the UK, is Revolut.
For starters, Revolut is a UK-based company that operates one of the biggest neobanks in the world. The most recent share sale valued it at over $45 billion, making it the 20th-biggest company in the UK.
That valuation makes it smaller than Barclays, which has a valuation of over $47 billion. It is also larger than Lloyds Bank, the biggest mortgage lender in the country. Revolut is also bigger than some of the top European banks like Societe Generale, NatWest, Nordea, and Deutsche Bank.
Revolut’s business has simplified how millions of its customers handle their cash. It has no branches, meaning that users only interact with it through its applications and website.
Revolut, which received a banking license recently, offers solutions like accounts, money transfer, crypto and stocks investing, multi-currency accounts, corporate cards, and other services.
Customers love Revolut because of its lower costs and its subscription model. While its standard account is free, Revolut’s plus, premium, and metal accounts cost £3.99, £7.99, and £14.99 in monthly fees.
Revolut’s business has been doing well in the past few years. In July, the company announced that its revenues jumped by 95% in 2023 to $2.2 billion, while its profit before tax soared to $545 million. This happened as it added 12 million customers, bringing the total number to 45 million.
Lessons from Nu Holdings
Revolut has not confirmed when it will go public. However, as a company that has received investments from venture firms like Softbank, Tiger Global, Molten Ventures, Schroders, and Coatue Management, going public is inevitable.
Besides, some of the top neobanks like Dave and Nu Holdings and Dave have done well as publicly traded company.
Nu Holdings,which is backed by Warren Buffett, has done well as a publicly traded company as it has grown its business in the Latin American region. Nu’s stock has surged by 380% from its lowest level in 2022, bringing its market cap to $75 billion.
Dave, an American neobank, has also jumped by 1800% from its lowest level in 2023, valuing it at more than $1.2 billion.
In the UK, while Wise stock remains below its IPO level, it has jumped by 193% from its lowest level in 2022.
Therefore, Revolut will likely go public to mirror the successes of these companies. What is also unclear is whether Revolut IPO will happen in London or in the United States. Most analysts are inclined to believe that the IPO will happen in the United States, which is more welcoming to tech companies.
Air Canada stock price has skyrocketed in the past few weeks, making it one of the best performing Canadian companies. AC has risen in the last eight consecutive weeks, moving to a high of $24.20, its highest level since July 31st. It has soared by more than 67% from its lowest level this year, giving the flag ship Canadian airline a valuation of over C$8.67 billion.
Air Canada stock formed a bullish pattern
There are signs that the Air Canada share price will continue doing well in the coming months after it formed a golden cross pattern on the daily chart. This cross happened after the stock formed a 200-day and 50-day Exponential Moving Averages (EMA) crossed each other.
It has recently crossed the important resistance level at $20.45, its highest level in April this year, while the Average Directional Index (ADX) has soared to 50, signaling that the trend is strengthening.
The Relative Strength Index (RSI) and the MACD indicators have all pointed upwards. It has also jumped above the 78.2% Fibonacci Retracement level. Therefore, the stock will likely continue soaring as bulls target the year-to-date high of $26, which is about 8% above the current level.
A break above $26 will point to more gains towards the key resistance level at $31, its highest level in March 2021, which is about 29% above the current level. The stop-loss of this pattern is at $23.
Air Canada’s business is doing well
Air Canada’s stock price surge has coincided with that of other global airlines. In Europe, the IAG share price has soared by over 163% from its lowest level in 2022. In the US, Delta Air Lines stock has spiked to $65, up by 113% from its 2023 lows. United and American stocks have also surged in the past few months.
Air Canada published better-than-expected financial results recently, Its operating revenue dropped by 4% in the third quarter to C$6.1 billion, mostly because of a strike action by pilots during the peak season. Like other airlines, its revenues were impacted by low airfares.
The company carried 12.6 million passengers during the quarter, a 0.1% drop from the same period last year. Similarly, its operating income of C$1.04 billion was a $375 million drop.
With the strke concerns done, the management expects its business to return to growth in the coming months. ON this, it expects that its capacity will increase by 5% this year, while its adjusted EBITDA will be $3.5 billion.
Like other airlines, Air Canada is modernising its fleets, especially by acquiring the recently launched Airbus A321XLR plane. It will receive 30 of them in the next five years, as part of a 90 aircraft order that includes Airbus A220, Boeing 787 and 737 Max. Over time, its spending on these aircraft is expected to peak in 2026 and then drop sequentially.
The other potential catalyst for the Air Canada stock price is that it has a solid balance sheet after it slashed its total debt stash by half in the last two years. It has a total liquidity of C$10.3 billion and net debt of C$3.4 billion.
Additionally, Air Canada is moderately valued as it has a forward price-to-earnings ratio of 9.07, lower than American Airline’s, Delta Air Lines, and United’s 19, 10, and 9.5, respectively. Its price-to-book multiple is also lower than its peers.
Air Canada is also highly diversified in terms of destinations. It makes most of its money by connecting Canada and European markets, followed by domestic, and the United States. It is also benefiting from its 8 million Aeroplan active members.
Therefore, Air Canada stock has strong fundamentals and technicals, meaning that it has more room to climb in the near term.
Quantum Computing Inc. (QUBT) stock price went parabolic on Wednesday as it formed a God candle and rose by over 92%. It soared to a high of $3.42, which was its highest level since February 2023. It has jumped by more than 686% from its lowest level in 2023, giving it a market cap of over 136%.
Why QUBT stock price surged
Quantum Computing Inc. is a company that makes integrated photonics and quantum optics solutions that power quantum computers. Its solutions are designed to operate at room temperature and low power at an affordable cost.
The company hopes that its solutions will be used in industries like cloud computing, quantum computing, LiDAR, and artificial intelligence.
The QUBT stock price surged after the company announced its first order for its lithium niobate (TFLN) photonic chip foundry. Details of the client were not made public although it mentioned that it was an Asian research and technology company.
Also, the company did not mention the amount of money that it will receive. QUBT mentioned that the frst photonic chips will be delivered in December this year and the full order set will be completed in the first quarter of 2025. In a statement, Pouya Dianat, the head of technology at Quantum Computing Inc. said:
“By integrating TFLN into our own quantum technology, we are able to enhance the precision and performance of our systems, and QCi is proud to play a critical role in the future of integrated photonics. We anticipate additional orders in the coming months.”
Quantum Computing Inc. is growing from a low base
The new order came a week after the company’s revenue showed that its business was growing from a low base. Its revenue rose to $101,000 in the third quarter, much higher than the $50,000 it made in the same period in 2023.
Its revenue’s low base is mostly because the company has started to ship its products just recently. The commissioning of its TFLN foundry plant in Arizona happened recently, with the production expected to start in early 2025.
Its operating expenses stood at $5.4 million, an improvement from the $6.6 million it spent in the same period last year. The improvement happened as the company focused on cost reduction, especially in the general and administrative expenses.
A key challenge is that Quantum Computing Inc. may need to raise more cash in the coming months, especially now that the stock has gone parabolic. It ended the last quarter with $3.06 million in cash and equivalents, $63 million in account receivables, and $241,00 in inventories.
For a company that had a net loss of over $5 million in the last quarter, it means that it will likely need more cash soon.
QUBT has been a highly dilutive company over the years as the number of outstanding shares rose from 7.36 million in 2020 to over 94.4 million today.
The weekly chart shows that the QUBT share price bottomed at $0.5250 and formed a double-bottom pattern. It has now formed a God candle and moved above the 50-day and 200-day moving averages.
QUBT stock has also jumped above the key resistance level at $1.35, its highest level on March 18. Therefore, I believe that these gains will not be sustainable as dilution risks remain. As such, the stock may drop and retest the key psychological level at $2 in the coming weeks or days. This view will become invalid if the stock moves above the key resistance level at $3.42, its highest level this week.
Rivian stock price jumped sharply on Wednesday after the company unveiled details of its $5.8 billion joint venture with Volkswagen. It jumped to $12, up by 25.6% from its lowest level this month, valuing the EV company at over $10 billion.
Rivian and Volkswagen joint venture
The main catalyst for the RIVN share price was the final details on the company’s joint venture with Volkswagen, the biggest European automaker. This JV is now known as Rivian and VW Group Technology, with teams being based in San Francisco.
The JV aims to provide Volkswagen with advanced software and electrical architecture to power its brands. At the same time, the deal will provide Rivian with much needed cash as its boost its troubled balance sheet. Most notably, Rivian will use the cash to ramp up the production of R2 SUV that will launch in 2026.
The deal is contingent on Rivian meeting several milestones, meaning that there are chances that it will fail. For one, a similar plan with Ford Motor Group did not work out a few years ago. Instead, the company cancelled plans to co-develop an EV in 2019.
At the same time, Volkswagen is under increased scrutiny in Germany, where it is going through a painful restructuring that could lead to thousands of job losses. It is considering shutting down three plants in the country.
According to the documents revealed on Wednesday, Rivian has already received $1 billion from VW. It will then receive $1 billion in 2025, $2 billion in 2026, and $460 million in early 2027.
Therefore, the Rivian stock price jumped because analysts believe that the joint venture will be beneficial to the company in the long term.
Rivian’s business is under pressure
The most recent results showed that Rivian’s business was going through a rough patch, which explains why its deal with Volkswagen is so important.
Its third-quarter revenue dropped from $1.33 billion in 2023 to $874 million in the last quarter. These revenues came from the sale of 10,018 vehicles and about $8 million in regulatory credits.
Rivian is still losing substantial sums of money for all vehicles it sells. Its gross loss for the quarter was $392 million, equivalent to about $39,000 per vehicle. Its net loss was over $1 billion.
The management believes that Rivian can achieve profitability in the coming years. It expects that its production for this year will be between 47k and 49k, while its deliveries will be between 50k and 52k. These numbers were lower than the delivery figures that analysts were expecting.
Analyst believe that Rivian’s revenue for the current quarter will be $1.36 billion, a small 3.13% increase from the same period last year. It will then make $1.1 billion next quarter and $4.6 billion in 2024.
These numbers mean that Rivian’s business is no longer growing, which is a difficult place to be for a a growth-oriented technology company.
Still, there are signs that Rivian’s trucks have become more popular than those made by companies like Ford and General Motors. The two companies have had to slash their guidance for their EVs amid waning demand.
Analysts expect that Rivian will start to generate a profit in the coming years. The expected earnings per share for the year will be $4.03 followed by $2.68 in 2025. The average Rivian stock price forecast by analysts is $14.88, which is higher than the current $12.
Rivian stock is fairly undervalued as long as the company manages to turn a profit and avoids dilutive cash raises. If it can achieve Tesla’s net profit margin of 13%, it means that its annual profits will be $780 million, which is reasonable for a company valued at over $10 billion.
The daily chart shows that the RIVN share price has formed what looks like a double-bottom pattern between $8.2 and $10. In technical analysis, this is one of the most bullish patterns in the market.
Rivian stock has remained below the 50-day and 100-day moving average, while the Relative Strength Index (RSI) and the MACD indicator have pointed upwards. Therefore, the stock will likely have a bullish breakout in the near term.
If this happens, the initial target for the stock will be $18.9, the neckline of the double-bottom pattern, which is 60% above the current level. A break above that level will point to more gains to $28, which is 138% from its current level.
