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Dow Jones falls for third day as yields rise; McDonald’s and Tesla slump, Walmart hits record high

US benchmark equity markets fell on Wednesday as Treasury yields continued to rise amid a shallow outlook for the Federal Reserve’s rate-cut cycle. 

At the time of writing, the Dow Jones Industrial Average was down 1.4%. The average shed more than 600 points, and fell for the third straight session. 

The S&P 500 index was down 1.5%, while the Nasdaq Composite fell more than 420 points. 

Earlier in the session, the benchmark 10-year Treasury note yield topped 4.25%, reaching its highest level since July 26. 

Robust economic data pushes yields higher

Strong economic data from the US are fueling the rise in Treasury yields. 

The US economy continues to remain resilient, which is also dampening hopes of a larger Fed rate cut in November. 

“To me, it’s all about the impact of higher rates. The market is repricing the probability that the Fed can aggressively cut rates,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told CNBC. 

“There have been parts of the economy that haven’t felt the impact of rising interest rates yet, but the longer rates remain higher, the more different parts of the economy have to reprice to that reality…the economy is out of equilibrium,” Schutte told CNBC. 

Shares of Coca Cola and Tesla fall

Shares of Coca Cola fell about 2% on Wednesday even though the company’s third-quarter earnings beat expectations. 

Tesla’s shares also dropped more than 1.5% as the company is scheduled to release its third-quarter earnings results after the closing bell on Wednesday.

McDonald’s shares drop after E. coli outbreak

Shares of McDonald were on track for its worst day since March 2020 as the fast-food giant scrambles to limit the damage from an E. coli outbreak. 

The outbreak linked to Quarter Pounder burgers has killed one person and sickened nearly 50 others in several US states, according to a Reuters report. 

The outbreak has also sickened people in more than 10 US states, with 10 hospitalised due to serious illness, according to the US Centers for Disease Control and Prevention (CDC). 

The CDC and McDonald’s are scrutinising McDonald’s supplies of slivered onions and Quarter Pounder beef patties as they investigate the cause of the E. coli outbreak, Reuters reported. 

At the time of writing, shares of McDonald’s Corp were down nearly 5% from the previous close. 

Walmart shares rise, but Boeing slips

Shares of Walmart rose almost 1% on Wednesday to reach a fresh all-time high on Wednesday. 

Shares of Walmart have outpaced the S&P 500 index in 2024, up 57% compared to the index’s nearly 22% jump this year, according to CNBC. 

Meanwhile, the stock of Boeing slipped nearly 3% after reporting its largest quarterly loss since 2020.

The company reported a loss of nearly $6 billion in the third quarter, while also losing more than $4 billion in its commercial aeroplane sector. 

Meanwhile, shares of Starbucks fell 1% after the coffee chain reported its results for the fourth quarter.

The company posted declines in same-store sales, net revenue and profit due to weaker demand in the US. 

The post Dow Jones falls for third day as yields rise; McDonald’s and Tesla slump, Walmart hits record high appeared first on Invezz

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Why is the Bitcoin rally cooling as Trump’s return looms?

Bitcoin’s designation as a “Trump trade” is beginning to feel the pressure from broader global market shifts, spurred by the possibility of Donald Trump’s return to the White House.

With the Republican nominee leading Vice President Kamala Harris in prediction markets, bond yields, and the US dollar have jumped recently.

According to a Bloomberg report, investors are adjusting their bets, pulling back on expectations of looser monetary policy, as Trump’s pro-growth agenda could fuel an already strong US economy if he secures victory in the November 5 election.

This market shift has caused Bitcoin and stocks to fluctuate, as financial conditions tighten in response.

Bitcoin is facing its first weekly decline in three weeks. Although Trump has historically embraced the digital-asset industry, questions remain as to whether his broader economic agenda will negatively impact the cryptocurrency.

“Absolutely, yes, the selloff in stocks, higher US dollar, and higher yields all equal a tightening in financial conditions,” said Tony Sycamore, a market analyst at IG Australia Pty in the report.

He explained that the rapid pace of the tightening is creating pressure on risk assets like crypto.

Bitcoin’s performance under Trump remains uncertain

Bitcoin saw a 1% rise on Thursday, reaching $67,300, but its weekly decline still hovers around 2%.

Despite the recent dip, Bitcoin has surged by 60% this year, with a record high of $73,798 in March.

Demand for US spot bitcoin exchange-traded funds (ETFs) has been a key driver of the asset’s rally, but the market now faces uncertainty as financial conditions tighten.

Trump, in contrast to President Biden’s regulatory stance, has vowed to make the US the “crypto capital of the planet,” appealing to crypto enthusiasts.

Democratic candidate Harris has taken a more cautious approach, advocating for a regulatory framework for the sector.

These contrasting positions highlight the differing impacts each candidate could have on the industry.

Election result to influence Bitcoin’s future?

The race between Trump and Harris is statistically tied in key swing states, according to a Bloomberg News/Morning Consult poll.

The tight margins indicate that final campaigning efforts could play a significant role in deciding the winner.

If Trump wins, bond yields may rise further, negatively impacting risk assets like Bitcoin.

Caroline Mauron, co-founder of Orbit Markets, noted, “The expected regulatory softening of a Trump administration toward the crypto industry should still be the more important factor,” despite potential market tightening.

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Analysis: What solutions can mitigate the negative impact of lithium mining?

The slow and dirty process of extracting lithium from rocks and salt water could take a toll on the environment, especially when the world tries to limit carbon emissions. 

But, the race towards achieving net-zero emissions relies heavily on lithium. And, so finding a solution to produce lithium in a cleaner manner remains imperative. 

Even as lithium prices have been rising sharply, demand for the precious metal is expected to increase by almost nine times over the next 15 years, according to estimates from the International Energy Agency (IEA). 

IEA said in a report:

EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040. 

As extracting lithium could be a slow process that often harms the environment, more efficient and less damaging methods of production are required going forward. 

According to a Bloomberg report, one promising solution is direct lithium extraction, which can significantly reduce the time taken to produce the metal from as long as 18 months to just days or even hours. 

Additionally, recycling and increasing the lifetime of lithium batteries could help reduce the need to mine huge quantities of the metal. 

“This effort should be accompanied by launching lithium mining operations with strict environmental laws and regulations and investing in advanced mining methods capable of extracting lithium from seawater,” according to a report by State of the Planet, which is a news site of the Columbia Climate School. 

Importance of lithium

Australia, Chile, and China are the largest producers of lithium, accounting for 90% of the world’s total supply. 

Lithium is an important mineral, which is used in electric vehicles (EVs) and stores the energy generated by solar and wind power.

According to Bloomberg, the low mass and radius of lithium atoms ensure that the batteries can absorb and store more electricity than other types of batteries of the same weight. 

“The weight aspect is crucial when it comes to EVs as a lighter car will travel further on the same charge,” according to the Bloomberg report. 

Growing demand for lithium-ion batteries is also at risk of supply bottlenecks, which could inflate prices and slow the process of shift to EVs. 

Source: IEA

Moreover, the production process makes lithium more expensive. 

Problems with lithium mining

Mining operations are vulnerable to growing climate risks. 

Copper and lithium are particularly vulnerable to water stress given their high water requirements. 

Moreover, EVs are supposed to lead the world into an energy transition, However, mining spodumene, a primary source of lithium, is an energy-intensive process that is powered by carbon-spewing fossil fuels, according to Bloomberg. 

There is a risk that this sulfuric acid while extracting lithium could spill into local water streams, posing a threat to wildlife. 

IEA said:

Over 50% of today’s lithium and copper production is concentrated in areas with high water stress levels. Several major producing regions such as Australia, China, and Africa are also subject to extreme heat or flooding, which pose greater challenges in ensuring reliable and sustainable supplies.

Moreover, brine lithium extraction uses a lot of freshwater, which could pose a threat to wildlife as it is mainly conducted in arid regions across the world. 

Lithium brine is a saline groundwater that contains dissolved lithium and is a primary source of lithium for the world. 

Possible solution: direct lithium extraction

One of the solutions for limiting the hazards of mining is direct lithium extraction, according to experts. 

“Emerging technologies, such as direct lithium extraction (DLE) or enhanced metal recovery from waste streams or low-grade ores, offer the potential for a step change in future supply volumes,” the IEA said. 

The direct extraction method uses industrial equipment instead of the long and slow process of evaporation, which takes months. 

According to a report in Bloomberg, startups have been using this technology but it has only recently matured to a point, which can potentially compete with existing methods.

DLE methods could potentially open up supplies in new regions around the world. 

“Adopting DLE could be the only way to access some important lithium sources in the future, as Bolivia and Chile push companies eyeing their lithium riches to adopt DLE techniques — an approach aimed at conserving scarce water supplies,” Bloomberg reported. 

Lithium recycling is an option

Meanwhile, recycling remains a challenge as well for minerals such as lithium. 

According to IEA, for bulk metals, recycling practices are well established, but this is not the case for many energy-transition minerals such as lithium and rare earth metals. 

IEA said:

Emerging waste streams from clean energy technologies (e.g. batteries, wind turbines) can change this picture.

The Paris-based energy watchdog said that recycling may not eliminate the need for continued investment in new supply to meet climate goals. 

However, by 2040, recycled quantities of copper, lithium, nickel, and cobalt from spent batteries could reduce combined primary supply requirements for these minerals by around 10%, IEA said. 

The post Analysis: What solutions can mitigate the negative impact of lithium mining? appeared first on Invezz

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DoJ warns Musk: million-dollar giveaway could be illegal

Elon Musk’s $1 million-per-day giveaway has come under scrutiny as the US Department of Justice (DOJ) warns it may breach federal election laws.

Musk, actively supporting Donald Trump in the presidential race against Kamala Harris, launched this initiative through his political action committee, America PAC.

The giveaway offers a chance for registered voters who sign a petition in support of the First and Second Amendments to win $1 million daily.

This effort is targeting voters in seven crucial swing states: Pennsylvania, Georgia, Nevada, Arizona, Michigan, Wisconsin, and North Carolina.

As Election Day on 5 November nears, the contest has sparked controversy and legal questions about its compliance with US electoral law, raising concerns among Democrats and prompting calls for a DOJ investigation.

What is the legality of Elon Musk’s voter giveaway?

The core of the DOJ’s concerns lies in US laws prohibiting payment for voter registration.

These laws aim to prevent undue influence in the election process. Musk’s giveaway, while framed as a petition initiative, requires participants to be registered voters, creating potential legal issues.

The DOJ’s Public Integrity Section reportedly reached out to Musk’s America PAC, highlighting the possibility of federal election law violations.

The specific timing of the DOJ’s communication remains unclear, and the department has not commented on the matter publicly.

Musk’s America PAC has made it clear that the contest aims to attract over 1 million voters in pivotal battleground states.

These states, often crucial in determining the outcome of elections, could see significant influence if a substantial number of new voters sign the petition.

The PAC has positioned the effort as a campaign for constitutional rights, notably freedom of speech and the right to bear arms.

While no party affiliation is required for participants, the event’s timing and focus on swing states have led to criticism from Democratic leaders who see the giveaway as an attempt to bolster Trump’s support base.

Is the giveaway illegal?

While some legal analysts believe that Musk’s contest could violate federal law, others suggest that it may exploit a legal loophole.

The US Code specifically prohibits offering payment for voter registration or voting.

Legal experts like Paul Schiff Berman from George Washington University argue that targeting registered voters could breach this provision, potentially exposing Musk and America PAC to fines or imprisonment if found guilty.

Adav Noti from the Campaign Legal Center echoed these concerns, stating that the scheme is subject to civil or criminal enforcement by the DOJ.

Musk has dismissed allegations of illegality on social media platform X (formerly Twitter), claiming that the contest is open to all voters, regardless of party affiliation or voting status.

In response to mounting criticism, America PAC modified the contest’s terms, now describing the prize as payment for a role as a spokesperson.

Winners must create videos promoting the PAC’s agenda, aligning the payments with promotional work rather than voter registration.

Despite this adjustment, some legal experts believe the giveaway could still face legal challenges, as the connection to voter registration remains a potential issue under electoral law.

Republican ex-prosecutors demand DOJ action

Adding to the pressure on the DOJ, a group of Republican ex-prosecutors has urged the department to investigate the contest, citing potential violations of state and federal laws.

They argued that such activities, especially so close to an election, require scrutiny despite a general reluctance among law enforcement to act on election-related matters near voting day.

Their letter underscores the unprecedented nature of the contest in modern US political history, highlighting its potential impact on voter behavior in key battleground states.

As Election Day approaches, the outcome of this legal dispute could have significant implications for Musk’s political influence and America PAC’s operations.

If the DOJ pursues formal action, the case could set a precedent for how electoral laws apply to unconventional voter engagement efforts.

For now, the controversy continues to unfold, with Democrats and legal experts closely monitoring any developments.

Whether Musk’s giveaway will face legal consequences or succeed in reaching its voter targets remains uncertain.

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DIVO: Is this JEPI ETF alternative a good dividend fund?

The Amplify CWP Enhanced Dividend Income ETF (DIVO) fund has done well, rising to its highest point on record. It rallied to a high of $41.80, meaning that it has jumped by 13.5% this year. This rally has brought its market cap to over $3.69 billion. Its total return has risen by 17.7% this year. 

What is the Amplify CWP Enhanced Dividend Income ETF?

DIVO is one of the leading actively managed funds in the market today. It is a popular find that has had over $282 million in inflows this year.

The fund aims to provide investors with regular monthly dividends by investing in a group of dividend-paying companies and selling call options.

According to its prospectus, DIVO benefits when these stocks rise and when they pay their dividends. It also generates returns by using the covered call strategy, where it opportunistically sells covered call options on certain companies in the portfolio. By so doing, the company generates a premium on the options.

Covered call options have become highly popular this year, as evidenced by the success of funds like JEPI, JEPQ, and QYLD. 

The idea is that a fund will invest in securities or an index and benefit as it rises. The call option gives the fund manager a right but not the obligation to buy the asset. As such, if the stock falls, the call option trade becomes invalid. 

If it rises, the fund benefits by having a chance to buy it at a lower price. However, if the asset rises too much and crosses the strike price, then the investor misses the opportunity.

DIVO’s portfolio is made up of 35 blue-chip companies. Some of the most notable ones are Caterpillar, UnitedHealth, Visa, Apple, Microsoft, Home Depot, Honeywell, and International Business Machines. 

DIVO, like other actively managed funds, is more expensive than other passive ETFs like the Vanguard S&P 500 (VOO) and Invesco NASDAQ 100 ETF (QQQ).

Therefore, the fund is reacting to the ongoing earnings season. Some of the top constituents like Goldman Sachs and UnitedHealth have reported strong results, while others like Procter & Gamble and JP Morgan published weak numbers. 

Read more: JEPI, JEPQ, and JPIE ETF scorecard for 2024 so far

Is DIVO ETF a good investment?

DIVO and other covered call ETFs have become more popular because of their high dividend yields and growth.

In its case, DIVO has a dividend yield of about 4.4%, which is in par with what the 30-year government bonds are paying. Shorter-term bonds like the 2-year and 10-year have 4.05% and 4.2%.

Still, in this case, DIVO is a better investment because of the potential for the stock growth if its constituent companies do well. 

Therefore, right question is whether DIVO is better than other actively managed funds like JEPI, JEPQ, and QYLD. Most importantly, one should ask whether it is a better fund than other passively managed funds.

The JPMorgan Equity Premium Income ETF (JEPI) has a dividend yield of 7.08% and a smaller expense ratio of 0.35%. 

Looking at the total return, DIVO has done better than JEPI this year as it has risen by 17.7% against JEPI’s 14.3%. DIVO has also done better in the last three years as it has risen by 29%, while JEPI has soared by 25.86%.

DIVO has also been a better performer than the Global X S&P 500 Covered Call ETF (XYLD), which has risen by just 13.8% in the last three years. 

Therefore, in this regard, we can see that the DIVO fund has done much better than other similar funds. 

However, the fund has trailed the cheaper VOO ETF, which has risen by 34% in the last three years. VOO has also risen by 23% this year, while DIVO has jumped by 17%. Therefore, given a chance of the 4.4% yielding DIVO and the 1.2% yielding VOO, we believe that the latter is much better.

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AMC stock is in a deep slumber; is a short squeeze coming?

AMC Entertainment’s (AMC) stock price has moved sideways in the past few months as investors assess its performance. It has remained at the $4 mark since May, meaning that it has dropped by 30% this year. 

AMC bonds are also not doing so well. As shown below, the yield of its June 2025 bonds has risen to 99.3%, meaning that prices have dropped sharply. The yield of the November 2026 bonds has risen to 89.2%. 

AMC bond yields

The company has underperformed Cinemark, another big movie theatre company, whose stock has jumped by 115% from its lowest point this year. 

AMC has made some progress

AMC Entertainment has become one of the top fallen angels in corporate America. A fallen angel is a company that performed well in the past but whose performance has since lagged behind the market.

AMC’s entry into the fallen angel category accelerated during the Covid-19 pandemic when it was forced to shut down its locations. As a result, it had to increase its borrowing to fund its operations. 

The company benefited in early 2021 when it became one of the top meme stocks. At the time, its stock soared to a split-adjusted level of $392, helping the management to raise cash to reduce its debt. 

AMC then did well in 2023 as demand for top movies like Barbie, Oppenheimer, and Taylor Swift’s Eras tour pushed its revenues up sharply. It made over $4.8 billion in 2023, up from $3.9 billion a year earlier. This performance also helped it to reduce its net loss from $973 million to $396 million. 

The challenge, however, has been to replicate last year’s success in 2024. Some of the top-selling Box Office movies were Inside Out, Godzilla x Kong, Kung Fu Panda, Deadpool & Wolverine, Dune: Part 2, and Despicable Me. 

On the positive side, AMC Entertainment’s results have shown that there is still demand for Box Office movies. Its second-quarter revenue dropped to $1.03 billion from $1.34 billion in the same period last year. 

Also, its half-year revenue of $1.98 billion was lower than the $2.3 billion in 2023. In my view, this is a strong performance considering the impact of last year’s strikes in Hollywood.

Dilution and free cash flow

The main reason why AMC Entertainment stock has crashed is that the management has diluted its shareholders significantly in the past few years. 

Dilution happens when a company issues new shares, thereby, reducing the ownership stake of existing holders. It also reduces a company’s earnings per share. 

The most recent 10Q report shows that the firm had 321.5 million outstanding shares, a big increase from 151.3 million in the same period in 2023. Data by TradingView shows that it had about 5.9 million outstanding shares in 2020.

AMC has had to dilute investors to reduce its mountain of debt. Over the years, it has paid billions of dollars in debt, bringing its current corporate borrowings to $4.2 billion and its lease liabilities to $3.7 billion. 

A key concern among investors has been its upcoming maturities, which are substantial. For example, debts worth over $2.6 billion were to mature in 2026 before the company expanded the maturity to 2019. 

The company will pay its maturities in 2026 using some of the funds in its balance sheet. It ended the last quarter with $770 million in cash and equivalents and $1.075 billion in current assets. 

The challenge is that it is still burning substantial sums of money, which will erode its cash balances.

Read more: AMC stock price forecast: buy, sell, or hold?

AMC stock outlook

AMC chart by TradingView

AMC Entertainment runs a quality franchise that will likely continue doing well even as more customers shift to streaming. Most studios like Disney and Warner have all committed to release theatrical movies in the future. 

The company is still burning cash, and its upcoming results will provide more details about this. Analysts expect that its sales will come in at $1.34 billion, also a drop from the $1.4 billion it made last year. 

AMC is also expected to lose 7 cents a share, a drop from the 8 cents it made last year as the Barbie and Oppenheimer demand rose. 

Analysts expect that its annual revenue in 2024 and 2025 will be $4.63 billion and $5.19 billion, respectively. Its annual loss per share will improve from 83 cents to 49 cents this year. 

The daily chart shows that the AMC stock price has moved sideways in the past few months as its short interest has risen to 16%. 

It has moved below the 50-day and 25-day Exponential Moving Averages (EMA), while the Average True Range (ATR) has retreated to its lowest point since May 9. The Relative Strength Index (RSI) has remained below 50.

Therefore, AMC shares will likely remain in this range as traders wait for the next earnings on November 6. I believe that this consolidation could lead to a strong upside, which may push it to $5.93, its highest point on June 6. 

Read more: AMC stock nears the make or break price: buy or sell?

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TSLY vs TSLL: One is a better Tesla ETF to buy

The YieldMax TSLA Option Income Strategy ETF (TSLY) ETF jumped by 8.135% in the extended hours after Tesla published strong financial results and provided an exciting update of its business. 

Similarly, the closely-watched Direxion Daily TSLA Bull 2X Shares ETF (TSLL) ETF jumped by 24% to $11.18. Before that, the fund was down by over 37% year-to-date.

Tesla earnings and forecasts

Tesla, the biggest company in the electric vehicle industry, published stronger results than expected, pushing its stock upwards by over 12%. 

The company said that its production rose to 469,796, while its vehicle deliveries were 462,890. 

These deliveries pushed its automotive revenues up by 2% to $20.0 billion. Previously, it made $19.8 billion in the second quarter and $17.3 billion in Q1.

These results showed that the company’s business was doing well even as the EV industry went through major challenges. The biggest issue is that customers, especially in China, have multiple choices, including vehicles from Nio, Huawei, XPeng, and BYD. 

The energy generation and storage revenue jumped by 52% YoY in the third quarter to over $2.37 billion. This division will likely continue doing well in the coming months if the Fed continues to cut interest rates. 

The services and other revenue division, which includes regulatory credits, jumped by 29% to $2.7 billion. These numbers mean that Tesla is now making about a fifth of its revenue on its energy and services business.

Tesla’s margins continued rising, reflecting the fact that it has not slashed prices this year as it did in 2023. Also, the cost of doing business was reduced during the quarter. Its EBITDA margin jumped to 18.5%, while its free cash flow jumped by 223% to $2.7 billion. 

Tesla shares also jumped because of Elon Musk’s commitments to the future as he promised that the robotaxi business would go in business in California and Texas in 2025. The service will let people share their EVs and start making money. 

Tesla’s surge also happened as investors reflected on the upcoming US general election, in which polls suggest that either candidate could win. The prediction market in websites like Predictit, Polymarket, and Kalshi estimates that Donald Trump will win the election.

Trump is widely seen as being a negative president for electric vehicles. For example, he has campaigned against the substantial sums offered by the Biden administration to support the industry.

However, as president, there is little he can do to slow the sector. Besides, he has received millions of dollars from Elon Musk, who will join the administration to lead the proposed Department of Government Efficiency. 

Read more: Don’t short Tesla Inc (TSLA) stock today – here’s what to do instead

TSLY and TSLL are alternatives to Tesla stock

There are numerous ways of investing in Tesla. The most straightforward approach is to invest in Tesla shares straight away. This has been a good way to make money as the company’s market valuation has jumped to over $800 billion. 

TSLY, on the other hand, is a popular approach for investors focused on dividends and monthly distribution. The fund offers a unique exposure to Tesla by using a covered call approach, which helps it to have a dividend distribution rate of 124%.

The fund generates this return by doing two things. First, it invests most of the funds, about 80% in assets tied to Tesla shares. This investment helps it to benefit from Tesla’s price movement.

Second, the fund then sells call options with a strike price between 0% and 15% of the current share price with a 1-month expiry. By selling these call options, the fund generates a premium, which it uses to fund the monthly distributions. 

The benefit of the fund is that if Tesla shares fall, the premium still remains, helping to offset the losses. On the other hand, if Tesla shares surge, as they did after earnings, it may miss the upside if the strike price is hit. 

TSLY’s dividend helps to offset the weakness in the ETF price. For example, TSLY has crashed by over 50% in the last twelve months. With the dividend included, it has dropped by just 7.1%. 

TSLL, on the other hand, is a leveraged ETF that provides two times the daily return of Tesla shares. In the long term, it does well when Tesla shares are doing well, and vice versa. It has dropped by 35% this year as Tesla shares have fallen by 14% (before the post-earnings jump).

Therefore, there is a likelihood that the TSLL stock will do well in the coming months as investors move back to Tesla after its strong results.

So, which is a better way to invest in Tesla? I believe that investors highly optimistic on Tesla should buy its shares and then complement the purchase with the TSLL ETF. For long-term investors, allocating cash in the TSLY ETF is not ideal as its returns have constantly underperformed Tesla.

Read more: Wedbush predicts Tesla to hit $1 trillion market cap again: Buy or wait?

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Rivian stock price is at crossroads, Nov. 9 will be key

Rivian (RIVN) stock price has continued to underperform the market this year after the company lowered its guidance. It has crashed by 56% in 2024, while other EV companies have pared back their earlier losses. This retreat has brought its market cap to over $10 billion.

Rivian has underperformed other EV companies like Lucid, XPeng, Nio, and Tesla, as shown below. 

Rivian is facing headwinds

Rivian’s downfall has been severe, especially for a company that was once valued at over $100 billion. At the time, most investors expected it to mirror Tesla’s growth since it focuses on the SUV segment, which is the most popular one in the US.

Rivian, however, has faced some challenges recently as demand for its vehicles has waned. The most recent deliveries results showed that its business was not doing well. Its vehicle production was 13,157 in the quarter, down from 16,304 in the same period last year.

Rivian delivered 10,018 vehicles, or 76% of what it produced. This is notable since the deliveries-to-production ratio has been trending downward. It stood at 96% in Q2’23 and 143% in the June quarter. 

The company has also been burning cash fast in the past few years. As a result, the amount of cash in its balance sheet dropped from $11.56 billion in December 2022 to $7.86 billion last quarter.

In this period, the company has raised cash by selling stock. It raised $1.5 billion in 2023, a move that diluted shareholders. Over time, its outstanding shares have risen from 892 million in 2022 to over 1 billion today.

The company also received a $5 billion investment – or bailout – from Volkswagen earlier this year to bolster its balance sheet. 

Rivian is also seeing substantial competition, especially from Tesla’s Cybertruck, whose sales have jumped recently.

Read more: Rivian (RIVN) stock: EV maker’s shares slip despite Fed’s rate cut

Rivian earnings ahead

A potential catalyst for Rivian shares is Tesla’s earnings this week, which showed that its business was doing well.

Its results showed that its automotive revenues rose by just 2% to $20 billion, while its energy generation, storage, and services revenues jumped to $2.37 billion and $2.7 billion. 

Tesla tends to set the pace for other electric vehicle companies like Rivian and Lucid. As such, there is a likelihood that Rivian’s shares will do well in the near term as traders wait for its numbers on November 7.

Its most recent results showed that Rivian’s revenues in the three months to June stood at $1.15 billion, an increase from $1.12 billion in the same period last year. 

It continued to lose money for each truck sold as its gross loss rose from $412 million to $451 million. In this, its gross margin was minus 39%, an improvement from the previous quarter’s minus 44%.

Rivian has been losing substantial sums of money. Its net loss during the quarter was $1.45 billion, higher than the $1.19 billion it made in Q2’23. 

Analysts expect its challenges to continue for a while. Its third-quarter revenue is expected to come in at $1.03 billion, a 22% drop from the $1.3 billion it made in the same period last year. 

Its fourth-quarter revenue is expected to come in at $1.3 billion, while its annual figure will be $4.7 billion, followed by $5.7 billion next year. 

Rivian stock analysis

RIVN chart by TradingView

Analysts believe that Rivian stock is relatively undervalued. The average estimate is that its stock is worth $16.6, which is about 60% above the current level.

A case for Rivian can be made since its vehicles are well-regarded. It also has room to expand its business internationally. Unlike Tesla, Rivian sells most of its vehicles just in the US.

The challenge is that its loss-making streak will continue, which will see it raise additional cash in the future. It has already applied for a federal loan to help it restart its plant in Georgia and it is unclear whether it will receive it if Trump wins.

The daily chart shows that the RIVN share price has been in a downward trend in the past few months. It has remained below the descending trendline that connects the highest swing since September 2022.

Rivian has remained below the 50-day and 25-day Exponential Moving Averages (EMA). The MACD indicator has remained below the zero line, while the Relative Strength Index (RSI) is above the oversold level.

Therefore, at this stage, the stock will likely continue falling as long as it is below the two moving averages and the descending trendline. More downside will be confirmed if it drops below the key support at $8.28.

On the positive side, a move above these resistance levels will point to more gains in the longer term. Also, Rivian has a short interest of 12.2%, meaning that a short squeeze is a possibility. 

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NatWest share price has double-topped ahead of earnings

NatWest (NWG) share price has done well this year as the UK economy has remained more resilient than expected. It jumped to the year-to-date high of 365.2p in July, and then retreated to 303p as the Japanese yen carry trade unwind happened in August. It then bounced back and retested its highest level this year. 

NatWest has done well this year

The British economy has held steady this year and is doing better than most of its European peers. Data released last week showed that the country’s retail sales rebounded in September, while inflation continued falling.

The International Monetary Fund (IMF) decided to boost its economic forecast for this year. It expects the UK will grow by 1.1%, higher than the previous guidance of 0.7%. 

The agency, however, warned about the country’s substantial public debt as deficits continue rising. 

NatWest – and Lloyds Bank – are often seen as barometers of the UK economy because they are the biggest lenders. They also don’t have large operations outside the country, unlike other big banks like HSBC and Barclays.

NatWest does that through its ownership of its eponymous bank and other brands like Royal Bank of Scotland, Ulster, Coutts, Lombard, and Adam & Company. Its business has almost 20 million customers in the country. 

The next important catalyst for the stock will be its earnings, which will come out on Friday. These numbers will come two days after Lloyds Bank published strong results, which were better than estimates. Its profit jumped to £1.21 billion, while its return on tangible equity rose to 15.2%. 

Net interest income continued falling, moving to £9.6 billion, a drop from 8% in the same period last year. NII dropped because of the tightening of the spread between what it gives customers and what remains. 

NatWest earnings ahead

NatWest will publish its financial results on Friday. The previous numbers showed that its attributable profits rose to £2.09 billion in the first half of the year, while its return on tangible equity rose to 16.4%. 

Its net interest margin in the second quarter rose to 2.10%, while its net income came in at £987 million. 

Analysts expect that NatWest’s net interest income for the quarter will be £2.78 billion, higher than the £2.75 billion it made last quarter. They also expect that its profit for the period will be £1.059 billion. 

Looking ahead, analysts expect that NatWest’s net interest income will be £11.0 billion this year from £11.049 billion last year. It will then rise to £11.54 billion and £12.2 billion in the next two years. Its annual profit will hit £4.58 billion in 2026, higher than £4.7 billion last year. 

NatWest’s performance will be impacted by the next actions by the Bank of England (BoE). Like other big central banks, it has also started to cut interest rates this year. It slashed rates by 0.25% a few months ago and is expected to cut again in the next meeting. 

The BoE’s interest rates remain higher than other European countries, meaning that its NIM will be better than other European banks. 

The other potential catalyst for the stock will be the upcoming budget, in which Rachel Reeves is expected to announce measures to fill a large £22 billion gap. In her October 30th budget, Reeves is considering changing the definition of debt, a move that will help her cut some taxes.

In the past, as we saw during Lizz Truss era, the budget reading can lead to more volatility in the UK stock market. 

NatWest share price forecast

NWG chart by TradingView

The daily chart shows that the NWG share price has been in a strong bull run in the past few months. It has risen from a low of 157p in October last year to 365p. 

The stock has remained above the ascending trendline that connects the lowest swing since June 14. It has remained above the 50-day and 100-day Exponential Moving Averages (EMA), meaning that bulls are in control for now.

NatWest has also remained above the ascending trendline that connects the lowest swing since June 14. It has also moved above the 23.6% Fibonacci Retracement point.

However, there are signs that it has formed a double-top pattern, a popular reversal sign in the market. Therefore, the outlook for the stock is neutral as long as it remains below the resistance point at $35.

A break above that level will point to more gains, with the next point to watch being at 400p. The alternative scenario is where the stock retreats and retests the 50-day moving average point at 343p.

The post NatWest share price has double-topped ahead of earnings appeared first on Invezz

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Stocks

SOL outperforms BTC and ETH amid ongoing selling pressure across crypto market

The cryptocurrency market is facing sustained selling pressure, leading to a shift in overall sentiment towards a downtrend.

However, Solana (SOL), the fifth-largest cryptocurrency by market capitalization, is beating the trend as it gains attention from investors.

Despite the bearish environment in the crypto market, SOL prices jumped 5% over the last 24 hours.

This stability has piqued the interest of traders, who are closely monitoring its performance against major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

As Solana maintains its upward momentum, it stands out as a potential leader in the ongoing market dynamics.

Solana price movement

In a surprising twist, Solana has outpaced other major cryptocurrencies, including Bitcoin, Ethereum, and Binance Coin (BNB).

At the time of writing, SOL is trading at $173.5, marking a 5% increase in the past 24 hours.

This rise is notable against the backdrop of a 20% decline in trading volume, which suggests heightened caution among traders.

Source: CoinmarketCap

The dip in trading volume reflects broader market concerns, as investors remain wary amid uncertain market conditions.

Yet, Solana’s price action indicates strength, positioning it as a cryptocurrency to watch in the coming days.

From a technical standpoint, Solana’s recent price movements suggest a bullish outlook.

The cryptocurrency recently broke out of a tight consolidation range between $162 and $173.5, which had held for two days.

This breakout has set the stage for a potential 10% increase, with the next target being the $190 level.

SOL’s price remains above the 200 Exponential Moving Average (EMA) on the daily chart, which is considered a key indicator of an uptrend.

This trendline support suggests that SOL could continue to attract buying interest, especially if broader market conditions stabilize.

Short sellers retreat

The breakout in Solana’s price has triggered a wave of liquidations among short sellers.

Data shows that nearly $3.5 million worth of short positions have been liquidated, compared to $350,000 in bullish liquidations.

This disparity indicates that bearish sentiment is waning, with short sellers stepping back amid rising prices.

The liquidation of short positions often serves as a bullish signal, as it can prompt further price gains.

With the bears losing steam, Solana’s upward momentum may find further support in the coming trading sessions.

Bullish on-chain metrics support Solana’s rally

Solana’s bullish trend is further reinforced by favorable on-chain metrics.

Analysis from CoinGlass, an on-chain analytics platform, reveals that SOL’s Long/Short ratio currently stands at 1.02.

This ratio signals a predominance of long positions over short ones, indicating a positive market sentiment among traders.

Open interest for SOL has surged by 11%, reflecting a buildup of new positions following the recent price consolidation.

Traders often view rising open interest alongside a Long/Short ratio above 1 as a sign of growing confidence in the asset, which could drive further price appreciation.

With bullish technical and on-chain indicators aligning, Solana appears poised for further gains in the near term.

The cryptocurrency’s ability to hold above key support levels and attract new long positions could provide a foundation for a continued upward trend.

Broader market conditions and the overall direction of the cryptocurrency market will likely influence Solana’s trajectory.

As investors remain cautious amid the market downturn, SOL’s resilience could make it a compelling choice for those seeking opportunities during the current volatility.

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