Jefferies Calls Reddit a 'Buy' on AI Strengths

20 minutes ago

Reddit (RDDT) shares climbed Wednesday after analysts at Jefferies initiated coverage of the social media platform with a “buy” rating, citing its success within Google search results and its AI use cases.

The firm issued a price target of $90 per share, a 27% premium over Tuesday's closing price and well above the analyst consensus from Visible Alpha.

The stock was up another 2% at $72.15 in recent trading on Wednesday afternoon. The shares have gained about 43% since the company's IPO in March.

Reddit’s user growth accelerated to 51% in the second quarter, the firm noted, its highest level in four years. A big reason for that is the success of a revamped web platform the company debuted last year, which has led to “deeper integration into Google search.” The company’s average revenue per user is actually well below rivals Pinterest (PINS) and Snapchat (SNAP), which suggests a “long runway for increased monetization,” analysts said. 

Reddit’s large library of user posts are a valuable resource for companies developing generative AI models, Jefferies said. The company has established about $325 million in contract licensing revenue over the next three years, led by deals with Alphabet’s (GOOGL) Google and OpenAI. Going forward, the firm suggested that partnerships with companies such as Amazon (AMZN) and Anthropic could be in the cards, which would mean more high-margin revenue streams. 

–Andrew Kessel

Boeing Leads Dow Decliners as Machinists' Strike Continues

1 hr 40 min ago

Boeing (BA) shares fell Wednesday after the plane maker withdrew its contract offer for its striking machinists and S&P Global put its bond rating on a watch list.

In a note to employees, Stephanie Pope—who serves as both Boeing COO and Boeing Commercial Airplanes CEO—wrote the company’s leadership team “has been doing all we can to find common ground with the union.” However, after a third round of negotiations with a federal mediator, “the union did not seriously consider our proposals,” and instead made “non-negotiable demands” that the company could not meet.

Because of this, Pope said, "further negotiations do not make sense at this point and our offer has been withdrawn."

The 33,000 members of the International Association of Machinists and Aerospace Workers walked off the job last month after the rank and file voted to reject a contract agreement hammered out days earlier. 

S&P Global warned the strike was "increasing financial risk for the company," and estimated Boeing will have a $10 billion cash outflow this year as a result. The agency put its ratings on Boeing's debt on "CreditWatch with negative implications." S&P explained that reflects "the increased likelihood of a downgrade if the strike persists toward the end of the year."

Boeing shares recently were down 2.4%, trading near their lowest level in two years.

–Bill McColl

What's Next for Chinese Stocks After Stimulus Rally Stumbles?

3 hr 12 min ago

U.S.-traded Chinese stocks tumbled on Tuesday and fell again in early trading Wednesday after a disappointing update from the government tempered exuberance that propelled Chinese equities out of a bear market in recent weeks. 

The country’s economic planning agency said Tuesday it would accelerate some planned investments meant to help the country meet its 2024 growth goals but abstained from outlining new stimulus measures. Late last month, the Chinese government announced a spate of monetary stimulus measures including lowering banks’ reserve requirements, cutting interest rates, and supporting equity markets. 

Most experts agree that sustainably turning around China’s flagging stock market will require doing more to support the real economy. 

“So far, the approach is more directly beneficial for Chinese equities than for real growth and commodity demand,” wrote V22 Research analysts Michael Hirson and Houze Song in a note on Saturday. The government, they said, will need to unveil more robust measures to boost consumer spending and support the property sector for the wider economic outlook to improve.

Read the full article here.

–Colin Laidley

Palantir Price Levels to Watch as Stock Hits Record High

5 hr 9 min ago

Palantir Technologies (PLTR) jumped more than 6% Tuesday to a record high following bullish commentary from Ark Invest, which pointed out that the analytics software provider could have further potential upside from the AI boom.

The stock was up 0.5% at $41.66 in recent premarket trading Wednesday.

After breaking out above an ascending triangle in early July, the stock has continued to trend higher apart from a brief early-August correction, with gains accelerating last month after the software vendor’s inclusion into the S&P 500 index.

During retracements, investors should watch important support levels on Palantir's chart around $32.70, $29, and $25.50.

A bars pattern, which extracts Palantir’s trend higher from May to August last year and positions it from the early-August low, forecasts a potential bullish price target in the stock of around $55.

Read the full technical analysis piece here.

–Timothy Smith

Major Indexes Poised to Open Slightly Lower

5 hr 30 min ago

Futures tied to the Dow Jones Industrial Average were down less than 0.1%.

S&P 500 futures were down also down less than 0.1%.

Nasdaq 100 futures were off 0.14%.

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