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Tiger Brokers is a global brokerage platform that gives Australian investors simple access to ASX and US stocks. Listed on the Nasdaq, the trading group’s Australian division is offering zero brokerage on both US stocks and ASX shares for the first 3 months.
Global investors have faced some contrasting fortunes over the past week, as equity markets tread water amid rising interest rates and the latest US company earnings season.
US tech stocks again came under pressure from rising bond yields, after the Fed increased the likelihood of a larger 50 basis point rate hike at its May meeting.
Highlighting this week’s earnings reports, US tech giant Netflix missed the mark on its Q1 update earlier in the week, and the stock promptly fell by 35%.
And Tiger Brokers chief strategist Michael McCarthy said the move was an example of how investors are now demanding that companies match their post-Covid growth rates in a tighter liquidity environment.
Netflix’s sharp decline makes it “the worst performer in the S&P 500 for 2022”, McCarthy said.
“After touching highs near $700 a share just 6 months ago, the dramatic change in its prospects culminated in the first quarterly drop in subscribers in ten years,” he said.
In addition, management’s “about face on potentially carrying advertising can be interpreted as a sign of deep concern about growth prospects,” McCarthy said.
“If these concerns are repeated at previously high growth companies such as Amazon, Alphabet and Uber, there could be large share price falls.”
“There is little doubt that investors will need to be much more stock selective as central banks withdraw stimulus funds and higher interest rates start to bite.”
But while investors sold off Netflix after it missed expectations, the bulk of US companies that have reported so far have beaten earnings estimates.
For investors, it means backing companies to take advantage of broader economic strength to growth their business, even though inflation is climbing.
In that context, Tiger Brokers traders were rewarded this week when Tesla reported its Q1 results, and beat expectations with revenue of more than $18bn.
Tesla shares promptly rose back above the US$1,000 mark, making it a profitable trade on Tiger Brokers where Tesla was the most traded US stock last week.
Fellow EV manufacturer Nio Inc was another popular trade, while China based digital and ecommerce company Sea Ltd held its place in the Top 3.
Along with Tesla’s quarterly results, its major shareholder Elon Musk stole most of the financial headlines last week after announcing he was putting together a bid to buy Twitter.
By Thursday, Musk said he’d packaged up a $US46.5bn funding plan, which includes a margin loan held against some of his Tesla shares.
While it remains to be seen if the deal will go through, Musk’s efforts will likely highlight global M&A activity over the coming weeks.
McCarthy describes Musk as a “rare and unusual corporate leader”.
“The moves he makes have paid off handsomely for shareholders so far. Only time will tell if Tesla’s attempted takeover is a compelling lead that others will follow, or the ringing bell that heralds the end of the FANG tech boom,” McCarthy said.
Looking across the options landscape, the Tiger Brokers data shows that Tesla remains popular.
Investors also used options trades to make bets on the moves of broader indexes, with the QQQ (Nasdaq) option and the SPY (S&P500) option making an appearance in the top 5 most popular traded options globally.
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