TECH-HEAVY: The potential formerly known as Twitter; The formerly limitless potential of Alibaba

Being sprightly, I started my day even before the day knew it was starting, which is why several of my poorly paid and informed ‘plants’ at the greatest national broadcaster on earth, (yeah, the ABC) sent breathless, very early word to Stockhead central that the top dog at the nation’s top telly maker, Mnsr David Anderson, tweeted to all formerly enthusiastic ABC staff that the broadcaster would no longer associate with Twitter (X).

“Starting from today, other ABC accounts will be discontinued,” the ABC MD appeared to say quite formally.

‘Just plain sick and tired of having to do everything all the time for no bloody reason at all’ is what no one from Aunty has ever formerly or even more contemporarily remarked to this writer. Which is why news that the ABC is closing almost all of its official accounts on the internet echo box formerly known as Twitter is being pinned outrageously on obvs made up stuff like “toxic interactions” (never had one), costs (Yo, brah. It’s free) and ‘better interaction with ABC content on other social media platforms (like Stockhead).’

More about Mr Musk on Stockhead’s soon to be rebranded ‘Selon Elon.’ Not much rhymes with Musk, but we’d invite some suggestions. The winner will enjoy a free Life-Celebration-Yum-Fest in Sydenham.

Where’s the tech?

A happily crapper-than-expected July jobs report, combined with an upbeat batch of corporate earnings, provided whacky US investors with more paper thin reasons to be optimistic about what stocks will do in the second half of the year.

The strong corporate numbers, gilded with upbeat guidance, continue to evaporate dark thoughts of an imminent US recession.

Meanwhile, last week’s soft jobs report presents the Fed with less gristle for the rate hike policy grinder.

Last week was a typical hot and cold from the tech world.

Better-than-expected quarterly hits from Messrs Amazon (AMZN) and Advanced Micro Devices (AMD), triggered a greed feed on the mega tech fish and chips makers. That kind of frenzy suggests the Fed’s 25 basis point bite hike could actually be top of the rates rally.

Imagine a world where volatility, stupidity, paranoia – a little like what we’ve seen these last many months – is switched out of a calm market, full of certainty where stocks and investors lack neither direction nor conviction?

As far as dreams go it still sounds a little pipey.

Stocks closed lower on Friday, with the the Dow Jones Industrial Average falling 0.43%.

Apple (AAPL), which fell 4.8% after reporting Q3 earnings lacking iPhone revenue led the rot.

Microsoft (MSFT), Intel (INTC) and Disney (DIS) balanced that out with solid wins.

The S&P 500 gave up 0.5%.

The very tech-heavy Nasdaq Composite shed 0.36%.

Jobs are bad. But despite the miss, US unemployment rate ticked lower to 3.5% from 3.6% in June.

The sour reaction from punters was probs over hourly wages rising 0.4% for the month, and 4.4% year over year.

That’s what The Fed saw, and while it only came in a wee bit ahead of the 0.3% and 4.2% expected, respectively…. higher wages point to more inflation.

It remains to be seen what implications this report will mean for the Federal Reserve’s rate-hiking cycle. The market will get a hint when the consumer price index for July is revealed this week.

It’s whispered in cubicles in New York that the report could have an even greater impact on rate expectations.

Meanwhile, earnings reports delivered so far have been encouraging, revealing the expected slowdown in profits have been better than feared. So far, of the roughly 84% of S&P 500 companies that have provided their results, 80% have topped analysts estimates. Will the trend continue next week? Here are the stocks to watch.

Plug Power (PLUG) – After the close, Wednesday 

Don’t know PLUG? Well, you’ve a new-tech knowledge gap that needs… never mind.

Plug Power’s got lots of chops Stateside for its hydrogen-based tech, in-house makers of stuff like fuel cells and machines which go ‘ping’ and attempt to split (H20) water into hydrogen (H).

PLUG usually plugs itself as the world’s  “leading provider of comprehensive hydrogen fuel cell turnkey solutions.”

And it’s customers are world beaters, to be sure –  AMZN, BMW, and Walmart (WMT).

Alas, since peaking in ’21 PLUG’s share price is circa 75% what it was and at around $11 – 35% of those losses have been bled out while the benchmark S&P 500 gained 8%.

Over 12 months PLUG’s lost 50%, the benchmark is up 10%.

On Wall Street analysts expects PLUG to report a per-share loss of 25 cents on revenue of US$237.4 million. This is actually a beat on last year’s quarter loss of 30 cents a pop on US$151.27 million.

It seems like investors will pull the PLUG if it doesn’t power to profit real, real soon.

This from Nasdaq’s terrific Richard Saintvilus:

Last month, the management not only boosted its revenue guidance to $1.3 billion, which is now higher than consensus estimates, they also reiterated their annual revenue target of $20 billion by FY2030. For some context, full year 2023 revenue is projected to be $1.28 billion. This means they expect average annual revenue growth of 208% in the next seven years. This includes forecasting annual sales of $5 billion and 30% gross margin for 2026. These are ambitious targets, suggesting more than 600% growth above 2022. Whether the company can reach this goal remains to be seen, but in the near term, the company must show more progress in gross margin improvement for the stock to rebound.

Disney (DIS) – After the close, Wednesday, Aug 9

Walt Disney stock is down some 25% over the past five years, while the S&P 500 is 60% higher. And when factoring the declines of 18% and 26% in the respective one year and three years, Disney has been a blockbusting failure. In Q2 total subscribers to Disney+ fell for the second straight quarter, falling about 2% sequentially to 157.8 million from the prior quarter’s 161.8 million.

And Disney is cheap, trading at 10-year lows and at just 17 times forward EPS estimates.

Return of the Iger’s advertising-supported tier on Disney+ plan, stolen straight from Netflix, will be a fun focus on Wednesday eve’s analyst call.

They say Disney will earn $1.00 per share on revenue of US$22.54 billion vs last Q2 when earnings came to $1.09 per share on revenue of US$21.50 billion.

Alibaba (BABA) – Before the open, Thursday, Aug 10

Consensus expectations have Chinese ex-mega tech Alibaba making US$2.02 billion on revenue of US$31.48 billion. Last Q2 earnings limped to $1.74 on revenue of US$30.46 billion.

I could write forever on this. So I’ll be brief. …and possibly frustrate my dear editor and offer everyone some advice – wait.

China’s just not itself right now.

As far as BABA goes… I guess if ex-CEO/founder Jack Ma turns up in a cantina in Mexico with an ice-pick in his neck – buy.

But even today China logged its first monthly (July) inflation drop since the monthly CPI read fell near the end of 2020.

China’s producer price index (PPI) fell away by 4.4% in July vs a year ago – which is a good deal more than the 4.1% expected by all those hard to reach economists polled by Reuters.

Frankly, I don’t think that last bit’s too important but honestly, if Reuters and Bloomers et al go to the enormous hassle of surveying swathes of Chinese analysts, then they deserve a nod for the effort. And if the combined confusion of wildly differing potshot economics produces a number then let’s share it.

It’s the falling consumer prices which are a worry. Mainland stocks were thumped as a result ‘cos if China’s consumers aren’t consuming and consumer prices then slide into negative territory – which they did in July, for the first time in almost 30 months – then whatever late-to-the-party stimmy gets rolled out by officials suddenly looks far less silvery than all the other magical bullets fired off over the past 20 years of ravenous consumer spending.