Good Morning to Everyone Except Peloton🏃♀️ | Market News Sentiment Review 11/1-11/5
Optimism persists for yet another week behind monster earnings and more all-time high prices. We dive into sentiment for Peloton, T-Mobile, Marathon Oil, Qorvo, Solano, Cardano, and Quest Diagnostics.
Hello and welcome to my weekly review of market news sentiment. I am your host Ramsey Shaffer (@babbldev on Twitter) — thanks for being here, and a HUGE shoutout to the 3 new subscribers to the newsletter this week! We’re closing in on 200 subscribers (!!) so if you haven’t already, join our growing lil community here 👇
This past week we analyzed another 1,089 stock market news articles from across the internet to find stocks worth watching and investing in. Below we’ll highlight the topics and tickers that Wall Street is talking most about this week, and give you some ideas for stocks to buy (and sell) based on their news sentiment. Here’s the breakdown:
This Week’s News Sentiment [1 min read]
Most Mentioned Tickers in News Coverage [2 min read]
Best and Worst Ticker Sentiment [3 min read]
Weekly Market Mood Outlook [1 min read]
1. This Week’s News Sentiment 📰
Stock market news sentiment rose for a second consecutive week behind another crop of impressive Q3 earnings reports. On the whole, the majority of articles written about the markets this week leaned optimistically, posting a net 0.21 sentiment score on a scale from -1.0 to +1.0 (an increase of 9% compared to last week). In terms of time-sense expressed, articles written this week were considerably reactive, speaking of the market mainly in past-tense as analysts reacted to earnings and new highs from many stocks in the market. Overall, our algorithms show increasing bullishness across stocks and cryptocurrencies, driven by the events and topics below:
📈 Stocks: With earnings season now almost over, the S&P 500, the NASDAQ, and the Dow rose for the fifth consecutive week, and all three indexes pushed their record levels higher. The NASDAQ added about 3%, outperforming its peers by a wide margin for the second week in a row.1 Growth stocks and small-caps carried the load this week, with the Russell 2000 Index outpacing its large-cap peers by a wide margin and adding more than 6% for the week to top its record set nearly eight months earlier. In terms of earnings, the proportion of S&P 500 companies that had beaten analysts’ net income expectations stood at 81% as of Friday, which according to FactSet ranks above the 76% five-year average.
₿ Cryptos: The global cryptocurrency market cap rose for yet another week in a row, eclipsing an all-time high of $2.7-trillion dollars and climbing roughly 4%. As the crypto market cap inches closer to the fabled $3T mark, much of the growth this week was driven by Ethereum ($ETH) and Ethereum-alternatives like Solano ($SOL) and Cardano ($ADA), as well as meme coins like Shiba Inu ($SHIB) and Dogelon Mars ($ELON). For as much as Wall St. analysts gripe, the American dream of becoming a crypto-billionaire with 10,000% gains appears to be alive and well.
🦅 Economy: U.S. jobs growth in October exceeded most economists’ expectations, and the addition of 531,000 jobs signaled a resurgence in the labor market following recent weakness. Though inflation concerns have brought increased news pessimism in recent weeks, this week the Federal Reserve said that it will soon begin to trim the $120 billion in bond purchases that it’s been making each month to support economic growth. The Fed continues to characterize the recent spike in inflation as “transitory,” but now acknowledged that price increases have been faster and more enduring than they had forecasted. Lastly, The House passed a more than $1 trillion bipartisan infrastructure bill on Friday sending it to President Joe Biden for his signature.
2. Most Mentioned Tickers 📊
Each week we analyze the number of headlines written about each stock and cryptocurrency. The most mentioned tickers in this week’s news and the tickers with the biggest volume increase compared to last week are shown below:
💻 T-Mobile US Inc. ($TMUS) saw the biggest jump in stock market news coverage as Q3 earnings highlight its dominance in the realm of 5G: shares of $TMUS rose 7% to $122.77 on the week after the company’s third-quarter earnings report was released Wednesday. The report underscored T-Mobile’s emergence as a cellular leader in the era of 5G, as competitors like AT&T ($T) and Verizon ($VZ) have repeatedly delayed the rollouts of their ultra-wideband 5G networks due to concerns about their chosen airwaves causing interference with other communication networks — particularly in the realm of aviation.
By analyst accounts, T-Mobile is estimated to be about a year ahead of AT&T and Verizon in their rollouts, and as a result, it will likely have the broadest 5G coverage in the nation when all is said and done. Coupled with “synergies induced” by its recent merger with Sprint, having such a leg up in the 5G revolution could prove to provide some serious growth for investors heading into 2022 — some analysts argue that the company’s prospects for a monstrous 2022 signal that its current price is undervalued, making it an attractive long-term investment.
“T-Mobile: Unstoppable Growth In The 5G Era” | Seeking Alpha
3. Sentiment Winners and Losers 👍👎
Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. Here’s a look at which tickers scored the highest (and lowest) in terms of optimism, pessimism, speculation, and reaction expressed in this past week’s news:
Sentiment: Most Optimistic😀 and Pessimistic😒 Tickers
🛢️ Marathon Oil Corp. ($MRO) news was highly optimistic this week after a strong Q3 earnings report. We’ve written a lot about the impacts of booming oil prices in recent weeks — gas prices are climbing, EV stocks are rising in spite, and airlines are hedging their bets as crude oil continues to hover above $80 per barrel. Arguably no one has benefited more from this premium pricing environment than Marathon Oil, whose stock price has climbed more than 240% over the past year. Marathon finished this week at $17.07 per share, rising 3% following their third-quarter earnings report released on Thursday. The earnings call highlighted Marathon’s transition from survival to cash generation mode in recent months, with strong revenues from its oil and gas divisions pairing nicely with the company’s limited hedges.
During the call, Marathon CEO Lee Tillman emphasized the company’s intentions to put shareholders first, raising their quarterly dividend to $0.06 per share and pledging to return around 50% of fourth-quarter cash flow from operations to equity holders. With a forward-looking price-to-earnings ratio at 14.57 and a price-to-book ratio of 1.25, analysts posit that $MRO stock is still undervalued despite its hyperbolic growth in the past 12 months — for all intents-and-purposes, $MRO is making the case to be a great buy for value investors, driven home by its growing news optimism in recent weeks. This week’s most optimistic $MRO article:
“Marathon Oil Can Possibly Buy Itself Back in 5 Years” | Seeking Alpha
📻 Qorvo Inc. ($QRVO) fell hard Thursday on its disappointing outlook for the rest of 2021. After climbing 6% throughout the week heading into its third-quarter earnings report, $QRVO stock dropped more than 13% on Thursday and Friday. The fall was driven almost entirely by the chipmaker’s disenchanting sales guidance for the remainder of the year, which came in well below analyst expectations. While Qorvo did post increased revenues of $1.26 billion (compared to last year’s Q3 revenues of $1.11 billion), analysts were expecting revenues closer to $2.25 billion.
The revenue miss raised questions about both the impact of chip shortages and the potential loss of market share to Qualcomm and other competitors. Qorvo management admitted that supply challenges and “other factors impacting global smartphone demand” could mean a sequential decline in revenues over the next quarter as well, though they remain adamant that the logistic issues will prove to be transitory in the long term. Following the report, Bank of America and other rating agencies downgraded their $QRVO rating from “buy” to “neutral”, arguing that the boost to Qorvo’s revenue from 5G was slowing, possibly creating a significant decrease in revenue growth in the years ahead. While its revenues remain squeezed and supply chain issues persist, the bearishness surrounding Qorvo in the news seems well-warranted. This week’s most pessimistic $QRVO article:
“Qorvo Stock Is Sliding. A Soft Outlook Has The Street Worried.” | Barron’s
Time-Sense: Most Speculative🤔⏩ and Reactive😮⏮️ Tickers
⛓️ Cardano ($ADA) vs. Solana ($SOL) is this week’s biggest crypto rivalry: Cardano and Solana were both highly speculative in stock market news coverage this week after Solana surpassed Cardano on Friday to become the 4th largest cryptocurrency in the world in terms of market cap. While Cardano has climbed roughly 1,000% so far this year to around $2 per coin with a $66 billion dollar market cap, Solano has risen the stakes and exploded 16,000% (!) on the year to $248 per coin and a $72 billion dollar market cap.
Both coins have steadily been making their case to become the preeminent Ethereum alternative (so-called “Ethereum killers”) — with $ETH mining and transaction costs rising, investors and developers alike have begun turning to third-generation programmable cryptos like $ADA and $SOL to support their projects. While Cardano had been dubbed the darling Ethereum challenger by many analysts over the past year, its fall from third- to sixth-largest crypto market cap last week has brought some to question its future. Solano on the other hand touts faster transaction speeds and has been able to ride this to its new highs with growing adoption of mobile and video game projects being created on its blockchain. Accordingly, analysts have changed their tune in recent days to become much more bullish on Solano than Cardano, the question: how long will this bullishness last? This week’s most speculative Cardano and Solano article:
“Solano Pushes Cardano Out of Top 5 Cryptos” | The Motley Fool
🔬 Quest Diagnostics Inc. ($DGX) erases its earnings report boost to end the week down big. Quest Diagnostics is Fortune 500 clinical laboratory company that some would consider to be a formidable growth stock. The company posted its third-quarter earnings report two weeks ago, in which it announced impressive $3.96 earnings per share to beat analyst estimates by more than 33%, driven by demand for clinical testing relating to COVID-19. While $DGX stock rose significantly heading into the Q3 report, some of the love has since been lost as the stock fell more than 4% throughout this week, erasing nearly a fifth of its gains since the beginning of the year.
Following its drop in share price, analysts have actually been relatively bullish about $DGX for the long-term, citing healthy cash flows and optimistic guidance from the company’s management as reasons to buy the dip. The stock currently boasts an attractive price-to-earnings ratio around 8.5, and according to Simply Wall St., could be selling at a near-43% discount relative to its intrinsic value as a company. Zacks also has it listed with a “Strong Buy” rating following the earnings report. This week’s most reactive $DGX article:
“An Intrinsic Calculation for $DGX Suggests It’s 43% Undervalued” | Simply Wall St.
Biggest Mood Swings and Changes 🎭🔀
Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest change in each of our four sentiment metrics this week compared to last.
🔋 NextEra Energy Inc. ($NEE) saw the largest increase in optimism this week after it was announced on Friday that the company is set to receive an $824-million dollar investment from Apollo Funds to support its wind and solar deal.
💿 Xilinx Inc. ($XLNX) recorded the biggest increase in pessimism this week after news about its expected $35-billion dollar acquisition by Advanced Micro Devices ($AMD) fell flat as the company awaits slowing progress from Chinese regulators to grant it antitrust clearance.
💊 Johnson & Johnson Inc. ($JNJ) posted the biggest increase in speculative language expressed this week compared to last after the US government terminated a deal with Johnson & Johnson’s coronavirus vaccine manufacturer Emergent BioSolutions. The canceled deal was announced following claims that the company had mishandled and ruined millions of Johnson & Johnson vaccine doses, bringing into question the logistics of $JNJ’s vaccine production going forward.
🏃♀️ Peloton Corp. ($PTON) toated the biggest increase in reactive language expressed this week compared to last as its stock fell off a cliff on Friday, falling nearly 40% in the aftermath of the company’s Q3 earnings report — apparently people are going back to the gym, signaling that the stock’s smooth ride over the course of the pandemic may be coming to a halt.
4. Market Mood Outlook 🌡️🔭
As the fun run of third-quarter earnings season begins to dwindle, let’s not forget where we are in the grand scheme of things. The global economy is bustling compared to last year’s COVID-19 woes — though growing pains like inflation and international supply chain issues have ruffled feathers heading into the holiday season. Stock and cryptocurrencies continue to eclipse all-time highs set within the past seven months, driven primarily by a DIY investing revolution like nothing we’ve ever seen before.
While many analysts speculate that the buck has to stop somewhere and that “the markets will surely correct sooner or later”, news sentiment shows no immediate signs of impending doom; in fact we are seeing quite the opposite, much more optimism than pessimism in analyst reporting. We will look ahead for more clues about the seriousness of inflation in the short term — specifically this upcoming week’s Consumer Price Index report scheduled to be released by the Bureau of Labor Statistics on Wednesday. We’ll also look to the last big group of Q3 earnings reports scheduled for this week (full slate shown below) from the likes of AMC Entertainment ($AMC), Coinbase ($COIN), ContextLogic ($WISH), and DoorDash ($DASH).
That’s all for this week’s report — if there’s anything we missed, or any tickers you’d like to see more sentiment analysis for, let us know by replying to this email, commenting below, or sending us a message at firstname.lastname@example.org — we LOVE💜 hearing from you all! Keep an eye out this week for our monthly “What We’re Reading” bonus newsletter, and expect some exciting changes to the format of this weekly review in next week’s edition. Good look to all of you the markets this week, and thank you for reading! 😄🙏
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