Markets Slip but Optimism Increases🌊 | News Sentiment Roundup 9/13-9/17
Market optimism and speculation continues to build despite a slight (but probably healthy) pullback from the major indexes. We dive into sentiment for $CLOV, $CPRT, $ETSY, $BAC, and $RIDE
Good morning ladies and gentlemen, welcome to another weekly edition of my stock market news sentiment review. I am your host Ramsey Shaffer (@ramsey_stocks on Twitter), thank you for being here. Subscribe below to stay up to date on all stock market news and sentiment. If you like what you see, tell a friend! Reply or comment with any thoughts or questions. 🤠
This past week we analyzed another 1,648 stock market news articles from across the internet and summarized the results of our analysis into this 5-minute report to help you gauge the aggregate mood about stocks and the market overall. A breakdown of how this report is written:
This Week’s News Sentiment
Most Mentioned Tickers
Best and Worst Ticker Sentiment
Market Mood Outlook
1. This Week’s News Sentiment 📰
Despite a week of relatively slow movement in the markets, this week’s finance news coverage was about as bullish as we’ve seen over the past 6 months. The average stock market news article published this week recorded a 0.44 sentiment score (on a scale from -1.0 to +1.0 — ie. nearly half of sentences written about the markets this week were optimistic in nature). Couple this with an average weekly time-sense score of 0.64 (on a scale from -1.0 to +1.0 measuring the past vs. future tense language expressed, this means roughly 2/3rds of sentences about the markets were written in future-tense) and we have the makings for highly bullish conversation (optimism into the future = bullish). Here’s a look at the major news events from this past week driving conversation sentiment:
📈 Stocks: The S&P 500 and NASDAQ fell for the second week in a row amid choppy trading, although their latest weekly declines were modest at just 0.5%. The Dow's decline was even smaller; that index posted its third straight negative result.1 With the current precedent of seemingly unending gains across major market indexes throughout the past year, dare I say it’s kind of refreshing to see some healthy correction. For the most part, Wall St. analysts reacted positively to the pullback, saying we’ve been due for a while now.
🦅 Economy: While inflation remained strong, the recent spike in U.S. consumer prices moderated in August. The Consumer Price Index rose 5.3% compared with the same month a year earlier, but the rate of increase was down slightly from July’s figure and was markedly below June’s surge in inflation. Despite a recent decline in consumer sentiment, U.S. retail spending unexpectedly rebounded according to a report published this week. Sales rose 0.7% in August, marking a sharp turnaround from July’s 1.8% decline.While both happenings have tempered the economic outlook into the short term, it’s still very hard to say where the U.S. economy will be 1 year from now.
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:
📱 Facebook Inc. ($FB): Facebook was mentioned more than any other stock in this past week’s news coverage after eclipsing a new all-time high share price last week above $380 — it’s stock fell nearly 5% this week back down to $364.72 by end of day Friday. While $FB headlines throughout the week leaned optimistically on average, articles were highly polarized as to whether the stock has any room to grow in the near term. While some analysts argue that Facebook’s current stock valuation remains surprisingly reasonable — even after its 40% run-up so far in 2021, it’s still only trading at 21-times forward earnings — others expect the social media giant to see a slowdown in the second half of the year. Developments within the company as of late have centered around its Reality Labs operations, as recent acquisitions of extended reality start-ups like Unit 2 Games and CTRL-Labs have quickly made Facebook one of the world’s biggest players in the blossoming field of virtual reality. The company also just announced that it will be partnering with Ray-Bans to release AR glasses this Fall. This week’s most optimistic and speculative $FB article:
“Reality Labs Will Take Facebook's Stock To New Dimensions” | Seeking Alpha
💉 Clover Health Investments ($CLOV) doomed to be a meme (forever?): the ticker with the biggest increase in news headlines this week compared to last week was Clover Health ($CLOV). Clover Health’s jump in headlines this week can be attributed to its incredibly high implied volatility in the options trading realm. Despite falling 3.9% to $8 per share throughout the week to add to its -46.7% slide in price so far this year, $CLOV has remained one of the top stocks in social media circles, garnering more news coverage than nearly any other “meme” stock of the past 6 months on Twitter and Reddit. While the stock’s meme status may be more of a curse than a blessing for any serious long-term holders, Wall Street analysts do seem to agree that its current positioning as a disruptive tech company on the fringes of a relatively stagnant health insurance industry could be reason enough to keep it in your watchlist; the jury is still out. This week’s most speculative $CLOV article:
“Do Options Traders Know Something About Clover Health Stock We Don't?" | InvestorPlace
3. Sentiment Winners and Losers 👍👎
Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. Here’s a look at which tickers scored the highest (and lowest) in terms of optimism, pessimism, speculation, and reaction expressed in this past week’s news:
Sentiment: Most Optimistic😀 and Pessimistic😒 Tickers
🚗 Copart, Inc. ($CPRT) posts great Q4 earnings on giant used car prices: This week’s most optimistic individual stock in news coverage was Copart (optimism score: 73.4%). $CPRT finished the trading week essentially unchanged around $144 per share, but has gained more than 30% in value over the past 6 months. Copart is a global provider of online vehicle auction and remarketing services to automotive resellers, primarily operating in the US, Canada, and the UK. Much of the optimism in news surrounding Copart this week came as the aftermath of its Q4 earnings call released on September 8th, in which the company highlighted strong growth and record earnings per share of $1.03 (above consensus estimates of $0.86). The stock has benefited handsomely in recent months from booming used car prices across the globe, garnering rave reviews from analysts and amateurs alike who say that its patented platform and unique business model provide for great profitability with an economic moat to boot. This week’s most optimistic $CPRT article:
“Copart Stock (CPRT): One Of Its Kind” | Seeking Alpha.
🧶 Etsy Inc. ($ETSY) breaks resistance, but it’s overvalued: this week’s most pessimistic ticker in news coverage was Etsy(pessimism score: 29.8%). $ETSY stock broke resistance above $220 to post a weekly growth of 5.5% in share price, and has posted 31.9% growth so far in 2021. With the stock trading above its 6-month price window, one might expect news coverage to react with jubilance. Instead, we saw relatively high degrees of pessimism expressed about Etsy in the news this week, with analysts saying that the stock has become a bit too big for its britches. In terms of its valuation, $ETSY’s trailing-12-month Price to Earnings ratio of 61.6 puts it well above the historical average — add in its trailing-12-month earnings per share (EPS) of 3.48 and it starts to look utterly overvalued. While these numbers may not bode well for the stock in the near term, others argue that the company’s expedient growth over the past few quarters makes it the preeminent craft e-commerce play over the long term. For now, that bullishness appears to be solidly priced in. This week’s most pessimistic $ETSY article:
“Is Etsy Inc (ETSY) Stock Over or Undervalued?” | InvestorsObserver
Time-Sense: Most Speculative🤔⏩ and Reactive😮⏮️ Tickers
🏦 Bank of America Corp. ($BAC) receives an upgrade (where to next?): The stock with the most speculative (ie. future-tense) sentiment measured in the news coverage this week was Bank of America (speculation score: 93.4%). $BAC stock finished the week flat, changing -0.25% in price to end the period at $40.50 per share. While $BAC shares have increased in value by roughly 32% so far in 2021 (along with a multi-year high set back in June), the stock has fallen 8% since reaching its peak, in part due to its underwhelming Q2 earnings results posted in mid-July. Much of the speculation surrounding Bank of America in this week’s news stemmed from its upgraded rating from Hold to Buy given by Odeon Capital analyst Dick Bove; he also announced a revised $BAC price target of $46.50 per share. The upgrade following its recent lackluster price performance might seem a bit perplexing — even if the stock does rally at some point, we are left to wonder if it may continue to fall in the short term. If there’s any takeaway, it’s that remaining analysts seem to expect some choppiness in $BAC share price over the coming weeks. This week’s most speculative $BAC article:
“Bullish on BAC? Cash-Secured Puts Make the Stock More Affordable” | Investing.com
🏎️ Lordstown Motors Corp. ($RIDE) pops on short interest and a new CEO: The stock with the most reactive (ie. past-tense) sentiment measured in the news coverage this week was Lordstown Motors (reaction score: 63.6%). Much of $RIDE’s news reaction followed its 14.9% rise to $7.06 per share on the week, as the embattled stock climbs its way out of a 65% drop in price so far in 2021. Lordstown is yet another American electric vehicle startup, and has suffered in recent months on a multitude of analysts downgrades, citing fierce competition within the booming EV industry from competitors like Fisker ($FSR) and Lucid Motors ($LCID). The naysayers were silenced (just slightly) this week on the stocks jump in share price, driven by its high short interest bringing in extra intrigue from traders — the trading flurry can almost be traced back to this Tweet from Ihor Dusaniwsky on Monday in which he called out the stock’s staggering $203M in short interest. The stock will likely continue to receive heightened attention in the coming weeks following the flurry, and if you needed any more reasons to pay attention to it, Lordstown just named a new CEO two weeks ago. This week’s most reactive $RIDE article:
“Lordstown Motors Shares Rev Up On Short Interest” | InvestorsPlace
Biggest Mood Swings and Changes 🎭🔀
Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest change in each of our four sentiment metrics this week compared to last.
📮 United Parcel Service, Inc. ($UPS) saw the largest increase in optimism expressed this week compared to last week despite falling 2.4% to $190.24 per share over the period. The optimism increase stems from multiple opinion pieces published this week arguing that $UPS is becoming a great value buy for the long-term, citing surging e-commerce package demand and significant margin expansion targets from the company’s management.
🔎 Alphabet Class C ($GOOG) recorded the largest increase in pessimism expressed this week after falling 1.2% to $2,829.27 per share and underperforming industry peers like IBM ($IBM), Microsoft ($MSFT) and Facebook ($FB). Much of the pessimism surrounding $GOOG this week came as analysts warn of stock pullbacks following the company’s recent eclipse of fabled $2-trillion dollar market cap mark.
💻 Nvidia Corp. ($NVDA) posted the biggest increase in speculative language expressed this week compared to last. $NVDA stock price fell 3.5% this week to $219.00 per share despite receiving multiple price target hikes from Wall Street analysts like Vivek Arya (Bank of America). Arya raised his $NVDA price target from $260 to $275 on the week, citing its recent outperformance vs. competitors like Advanced Micro Devices ($AMD).
🐕 Dogecoin ($DOGE) received the biggest increase in reactive language expressed this week compared to last week after falling 10% on the week back to $0.23 per coin. The tumble caps off a 30% fall in price over the past month — but keep in mind $DOGE is still up more than 8,096% over the past year. Much of the reaction this week came in comparison to it’s alt-coin counterpart Shiba Inu Coin ($SHIB) which rose 25% on the week following its debut of trading on Coinbase.
4. Market Mood Outlook 🌡️🔭
We’ve officially hit the mid-quarter slowdown between earnings seasons, and the market reflected that this week. Overall the major indexes pulled back slightly again for the third consecutive week on relatively light trading. Despite this, news sentiment remained significantly optimistic and speculative into the future on the back of inflation and retail positivity. Looking ahead into the rest of September, we will be curious to see if the current bout of optimism can sway the markets back above their all-time highs (or risk snapping the S&P 500’s string of seven positive months in a row). Looking ahead to this week, the U.S. Federal Reserve will conclude its two-day meeting on Wednesday and is expected to explore when to trim its bond-purchasing stimulus program as an initial step toward broadly tightening its monetary policy — some analysts expect the Fed to hold off on any specific tapering until September’s job growth numbers are released. That’s all for today’s report; good luck this week everyone, and thanks for reading. 🙏
Beta News Analyzer
In other news, we’re currently finalizing our beta web app! Our news analyzer is set to be released in the coming weeks. Sign-up for our limited waitlist below to gain early access before we release it for real this Fall:
When you sign-up, you’ll gain real-time market sentiment for thousands of stocks, top-tier sentiment metrics created by us, and news from accredited sources without bots or algorithmically written articles. The early access pricing will be ~50% less than what we’ll charge once we go live, since we think it’s important to reward the people like yourself who’ve been with us on this journey so far. Thanks for being here with us! Here’s a sneak peek: 👀