Stock Market Futures In The Green As Nasdaq Drifts Near Correction Territory
Stock market futures are gaining in early morning trading on Thursday this week. This comes after a rough day in markets where major stock market indexes ended the trading day in the red. Particularly, the tech-heavy Nasdaq composite closed at about 10% below its record November 2021 levels. As a result of this, some analysts are already noting that it could be going into correction territory. Amidst inflation and upcoming interest rate hikes weighing in on high-growth tech stocks, this is not all that surprising.
Nevertheless, providing some insight into all this is Commonwealth Financial Network’s chief investment officer Brad McMillan. McMillan explains that all the panic around the current rise in interest rates is rooted in two assumptions. First is the assumption that an increase in rates reflects a problem with the financial market. Second is the belief that changes in rates indicate a move towards ideal “correct” rates. McMillan then goes on to say, “This narrative is pretty standard for this stage of the economic cycle.” Targeting the first assumption, he believes that problems in the financial markets stemming from the pandemic and economic pressures are “appearing to fade.” Regarding the second, the CIO argues that the current measure of the “right” rates is within the context of the current pandemic.
In closing, he says, “If both of these assumptions are wrong — and they are — the narrative we are seeing in the headlines must be wrong as well.” As of 7:24 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.42%, 0.47%, and 0.80% respectively.
Kinder Morgan Forecasts 40% Profit Bump In 2022
After yesterday’s market close, Kinder Morgan (NYSE: KMI) reported solid figures across the board in its latest quarterly earnings report. Diving in, the energy infrastructure titan posted an earnings per share of $0.27 on revenue of $4.43 billion for the quarter. Notably, this marks a massive year-over-year increase in revenue of 42%. Overall, CEO Steve Kean notes that the company had a record year in 2021 financially, beginning with KMI’s solid performance during Winter Storm Uri. Kean also cites KMI’s workforce who executed the company’s strategies well despite unpredictable pandemic conditions. With the current cold season in mind, demand for KMI’s services could likely persist.
For the current fiscal year, the company is expecting to raise its annual dividend to $1.11 per share. This would mark a 3% increase from its 2021 dividends. On top of that, KMI is also forecasting a sizable profit jump of 40% to about $2.5 billion in 2022. Regarding the company’s plans moving forward, Kean highlights that KMI’s assets “remain well-positioned to serve growing domestic markets and export locations.” He also adds that the firm plans to build on its current momentum over the next 25 years. After considering all of this, I could see investors eyeing KMI stock today.
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Lucid Jumps Despite PIPE Investment Lockup Expiry
In the electric vehicle (EV) space now, Lucid Group (NASDAQ: LCID) seems to be turning some heads. This is evident as LCID stock was among the top gainers in the sector yesterday. For the most part, this would be despite the expiry of the lockup period for a big chunk of its Private Investment in Public Equity (PIPE) investors. Not to mention, Saudi Arabia’s sovereign wealth fund is reportedly among the entities going long on Lucid’s growth story now. This could see a joint venture formed between the two, bolstering the EV maker’s operations locally. Should things go as planned, Lucid could be looking at potential manufacturing plants being built in 2025 or 2026.
Across the board, it seems that investors are keen to bet on this upcoming name in the EV space. Seeing as Lucid is in the business of developing luxury EVs this would be an interesting approach to the industry. After all, most would argue that EVs are, indeed, the next step for the automotive industry. For those looking to invest in the higher-end offerings currently in the market, LCID stock could be a go-to. If anything, the company’s Lucid Air EV reportedly features an official range of 520 miles per full charge. This would be the longest single charge range in the industry now, according to the Environmental Protection Agency.
Meta Platforms Launches Test Of Subscription Model On Instagram
Meta Platforms (NASDAQ: FB) remains hard at work expanding its social media operations now. As of yesterday, the company is testing out a trial run for subscriptions on Instagram, its photo-centric social media platform. According to CEO Mark Zuckerberg, this program will allow followers to directly support their favorite content creators on the platform. Among the key perks from subscriptions would be exclusive access to a special category of “Lives and Stories”. All around, this could be a positive play by Meta. On one hand, it could further incentivize social media influencers to engage with their audiences via Instagram. On the other hand, Instagram would be receiving more overall traffic alongside a more diversified creator pool.
In detail, the company is not planning to take a cut from these subscriptions until 2023 at the earliest. This would provide some breathing space for upcoming content creators looking to test out the new feature. Now, this would not be Meta’s first time testing out social media subscriptions. Since 2020, Facebook has had a similar feature and Meta notes that it has and continues to learn from feedback on that end in creating Instagram Subscriptions. As it stands, Meta says that ten creators now have access to a “subscribe” button on their profile and can set monthly fees. The company plans to expand this access to more creators in the coming months.
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Netflix Earnings: What’s In Store
On the earnings front, one of the big names taking the spotlight today would be Netflix (NASDAQ: NFLX). After today’s closing bell, investors will likely be tuning in to the video streaming giant’s earnings call. Accordingly, they may also be wondering what Wall Street expects to see from Netflix today. Analysts are expecting Netflix to post an earnings per share of $1.13 on revenue of $7.68 billion for the quarter. For the full fiscal year, consensus outlooks currently point towards a full-year earnings of $10.50 per share on revenue of $296.6 billion.
Also, two key metrics could be in focus as well. In essence, this would be Netflix’s subscriber growth and operating costs. By the company’s estimates, Netflix could add a whopping 8.5 million paid subscribers throughout 2021. Furthermore, the firm also expects to have an operating margin of 20% or better. All this combined with Netflix raising subscription fees while providing more quality original content seems to be impressing investors. Namely, Credit Suisse (NYSE: CS) analyst Douglas Mitchelson recently hit NFLX stock with a Buy rating and a price target of $740. This would suggest a potential upside of 43% over its closing price of $515.86 on Wednesday’s closing bell this week.
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