Value Stock Earnings, Tax Hikes(?) and More

This past week we randomly sampled finance news articles and social media posts from around the internet and analyzed each of them to determine the most-talked-about tickers and sentiment trends in news conversation. Here’s what we saw last week, and what to expect in the week ahead.

Markets At A Glance

The stock market finished last week relatively flat, capping off a volatile string of trading days with some of the lowest daily volumes thus far in 2021.1 The S&P 500 retreated slightly from its April 16th all-time high, trading lower on 3 of 5 days last week; the broader market remains only 1.2% below the recent high, so this shouldn’t be cause for much concern. A portion of this market fluctuation can be directly attributed to Thursday’s headlines from the White House, as Joe Biden considers plans to nearly double long-term capital gains tax rates (for taxpayers earning more than $1M annually).2 Overall, small-caps somewhat outperformed large-caps on the week, though there’s no telling if this will remain a trend. With 1/4th of S&P 500 companies already reporting earnings (and 77% of them topping their revenue estimates), we may do well to expect continued emphasis from investors on value stocks as the rest of the bunch release their quarterly earnings reports in the weeks ahead.3 Let’s take a look at what tickers were talked about most this past week:

What’s Making Headlines

We analyze the optimism, pessimism, reaction, and speculation expressed in the news each week to gain insight into each stock’s outlook. In terms of news sentiment, the amount of optimism and pessimism expressed in each article sampled last week was relatively similar to previous weeks. The amount of speculative language (ie. words referencing future events) was markedly higher than previous weeks, a possible byproduct of the market’s flat performance on the week. Reactive language (ie. words referencing past events) also increased last week, the likely result of initial earnings reports coming in. Below we’ve plotted the most-talked-about tickers in the news last week by their average sentiment across articles. Notably, we can see the big-name favorites like Apple ($AAPL), Microsoft ($MSFT), Amazon ($AMZN), Alphabet (both $GOOG and $GOOGL), and Tesla ($TSLA) bunched together in the 1st quadrant; with earnings around the corner, they all exhibit signatures of moderate optimism and speculation in conversation. Sitting above this group on the graph are the big cryptocurrency tickers: Ethereum ($ETH), Bitcoin ($BTC), and recently-IPO’d Coinbase ($COIN). The cryptos have moved steadily towards the top right of the graph in recent weeks, following a trend of increased “bullish” sentiment in the conversation around them (relative to the other tickers). One more thing to note is the positions of Gamestop ($GME) and AMC ($AMC); the pair continue to move away from the bullish quadrant, indicating that the memestock revolution of month’s past is certainly less alive than it once was; at least as far as news reporting goes. Below, we’ll dive into a few key tickers and analyze their conversation.

caption...

Bitcoin ($BTC)

Seeing Bitcoin being discussed with high optimism and speculation isn’t anything novel in today’s day in age. But its relative bullishness in last week’s conversation is a bit surprising, given that its price fell more than 7% on the week, dipping below the $50,000 benchmark for the first time since March 7th. Many analysts report that this drop is a direct result of Biden’s tax-hike comments. The price did rebound considerably over the weekend, jumping approximately 5% after this suspiciously timely Tweet from Elon Musk. Some other potentially influential Bitcoin-related headlines from this past week with high-scoring sentiment metrics include:

  • Bullish: “Bitcoin on Track for Biggest Bounce Since February on Musk Tweet” | TheStreet
  • Bearish: “Turkish Ban May Be Bitcoin’s Marketing Boon” | Benzinga

Netflix ($NFLX)

Even with an EPS beat ($3.75 vs. $2.97 estimate) and slightly better-than-forecasted revenue in Q1, Netflix stock tumbled more than 10% after last week’s earnings report. Much of this investor pessimism stems from their considerable underperformance in terms of subscriptions: while the company predicted 6.44M new subscribers in Q1, they finished the quarter with only 3.98M new subscriptions being placed. This miss brought broader implications for the entertainment subscription market, as it appears Netflix may have fallen victim to some of its own successes early on in the Covid-19 market. Though the company added more than 26M subscribers in the first half of 2020 (nearly as many as their previous five quarters combined), market infiltration from other platforms and the recent reopenings of movie theatres and other entertainment venues has caused analysts and investors to question Netflix’s dominance going forward. In light, the company announced share buybacks during earnings. Directly from the media, here are a few notable headlines and posts:

  • Bullish: “Netflix just destroyed earnings but signed up about 2 mil less subs than they thought…” | @GerberKawasaki (original tweet here)
  • Bearish: “It’s a $NFLX problem not an OTT problem…” | @OphirGottlieb (original tweet here)

And the (Sentiment) Oscar Goes To…

Aside from these key tickers, below we present a quick look at which tickers scored the highest (and lowest) for each of the sentiment metrics we currently track.

Ticker Optimism😀 and Pessimism😒

In terms of mood, last week we saw some fresh faces. CEL-SCI Corporation ($CVM) and The Container Store Group ($TCS) were spoken of with a greater proportion of optimism (relative to pessimism) than any other stocks mentioned. Other notable optimistic tickers in conversation include First Solar, Inc. ($FSLR), Carlisle Companies ($CSL), KLA Corporation ($KLA), and Texas Instruments Inc. ($TXN). On the other side of the ball, the ticker with the greatest proportion of pessimistic language (relative to optimism) was far and above the DAX performance index ($DAX), a composite of Germany’s 30 largest blue-chip stocks. Other highly pessimistic tickers last week included W&T Offshore Inc. ($WTI), UPS ($UPS), and the CAC 40 ($PX1), a benchmark French market index.

The complete visualization of the top-10 most optimistic and pessimistic tickers last week broken down into relative mood (normalized optimism vs.pessimism expressed) and absolute mood (% of optimism or pessimism expressed outright).

Ticker Reaction😮 and Speculation🤔

In terms of time-sense expressed, last week’s most reactive (ie. past-oriented) tickers in conversation include $CAC and $DAX (mentioned above) after relatively positive performance in their respective foreign markets. Other highly reactive tickers include the Dow Jones Industrial Average ($DJI), Delta Airlines ($DAL), Discover Financial Services ($DFS), and Spirit Airlines ($SAVE). Conversely, last week’s most speculative (ie. future-focused) ticker was far and above the Direxion Daily Semiconductor Bull 3X index ($SOXL) after 5 straight week trading days in the semiconductor market. Other highly speculative tickers include Newmont Corp. ($NEM), Willis Towers Watson PLC ($WLTW), Monolithic Power Systems, Inc. ($MPWR), and Aptiv PLC ($APTV).

The complete visualization of the top-10 most reactive (past-focused) and speculative (future-focused) tickers last week broken down into relative time-sense (normalized speculation vs. reaction expressed) and absolute mood (% of speculation or reaction expressed outright).

Looking Ahead

Recent momentum in the markets seems to suggest that our current bull market will persist in the near future (with a few bumps to be expected). The performance of large-caps as a group will likely be contingent on remaining earnings, but from what we’ve seen so far there is room for optimism; a comprehensive list of earnings reports scheduled for this week can be found here from @eWhispers on Twitter. It remains unclear how long the current trend of value vs. growth investing will play out, especially after the up’s and down’s brought on by last week’s comments from the White House and the Fed. We will look to the weeks ahead for more clues about how investors will react. With much of the stock market remaining relatively expensive for retail investors, it appears that another large bounce could be in place this week for cryptos, especially given last week’s retreat. All in all, this upcoming week is set to be another interesting one in the markets, at least as far as the news conversation is concerned. Thanks for reading! 🙏

Subscribe to the newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Don't miss these stories: