You Can't Keep Tech Stocks Down for Long  | | Luke Lango | I woke up this morning, and tech stocks were reeling in the futures market while cyclical stocks in the Dow Jones were rising. “OK,” I thought, “We were due for a mini-reset anyways. Tech stocks have been crushing it for the past few weeks anyways, and a little reset here is totally healthy.” But then the tide turned. From the opening bell, the Dow slipped and the Nasdaq rallied. By midday trading, the two were equal, both up about 0.1%. This reversal underscores what we told you in yesterday’s Daily Notes: We are back in the 2010s investing environment characterized by low-growth and low-rates, and in that environment, tech stocks are unstoppable. At this point in time, we have confidence in saying that every dip over the next few months in hypergrowth tech stocks will be small and short-lived, and ultimately turn into little more than a great buying opportunity. Of course, that’s amply true for our stocks. We own the next generation of world-changers. The only thing that held back our stocks in February, March, and April was a once-in-a-lifetime, never-going-to-happen-again physical economy reopening that created an adverse investing environment for hypergrowth stocks. That’s over now. Now, the macro backdrop is healthy for hypergrowth stocks, and will remain so for the foreseeable future. So, our stocks are going to keep pushing higher. One word of caution: The whole market may be due for a near-term technical pullback, and that’s totally healthy. Buy the dip. Long story short, stocks don’t go up in straight lines. They go up for a while, then retreat a few percent, find their footing, and get back on track. We haven’t had a “retreat” in a while. The S&P 500 has gone more than 275 days without a 5% pullback, which is among the top 20 longest streaks ever, according to CFRA Research. History does repeat itself, so it looks like we are overdue for a mini-pullback in the broader market. When that pullback does come, buy the dip in our stocks, because the macro and micro fundamentals underlying our stocks remain very, very healthy. With that in mind, let’s have a look at today’s Daily Notes:
Innovation Investor - 3D Systems scores another big auto partnership amid a wave of deals which broadly underscore that 3D printing is coming into its own, which is great news for Desktop Metal (DM). Rodin Cars today announced that it will be using 3D Systems printers to make parts for its racing car. This deal comes on the heels of a slew of other auto and biomedical 3D printing partnerships with various 3D printing companies over the past two weeks. The sum of these deals broadly underscores that 3D printers are, indeed, ready to be used on the manufacturing floor and a have real-world, industrial impact on how companies make things. That, of course, is great news for Desktop Metal – who we believe is the unrivaled leader in mass-scale 3D printing thanks to its Single Pass Jetting technology. We believe the long-term upside in Desktop Metal stock from current levels is enormous.
- Evercore visits Lucid Motors’ (CCIV) New York Studio and comes away very impressed. In a note dated today, the research team over at Evercore said they visited the Lucid Motors New York Studio and test drove the Lucid Air, and walked away very impressed with the company, the car, the technology, the branding, and the management team. Evercore also noted that reservations have increased from 9,000 to 10,000, and that manufacturing ramp is progressing ahead of schedule. Overall, Evercore was very impressed. We aren’t surprised. From a distance and up-close, Lucid Motors is very impressive. The world is sleeping on this company right now. But mark our words: By mid-2022, everyone will be calling this company the Tesla-killer.
- Luminar (LAZR) drops on secondary offering, and this is a great buying opportunity. Luminar stock dropped today after the self-driving company filed for a 9M Class A stock offering. Shares are dropping on fears of dilution. We’ve seen this rodeo many times before. Stock drops on fears of dilution surrounding a secondary. Those fears prove temporary. Stock rebounds. It happens every time. This time will prove no different. Luminar stock will swiftly rebound from this secondary-inspired sell-off. Buy the dip.
- Virgin Galactic (SPCE) falls big after meteoric rally. Virgin Galactic stock rallied about 230% in a matter of a month. It’s no surprise to see the stock giving back some gains today after such a huge rally. The important part is that we think this “giveback” is temporary. Virgin Galactic will fly Richard Branson into space at some point in the first-half of July. The stock will do one of two things heading into that event. Either it will rally big into the Branson flight, and then have a “sell the news” event. Or it will trade flat into the Branson flight, and then soar afterwards. Either way, the stock is going to pop in a big way at some point over the next month. We sold one-third of our position just last week. It may be time to think about buying back down here.
- The National Highway Traffic Safety Administration is ordering automakers to report any crashes involving fully autonomous vehicles or partially automated driver assist systems – that’s bad news for Tesla (TSLA) and good news for Luminar. This is a move clearly directed at Tesla, after the company has come under sociopolitical pressure for its “full self-driving” mode that isn’t full self-driving at all, and which has resulted in numerous crashes. We believe this is part of a broader crackdown from U.S. government agencies on the AVs, and then in the long run, all AVs will be carefully monitored by a central authority. That’s bad news for Tesla, because it will underscore that this company’s self-driving tech is overhyped and not that reliable. Meanwhile, it’s good news for Luminar, because it will underscore that this company’s self-driving tech is very solid and very safe.
- Piedmont Healthcare partners with Axon (AXON) to provide de-escalation tools to hospitals. Piedmont Healthcare is a state-wide hospital network in Georgia that serves over 2.7 million patients annually, and they are ordering TASER weapons, body cameras, and licenses to Axon Evidence from Axon. We are very bullish on this deal, because it underscores that Axon is not just a police tech company. They’re a public safety tech company. In any location or situation where public safety is a concern, Axon’s tools have value. This includes law enforcement agencies, hospitals, fire stations, parks, malls, hotels, so on and so forth. Now, we are selling some Axon stock today because the valuation is rich and we’re up 40%. But we are maintaining a core position because if this company continues to expand beyond the law enforcement space, the long-term potential upside is huge.
- Sprout Social (SPT) makes a big splash in social commerce with Shopify and Facebook Shops integrations. Today, Sprout Social announced that it is integrating with Shopify and Facebook Shops to add those social commerce shopping sites to its social media management platform. In other words, Sprout Social users will now be able manage Shopify and Facebook Shops pages and interactions through the centralized Sprout social media management platform. We believe this is a big deal, because it expands Sprout’s use cases beyond core social media and into the social commerce realm – which we believe represents the future of online selling. To that end, we think these integrations strengthen the thesis that Sprout Social will one day turn into a must-have tool for anyone selling anything online.
Exponential Growth Report - Volta (SNPR) teams up with Bloomberg Media to advertise an “Air Pollution Scoreboard”. Volta announced today it is teaming up with Bloomberg Media to feature Bloomberg Green’s climate change-focused editorial content across Volta’s national charging network, with the focus being a display of Bloomberg Green’s “Air Pollution Scoreboard” – an animated data visualization which shows you the air quality in various cities. This content is slated to run across Volta chargers in Los Angeles, Houston, Atlanta, Chicago, Washington D.C. and New York. This marks the third big advertising deal for Volta over the past two weeks, and further emphasizes that companies are at least open to Volta’s unique advertising solution. Whether or not it works for these companies remains to be seen. We believe it will. But we will get confirmation of such within the next few months via ad campaign renewals. Stay tuned.
- Else Nutrition (BABYF) continues physical retail footprint expansion with new Huckleberry’s Natural Market deal. Today, Else Nutrition announced that it will begin distribution of its products at 16 Huckleberry’s Natural Market locations in Washington, Idaho, Montana, and Oregon. We believe this company is doing everything right. They’re honing in on a geography (the Pacific Northwest) and are making sure that their products are everywhere in that geography. At the same time, they’re going all-in with online selling and influencer marketing. The result is that sales are soaring. We think this trend will persist for many years to come, and that Wall Street is completely missing the story on this stock. We really believe this is a 10X to 20X investment opportunity from current levels. (Oh, and for what it’s worth, we are still big buyers of the product for our little girl).
That's all for Daily Notes today. See you back here tomorrow. Sincerely, 
Luke Lango
Editor, Innovation Investor & Exponential Growth Report New to Innovation Investor? Click here to access Innovation Investor's Special Report archive. Get more from your subscription by reading our owner's manual and watching our introductory video. Exponential Growth Report Disclaimer: Small-cap stocks that can rise 10X over the long run are often volatile. If you are interested in these stocks, understand the risks and buy them like a professional. Learn more about the risks of nano- to small-cap stocks and how to buy them here. |
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