The Fed-Powered Rally We Expected  | | Luke Lango | When stocks plunged on Monday, we gave you a base case for how things would play out over the next few days. Tuesday – choppy ahead of the Fed’s presser. Wednesday – huge up day thanks to Fed Chair Jerome Powell sounding a dovish tone. Thursday and Friday – more big Fed-powered gains. Well, as much as we don’t pride ourselves in being near-term price movement forecasters, that forecast is playing out as expected so far. Powell took the stage yesterday, and in predictable Powell fashion, he sounded the exact dovish tone the market wanted to hear to keep stocks in rally mode – and stocks have been surging ever since. We think this rally has legs. Remember, with respect to our portfolio, we’ve been seeing growth assets, risky assets, and long-duration assets outperform since May on the back of slowing economic growth, continued evidence that the hot inflation is transitory, and a sharp drawdown in Treasury yields. We expect all those things will persist. We’re seeing more and more evidence of peak consumer demand, which will likely weaken over the next few months as we head into winter and the Fed starts its taper. Meanwhile, supply chain disruptions will ease, and headline inflation will cool as we remove base effects from the equation. This will result in a continued dovish Fed, a lower-for-longer situation with interest rates and yields, and continued outperformance in our portfolio. Needless to say, we’re bullish. Not to mention, Twitter is adding Bitcoin payments to its mobile app (a positive development for our crypto-related investments), electric vehicle (EV) stocks are breaking out on some positive analyst comments and good legislative progress, the White House is a making a big push to ease the semiconductor supply shortage (a good thing for EV stocks, too), Impossible Foods is launching a new plant-based pork product, and FedEx is starting to test autonomous trucks. Lots of good stuff. We earnestly believe there’s never been a better time to be “all in” with hypergrowth tech stocks. Now, let’s dive into today’s Daily Notes on our Innovation Investor portfolio and Exponential Growth Report portfolio: Innovation Investor - Access Technology Ventures invests another $300 million in Opendoor (OPEN) . Access is now Opendoor’s largest shareholder with over $1 billion invested in the innovative real estate company, and we’re bullish on this development because: 1) it’s a huge investment, and 2) it is happening at a huge premium to the company’s SPAC IPO price. In other words, Access is cost-averaging its investment “up,” which is something you only do when you’re extremely confident in the long-term value creation of a company. We’re just as confident. This will be a $100-plus stock one day – and that day may not be too far away.
- TuSimple (TSP) releases a study showing its autonomous technology significantly improves safety. Telematics data collected by TuSimple shows that harsh braking, accelerating, and cornering is far more likely to occur with human-operated vehicles than with vehicles driven autonomously using TuSimple’s tech. That’s big. Safety is key with autonomous vehicles. And TuSimple is nailing that. We continue to believe this is one of the market’s leading autonomous trucking companies with a discounted stock price that could shoot up to $60 in the near-term and $100-plus in the medium-term.
- An exclusive hunting game makes its way to the Skillz (SKLZ) platform. Skillz announced today that it would be launching a new game aimed at hunting fans — Big Buck Hunter: Marksman. The coolest part about this release? This is the first FPS game (first-person shooter) for Skillz. FPS games are huge across all platforms, mobile and otherwise. On top of that, the game has already hit the number three spot in the sports category in terms of popularity. This game could be a game-changer for Skillz (no pun intended). Proof that it can develop great FPS games will change the story here, and could shoot the stock up to $20 rather quickly.
- Roku (ROKU) gets a Guggenheim upgrade and more advertising in Canada . Guggenheim upgraded Roku to “Buy” from “Neutral” and gave it a $395 price target on the back of the platform’s advertising and international expansion potential, as well as the possibility of more marketing agreements for the company. In Canada, Roku seeks to capitalize on the country’s growing streaming market by offering access to OneView, which gives advertisers access to an easy-to-use platform that can leverage Roku’s data for marketing campaigns. The company’s innovation pipeline continues to impress us, and that’s why we see continued strong gains for Roku stock.
- Virgin Galactic (SPCE) hires a former Disney exec as its Chief of People Officer. Aparna Chitale, who previously was VP of Human Resources at Disney Parks Experiences and Products, brings over 20 years of experience to Virgin. Having worked for Disney, Aparna knows talent. And she’ll bring this knowledge to Virgin Galactic to aid it in expanding the company’s roster in the best possible way. Not to mention, this isn’t the first Disney exec Virgin Galactic has poached. If this company can make spaceship rides have the same customer experience as Disney rides… well, clearly, that’d be a great thing.
- Peloton (PTON) is fine charging less for bikes and treadmills, because it says subscriptions are more important. Peloton management announced today that it is cutting the price of its bikes and treadmills, on the hope of fostering more multi-product households. We agree with this strategy. The more people who are in the Peloton “club,” the more people who will subscribe to the app and become personally invested in the company and its influencer-like trainers. And with the launch of its own private label clothing company, we see Peloton easily making up for its lower hardware costs in time, and then some. Great strategy.
- Morgan Stanley is bullish on Joby Aviation (JOBY). Joby popped about 10.5% today after the firm stated its bullish outlook for the eVTOL company, stating that there’s no limit to how high Joby stock could go. We absolutely agree. The sky is the limit for this eVTOL maker.
- WallStreetBets rallies behind Canoo (GOEV), causing shares to jump. Canoo stock popped today, thanks to renewed interest by Reddit’s most infamous meme trading subreddit. With no other news to report on for the company, we expect some near-term volatility here. Don’t count on recent strength to last – but also count on the stock being a long-term winner.
- Sprout Social (SPT) rallies after a successful analyst day and subsequent Morgan Stanley optimism. Morgan Stanley lifted its price target on the stock to $146 on the grounds that Sprout Social is expanding its strategy and platform functionality in meaningful ways, and that this expansion will likely lead to higher revenue and operating margins. The stock is up on the news, but we’re slightly concerned about valuation here. Look for us to sell some more into strength here.
- Volkswagen invests in a new battery factory, which is good news for QuantumScape (QS). Volkswagen is significantly expanding its EV battery production capacity, and that’s great news for QuantumScape, because VW is an investor in QuantumScape and plans to use its batteries in all its EVs.
Exponential Growth Report - Another partnership in the books for IonQ (DMYI). This time, IonQ and GE will be working together to analyze quantum computing’s role in risk analysis when it comes to finance, climate, geopolitics, and more. It’s cliché, but this company keeps nailing partnership after partnership with so many different players across so many different industries. This partnership pipeline underscores how pervasively impactful quantum computing will be – and the fact that IonQ keeps winning all these partnerships illustrates how strong this company really is.
Have a great night. I will be in touch again 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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