Swaggy's Top Stonks - Are short-squeeze stocks back?
Swaggy's Top Stonks - Are short-squeeze stocks back?
Swaggy’s Top Stonks. We compile and analyze data from multiple sources bringing you the top trending tickers from around the internet. If you haven’t subscribed already, please do so below.
Swaggy's Top Stonks
August 29, 2021
Welcome newcomers to Swaggy's Top Stonks and thank you for subscribing. Just a heads up that Swaggy's Top Stonks will be skipping next weekend's edition for Labor Day weekend.
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This Week's Letter
Market Update
Earnings SZN - Booms and Busts
Short Squeeze - Is it back?
TheStonksHub - SKLZ Stock Analysis
Trending Tickers
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Market Update
It was a good week for the market. The SPY closed 1% higher, the QQQ was up 1.85%, and the Russell/IWM closed the week up 3.85% -a much needed win for small caps. Many WallStreetBets trending stocks, current and former, also posted some nice gains due to several reasons. First, that "short squeeze" stocks started to pick up momentum again. Second, the Russell, which tracks the performance of small cap stocks, had one of it's best performing weeks so far in 2021.
What do small caps have to do with anything?
I don't know the exact stat, but off the top of my head I would say 80% of stocks mentioned on WallStreetBets, and also a lot of other investing forums, are small-to-mid-cap stocks. Small caps by definition are stocks with market caps in the range of 300 million to 2 billion. Under 300 million we start to get into micro-caps.
The general rule is that as market cap gets smaller, the stock becomes more volatile and experiences larger price swings. These stocks are some of WSB's and social media's favorites mainly because they present an opportunity to find the next 10-bagger (10x return). Imagine finding the next Apple, Google, or Microsoft, and getting in when they were at the very start of their growth.
That's why it's not surprising to see many popular stocks being discussed by retail traders to be small or mid-caps. Thus, a good week for small/mid caps is generally a good week for retail and WallStreetBets.
Earnings SZN - Booms and Busts
Earnings season is winding down. Here's what moved this week and a few more names to keep an eye on for next week.
Last Week
JD.com (JD) temporarily lifted most Chinese stocks after reporting solid earnings. Tickers like PDD and BABA also had moves to the upside after JD offered a glimmer of hope to Chinese stocks that have been battered down.
Best Buy (BBY) closed slightly lower this week after reporting solid earnings.
Shares of Dicks Sporting Goods (DKS) closed +20% for the week after beating estimates. The company referred to strong growth and robust demand being key factors for their success.
Salesforce (CRM) had a good week after posting solid earnings. Shares popped 5% to the upside after reporting, but ended up the week up 3%.
Snowflake (SNOW) reported strong earnings where revenues were up over 100% YoY. The stock saw a 6% increase after the earnings report.
Ulta Beaty (ULTA) beat on EPS and revenues leading the share price to new highs this week.
Peloton (PTON) shares tumbled down nearly 13% in after-hours trading after the company reported a huge miss on EPS and lowered guidance. This comes on the coat-tails of recalls that have affected their product line over the last several months. The company also noted of "internal challenges" they are trying to solve moving forward.
Next Week's Highly-Anticipated Earnings
Cloudera (CLDR): Monday BMO
ZOOM (ZM): Monday AMC
Chewy (CHWY): Wednesday AMC
C3.AI (AI): Wednesday AMC
Docusign (DOCU): Thursday AMC
The Short Squeeze - Is it back?
A few key names in the short-squeeze saw some precarious price action starting Tuesday afternoon going into the close. At exactly 1:30pm on Tuesday both AMC and GME started a significant rally that lasted into the closing bell. Here's a look at the chart.
If you remember back at the end of May, something similar also happened. Which leads me to ask... will we see something comparable this time? Short-squeeze stocks have become a cyclical asset class with extremely unpredictable timing. If you believe other short-interest stocks will begin to follow suit of AMC/GME, here are a few of the other more popular names that tend to trend on WSB. Some have high short-interest and others just simply follow the trend for unknown reasons.
ContextLogic (WISH)
Workhorse (WKHS)
BlackBerry (BB)
Nokia (NOK)
Palantir (PLTR)
SoFi (SOFI)
Clover Health (CLOV)
Root Inc (ROOT)
Petco (WOOF)
SmileDirectClub (SDC)
MicroStrategy (MSTR)
Senseonics (SENS)
Bed Bath and Beyond (BBBY)
TheStonksHub - SKLZ Inc. Stock Analysis
Our partner site, TheStonksHub, released a free analysis and breakdown of e-gaming company, SKLZ Inc (SKLZ). SKLZ gained popularity earlier this year as one of the stocks that joined the short-squeeze, but also because of ARK's investment into the company. SKLZ is down 80% from the high and TheStonksHub break's down what the company's business model is and how they earn money. Read the sample, or continue reading the full version using the link below the preview.
Not a gaming company
SKLZ is a mobile tournament platform. Basically, they take competitive mobile games, and create some sort of tournament experience for those games with a prize pool. They provide this service through an API (application program interface). Basically, their product goes like this:
They create the software for hosting tournaments with prize pools
They offer the software to mobile game companies as an easy-to-implement solution
Mobile game companies implement tournaments using their software
They take a cut of the total prize pool every time a tournament is hosted with their software
It is extremely important to note that SKLZ’s product is only this tournament software package. They do not develop any mobile games themselves and are entirely reliant on 3rd parties to choose to use their software.
The mobile gaming market
Mobile gaming accounts for over 50% of all video gaming revenue worldwide. In the US, one of the largest gaming markets in the world, mobile gaming revenue reached ~$11B in 2020. It’s expected that the global share of mobile gaming will continue to rise even in relation to the rest of global gaming growth.
In the US specifically, there has been an increased in global mobile gaming revenue share. Over the years, it has overtaken Japan as the largest mobile gaming market globally.
(Continue Reading - SKLZ: E-sports for non-gamers)
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