Is Peloton stock bullish for 2021?

The stellar run for home fitness in 2020 is making many investors ask is Peloton (NASDAQ: PTON) stock bullish for 2021? The virus elevated Peloton to one of the highest points in the online fitness arena. However, the slow transition back to regular gym life is forcing Peloton to adapt its business model. Will Peloton’s 2021 plan and beyond succeed? To answer the value investment question, we must look at seven key areas. These include Peloton’s financials, analyst ratings, options activity, future catalysts, the management, and the bearish outlook.

Table of contents 
1. What do the bulls see for 2021? 
2. Do the bears have strong rebuttals?
3. So ... is Peloton stock bullish for 2021?

The 2021 bull argument

Financials

Peloton’s financials are shaping up to be promising for 2021 and beyond. The current financial situation is one of unprofitability but huge upside in revenue and free cash flow. For example, Peloton remained unprofitable for 2020 but posted $600 million in revenue for Q3, a 133% increase YoY. However, CEO John Foley points out that impressive revenue growth is not new as Peloton grew revenue by 100% YoY for the past six years. Despite Peloton’s consistency, their blowout revenue results during 2020 saw 25 analysts raise their revenue forecasts to $3.6 billion for 2021. Why is this revenue-raising significant? If Peloton grow into their XL revenue shoes, then profitability could be on the table. Hence, the incredibly bullish sentiment from analysts when discussing Peloton’s 2021 financials.

Management and future catalysts

Peloton’s management, more specifically CEO John Foley, remains bullish on the company’s future. The three talking points from management include the shift in the gym industry, the current demand-supply imbalance, and the growing traction for a rent-a-bike style service.

Everything is at home, from work to entertainment to food, and soon fitness will join the home party. Peloton looks to capture and create the emerging market. John Foley drives the point home, “If you can have a better workout experience with fantastic instructors, a gamified network, and a collaborative community why wouldn’t you workout at home”. Peloton will look to assert their brand as the online fitness captain over the coming years. Despite COVID-19 causing a demand-supply imbalance for the fitness industry, Peloton, according to John Foley, “outpaced the demand” by working around the clock. The recent transition back to the gym should give Peloton’s supply chain some breathing space. In turn allowing PTON to service the current demand, while expanding their supply chain at a more organic rate.

Moreover, the last talking point is Peloton’s transition from a one -time purchase to a subscription pricing model. John Foley champions the subscription model as Peloton will access price-conscious customers, ultimately expanding their market share in the years to come. The subscription service should see Peloton capture the pay as you go mindset of millennials and future generations. Buy now pay later, renting cars, and entertainment services like Netflix and Spotify prove this point. Peloton is already experiencing growth in their subscription model. For example, in Q4 2020, subscriptions were used 24 times a month. Contrast that to 12 times a month in Q4 2019, and the growth is starting to come through.

Future catalysts

For most fundamental investors, catalysts are at the centre of the investment decision. Peloton’s catalysts, much like Apple, are earnings and new product launches. The Peloton Bike + (featured below) is rolling out at the beginning of 2021. To say the features are revolutionary would be an understatement. The swivel screen, inbuilt speaker, and machine communication cater to the stay at home style. Like Apple, Peloton will permanently discount its older models, which should reel in more price-conscious customers. Therefore, the Peloton bike + is a significant catalyst as it should contribute to more robust earnings during 2021.

 

 

Options

Peloton options are currently indicating a bullish sentiment for 2021 and beyond. Investors anticipate a healthy rise from now to the middle of October 2020 as volumes for $100,$105, and $110 calls are 4760, 1435, and 1514 respectively. When comparing the volume to the corresponding put strikes, the results are 842, 126, and 88, ultimately revealing the optimistic undertone. However, the bullish sentiment seems to be carrying through to 2021. For example, volume on out the money calls between $100 – $140 is significantly higher than the in money puts for the same strikes. If investors would like to investigate the options activity for PTON during 2021,2022, and 2023, then click here.

Hedge funds/smart money

When pouring through forum discussions, articles, and videos investors can often be left unsure of the sentiment. Examining the Peloton smart money is like a fast pass to know whether the PTON retail bulls are bodacious or in line with the institutional investors. According to Insider Monkey, “Peloton Interactive was in 50 hedge funds’ portfolios at the end of June and the all time-high for this statistics is 48.” The Insider Monkey data allows investors to conclude that more hedge funds are increasingly taking positions in Peloton. There was only 28 hedge funds in PTON back in Q3 2019, further driving home the argument that the smart-money is building up overtime. Overall, the increase in the number of hedge funds taking long positions suggests the retailers 2021 bullish predictions are somewhat accurate.

The 2021 bear argument

Financials

Peloton’s 2021 and beyond financial fairy-tale is not perfect. First, the company is unprofitable. Second, investors should ask, is the record revenues unsustainable? While the fitness giant dominated the stay at home shift, people returning to the gym could cause a pullback in Peloton’s earnings. However, it seems the positive financial outlook and digital fitness’s future outweighs the negative earnings and unsustainability issue.

Management

Despite management’s optimism, John Foley does recognise that Peloton must face challenges now and in the future. First, the COVID-19 demand spike alerted Peloton that they must adapt their supply chain to thrive off the stay home fitness market. If left unchecked, Peloton could lose market share. Second, the meteoric 2020 growth story is likely unsustainable. Consequently, Q2 of 2021 FY could look less successful than the over-inflated 2020 sales. Explaining how the potentially lower revenues still signify growth might be a concern in the imminent future.

Options Activity

Peloton’s blowout 2020 revenue is causing options projections to be incredibly bullish. While the 2021 and beyond outlook looks promising, the imminent future could entertain a sell-off. Because the rapid share price growth and the shift back to public gyms could cause investors to take profits. Thus, the short-term options activity could be overly ambitious.

So… Is Peloton stock bullish for 2021?

Before I begin, I remind our viewers that this is not financial advice. Instead, the content is investment commentary from extensive research.

Overall, Peloton’s 2021 and beyond growth story is one to investigate further. It seems the pleasing financials are here to stay as profitability is on the table for 2021. Management, especially John Foley, are confident in success. Because of Peloton’s plan to cornerstone the home fitness market, their ability to keep up with rampant demand, and the popularity in their subscription price model. Moreover, the earnings and product catalysts are promising for 2021. Lastly, the smart money and options activity confirms the 2021-2025 bullish argument. Yes, there are valid rebuttals in the areas of financials, options, and supply chains. However, it seems there are more bulls than bears in the Peloton 2021 tug of war.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Will the Teva stock recover after a 10% sell-off?

Will Teva stock recover from the recent bloodbath? It is the big question institutions and retail investors are asking. On one end, investors believe the lawsuit and stagnating financials will cripple Teva. Conversely, the bullish hedge funds argue that Teva holds value in the long-term. Thus, today’s article will breakdown the recent sell-off, which institutions are bullish, and the likelihood of a recovery.

Table of contents 
1. Why is the Teva stock down? 
2. Can Institutional buying clarify the sentiment? 
3. Will the Teva stock recover?

Is the Teva rebound over?

Teva’s recent decline comes after the company faces legal scrutiny for price-fixing and violating an anti-kickback law. If the federal prosecutors find Teva guilty, than the consequences would be dire for the company and investors. Because Teva would be excluded from federal healthcare programs in the U.S., further jeopardising the Israeli company’s business and its long-term sales and growth. It seems the possible legal risk might be unpalatable for some investors, hence the sell-off.

Moreover, Teva’s inability to produce substantial profit margins might be causing investors to call it quits. For the past three quarters Teva has not been able to post earnings above 4%. Profit stagnation for three-quarters could suggest the business is fundamentally stuck for the moment. Consequently, short-term investors are likely selling.

Institutions are doubling down – is this a signal of a Teva rebound?

While more retail investors are flooding the market, institutional investors still own the underlying sentiment of Teva. Therefore, looking at which hedge funds are long and short on Teva and why is crucial.

Before the pandemic, hedge funds were leaning towards the bullish side of Teva. The virus understandably scared institutions away. However, in the past few months, the institutional bulls reclaimed victory. Especially as Teva Pharmaceutical Industries was in 31 hedge funds at the end of June. The most notable hedge funds leading the pack include Berkshire Hathaway and Abrams Capital Management.

It is essential to understand that when institutions go long on a stock, they are not looking for an overnight fix. Instead, they are looking to follow the value of the company until it reaches its milestones. In Teva’s case, the recent injection of bullish hedge funds is a point to the bullish argument.

Will the Teva Stock recover?

Before I begin, I remind our viewers that this is not advice. Instead ,this is investment commentary from extensive research 

To understand whether Teva will recover, investors should ask, is there even a dip to invest in, in the first place? Initially, the lawsuit, disappointing financials, and the recent sell-off may suggest there is no dip to invest in. For the imminent future, hedge funds would likely agree with the bearish stance.

However, if Teva is at capitulation and management’s recovery strategy is successful, then the institutions going long will be right. (opinion not advice) Teva is currently culling unprofitable product lines while also rolling out new offerings to the market. All with the intention to restructure the company for financial success. Furthermore, Teva could pay out the legal settlement, if found guilty, over multiple years. In which case, Teva would reach the light at the end of the tunnel.

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If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Shorting the US market with SQQQ – here’s what you need to know.

ProShares UltraPro Short QQQ ETF (NASDAQ:SQQQ) is a leveraged (3x) ETF that inversely tracks the Nasdaq 100 index. The ETF gained serious popularity amongst investors during the market crash in March earlier this year. It is important to understand the instrumental purpose of certain ETF’s before looking to invest. The SQQQ is a highly risky tool for day-traders and speculators, designed to short the US market over short periods of time, in this case the Nasdaq 100. The inverse 3x leverage on this ETF means it will reflect a skewed inverse relationship with the Nasdaq index, which is seen to have a negative relationship with time (on average). Lets breakdown understanding the ETF and why people are looking at SQQQ for a potential second market crash.

Understanding SQQQ’s main function for investors

At its most basic level, the SQQQ is designed to give speculators and day traders eye watering returns when they suspect the US market to correct or fall. The 3x leveraged inverse relationship simply means day by day, when the NASDAQ 100 index decreases by 10% – SQQQ will gain 30% and vice versa. Proshares discloses that the main function for SQQQ is to be traded over short periods of time (intraday). For example, if we look at the performance of SQQQ over the past 5 years, we can see it has lost 98% of its value. However, if we look at the 1 month performance between February and March this year, SQQQ almost doubled it’s value. Hence providing speculators and day traders with great returns whilst the market went into free fall.

Understanding what SQQQ is shorting?

Warren Buffet is known for his advocacy in thoroughly understanding the business you are buying shares in. In the same sense, understanding how an ETF moves is critical for an investor when forging an investment strategy. The NASDAQ 100 index is a basket of 100 large US listed companies (non-financial sectors) including the likes of Apple and Facebook. See the full list of 100 companies here.

In essence, the SQQQ is betting against some of the largest US corporations combined into one index, weighted by their market cap respectively. But instead of simply shorting, SQQQ is tripling down on the performance of these companies. If we can learn anything from history, long term bets against US corporations (as a collective) never pans out well. However, intra-day bets against US performance can prove a profitable strategy assuming the market sentiment is bearish.

The current position of SQQQ

With the current US market outlook highly up for debate, we can conclude that the NASDAQ index has outperformed the SP 500 index in recovery after the March crash. The tech rally is definitely an explanation for the fast recovery of the NASDAQ 100, with 6 big tech corporations making up half of the indexes weighting. The heavy weighting of tech in the index can be an argument for a volatile correction.

From a short term perspective, the SQQQ has performed well posting a 40% gain over the past 2 weeks, as the NASDAQ went into a technical correction. The current market sentiment is in tug of war between the bulls and the bears. Recent analysis from Michael Markowski predicts a 3 year bear market bottoming out in 2022 using Dot com and Great Depression data. Another interesting survey by CNBC found 51% of CFO’s believe the Dow Jones will fall below 19,000 again before recovering. Another market crash could provide SQQQ investors a golden opportunity to cash in on the decline (opinion not advice). However the associated risk should always be calculated and monitored as per Proshares recommendations (opinion not advice).

If you want to learn more about SQQQ, click here.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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Institutions bought in before the $1 billion PIC XL Fleet merger – Here’s what you must know now

Pivotal Investment Corporation II (NYSE: PIC) shocked the investing world on Friday after announcing their merger with EV technology provider XL Fleet. Investors immediately bought shares in PIC to secure their position before the news spread. However, the question on everyone’s mind, is did Friday’s investors and hedge funds jump the gun? Thus, today’s article will breakdown the merger and what investors must know before investing in PIC.

Table of contents 
1. Key elements of the merger 
2. What investors must know before investing

Overview of the PIC XL Fleet merger

XL Fleet, a provider of electric vehicle technology, is going public through the SPAC PIC. The reverse merger holds an astronomical valuation of $1 billion. However, considering XL Fleet is in the EV business, a high valuation is not a surprise. XL Fleet will receive $350 million from the $1 billion to expand internationally and service outstanding debt. PIPE investors will receive $150 million in common stock for $10.00 a share.

Importance of PIPE investors

It is important to note that PIPE investors are already up 21% on their investment, as PIC currently trades at $12.10. Investors should track the ROI of PIPE investors to understand when PIC could becoming overvalued. For example, if PIC rockets to $20 when the merger is complete, it might be time to de-risk your investment. (Opinion not advice) Because PIPE investors would be at an impressive 100% gain. XL Fleet would need a significant amount of retail investors to believe the EV story for the stock to gap up a lot.

XL Fleet and PIC do not have a concrete date for the merger. However, the merger is expected to close in the fourth quarter of this year. Once XL Fleet and PIC sign the paperwork, PIC will trade under the name XL on the NYSE.

Here is what you must know about the PIC XL Fleet merger before investing

Before I begin I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research 

It is essential investors understand the potential SPAC bubble and whether XL Fleet is hype or making strides.

Is XL Fleet’s progress noteworthy?

XL Fleet is not an EV producer. Instead, XL supplies electrified powertrain solutions to EV producers such as Ford, Chevrolet, GMC, and Isuzu.

Most companies entering through a SPAC are often pure speculation. Take Fisker or Nikola, for example. However, XL Fleet is not speculating as they already have thousands their units on the road. XL’s units are not fresh on the road either as they have over 130 miles driven by more than 200 reputable customers. Coca Cola, FedEx, Pepsi Co are a few of the big names in XL’s customer base.

To add the cherry on top, XL Fleet is projecting strong financial growth for 2021. For example, XL forecasts 2021 revenue to be $75 million, which is 3x 2020s revenue. Overall, XL Fleet’s growth leans more towards the noteworthy side than hype.

The possible SPAC bubble

SPACs are growing in popularity amongst start-ups, institutional, and retail investors. Initially, SPACs seem like the golden ticket to an Eldorado of riches. Mainly because investors think of SPACs and Nikola or Draftkings come to mind. Consequently, investors are betting on SPACs to pay-off, similar to that of a lottery ticket.

However, the major drawback is only a few SPACs are entering the limo, while the rest sit on the gutter. The low success rate is causing the bears to short SPACs whether they have a merger or not. Considering PIC has a merger on the table, there is a chance of entering the limo. (opinion not advice) However, PIC investors are not immune to the growing SPAC bubble. Because the bears could still short XL Fleet’s growth.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

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https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

FDA gives Sorrento Therapeutics the green light to begin Phase I COVID-19 trials – Should you short?

Sorrento Therapeutics (NASDAQ: SRNE) is putting on a volatility show this week. The bulls were leading the charge at the start of the week but took a big rest on Wednesday, which saw SRNE pullback by 12%. All bullish hope seemed lost. However, today the FDA gave Sorrento the green light to begin phase I COVID-19 trials. To say that the announcement was a super magnet for bullish investors would be an understatement. Many investors are now torn between shorting the optimistic jump or riding the wave. Thus, today’s article will breakdown the FDA news and deconstruct the short/long argument.

Table of contents 
1. Why all the hype? 
2. Is the Sorrento Therapeutics FDA news worth shorting?

Why are investors rallying behind the Sorrento Therapeutics FDA news?

Sorrento Therapeutics enormous 55% rally is because of three reasons. First, the pullback on Wednesday alerted many technical investors to jump in and for the longs to top up on their positions.

Second is the bullish reaction to today’s COVID-19 catalyst. The FDA permitted Sorrento to begin enrolling hospitalised patients for its Phase I COVID-19 trial. Phase I is usually not that noteworthy as it aims to test the drug safety’s and is a relatively easy hurdle to overcome. However, considering the trial relates to COVID-19, Phase I is significant. Hence, the volcanic volume in pre-marketing trading.

The future of Sorrento

Lastly, investors bought shares because today’s announcement symbolises a beacon of bullish hope. “The initial trial is expected to be followed by large trials targeting a potential Emergency Use Authorisation (EUA) submission as early as before the end of this year.” If the FDA were to grant Sorrento a EUA, STI-1449 would be fast tracked through the clinical timeline. In which the speculation surrounding Sorrento would become extremely bullish.

Moreover, Sorrento’s COVID-19 vaccine candidate holds impressive pre-clinical trial data (opinion not advice). For example, in the in vitro study, “STI-1499 demonstrated 100% in vitro neutralising effect against SARS-CoV-2”, ultimately preventing the infection of healthy cells. While past performance is not an indicator of future performance, investors may use pre-clinical data to predict potential Phase I outcomes. To add the cherry on top, a phase one announcement of this calibre often increases media coverage and, future volume. Therefore, the bullish future might have enticed investors to jump in before all the eyeballs come swarming over.

Sorrento Therapeutics FDA news – all hype or a real catalyst?

Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research

Short answer: Sorrento is likely to suffer a sell-off in the short-term (opinion not advice) 

Some investors see COVID-19 Phase I and are sold on the idea of buying shares. The Sorrento Therapeutics FDA news is a real catalyst that should lay the foundation for a bullish undertone. (opinion not advice) Because humans are wishful thinkers, and thus, investors will expect positive Phase I trial results. However, it is always important to remember you are buying shares off somebody else. So if they are willing to sell you their shares, you must ask why? In the case of Sorrento, investors might look to sell shares for two reasons. One, to take profit. The other likely reason is that a fall in SRNE activated investors stop losses. Both possible reasons should signal red flags. Because profit- taking implies the music is starting to slow down, and stop losses could mean the party could be over.

COVID-19 deception theory

The common theme of COVID-19 stocks rising on FDA news only to fall the following day is all too familiar. The COVID-19 deception theory is suggesting a SRNE pullback is likely. Thus, it is important to be impartial and not base your investment off phrases such as “but this COVID-19 stock is the exception”.

Overall, the move for the week is favouring the bullish side. Ultimately, signalling possible growth as time goes on (opinion not advice). However, the recent growth is likely unsustainable as it is difficult to top an FDA announcement. Hence a short term sell-off is likely.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

INO surges 10% pre-market – here’s what you need to know

Inovio (NASDAQ:INO) is set to open 10% higher this morning after the promising address by CEO & President Dr. Joseph Kim on the H.C Wainwright 22nd Annual Investment Conference. Dr. Kim advised that the initiation of Phase 2 trials for their COVID-19 vaccine INO-4800 is on track to commence later this month. The CEO also addressed he is “very confident” INO will acquire additional external funding to accelerate these Phase 2 trials. Since the address on the 14th, INO has gained serious momentum. It seems INO has put itself back into the spotlight on Wallstreet. Lets breakdown what you need to know regarding the conference call and what the future looks like for INO.

Summarising the conference call – here’s what you need to know

The address by the CEO shed light on INO’s confidence regarding the imminent outlook for INO’s COVID-19 vaccine. The key points are as follows:

  • INO are “confident” Phase 2 trials will begin later this month after publication of the Phase 1 trial in the coming weeks.
  • Phase 1 human trials showed immunological responses in 100% of the 38 patients
  • Phase 1 non-human primate trials showed strong neuturalising T body immune responses in primates
  • CEO Dr. Kim advised investors to “stay tuned” for possible upcoming funding INO are expecting to receive coming into the Phase 2 trials – speculators believe the funding will come from WARP
  • INO plan to expand their Phase 2 trials globally, after receiving approval from the Chinese Government to conduct human trials in China with INO-4800 as well as the possibility of South Korea
  • Thermo Fisher partnership will allow INO to produce 100 million doses of INO-4800 in 2021 and further expansion for 2022

INO forecasts and outlook

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research.

It seems the imminent future looks strong for INO as the company is on track to commence Phase 2 human trials at the end of September, according to CEO Dr. Kim. Not to mention the added potential funding for Phase 2 trials which if history tells us anything – it’s good news. However, speculators have snapped up the opportunity to buy INO yesterday suggesting a pull back is imminent (opinion not advice). The expected news to break this month however, is a positive sign for long term shareholders. Especially if Phase 2 trials can be commenced by the end of this month.

INO Forecasts by analysts

The 12 month forecasts from analysts according to CNN data suggest a median price target of $16 with a high end target at $36 and low end target at $8. These forecasts are heavily weighted upon the success of INO-4800. 5 analysts according to Nasdaq data suggest an average 12 month price target at $19 a share. The forecasts are definitely bullish at this stage with the potential commercialisation of the COVID vaccine.

INO investor Outlook

An interesting concept is to consider that INO will not be proportionally effected the same as other SP 500 corporations. Its stock price tends to fluctuate violently on company news and trial data and not COVID related market downturns (according to recent historic data). This is the associated risk with a stock like INO which heavily relies on its own success in the COVID trials.

In summary, the confidence from CEO Dr. Kim has reflected on Wallstreet. We await to review the publication of Phase 1 data and the announcement of Phase 2 trials in the coming weeks.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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$4 billion IPOB Opendoor merger is set to revolutionise the real estate market

Social Capital Hedosophia Holdings Corp. II (NYSE: IPOB) stole a huge part of the spotlight after announcing a $4.8 billion SPAC with Opendoor. The digital real estate disruptor should make this one of the hottest SPACs of 2020. However, as the bulls rush in to snap up IPOB shares is shorting the SPAC a smart idea? Especially when listening to the wise words of Warren Buffett, “Be greedy when everyone is fearful and fearful when everyone is greedy.” Today’s article will breakdown the merger, explain the future impact of Opendoor, and the risks/reward of an IPOB investment.

 

Table of contents 
1. Breakdown of the IPOB Opendoor merger 
2. How will Opendoor impact the housing market? 
3. Are investors overlooking potential risks with the merger?

What you need to know about the IPOB Opendoor merger

Opendoor, the real-estate technology company, is officially merging with IPOB, a blank check company. The value of the reverse merger comes in at $4 billion. Opendoor receive $1 billion in cash proceeds, which will be used to accelerate company’s growth. An important note is that $600 million of the $1 billion goes to private investment in public equity (PIPE) at $10 a share. Essentially, this means the big investors who were backing the SPAC jumped on the train at $10, which would give them a 75.6% ROI at the moment. If the words SPAC or PIPE investors sound foreign, then YIG strongly suggests reading our simple explanation here.

Will Opendoor revolutionise the housing market?

Opendoor radically reduces the time it takes to buy and sell property. Homeowners looking to sell briefly explain to Opendoor the details of their house, and can receive an offer instantly. If the buyer is satisfied with the valuation, then they can sell their home and receive the cash in days to weeks. However, the innovative offering is currently only available in 21 markets of the United States. The consultation like feedback is free and comes with no lock in contracts, making it very attractive to time-conscious homeowners who are looking to sell. However, Opendoor does have drawbacks. For example, the homeowner will likely receive less cash than if they went through a traditional real estate agent. Mainly because of the significant reduction in time.

Overall, the question of whether Opendoor can shift the property market remains at the heart of the bullish argument. Because if Opendoor can live up to its potential, investors could see a similar run to that of DraftKings (NASDAQ: DKNG), Hyliion (soon to be SHLL), and Fisker (NASDAQ: SPAQ). The 34% surge following today’s announcement would suggest that investors are expecting big things from Opendoor.

IPOB Opendoor merger could be too bullish – should investors be cautious?

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research

Bears are anticipating a pullback. Considering IPOB is down 5% in pre-market trading, the shorts are right in predicting the direction of the move. While IPOB could continue to pullback, investors must understand that the catalyst is positive and should pull in quite a few long investors. Thus, the bearish decline might only last a few days. YIG would like to point out that attempting to short over a few days is a dangerous idea. Because the volatility can turn against your account rapidly.

In cases where it might seem too late to jump in, it is always best to look at resistance and support levels. Strong resistance lies around $18. If IPOB trades above $18, than the breakout should cause the bulls to dominate. However, IPOB could experience a sell-off following the string of bullish momentum. If IPOB begins to decrease, investors would want to look out for the $16.50 support. Because a fall below the $16.50 would ignite significant selling pressure. Thus, understanding the support and resistance of IPOB is crucial to gauging the sentiment and avoid jumping in the short or long position off emotions.

Overall, it looks like IPOB could descend for the next few days following yesterday’s catalyst. However, that is not to say that the SPAC could not soar after a new support point is found.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

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Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Unity Software IPO – Here’s what you need to know about the $1 billion tech company

IPO

Unity Software (NYSE: U) IPO is making noise on Wall Street ahead of Friday’s debut. Some investors are claiming Unity to be one of the hottest software IPOs of 2020. Especially as the valuation is a billion dollars. Today’s article will breakdown the IPO, Unity’s product offering, and everything investors must know before investing.

 

Table of contents 
1. Unity Software IPO breakdown 
2. What does Unity Software sell? 
3. What investors must know before the Unity Software IPO.

 

Overview of the unorthodox Unity Software IPO

Many companies are digressing from the conventional IPO plan. In a traditional IPO, the underwriters set the debut price while the retail and institutions acquire ownership. However, Unity Software IPO goes against the underwriter grain. Instead of Goldman Sachs setting the IPO price, Unity Software’s upper management is putting on the pricing hat. CEO John Riccitiello and his team will use an online bidding system to determine the price. Institutional investors will express the price they would be willing to pay for U shares. After all the institutional investors cast their price, Unity’s team will set the IPO price. Unity will allocate shares to those institutions whose bid fell at or above the asking price.

Unity is going against the underwriting grain to avoid Goldman and other bankers setting an undervalued IPO price to cater tpreferred investors demand. Despite the ambiguity of the novel pricing method Unity “originally planned to offer its stock in a range of $34 to $42”. 

What is Unity Software’s business model?

Unity Software licenses 2D and 3D software via two revenue streams. Revenue stream one involves offering monthly subscriptions to content creators such as artists, architects, and engineers to access the 2D and 3D software. Revenue stream two involves subscriptions to businesses who are looking to increase their end-user engagement. Some would call Unity’s software offering revolutionary. Because for centuries, “photos and video content have largely been created in the same way by capturing 3D images through a 2D lens”.

If we dispense for the product offering and go to the financials, than the growth potential speaks for itself. For example, Unity’s revenue is up 39% YoY, as “the number of customers spending $100,000 or more increased from 515 to 716”. Also, the gaming giant decreased its net loss by 20% YoY.

 

Here’s what you need to know before investing in the Unity Software IPO

Before I begin I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research

Considering Unity Software is a tech company, investors should expect volatility after the IPO instead of linear growth. However, the price fluctuations should look to favour the bullish side. Especially as Unity is “expected to be one of the hottest IPOs of the coming wave”. Not to mention tech stocks continue to soar, which could see Unity Software pop on Friday.

On the other hand, just because Unity Software is a hot IPO does not mean it is smart to tie down all your capital. Especially when valuations are high, $ 1 Billion in Unity’s case and humans tend to overreach. Thus, investors could be overly optimistic in these first few months, which could create the perception of long-term linear growth. Not to mention that vaccine delays, continued social unrest, and a possible stock market correction could potentially affect the Unity stock price.

Overall, Unity is a solid technology company with a unique offering in the gaming sector. However, an investment in the Unity Software IPO is not without risks.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

NKLA stock forecast – who is right, the GM bulls or the Hindenburg bears?

Nikola’s (NASDAQ: NKLA) price action is mimicking that of a rollercoaster. The NKLA stock forecast 2021 is changing weekly, making it difficult for investors to understand the underlying sentiment. It seems NKLA’s volatility provides an El Dorado of riches to some investors. In contrast, others are left at the side of the road. Thus, today’s article will simplify the Nikola madness and provide our readers with educated commentary on 2020 forecasts and beyond.

Table of contents 
1. Why was NKLA bullish and bearish this week? 
2. Who owns the Nikola charts for 2020 - bulls or bears? 
3. Where do investors see NKLA in 2021?

Summary of the Nikola rollercoaster this week

Nikola came out of the gates storming this week after announcing its GM partnership on Tuesday. The ten-year alliance will see “GM engineer and manufacture Nikola’s Badger pick up truck and provide the battery system for Nikola’s semi-trucks in exchange for 11% ($2 billion) of Nikola.” Instantly the bulls came charging in numbers, which revived the dying EV stock by 41%. However, the bullish sentiment was over in a heartbeat as the bears, more specifically short-seller Hindenburg Research, drove a 35% decline. Nikola is now trading below its pre-GM announcement. Let’s breakdown these competing arguments.

NKLA stock forecast for the rest of 2020 – are the bulls or bears calling the shots?

Bullish argument

The bullish Nikola narrative is driven by NKLA’s existing partnerships and upcoming catalysts. First, Nikola holds a strong influence in the electric truck garbage sector. For example, Nikola recently signed a deal to provide 2,500 electric garbage trucks to Republic Services. The partnership validates the Nikola brand, leading to possibly more electric garbage truck deals in the future (opinion not advice). Especially as “Nikola is a leader in the battery-electric space”. Second, the GM partnership, to a certain extent, restores investor confidence that the Badger will come to fruition. In which the Badger hype could act as a bullish driver for Nikola.

Furthermore, Nikola’s upcoming catalysts are bolstering the bullish argument. For example, according to CFO Kim Brady, Nikola reveals the TRE prototype at the end of September. “Also, by the end of 2021, Anheuser-Busch InBev (NYSE: BUD) is expected to receive Nikola’s two hydrogen fuel cell trucks.” Overall, according to the bulls, the existing partnerships validate Nikola’s value proposition, and the upcoming catalysts suggest possible futures surges.

Nikola stock forecast – bearish argument

Nikola bears are shouting stock manipulation and deceptive catalysts. Initially, some investors thought the bears were trying to force Nikola down to profit off their shorting positions. However, Hindenburg’s recent research report gives the bears a significant amount of weight. The report’s most alarming allegations include:

  1. The first Nikola truck test drive was fake as it involved toeing the truck up a hill and pushing it down
  2. Nikola did not develop their own inverter but bought a Cascadia inverter off the shelve and covered the logo with masking tape.

Considering Hindenburg has email and photographic evidence, it is safe to say that their argument stands at the moment. However, the real anchor in the bearish argument is that Trevor Milton is yet to debunk the allegations (refer to the Twitter post below). Ultimately, suggesting that there could be truth to the accusations (opinion not advice).

 

Nikola stock forecast 2021

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research

YIG Takeaway

Nikola is becoming an emotional stock (opinion not advice). Some bulls are adamant that the 2022 Badger is not artificial hype but symbolises real growth potential. In contrast, the bears scream stock market manipulation and fake catalysts. Reading those sentences alone could have activated some internal bias depending if you are a bear or a bull. The smartest way to trade Nikola leading into 2021 would be to push the stock price and emotions aside and play both sides or leave the stock alone completely. (opinion not advice)

Because Nikola’s volatility is likely to increase from here. Especially, as upcoming bullish catalysts and out of the blue partnerships could prop up the stock. At the same time short-sellers and a stock market crash could wrench NKLA down in a heartbeat. Overall, the bears and bulls should own the charts at different points. Thus, making absolute predictions that Nikola is bearish or bullish come 2021 is a dangerous claim.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

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Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Starboard Value Acquisition Corp IPO – everything you need to know before investing

Starboard Value Acquisition Corp (NASDAQ: SVACU) is sliding onto NASDAQ this Friday, 11th September. Main Street does not focus on this SPAC as retail investors hone in on the trending blank check companies such as SHLL, SPAQ, and HCAC. However, some investors are contemplating a Starboard investment. Because if SVACU land an acquisition, then investing at IPO could potentially be the point of maximum financial gain. Thus, today’s article will breakdown the IPO for our readers and the risk/reward features of a SVACU investment.

Table of contents 
1. Overview of the SVACU IPO 
2. What you must know before investing in Starboard IPO

Breakdown of the Starboard Value Acquisition Corp IPO

Starboard is a blank check company, also known as a Special Purpose Acquisition Company (SPAC). Essentially Starboard’s sole intention is to acquire a company and bring it public through mergers, acquisitions, or stock purchases. In Starboard’s case, they are looking for a company in the technology, healthcare, consumer, industrial, and hospitality and entertainment sectors. However, before breaking down the IPO specifics, YIG strongly recommends investors read our simple explanation of SPAC’s here.

SVACU will IPO at $10.00 per unit. Each Starboard unit comprises of one stock and one-sixth of a redeemable warrant. UBS securities LLC, Stifel, Nicolaus &Company, Incorporated are acting as join book-running managers for the offering. The offering of SVACU securities should close on the 14th of September, 2020.

What you must know before investing in Starboard value acquisition corp

Before I begin, I remind our viewers that this is not financial advice but rather investment commentary from extensive research

Investors must understand the enormous risk/reward play-off in a SVACU investment. The IPO signifies Starboard arriving on the NASDAQ, but that is it for the moment. Think of the IPO as SVACU walking up to the podium and saying we are going public, keep your ears tuned for potential acquisition talks. Volatility is likely to be high come Friday’s IPO, as SPAC’s often receive decent volume because of their potential value. (opinion not advice)

Think of a SVACU investment as buying a metal detector and searching for gold. Starboard could acquire a high-growth company, which could send the stock skyrocketing. In which investors have struck gold. Especially, as SPAC’s SHLL, SPAQ, and Vector IQ all soared after their acquisitions. However, Starboard could fail to acquire a company, resulting in the PIPE investors receiving their money back.

Consequently, you bought a faulty metal detector and a potential capital loss. Overall, the SPAQ boom, SVACU’s broad acquisition target, could potentially see early investors come out on top. However, YIG does stress the importance of factoring in the risk of no acquisition into your investment.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

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Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

General Electric stock 2021 forecast – have all the 2020 bears left yet?

General Electric’s stock (NYSE: GE) shapes up for a comeback as we enter 2021. However, claiming a 2021 bullish run is a bold claim. Because the GE stock is down 48% YTD. Nonetheless, today’s article will break down both sides of the 2021 argument for our readers and provide YIG’s take on a General Electric investment.

Table of contents 
1. General Electric stock 2021 forecast  
2. YIG's take on a General Electric investment

General Electric stock 2021 forecast

Bearish 2020 summary

Like most aviation, healthcare, and power companies, the bears took General Electric’s stock price to the woodshed in 2020. GE’s bearish 2020 decline is understandable. Because the low demand for flying, low priority for elective surgeries, and the lack of activity in the power industry crippled General Electric’s aviation, healthcare, and power segments. Consequently, GE’s financials deterred bullish investors. For example, GE reported a 38.4% fall in Q2 revenue and missed the consensus estimates. After disappointing Q2 results, investors went on a selling spree, ultimately triggering a 30% decrease in two months. However, all things must come to end, and it seems the bears took a rest with GE. Nonetheless, the question remains, will General Electric rise or fall from here?

Bullish 2021 outlook

Some investors are changing their tune as General Electric’s 2021 future is becoming brighter each day. (opinion not advice) The economic recovery is masqueraded as progress only because of vaccine optimism and the recent decrease in numbers. Businesses, especially General Electric, would not attempt to revert to pre-COVID-19 production if there was no hope.

A fast-tracked and readily available vaccine will significantly boost GE’s jet-fuel, healthcare, and power segments. Demand for flying would spike. Increased air travel would see more airplanes order GE parts. However, recovery in travel is likely to be gradual. Hence, the 2021 bullish argument is holding more weight than a sharp rebound in the upcoming weeks.

Moreover, rapid eradication of the virus would see hospitals return their focus towards elective and general surgeries. In which the demand for GE’s healthcare products would surge again. However, YIG would like to point out that GE’s bullish 2021 forecast will be nothing but a fantasy if COVID-19 rages on. Overall, an optimistic 2021 picture would generate positive earnings guidance, which would reel in value and fundamental investors.

Furthermore, parking aside the fundamental recovery, some investors champion the technical argument. Especially, as the extreme sell-off likely caused capitulation, in which the buyers would drive up GE. However, how does one pinpoint capitulation? Some investors use the relative strength index (RSI) and resistance levels. However, according to MarketSmith chart analysis, GE’s relative strength line is falling within a multi-year downtrend. MarketSmith’s research suggests true capitulation is not noticeable yet. Overall, GE’s 2021 projections will only come to fruition from a technical standpoint if the vaccine holds up.

Does YIG see value in a 2021 General Electric Investment?

Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research

Short answer: Both the bullish and bearish 2021 arguments hold weight. However, if a COVID-19 vaccine is produced, then the bulls will prevail. (opinion not advice) 

A General Electric 2021 reversal looks promising, as long as the vaccine hopes hold. It seems GE capitulation will only be noticeable once bearish investors believe in the COVID-19 story. Because if COVID-19 intensifies, then GE could continue down its bearish path. Not to mention that if uncertainty remains high, than volatility around GE would reduce, making it difficult for a volcanic rebound. The U.S election is around the corner, 3rd November. Consequently, uncertainty will be going nowhere. (opinion not advice) However, overall, GE looks bullish for 2021 as all their core business functions should normalise.

If you enjoy our article or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Lululemon’s future post Q2 earnings – Does YIG see value in the fitness apparel giant?

Lululemon (NASDAQ: LULU), one of the world’s most-loved yoga-gear retailers, is bobbing and weaving the viruses punches as LULU is up 54% YTD. LULU’s earnings are tomorrow, which is causing the bears and bulls to divide. Some analysts adamantly believe LULU’s reputation will see the stock continue to rise into 2021. Whereas the bears are screaming ‘overvalued’ and suggest that average earnings could ignite a sell-off. Despite the polarisation, YIG will break down LULU’s earnings and paint the future outlook for our readers.

Table of contents 
1. Lululemon's earnings sentiment 
2. Will LULU be bullish or bearish after earnings? 
3. YIG's takeaway on a Lululemon investment post-earnings.

LULU earnings expectations

Wall Street remains somewhat optimistic ahead of LULU’s earnings and beyond. The bullish consensus comes from nine institutions raising their Lululemon price targets, the lack of sell-ratings, and the digital revolution.

However, bullish Lululemon analysts do have critics. For example, investment bank Citi Group downgraded its LULU rating from a buy to a neutral. Primarily, as Citi heard overvaluation alarm bells ringing as the institutions all raised their target prices. Moreover, analyst Paul Lejuez downgraded his rating from buy to neutral. Lejuez also agrees with the LULU inflation argument. Especially as Lejuez stated, “we have to ask ourselves if we can realistically recommend buying Lululemon at $400… and we just can’t do it.” Both neutral ratings are not bearish for the bigger picture. However, the downgrades are bearish for short-term earnings investors. Because the overvaluation will likely see LULU stagnate or sell-off in the next few days.

Analysts expect LULU’s EPS to come in at $0.55 and for revenue to be $842.49 million. Looking at the earnings estimate in isolation does not give investors much insight into whether the forecasted financials are significant. However, between May and June 2019, LULU posted an EPS of $0.96 and revenue of $833.35 million . If the consensus estimates hold up, LULU will report a 42.71% and 24.12% fall in EPS and revenue YoY. Ultimately, painting a bearish earnings report. However, LULU’s online sales could be the saving grace for a better than expected earnings (opinion not advice).

Lululemon’s post-earnings

Bullish LULU scenario after Q2 earnings

Despite COVID-19 wreaking havoc on Lululemon’s Q1 financials, the future looks bright for three reasons. First, many investors have a strong, even sentimental bond with Lululemon. Investors saw the benefit of strong customer affiliation, as LULU reported a 70% increase in online sales (June 11th). Lululemon will continue to leverage its brand loyalty online to sustain its high sales volume. Second, the yoga-gear retailer is not just known for yoga-gear. For example, more and more people are now buying self-care products, gym, and business attire form Lululemon. Hence, the one-stop shop vibe and online domination. Lastly, the digital world is growing at a lightning pace, allowing businesses, like Lululemon, to reach more people. However, many retailers, as seen with COVID-19, will be crushed financially. For example, Target. Thus, LULU’s strong brand loyalty, broad product range, and digital  presence should be a vacuum for online sales.

Bearish Lululemon outlook after Q2 earnings

However, the bears exposie the growing recession, the disadvantages of holding inventory, and supply chain disruptions. The fallout of an economic downturn could see investors stray away from the retailer as discretionary income becomes tight. Not to mention a $400 price tag could be expensive for some investors. In which we could see LULU stock-split.

Holding inventory is a contentious issue. Lululemon’s stock is stacking up because of COVID-19. For example, LULU reported a 41% increase in inventory last quarter, and analysts expect another increase this quarter. Lululemon’s executives stress that holding inventory is not concerning at the moment. However, the risks of higher storage costs, insurance premiums should not be brushed under the rug.

Does YIG see value in LULU post earnings?

Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research

Short answer: All the signs are pointing towards the upside, post-earnings. However, if COVID-19 or the recession intensifies, the growth prospects would fade. (opinion not advice) 

The after-earnings outlook appears bullish. Sure, a recession is a drawback, but you could say that about most companies. Also, LULU’s high sales volumes should fix any concerns around holding inventory. The raising of price targets above $400 should see retail investors follow suit. For example, Citi Group, Telsey Advisory Group, and Royal bank all raised their price targets above $400. All in all, it seems the expected earnings are already priced in. In which low volatility should be the picture through earnings. However, the future is in the hands of the bulls.(opinion not advice)

If you enjoy our articles or are wanting to learn more, you can subscribe to us for free via email and get updated when we post a new article. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

The Apple bull is expected to steam into 2021 – Here’s what you need to know

Apple (NASDAQ: AAPL) is arguably the most talked-about and traded stock in the 2020 market. The Apple bull shrugged off the February and March bears and climbed 139% since the bottom. However, Apple’s meteoric rise is attracting a fair amount of pessimists leading into 2021. Especially as the economic carnage continues and speculations of a tech bubble are still looming. At face value, the Apple bull is showing no signs of fatigue. The release of its iPhone 12, which includes 5G, and analyst upgrades, should act as the wind under the bull’s wings. Nonetheless, today’s article will breakdown Apple’s 2021 forecast for our readers.

Table of contents 
1. Why analysts, institutions, and professional investors are bullish for 2021
2. What you need to know before investing in Apple - YIG's take

Will the Apple bull run out of gas before 2021?

Apple holds a bright 2021 future for four reasons. These include:

  • The release of cheaper 4G iPhone’s and the iPhone 12
  • Upgrades from Wedbush analyst Daniel Ives
  • The historical bullish reaction after stock splits
  • The recent Warren Buffet rally.

Apple is notorious for its flagship product, the iPhone. However, Apple’s entire product range are now household items. The integration of Apple into every facet of our lives allowed AAPL’s product lines to sustain their huge sales volumes during the pandemic. Considering COVID-19 is continuing into 2021, Apple should still maintain its 2020 sales volumes. Especially as customer loyalty seems to grow in times of crisis. Apple’s brand loyalty, encouraged Warren Buffet to snap up shares,and made up to 40% of Berkshire Hathaway’s equity portion earlier this year. Consequently, retail investors followed Buffet’s tracks and invested in Apple, as they saw the brand loyalty skyrocket during 2020. Thus, Apple’s unwavering customer base should propel the bullish run into 2021 (opinion, not advice).

IPhone 12 bullish anticipation

Despite having a suite of products, Apple’s iPhone is their biggest wallet and eyeball magnet. Each year the world waits in anticipation in the lead up until their September launch. For 2020 it is the iPhone 12, which Wedbush analyst Daniel Ives believes, “represents the most significant product cycle for Cook & Co. since the  iPhone 6 in 2014″. Not to mention it will be the first Apple iPhone with 5G. Hence Ives recent upgrade from $515 to $600, which is way above the average analyst price target of $445. The significance of the iPhone 12 saw Wedbush maintain their outperform rating on Apple. Primarily because Ives believes the super cycle product will be the driving force behind the 2021 Apple bull. However, supply disruptions will see the iPhone 12 come out in October of 2020, ultimately heightening the build-up. Thus, the above-average hype should trigger a buying frenzy at the end of 2020 and into 2021.

In addition to analysts and professional investors, retail investors are also snapping up Apple shares. The recent 4-1 stock split saw a tidal wave of everyday investors join the Apple 2020 party. Especially as the price allowed retail investors to purchase fractional shares on platforms like Robinhood.“Historically, after Apple has split its stock, the following year’s return has outpaced the performance of the S&P 500, except for the dot com crash”. Thus, despite the recent bearish onslaught, the stock-split should see Apple rage into 2021 (opinion, not advice).

Here’s what you need to know before investing in Apple pre-2021

Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research

To a large extent, it seems the Apple 2021 bull scenario is likely. Especially when you factor in the enormous iPhone 12 hype, the spike in Wedbush’s optimism, and the retail tsunami following the stock-split. Apple has enough catalysts in its quiver to sustain the bullish run into 2021. However, mid-course corrections would not be surprising.

Counterarguments to the 2021 Apple bull

Furthermore, while the Apple cheerleaders have a loud voice, its essential to pinpoint the drawbacks of an AAPL investment. First, Apple might be pandemic proof, but it is not recession-proof. If the recession infiltrated the stock market, Apple would likely turn bearish (opinion not advice). Thus factoring in an economic downturn is crucial when investing in Apple. However, for now, the economic recovery is favouring the Apple bulls. Also, tech bubble or not, Apple’s trillion-dollar market cap might become unsustainable. In which institutions would be the first to sell, and retail investors would likely get burned. Overall, YIG does see validity in the 2021 bull argument but stresses the importance of the potential holes.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.