HI Market View Commentary 11-27-2023
Why is our market moving so much higher? Last 30 days +10.61 HI +11.39
Seasonal Sales cycle is intact
Earnings are slightly better than expected
Money Managers playing catchup and the business cycle for an up year in the market
Dec. average +1.4% Dec Prior to an election year is double +3.0%
YES we’ve let things run after earnings BUT we are ready to place protection back on to get us through the Dec 13th FOMC Rate hike meeting
What does HI do to fight the seasonal sell off end of year?= Protection, BIDU, DIS,
Typical Tuesday-Friday:
5:30-5:55am Wake up and either start the wood burning stove in winter, or out to the back porch for the sunrise in summer
6:00-8:00am Read news from CNBC watchlist, Finviz watchlist and general stock market news, and….
8:00-9:00am Working numbers, earnings, stock, verifying the news I read today
9:30-10:00am Breakfast
10:00-1:00pm Watching CNBC, Bloomberg, Fox News and doing some kind of paperwork
1:00-2:00pm Watching the closing hour of the market IN FRONT of a computer
2:00-300pm working numbers, 10-K reviews,
3:00-4:00pm Yes I watch Cramer/ Mad Money to see what he is telling everyone on TV. He has the most watched financial show
Monday
5:00-6:00pm Prepare Notes
6:00-7:00pm Webinar
Sunday
2 hours planning the next week
https://www.briefing.com/the-big-picture
Last Updated: 17-Nov-23 15:03 ET | Archive
A value hiding in plain sight
What a difference three weeks makes. In late October, the 10-yr note yield was pushing 5.00%, the S&P 500 was on the brink of breaking below 4,100, and the CBOE Volatility Index was north of 20.00.
As we write, the 10-yr note yield sits at 4.45%, the S&P 500 is at 4,500, and the CBOE Volatility Index is under 14.00.
It has been quite a reversal in all respects, so here we are. Holiday spirit is in the air, and, dare we say, maybe even some animal spirits as the term “seasonality” gets tossed around in a positive way like a football on Thanksgiving Day.
The implication is that investor sentiment has taken a marked turn for the better in the past three weeks, largely because interest rates have come down on the assumption that the Fed is done raising rates and is apt to cut rates in the first half of 2024.
Higher stock prices are the manifestation of the improved sentiment, but accompanying those higher stock prices are higher valuations. Three weeks ago, the S&P 500 was trading at a 17.1x forward 12-month earnings, or a slight discount to its 10-year historical average (17.5x), according to FactSet. Today, it trades at 18.7x forward 12-month earnings.
Raising the Valuation Bar
The S&P 500 doesn’t trade at a super-rich valuation, but it’s up there. Just about everyone regularly following the market this year knows why.
- Apple (AAPL) trades at 29.0x forward 12-month earnings (5-yr average is 23.7x)
- Microsoft (MSFT) trades at 33.2x forward 12-month earnings (5-yr average is 28.1x)
- Alphabet (GOOG) trades at 21.5x forward 12-month earnings (5-yr average is 23.5x)
- Amazon.com (AMZN) trades at 43.8x forward 12-month earnings (5-yr average is 63.6x)
- NVIDIA (NVDA) trades at 32.1x forward 12-month earnings (5-yr average is 39.4x)
- Tesla (TSLA) trades at 66.4x forward 12-month earnings (5-yr average is 95.9x)
- Meta Platforms (META) trades at 19.4x forward 12-month earnings (5-yr average is 21.0x)
Source: FactSet
These seven companies in the market-cap weighted S&P 500 have raised the valuation bar. To be fair, that isn’t anything new. They have typically sported premium valuations, but it may surprise some to learn that only Apple and Microsoft are trading at a premium to their five-year average. That doesn’t necessarily make the others “cheap” per se, but there is not as much to the premium valuation as meets the eye at first blush.
If anything, there is concentration risk in these seven names. Investors have flocked to them because they are market leaders with healthy financials. They have flocked to them, because, for the most part, they keep delivering results that validate their must-own status. Fund managers have flocked to them, because everybody else has, and the risk of underperforming “the market” is too great not to own them.
Of course, therein lies the risk for these stocks and “the market.” If their fundamental story changes for the worse, their stock prices will, too, and perhaps in a material way, as Meta Platforms (META) discovered before it got back on fundamental track.
Where there isn’t any concentration risk is in the rest of the market.
Some Q&A
We’ve covered this point before, but it’s worth covering again after the move the market has made in the past three weeks. The market-cap weighted S&P 500 is being driven by a handful of stocks. The S&P 500 Equal-Weighted Index is being driven equally by 500 stocks.
Whereas the market-cap-weighted S&P 500 has looked more like Lightning McQueen this year, the equal-weighted S&P 500 has resembled his best friend, and tow truck, Mater. Granted it hasn’t had the same happy, go-lucky disposition that Mater does, but it has had Mater’s clunky style.
Three weeks ago, it was down 5.5% for the year. As we write, the S&P 500 Equal-Weighted Index is up 2.7% for the year. That won’t win it many plaudits knowing the returns on money-market funds, certificates of deposit, and T-bills are higher, but at least it is something.
It is also something to see that the equal-weighted S&P 500 is trading at just 14.9x forward twelve-month earnings. That is a 9% discount to its 10-year average of 16.4x. That isn’t a super-cheap valuation, but it’s down there.
Why flock to the narrowly concentrated, market-cap weighted S&P 500, which is trading at a premium valuation, when there is ample value to be found in the widely distributed, equal-weighted S&P 500, which is trading at a discounted valuation.
That is the question which begs another question: why aren’t investors taking advantage of this value opportunity?
Here are some possible answers:
- If it ain’t broke, don’t fix it. The mega-cap trade has continued to deliver the goods for investors, so it is hard to walk away from it when it is still working.
- It makes no difference to an investor in a market-cap weighted index fund how the return was achieved. It all counts the same when you need to cash out.
- There isn’t faith in the value proposition — not yet anyway.
What It All Means
That last answer might be the one that matters most both in terms of its meaning and its opportunity.
It means investors think forward earnings estimates are too high, so what looks like a value today isn’t the value it appears to be at first blush if there is going to be a material downward revision to earnings estimates. Accordingly, investors default to the mega-cap stocks, which they expect to be more dependable in a more challenging earnings environment. An economy in recession would be considered a challenging earnings environment.
The opportunity, of course, is in forward earnings estimates holding up because the economy is holding up. That brings us back to interest rates. They have come down sharply in recent weeks for a variety of reasons, but one of the primary drivers is the belief that the Fed is done raising rates because a softening economy will lead to softening inflation.
The extrapolation ends at a softening economy.
There doesn’t seem to be any allowance at the moment for anything other than a soft landing. Interest rates would presumably be chased lower in the event of a hard landing, but the offset in that situation is that earnings estimates would be chased lower, too, which wouldn’t be good for stock prices.
There is a lot riding on the economic outlook. We would argue that the vast outperformance of the market-cap weighted S&P 500 dominated by the mega-cap stocks versus the equal-weighted S&P 500 is not a reflection of the confidence in the outlook so much as it is a reflection of the uncertainty surrounding the outlook.
If the investment community was more certain of the favorable economic view, it would show greater interest in the value-based opportunity that appears to be available in the equal-weighted S&P 500. That opportunity seems to be hiding in plain sight for some opaque reasons.
If the economic future clears in the manner the market is inclined to think it will, the opportunity seen today in the equal-weighted S&P 500 will be worth the, uh, “weight.”
—Patrick J. O’Hare, Briefing.com
(Editor’s Note: The next installment of The Big Picture will be posted the week of December 4)
Earnings dates:
COST – 12/14 est
MU- 12/21 est
Where will our markets end this week?
Higher
DJIA – Bullish Overbought
SPX –Bullish overbought
COMP – Bullish Overbought
Where Will the SPX end Dec. 2023?
11-27-2023 +2.5%
Earnings:
Mon:
Tues: CRWD, HPE, INTU, NTAP
Wed: DLTR, FL, FIVE, CRM, SNOW
Thur: BIG, KR, DELL, ULTA
Fri: GCO
Econ Reports:
Mon: New Home Sales,
Tue FHFA Housing Price Index, S&P Case Shiller, Consumer Confidence,
Wed: MBA, GDP, GDP Deflator, Fed Beige Book
Thur: Initial Claims, Continuing Claims, Chicago PMI, Personal Income, Personal Spending, PCE Prices, PCE Core, Pending Home Sales
Fri: ISM Manufacturing, Construction Spending
How am I looking to trade?
www.myhurleyinvestment.com = Blogsite
info@hurleyinvestments.com = Email
Questions???
https://www.reuters.com/technology/sam-altman-return-openai-ceo-2023-11-22/
Sam Altman to return as OpenAI CEO after his tumultuous ouster
By Jeffrey Dastin and Aditya Soni
November 22, 20236:25 AM MSTUpdated 5 days ago
[Captions
Sam Altman to return as OpenAI chief
- Summary
- Companies
- OpenAI revamps board with Bret Taylor as new chair
- Co-founder Brockman and other staff also return
- Questions still remain around Altman’s ouster
SAN FRANCISCO, Nov 22 (Reuters) – Sam Altman is returning as CEO of OpenAI just days after his ouster, capping frenzied discussions about the future of the startup at the center of an artificial intelligence boom.
The ChatGPT maker also unveiled a new initial board with former Salesforce co-CEO Bret Taylor as chair and Larry Summers, former U.S. Treasury Secretary, and Adam D’Angelo as directors. D’Angelo was part of the original board that had dismissed Altman.
The return of Altman could potentially usher in a new era for the startup which had long juggled concerns among staff about AI’s dangers and its potential for commercialization.
“i’m looking forward to returning to openai,” Altman said in a post on the X social media platform late on Tuesday.
The original board had given scant explanation for Altman’s firing on Friday other than his lack of candor and its need to defend OpenAI’s mission to develop AI that benefits humanity.
Analysts said the reshuffle will favor Altman and Microsoft (MSFT.O), which has pledged billions of dollars to the startup and is rolling out its technology to its customers globally.
“There are still huge questions about why Altman was fired and why Microsoft had been kept in the dark about the decision,” said Danni Hewson, AJ Bell’s head of financial analysis.
“What does seem clear is that Microsoft will now play a much bigger role, that the partnership will become stronger and the two companies more integrated.”
Microsoft’s CEO Satya Nadella welcomed the changes.
“We believe this is a first essential step on a path to more stable, well-informed, and effective governance,” he said on X.
Microsoft shares rose nearly 1% in premarket U.S trading.
It was not immediately clear if the previous board directors who hold no equity in OpenAI would retain their seats, or if the backers of its capped-profit subsidiary – such as 49% owner Microsoft – would ultimately win board appointments.
Unlike most Silicon Valley startups, OpenAI is overseen by a nonprofit parent board designed to ensure AI safety is given priority alongside growth. It created the capped-profit unit in 2019 to raise funds and grant stock options to its employees.
“The return of Altman consolidates his influence over the direction of OpenAI, and probably means it will be more bold and profit focused, but also potentially less risk averse,” said Kyle Rodda, analyst at Capital.com.
Spokespeople for the startup did not immediately respond to a request for comment.
OpenAI’s previous board consisted of Tasha McCauley, Helen Toner and OpenAI chief scientist Ilya Sutskever and Quora CEO D’Angelo, who is part of the revamped board.
Reuters earlier reported some shareholders were exploring legal recourse after the turmoil threatened the future of OpenAI, recently expected to have an over $80 billion valuation.
Tuesday’s moves reassured some investors.
“We believe this is the best outcome for the company,” said Thrive Capital, a backer of OpenAI.
Windows maker reveals multi-year, multi-billion dollar investment in OpenAI in January
YEARS FASTER THAN STEVE JOBS
Altman’s dramatic turnaround drew comparisons in Silicon Valley lore to Steve Jobs, Apple’s CEO who left the computer maker in a 1985 power struggle only to return 12 years later.
Altman took back the CEO mantle after four days.
His departure triggered a major upheaval at OpenAI, with President Greg Brockman quitting in protest. By Sunday Altman was back at OpenAI’s offices expecting his swift reappointment, when the board surprised again by naming ex-Twitch boss Emmett Shear as interim CEO.
In a post on X on Tuesday, Shear said he worked “~72 very intense hours” to bring stability – and ultimately Altman – back to OpenAI. “This was the pathway that maximized safety alongside doing right by all stakeholders involved,” he said.
Altman’s master stroke was made possible in part by Microsoft. When he was out of a job, CEO Nadella said Altman could head a new research team alongside Brockman and other colleagues departing from OpenAI.
By Monday, nearly all of OpenAI’s over 700-strong staff had threatened to leave and join Microsoft’s effort unless the board stepped down and reinstated Altman, according to a letter reviewed by Reuters.
This threat was backed by Microsoft’s vast computing power, the key asset driving OpenAI’s technology along with its staff of computer scientists.
Co-founder and President Brockman celebrated with a staff selfie late Tuesday night, having beaten the U.S. Thanksgiving holiday deadline against which parties raced to negotiate.
“We will come back stronger & more unified than ever,” he said.
Reporting by Jeffrey Dastin in San Francisco and Aditya Soni, Shivani Tanna and Bansari Mayur Kamdar in Bengaluru. Editing by Dhanya Ann Thoppil, Nivedita Bhattacharjee, Sam Holmes and Jane Merriman
Biden and Xi’s meeting sent an important signal for U.S. business in China
PUBLISHED TUE, NOV 21 20237:13 PM ESTUPDATED TUE, NOV 21 20239:24 PM EST
KEY POINTS
- Biden and Xi met for the first time in about a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.
- “I think for U.S. businesses the hope is that this kind of new tone can translate into a new normal for the economic relationship,” said Jake Colvin, president of the Washington, D.C.-based National Foreign Trade Council.
- “For the business community, the meeting demonstrates that full decoupling is off the table and that investment in China remains permissible, at least in non-sensitive industries,” Gabriel Wildau, managing director at Teneo, said in a note Friday.
BEIJING — U.S. President Joe Biden’s meeting with Chinese President Xi Jinping last week has set a bottom line in the relationship which reduces uncertainty for businesses, analysts said.
Biden and Xi met for the first time in about a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.
“I think there’s a lot of consensus coming out of this summit,” Wang Dong, executive director of the Institute for Global Cooperation and Understanding at Peking University, told reporters Tuesday.
“What you get from this summit is a very clear signal the two countries, they are committed to what we can call recouple, in a way, on the basis of reciprocity and mutual respect,” he said. “I think this is very important for both countries and indeed for the global economy as well.”
In essence, the U.S. and China are working out what it means to cooperate where they can.
“I think for U.S. businesses the hope is that this kind of new tone can translate into a new normal for the economic relationship, where there’s a mutually beneficial relationship where China plays by the rules and the United States and China can get back to a more normal economic footing, have some of these tariffs and retaliations drop away,” said Jake Colvin, president of the Washington, D.C.-based National Foreign Trade Council.
He said he participated in the Asia-Pacific Economic Cooperation CEO Summit in San Francisco last week.
In conversations with Xi, Biden did not budge on export controls, enacted out of national security concerns. But a White House readout said “the leaders affirmed the need to address the risks of advanced AI systems and improve AI safety through U.S.-China government talks.”
The two sides also agreed to restore military-to-military talks, which have been on a hiatus for more than a year.
“For the business community, the meeting demonstrates that full decoupling is off the table and that investment in China remains permissible, at least in non-sensitive industries,” Gabriel Wildau, managing director at Teneo, said in a note Friday.
“The meeting signals that both leaders want to avoid a downward spiral and cooperate where interests align,” he said.
The Biden administration has sought to restrict U.S. investment in, or business with, Chinese companies that are developing advanced tech that could support military development. But U.S. officials have pointed out the vast majority of trade and consumer-related business isn’t affected.
Top-down messaging
As with U.S. official visits to China this year, the Biden-Xi meeting spurred action, such as the resumption of more flights between the two countries.
For the first time since the Covid-19 pandemic, a direct flight headed for Washington, D.C., took off from Beijing on Tuesday, state media reported.
“I heard stories from dozens of decisionmakers telling me their versions of how their personal experiences with Chinese interlocutors had suddenly changed: promises of imminent licenses long thought dead, clarity on anti-espionage rulings, higher-level access to Chinese decisionmakers, favorable treatment by the Chinese media, and the like,” Ian Bremmer, president of consulting firm Eurasia Group, said in a note Monday.
Mastercard on Monday announced its joint venture in China received approval from the People’s Bank of China to begin processing domestic payments. The venture waited nearly four years since its application to begin preparations was approved in principle.
Wedding versus marriage
After meeting Biden, Xi spoke at a dinner with top U.S. business executives in which he said the fundamental question was whether the two countries are “adversaries or partners.”
“I was very heartened by the fact that there were so many companies that were invested in the U.S. and China having a positive relationship,” said Blueshirt Group managing director, Gary Dvorchak, who attended the dinner.
“In a negative U.S.-China environment a lot of those companies could have stayed away. Why do I want my CEO having a picture with Xi Jinping?” he said. “It would have been very easy for the whole thing to be massively negative and not have people show up.”
Looking further out, Dvorchak compared the dinner to a wedding. “The happy day is a happy day. How is the marriage?”
Upcoming election risk
Over the weekend, Eurasia Group said it’s more likely now that the U.S. and China will see a “managed decline” in their relationship through the end of 2024, and a lower likelihood of “serious deterioration.”
But the consulting firm sees zero chance of a “substantial improvement.”
The U.S. presidential election is scheduled for November 2024. The democratically self-ruled island of Taiwan is due to hold its elections in January.
Beijing considers Taiwan part of its territory, with no right to independently conduct diplomatic relations. The U.S. recognizes Beijing as the sole government of China but maintains unofficial relations with Taiwan.
“Whether this positive atmosphere can last very long is in doubt with [the] coming next year’s presidential election,” said Jin Canrong, deputy dean, professor and doctoral supervisor of the School of International Studies at the Renmin University of China.
He described the Biden-Xi summit as “very good,” with some consensus, but noted that in the long term, managing the relationship is “a very hard job.”
From a long-term point of view, there’s some doubt within the Chinese public about how the consensus achieved can be implemented, “because our impression is that the record of the U.S. side [fulfilling] their promise is very bad. They promise every day but do nothing,” Jin told reporters Tuesday.” He is also deputy director of the Center for American Studies at the Renmin University of China, and holds other positions.
No ‘splashy deliverables’
Long-standing issues for U.S. business operations in China remain, and deals aren’t made overnight.
Despite media reports saying the Chinese government might use the Biden-Xi summit as an opportunity to announce a commitment to resuming purchases of Boeing’s 737 Max aircraft, no such news has materialized. Boeing did not immediately respond to CNBC’s request for comment.
“This meeting didn’t result in any splashy deliverables,” Colvin said. “It was successful in putting a floor under the relationship and setting a new tone for cooperation and for problem solving.”
“But I think for companies there’s still going to be a focus on derisking and diversifying supply chains,” he said. “Ultimately they will make their decisions based on the reality on the ground in China.”
Correction: This story has been updated to reflect that Peking University’s Wang Dong said there’s a clear signal two sides are committed to “recouple, in a way.”
Baidu Demonstrates Technical Improvement Following Q3 Earnings
Nov. 25, 2023 6:15 AM ETBaidu, Inc. (BIDU)1 Comment4 Likes
Summary
- Baidu’s Q3 2023 financial performance showed resilience and growth, with an increase in total revenues.
- iQIYI, Baidu’s streaming subsidiary, saw an increase in revenue, indicating strong customer engagement and monetization strategies.
- Baidu’s stock shows bullish technical patterns, with potential for significant growth if it surpasses the $161 resistance level.
zorazhuang
Baidu, Inc. (NASDAQ:BIDU) emerged with a resilient and strategically sound financial performance in Q3 2023 amid a challenging economic landscape. The company witnessed a notable year-over-year increase in total revenues, primarily driven by the robust performance of Baidu Core, which experienced a year-over-year growth. A significant contribution to Baidu’s success came from its streaming subsidiary, iQIYI, which saw an increase in revenue, underlining strong customer engagement and effective monetization strategies. This article extends the discussion initiated in the previous article, offering a preview of Baidu’s Q3 2023 earnings to assess the company’s financial robustness. Additionally, the article presents a technical stock price analysis to unearth potential investment prospects. After the Q3 earnings release, the stock reversed from pivotal support levels, offering a compelling case for investor consideration.
Baidu’s Resilience and Growth Amid Economic Challenges
Baidu’s financial performance in Q3 2023 showcased resilience and growth in a challenging economic landscape. The company’s quarterly revenues rose to $4.72 billion, a 6% year-over-year increase. This growth was spearheaded by Baidu Core, which contributed around $3.64 billion, up by 5% compared to the previous year. The segment’s growth was balanced across both online marketing and non-online marketing revenues, demonstrating the breadth of Baidu’s revenue streams. Furthermore, Baidu’s annual revenue displayed a notable upward trend, totaling $18.41 billion in 2022.
Data by YCharts
A significant contributor to Baidu’s success this quarter was its streaming subsidiary, iQIYI, which saw a 7% increase in revenue year over year, reaching $1.10 billion. The platform’s growth in both subscriber numbers and average revenue per membership indicates robust customer engagement and monetization strategies. iQIYI’s average daily subscription base stood at 107.5 million members in Q3 2023, increasing from the 101.0 million recorded in Q3 2022, though slightly lower than the 111.2 million in Q2 2023. More significantly, the monthly average revenue per membership reached RMB 15.54. This figure represents a 12% increase from RMB 13.90 in Q3 2022 and is also higher than the RMB 14.82 observed in Q2 2023.
Regarding operational efficiency, Baidu effectively controlled its costs, with revenues remaining nearly flat yearly. However, the company did increase investment in critical areas, with an 11% rise in selling, general, and administrative expenses and a 6% increase in research and development expenses. This strategic spending, particularly in AI and technological innovation, reflects Baidu’s commitment to maintaining its competitive edge.
Financially, Baidu remained strong, with an operating income of $860 million. The company’s net income was $916 million, with a 24% net margin for Baidu Core. This robust profitability is further highlighted in the non-GAAP figures, which present an even stronger financial position.
Lastly, Baidu’s liquidity and cash flow positions were solid, with over $27 billion in cash and investments and a healthy free cash flow of $822 million. Additionally, the company’s commitment to returning value to shareholders continued, with US$126 million returned in Q3 2023.
Overall, Baidu’s financial performance in Q3 2023 exemplified resilience and growth, thriving in a challenging economic environment. The company achieved a significant increase in quarterly revenues, led by the robust performance of Baidu Core and complemented by the successful contribution of its streaming subsidiary, iQIYI. This performance, strategic investments in AI and technology, and solid operational efficiency position Baidu well for sustained growth and continued shareholder value creation.
Decoding Technical Patterns
Recap
The previous article explored a bullish, solid stock perspective with a symmetrical broadening wedge and an inverted head and shoulders pattern. It was noted that the stock price was fluctuating around a crucial long-term support level, potentially setting the stage for a significant bottom formation. The article emphasized that surpassing the $161 mark would be pivotal for initiating the next upward surge, with an initial target of $300. Overall, the long-term price trajectory was depicted as decidedly bullish, underscoring the potential for an upward breakout.
Current Market Trends and Projections
The stock price has yet to surpass the $161 mark and has undergone further consolidation, creating a more favorable opportunity for buyers. The revised monthly chart below reveals that the monthly candles for August, September, and October 2023 were bearish, leading to a decline toward a significant support level. This downtrend commenced around the crucial $161 level, underscoring its significance as a key resistance point. However, this decline is a compelling buying opportunity at more attractive price levels. The symmetrical triangle formation indicates the overall chart pattern remains bullish.
BIDU Monthly Chart (stockcharts.com)
To better understand this bullish trend, the weekly chart displays an inverted head and shoulders pattern, with the head at $73.58 and the left shoulder at $101.62. Notably, the recent price dip formed the right shoulder at a low of $103.32. A sharp rebound from this low following the Q3 2023 earnings has resulted in a pronounced weekly candle, suggesting the potential formation of a strong base. The critical resistance level remains at $161, and a breakthrough above this threshold could trigger a significant rally for Baidu.
BIDU Monthly Chart (stockcharts.com)
Examining the impact of the Q3 2023 earnings on the stock price, the short-term daily chart showcases a prominent bullish price action over the past three days. This pattern indicates that a bottom has formed, characterized by a triple base at $103.32, and the price has reacted positively, breaking above the neckline near $111.41. This notable reversal was further supported by oversold conditions, as indicated by RSI. Investors might consider increasing their long positions at current levels in anticipation of further upward movement. Surpassing the $161 level could catalyze a substantial upward rally.
BIDU Daily Chart (stockcharts.com)
Market Risks
Despite Baidu’s strong financial performance in Q3 2023, the company operates in a highly competitive and rapidly evolving industry, especially in AI and online marketing. The global economic landscape remains uncertain, posing risks to consumer spending and advertising budgets, which could impact Baidu’s revenue streams, particularly online marketing. Additionally, the increasing competition in AI might pressure Baidu to continuously innovate and invest heavily, which could strain its financial resources and affect profitability.
From a technical perspective, Baidu’s stock has shown a bullish trend but has not yet been able to break above the critical $161 mark. Failing to breach this pivotal level may signal underlying market hesitance or broader economic concerns. The stock’s consolidation phase and the bearish monthly candles for August, September, and October 2023 suggest that investors might be cautious due to macroeconomic factors or industry-specific challenges. If the stock fails to overcome key resistance levels, it could lead to a loss of investor confidence and a potential decline in stock value.
Baidu, being a major player in the Chinese market, is subject to regulatory risks that can significantly impact its operations and financial performance. Regulation changes, especially those related to internet privacy, data security, and AI, can lead to increased compliance costs or limitations on business practices. Furthermore, geopolitical tensions and the evolving global trade landscape can influence investor sentiments and create volatility in the stock market, affecting Baidu’s stock performance and overall market valuation.
Bottom Line
In conclusion, Baidu has demonstrated remarkable financial resilience and strategic growth in Q3 2023, successfully navigating a complex economic environment. The company’s total revenue increase, driven by the strong performance of Baidu Core and the significant contribution from its streaming subsidiary, iQIYI, highlights its robust business model and effective monetization strategies. The balance in revenue streams and strategic investments, especially in AI and technology, underline Baidu’s commitment to innovation and competitiveness.
The technical analysis of Baidu’s stock presents an optimistic picture for potential investors. Despite current market fluctuations and the stock’s consolidation around pivotal support levels, the overall bullish patterns suggest a promising future for Baidu’s stock, significantly if it successfully breaches the critical $161 resistance level. This could open avenues for significant growth, making Baidu an attractive option for investors seeking long-term gains. Given the price declines in recent months, the swift turnaround after the Q3 2023 earnings, evident in the weekly and daily charts, is highly encouraging. This turnaround provides investors with an opportune moment to increase their long positions at the current levels.
Black Friday shoppers spent a record $9.8 billion in U.S. online sales, up 7.5% from last year
PUBLISHED SAT, NOV 25 20232:55 PM EST
KEY POINTS
- Black Friday generated $9.8 billion in U.S. online sales, according to Adobe Analytics, up 7.5% from a year ago.
- The spending bump reflects consumers looking to advantage of big deal days and finding it easier to compare discounts online.
- After Cyber Monday, sales will likely taper off through the rest of the holiday season as retailers trim discounts.
Black Friday e-commerce spending popped 7.5% from a year earlier, reaching a record $9.8 billion in the U.S., according to an Adobe Analytics report, a further indication that price-conscious consumers want to spend on the best deals and are hunting for those deals online.
“We’ve seen a very strategic consumer emerge over the past year where they’re really trying to take advantage of these marquee days, so that they can maximize on discounts,” said Vivek Pandya, a lead analyst at Adobe Digital Insights.
Black Friday’s spending spike reflects a consumer who is more willing to spend than in 2022, when gas and food prices were painfully high.
Pandya noted that impulse purchases may have played a role in the Black Friday growth since $5.3 billion of the online sales came from mobile shopping. He noted that influencers and social media advertising have made it easier for consumers to get comfortable spending on their mobile devices.
Still, shoppers are price-sensitive, managing tighter budgets due to last year’s record inflation and interest rates. According to the Adobe survey, $79 million of the sales came from consumers who opted for the ‘Buy Now, Pay Later’ flexible payment method to stretch their wallets, up 47% from last year.
The best-selling categories of Black Friday, the Adobe report found, were electronics like smartwatches and televisions, along with toys and gaming. Meanwhile, home-repair tools underperformed. Pandya said top sellers directly correlated to whichever products had the best discounts.
Adobe gathers its data by analyzing one trillion visits to U.S. retail websites, 18 product categories and 100 million unique items. It does not track brick-and-mortar retail transactions.
A Mastercard analysis of this year’s Black Friday sales found that in-store sales rose just over 1% versus online sales, which grew by over 8% compared to last year.
“I do think the paradigm has changed around the in-store Black Friday experience, the long lines and things like that,” said Adobe’s Pandya.
Consumers are “more in the driver’s seat” when they are online shopping, he added, because it is easier to make side-by-side price comparisons and secure a better price.
Retailers are aware of the rise of deal-hunting consumers and want to capture as many of them as possible. Companies like Best Buy and Lowe’s have both announced higher discounting levels. Other retailers like Target and Ulta Beauty have rolled out pop-up promotions that offer 24-hour discounts on certain brands and items.
Black Friday kept the momentum going from the day before on Thanksgiving when online sales totaled $5.6 billion, according to a prior Adobe analysis.
Adobe expects the spending strength to hold over the weekend and through Cyber Monday with the biggest bargains still ahead. The report forecasts that online shoppers will spend roughly $10 billion over the course of Saturday and Sunday, and a record $12 billion on Cyber Monday.
But spending will likely begin to taper off deeper into the holiday season, according to Pandya. Cyber Monday, as the last major deal day of the holiday season, could be the final spending spike on non-essential goods for the rest of the year.
“We do expect growth to weaken because those discounts will weaken and they are dictating a lot in terms of buyer behavior this season,” said Pandya.
He noted that there are always gift-givers who procrastinate their holiday shopping so spending could continue to trickle in late into December. But the real growth surges, he said, “end up being in November and Thanksgiving week.”
Hunger Games prequel, ‘Napoleon’ lead as Thanksgiving box office shows signs of life
PUBLISHED SUN, NOV 26 202312:51 PM EST
KEY POINTS
- This year’s Thanksgiving box office is estimated to have reached $172 million.
- Lionsgate’s “Hunger Games: The Ballad of Songbirds and Snakes” held the top box office spot with around $42 million in ticket sales over the five-day holiday weekend.
- Disney’s “Wish” fell short of analysts’ expectations, generating about $31.7 million during its first five days domestically. Box office analysts had forecast a haul of $45 million to $55 million.
This year’s Thanksgiving box office was both feast and famine for the theatrical industry.
Lionsgate’s “Hunger Games: The Ballad of Songbirds and Snakes” had a solid second week run in cinemas, generating an estimated $42 million for the five-day Thanksgiving frame and Apple’s “Napoleon,” an R-rated war epic distributed by Sony, snared around $32.5 million.
Meanwhile, Disney’s latest animated feature “Wish,” which celebrates the company’s 100th anniversary, fell startlingly short of box office expectations, tallying just $31.7 million over its first five days in theaters. Analysts had foreseen an opening of $45 million to $55 million for the five-day period.
“It wouldn’t be a holiday box office season without some occasional upsets and this weekend is delivering on that front,” said Shawn Robbins, chief analyst at BoxOffice.com. ”‘Napoleon’ is a solid win for Sony, Apple, theaters and moviegoers all around. Another successful adult-driven film was needed right now after the vacancy left behind by ‘Dune: Part Two’ and the light holiday calendar still ahead.”
Top Thanksgiving box office titles (five-day)
- “Hunger Games: The Ballad of Songbirds and Snakes” (Lionsgate) — $42 million
- “Napoleon” (Apple/Sony) — $32.5 million
- “Wish” (Disney) — $31.7 million
- “Trolls Band Together” (Universal) — $25.3 million
- “Thanksgiving” (Sony) — $11.13 million
- “The Marvels” (Disney) — $9.2 million
- “The Holdovers” (Focus Features/Universal) — $3.75 million
- “Saltburn” (Amazon MGM/Warner Bros. Discovery) — $2.72 million
- “Next Goal Wins” (Disney) — $2.57 million
- “Five Nights at Freddy’s” (Universal) — $2.5 million
- Taylor Swift’s Eras Tour concert film (AMC) — $2.33 million
** All figures are estimated by studios
Yet, the underperformance of “Wish” continues to call attention to issues over at Disney’s animation studios, which have struggled to lure audiences back to theaters since the pandemic. For comparison, Universal’s “Trolls Band Together” managed to snag $25.3 million for the five-day period and it was the film’s second week in theaters.
“Disney’s ‘Wish’ is struggling to reach even the most conservative of expectations,” said Robbins. “It is a performance that again highlights the studio’s long road ahead to rebuild brand and audience confidence while making their films stand out as theatrical events again rather than have them be cannibalized by the impact of flailing streaming-focused strategies.”
Overall, the Thanksgiving box office secured around $172 million, an improvement over the previous three years of pandemic-pressured ticket sales. Prior to the coronavirus outbreak, the five-day Thanksgiving spread — consisting of the Wednesday before Thanksgiving through Sunday — had resulted in more than $250 million in ticket sales each year.
Thanksgiving 5-day frame over the last decade
- 2023 — $172 million (estimated)
- 2022 — $122.8 million
- 2021 — $142.7 million
- 2020 — $21.4 million
- 2019 — $263.4 million
- 2018 — $315.6 million (biggest all-time Thanksgiving frame)
- 2017 — $270.5 million
- 2016 — $260.8 million
- 2015 — $258.5 million
- 2014 — $230.2 million
- 2013 — $294.2 million
Source: Comscore
“This important period of Thanksgiving moviegoing has been solid though not earth-shattering,” said Paul Dergarabedian, senior media analyst at Comscore. “This week’s performance is encouraging for the industry, though at under $200 million, the total box office has not returned to the heyday years of pre-2020 levels.”
Still, Dergarabedian noted that the Thanksgiving box office offered moviegoers an eclectic selection of films across genres and age demographics, something that has been lacking in recent years.
“Overall, this is a positive step forward for Thanksgiving box office moviegoing traffic as the industry continues to learn how to navigate a rapidly evolving marketplace,” said BoxOffice.com’s Robbins.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal distributed “The Holdovers,” “Trolls Band Together” and “Five Nights at Freddy’s.”
HI Financial Services Mid-Week 06-24-2014