It was a fairly “meh” Monday on the stock market — which, perhaps in some ways, is a relief given the recent seesaw volatility we’ve witnessed.
As ever, though, some top stocks bucked the overall trend with some nice price leaps, while others fell to earth. Since it’s always nice to begin the week on a note of optimism, here’s a look at two companies in the former camp.
An up-and-down stock if ever there was one, Tesla (NASDAQ: TSLA) accelerated today to close nearly 4% higher.
There’s no clear, immediate reason for the stock to enjoy such a bump… but then again, reason doesn’t always apply to Tesla. Like Apple in certain ways, the company has a core of fans who love its business and aesthetics, and admire the — shall we say — frequently unorthodox approaches CEO Elon Musk employs to manage its operations.
These bulls aren’t entirely off base, looking at recent events. No, the company didn’t hit its ambition of delivering 100,000 cars in its Q3, and at a tally of just over 96,000, it fell short of analyst estimates, too (although it was a quarterly record for the company).
Nevertheless, 96,000-plus is an impressive number for a maverick niche manufacturer in a tough, capital-intensive industry that doesn’t come close to the scale of a General Motors or Ford. Those two giants, by the by, are still to some extent playing catch-up to Tesla in the electric vehicle (EV) space.
This summer Tesla also announced a modest price cut to its best-selling Model 3, in the hopes of juicing sales.
Investors who bid up Tesla today might also be counting on better-than-expected results when the company reports its official Q3 numbers next week. Analyst estimates are, unsurprisingly, all over the place — according to Yahoo! Finance they range from a solid per-share net profit of $0.34 to a red-soaked $3.52 loss.
Given the chronically high expenses and cash issues saddling the company, I’d bet on a shortfall, but this company always has the capacity to surprise us. That said, I’m still wary of Tesla, as I think it has many challenges it hasn’t fully proven it can surmount.
A recent addition to the up-and-down stock club is software-as-a-service (SaaS) purveyor Shopify (NYSE: SHOP). Adding to recent gains following a dip, the company’s stock rose by almost 5% today.
Is this justified? I think so. Shopify is a facilitator of e-commerce services, so if, for example, I start a business called Eric’s Not Overly Tasty Lemonade, I can use the company’s digital tools to sell my semi-quality beverage online.
No one who has turned on a PC or mobile device in the past few years has to be told that the e-commerce space is growing exponentially. Shopify is also on the rise, with a nearly 50% year-over-year increase in revenue in its most recently reported quarter.
This is the kind of sector and company-specific growth investors look for, so it’s no wonder that Shopify is experiencing yet another spurt of popularity. Of course, there’s competition in the form of monoliths like Amazon.com, but Shopify seems to be doing a good job competing on quality and value.
The company will surely continue to ride the ever-cresting e-commerce wave. Meanwhile, Shopify’s $450 million deal last month to acquire robotic warehouse equipment specialist 6 River Systems indicates it’s got a sharp eye on future growth opportunities in complementary segments.
As is typical for a young(ish) tech company, Shopify is unprofitable. Yet those losses are not necessarily all that scary, and the company is in the right place at the right time with the right products. It feels very much like a buy to me, even with the latest share price rise.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Shopify, and Tesla. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.