Root Inc 🚗 the next GME? & an early-access announcement 📣
+ Microsoft 🖥 news and Up n' Buzzing stocks 📈📊
Hi all, I hope you’ve had a great easter weekend!
The last few weeks have been turbulent for the stock market, with yield rises, funds blowing up, ships blocking canals, a 3rd COVID wave in Europe and month/quarter end meaning lots of fund rebalancing.
Historically, April has been a good month for stocks and the S&P 500 more specifically, let’s hope the trend continues this year!
Live dashboard announcement
I have been working hard over the last few weeks to make the results of my algorithm accessible, in real-time, to my readers.
For those new to this community, the algorithm identifies emerging stocks by scanning social media chatter on popular sites such as Twitter and Reddit.
It does this by assessing the amount a stock is mentioned, the sentiment of the chatter surrounding that stock (how positive or negative that chatter is) and the interactions surrounding that chatter (upvotes, likes, retweets etc.)
The algorithm surfaces emerging stocks by looking at which ones have seen a regular, non-spiky increase in chatter surrounding them.
The algorithm also tries to remove pump and dump stocks by filtering out the short interest group of stocks (BB, NOK, GME, AMC etc), removing stocks that have seen a single spike in chatter, and ignoring chatter by newly created or bot style accounts.
There’s a fair amount of extra analysis that goes on in the background to get to the final results (including L1 trend filtering) which I won’t cover in here, but to give you an idea of the performance of the model, here are the top stocks from last week, with their last week returns labelled above the bar.
The front end is now at a stage where it’s ready for testing. I will be providing free early access for the first 100 responders, and rolling out to all members in time. If you’d like to have early testing access, sign up using the button below:
Root Inc 🚗 (ROOT:NSQ) DD
Market Cap: $3.07bn
Root is a US car insurance technology firm, which prices insurance quotes based on actual driving data from customers mobile phones, rather than their demographic or credit scores, to give more reliable, and generally lower insurance pricing.
Root, by collecting and synthesizing behavioral data across various driving variables, including distracted driving, prices policies based more on causality than correlation. Through its mobile platform, customers can manage policy adjustments digitally, including through intelligent chat functions. In the event of an accident, claims can be adjudicated digitally, with various repairable claims resolved and paid within 24 hours.
What makes this very interesting to me is its current short interest % (the amount the stock is shorted, meaning people/funds are betting on it’s price dropping), the list of tech investors involved, and its current price compared to its IPO price last year.
Citron Research has done a great piece of research on this, which you can find here:
I’ll take a good extract by Andrew Field from the research paper above:
We believe ROOT is a misunderstood short. This is a disruptive tech company and investors have an opportunity to buy the stock at bargain prices vs. what the smartest tech investors in the world paid just five months ago.
The stock is currently highly shorted, meaning there are investors out there with a vested interest in lowering the stock price. Now we all saw how that backfired with GME, meaning rapid rises as a short/gamma squeeze occured, it could also work the other way.
Citron fail to mention there is currently a class action lawsuit against Root, alleging some of the IPO documentation was incorrectly prepared/had some false claims.
Microsoft Announce US Army contract worth up to $21.9bn, to supply AR/VR headsets
AR/VR is a rapidly growing industry that really excites me, and I can see tremendous growth in this area both from a business and consumer perspective.
This is actually something I covered a few weeks back now, when I discussed AAPL and their possible moves into AR/VR (read it here)
There is a good summary of the microsoft news here: https://www.reddit.com/r/stocks/comments/mk9aak/microsoft_wins_us_army_contract_for_augmented/
In short, this is good business for Microsoft, who are building some good revenue lines related to the US military complex, having secured a $10bn contract in 2019 to deliver cloud services to the Defence department.
Another stock to keep an eye on is Microvision (MVIS:NMQ), a laser scanning technology company who supply a number of parts for Hololens, the Microsoft AR/VR headset being supplied to the army. This was also a stock picked up earlier this week by my algorithm.
Up n Buzzing stocks
Academy sports & Outdoors (ASO): Has seen a big spike in chatter, along with a 9% increase in price today alone. ASO smashed earnings last week, reporting Earnings per share of $1.09 vs analyst estimates of $0.53.
Qualcomm (QCOM): Recovering from all time highs, with solid future growth planned ahead. QCOM has an average analyst upside of 27% from current price.
CloudFlare (NET): Another Tech stock recovering from all time highs, Cloudflare has been a source of much research and hype given its ever increasing internet footprint. Here is a good Reddit post describing the upside: https://www.reddit.com/r/stocks/comments/lj1uip/dd_cloudflare_net_is_going_to_continue_its_strong/
What are your plans for the week? and what do you think about a front-end for the algorithm being released? let me know your thoughts below