Trade These 4 Stocks on Tuesday…

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A flurry of deals lifted the Nasdaq up 2% yesterday, but oil is presenting itself as a harbinger to tech’s good vibes…

We are discussing today:

  • Effects of the coming oil price shock
  • Oracle-Tik Tok
  • Nikola vs. Short-seller update
  • Klarna’s new unicorn status

First, OPEC slashed oil projections for this year and next year. Then, this morning, the International Energy Agency (IEA), trimmed its oil projections for the rest of 2020. It was the second cut to its outlook over the last few months, and the Paris-based agency reduced demand by 200,000 barrels per day. “We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report. Yikes. Early predictions are that global demand will fall by 8.1 million bpd this year to 91.9 million bpd.

Furthermore, one of the global concerns is how another demand shock would batter oil-dependent countries. Those countries use oil sales to pay for basic civil services, healthcare, and education. Shocks to the basic foundations of life around the world will 1.) create a very challenging environment for OPEC+, which has already been doing the waltz this year, and we could see a challenge to its overall cohesion 2.) escalate political tensions between Russia and the Ukraine, the United States and Iran…

Ok, moving on. The Oracle-Tik Tok deal is the biggest nothingburger I’ve ever tasted. Oracle will take over “stewardship” of Tik Tok’s US operations…Ok…This is not a sale…No one is taking over operations, there are no changes to source code nor operational changes…Ok…So, Oracle has agreed to babysit Tik Tok? Sounds like it. This leaves all of the pressing concerns about Tik Tok like national security, well, all still unsolved…Wasn’t that the point of the sale in the first place? The goods news is the kids can do their dances in peace again…Tik Tok is unlikely to get shut down. And Oracle comes out being a huge winner, the stock climbed 4%…But, I think future concerns about China and security will probably have fewer teeth because Xi Jinping just called our bluff…

In other news, we updated you all on the Nikola and the Hindenburg Research debacle, well, yesterday, Nikola admitted that its semi-truck was indeed traveling downhill and not moving on its own power…*slaps forehead.

One more thing…Another unicorn emerged yesterday…Klarna, a big player in the “buy now, pay later” world, doubled its valuation in a huge $650 million round led by Silver Lake Partners. The round escalates Sweden’s Klarna to a $10.6 billion valuation, right beneath big names like Robinhood and Bitmain…But, the Swedish company is still unprofitable. Klarna’s interim first-half report showed a net loss of 522 million Swedish krona ($59.8 million) between January and June, a sevenfold increase from the net loss of 73 million krona it posted in the same period last year.

Below you can find some of the most notable stocks to watch today.
FireEye Inc. (FEYE) – Last Close:  $12.62
I have been snatching up cybersecurity stocks because with so many companies keeping employees at home, well, the next data breach is only around the corner. FEYE has a nice product line with a subscription segment that is growing, the balance sheet is far from perfect, but we think there is room to grow.
SailPoint Technologies Holdings (SAIL) – Last Close:  $38.27

Another cybersecurity solutions company…One of the areas of strength for the company has been bot-fighting…Bots are cheap and have multiplied during the pandemic and you could see a big uptick in demand for SAIL. The stock is up 38% since July 1st.

Medallia, Inc. (MDLA) – Last Close: $31.17
The market is overlooking this company. MDLA offers customer insights via AI and data analysis with capabilities that can track social media conversations and really rope-in all the chatter around a company. The company has also added some nice M&A assets this year. Keep them on your radar.
Mimecast Limited (MIME) – Last Close: $47.19
 
Another cybersecurity company we love (you see where our head is at)…Enterprise solutions with a diverse portfolio of products. The company has weathered the pandemic confidently and we see corporations looking to tighten up on security with so many employees putting data at risk in WFH situations. MIME is up $4 since June 1st. Steady as she goes…

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