The market’s downturn this week has put more than a handful of stocks on sale. And some recognizable names within the technology and services sectors have turned up on our radar, for better or worse. These include Snap (NYSE:SNAP), Roku (NASDAQ:ROKU), Disney (NYSE:DIS) and Electronic Arts (NASDAQ:EA).
Snap Inc (SNAP)
Snap stock has been riding a bullish wave this year as it regains its footing after a rocky initial public offering (IPO) in spring 2017 and a brutal conclusion to 2018, where it joined the dip in most other stocks in the market. But with constantly improving fundamentals and a few possible catalysts on the horizon in 2019 and beyond, including strong viewership in original programming, some analysts expect Snap stock to regain its IPO price of $17 this year (roughly 35% upside from current prices). RBC Capital Markets echoed bullishness for SNAP Monday morning, stating:
“SNAP’s monetization potential has been part of the Bull Pitch since the IPO. And that potential remains significant, with Snap generating one-third of TWTR’s monetization (in terms of Global Ad Revenue per DAU) and one-fifth of FB’s monetization. What is key is that SNAP has been showing a nicely improving monetization level over the past two years.”
Shares of Snap jumped 4.5% in early morning trading because of the positive outlook from RBC. Clearly, things are turning around for SNAP at the moment, but whether it can maintain this momentum is still to be determined. Investors should continue warming up to the stock the more Snap Inc can prove that it can go toe-to-toe with its competition.
Unlike Snap, streaming hot-shot and smart TV designer Roku has experienced a more difficult time wooing investors of late.
Down roughly 15% in the past 30 days, Roku stock has suffered because investors are starting to question its ability to take on high-level competitors like Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL).
Roku stock gave back 4% Monday after Citi downgraded it from “neutral” to “sell,” and it’s down another 40 basis points Tuesday. Although ROKU stock is reaching a crossroads, some analysts are still optimistic in its ability to hold strong in the long run. But in the short-term, Roku stock will likely suffer.
Disney has been having a pretty good year, but its stock price hasn’t reflected that (up 8% from its January low). Captain Marvel broke the box office, bringing in more money than Deadpool and The Dark Knight. Importantly, Captain Marvel’s success was carried on the backs of an international audience. With Avengers: Endgame nearing release — and already breaking box office presale records — the international haul of Marvel is a sign of what to expect for Endgame. Some people are even paying $15,000 per ticket!
But the catalyst we’re watching this week is Disney’s Investor Day, which takes place Thursday. Here we’ll find out more about Disney’s Netflix (NASDAQ:NFLX) counterpunch, Disney+, and potentially more big streaming market news regarding Hulu. Analyst group Cowen upgraded DIS stock to an “outperform” and set its new price target at $131, an increase of 13% from today’s stock price.
According to Cowen, “Disney has a very powerful pipeline of product that will play out over the balance of the year.” The analyst specifically cites Star Wars: Galaxy’s Edge — a domestic park opening this summer — as a strong catalyst for growth in the second half of the year.
Electronic Arts (EA)
Finally, investors have been paying more attention to Electronic Arts lately as its new and already extraordinarily popular Apex Legends title has presented itself as a promising alternative to Fortnite. This comes after several high-profile disappointments like its highly anticipated Battlefield 5 in November 2018 and Anthem, which was released Feb. 22, 2019.
However, the bullish momentum in EA stock has come to a halt recently after the Federal Trade Commission set a date for its workshop on the highly profitable loot box microtransaction system in video games. The workshop is set for Aug. 7 and could prove to be a dent in an otherwise stellar comeback for EA stock this year.
As of this writing, Robert Waldo did not hold a position in any of the aforementioned securities.
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