Week of 6/8/2020
DISCLAIMER* anything you read as a part of this series should not be listened to blindly. Do your due diligence, contact a personal certified financial advisor before making your BUY/SELL decisions.
For the second week of my Ree$es Pieces series I am very excited to review 2 more stocks for y’all. I am crazy about these two stocks for different reasons, but I am rating both as cautious BUY ratings. I say a “cautious BUY” because both are doing very well right now and my investing philosophy will always be, buy low and sell high. Meaning, while a stock is surging it's not always the best time to buy as when it has seen a drop and is what I call “on sale”.
That being said, the first stock on my review is a very new, volatile stock called Nikola Corporation with the ticker (NKLA)
Nikola Corporation (NKLA) - BUY
6/9/2020 1:38pm Stock Price - $86.70
1 Year Target Stock Price - $172.34
Nikola Corporation is a manufacturer of zero emission vehicles. Including all sizes of trucks and sport vehicles. This company has massive room for growth and the sky is really the limit. This is a pioneering industry that has very limited competitors due to it’s very significant barriers to entry. The start up costs and research and development expenses will make it very hard for start ups to enter the market giving Nikola a headstart to capture the majority of the market share. I also absolutely love the design of their vehicles, they are very futuristic and attractive to look at. Their vehicles have excellent range; the “Nikola One” is an 18 wheeler that has 500-750 mile range with up to 1000HP and only a 10-15 minute fill up time. The acceleration is up to 2 times that of a diesel competitor and has a much more aerodynamic design that results in incredible efficiency. The pickup truck they offer is my personal favorite of their line up. It is called the “Nikola Badger” which to me has a similar look to a Toyota Tundra, with a futuristic twist to it. This truck is crazy fast, reporting a 0-60mph in 2.9 seconds! It has up to a 600 mile range and can tow up to 8,000lbs. I would describe the interior design as similar to a space ship from Star Trek or Star Wars. With all this in mind, these vehicles are going to sell as fast as they are manufactured. Public opinion seems to agree, after the stock had its initial public offering (IPO) last week at $33.69 it soared up into $90’s within a week. That is close to a 150% increase already, with a lot more growth to come, which is why my 1 Year Target Price is so high and I think It could be even higher. Another indicator is the volume the stock is being traded at. Today its volume has already been over 55 million, while its average volume is only around 20 million.
There are 2 main risks that I factor in when considering this stock. The first being, the company has not broken profit yet and probably won't for a while. That is somewhat troubling because you want to be investing in a company that is making a profit. Sometimes with companies that have this much hype and optimism they under perform and can tank quickly going bankrupt leaving your investment in the toilet. The other main risk is the only real competitor they have is Tesla, an already well established leader in this market. It will be directly competing for market share with Tesla, which could cause growth to be slower than I am forecasting. Tesla already has immense infrastructure already implemented which gives them a big head start. This will be tough for Nikola to compete with, along with the mainstream brand recognition Tesla enjoys.
Snapchat Inc. (SNAP) - BUY
6/9/2020 2:33pm Stock Price - $20.91
1 Year Target Stock Price - $27.45
Snapchat is a social media platform on a mobile app offered on android and IOS systems. I’m sure you know all about Snapchat and probably use it daily. What you likely don’t know is that it is an investment opportunity as well as a way for you to send pictures, videos, messages, and stay updated on current events/news. The stock has been criticized pretty heavily since its initial public offering (IPO) in 2017, but public opinion is quickly changing. They have seen leadership changes at the CEO position that has revamped the company. Since the new CEO has come into office, the company has focused on increasing their revenue and profit margins via more advertisements.
The platform has also introduced political figure promotions on its subscription page. This is leading me to believe that the upcoming election will have a lot of content being published on Snapchat drawing more of the older demographic to the app. President Trump recognized Snapchat’s hold on the younger population and has made many controversial posts on the platform leading him to be removed from the subscription page. Nonetheless, I think Snapchat will return President Trump before the election and it will continue to grow as a news outlet as well as a social media platform. In addition, the app has already begun grabbing an older population of people because they want to connect with their younger counterparts. For example, my parents started using Snapchat because they know it is a good way to get in contact with me and see my posts to keep up on what I am up to. I think this is happening nationwide and will continue happening. Finally, my favorite part of the app is the memories feature it offers. Snapchat offers the ability to save your videos and images and will pop up and remind you of them in the following years on that day. So for someone like me who has had the app since 2014, I have memories that pop up from different years almost everyday which is going to keep me and others using the app to experience the nostalgia.
Similar to Nikola, Snapchat has not broken profit yet which is troubling for the same reasons. They also compete with social media giants like Facebook, Twitter, and Instagram for market share. One of the main criticisms I have heard of Snapchat is that Instagram took their “stories” idea and made it better which renders snapchat much less useful. Another speculation is that older people have no use for the app and the younger generation doesn’t make up enough of the market yet to give them the user growth the other major media platforms experience. To be honest my only personal concern is that the very young age demographic who is just starting to get into using social media will view snapchat as my generation viewed MySpace. By that I mean, there is a chance kids will gravitate to apps like Tiktok and Instagram and say that Snapchat is for “old people” which is what my generation said about MySpace.