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The 3 most tempting stocks for autumn 2022

The still-ongoing earnings season has the effect of turning the U.S. stock markets into an ancient drama filled with shocking ups and downs. The truth is that the volatility is still not going away from the markets, and that is a fact that presents many opportunities for potential gains. Purple Trading clients know this, and they could not take their eyes off 3 titles, in particular, this month. Read this article if you want to know which ones are these and what is so alluring about them.

A money-eating monster called Metaverse

When speaking about companies that are “money-eating monsters”, Meta - the parent company of Facebook, Instagram, or WhatsApp instantly comes into mind. The company's woes continue unabated, and it has even written off nearly 75% of its capitalization as of the end of 2021. Such an extreme decline in the company's value is something quite unique. Facebook founder Mark Zuckerberg himself has even gone down in history as the man who lost the most money ever. The cause can be sought on multiple levels, but we will focus on the company's third-quarter results.

 

Meta has been exemplary in year-on-year revenue growth but has broken that trend twice this year. 3Q revenue was down 4.5% year-over-year, mainly due to a decline in ad interest. The average price per ad fell 18% year-on-year, but Alphabet and Snapchat also reported similar trends. However, the aforementioned companies do not have a burden called Metaverse chained to their feet.

 

The latter is proving to be, quite literally, a money-eating monster. Meta has already invested over USD 30 billion in it and the investment is expected to grow next year. Mark Zuckerberg is begging the markets for leniency and is still convinced that Metaverse is the next big thing. However, investors' patience with Metaverse is already minimal, and it shows in the stock's fall (see chart 1).
 

Meta shares in the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages

Meta shares in the MT4 platform on the D1 timeframe along with the 50 and 100-day moving averages


Relatively positive was at least the data referring to daily active users. This reached 1.98 billion. Interest in Instagram has also reached its peak levels, exceeding 2 billion daily active users for the first time in history. However, this was not enough to soften investors. The current quarter is likely to be disappointing again, with a year-on-year decline in revenue expected again. Like others, Meta is also suffering from the strong US dollar, which is knocking down revenues from abroad. We cannot say that Meta is a good buying opportunity at the moment, as it is more reminiscent of General Electric - formerly one of the world's largest companies that are known for gradually falling to its knees thanks to a series of very unfortunate decisions.

 

Also this week, Meta announced widespread layoffs (around 13% of its workforce), which were received rather positively by the market. The layoffs should also affect employees working at Metaverse, so costs could come down. The question that is still up in the air at the moment is how financially challenging it will be to compensate the redundant workers.

How long will Apple keep on supporting the big tech?

Remember the famous FAANG companies? Behind that acronym are the names of the tech darlings that filled most investors' portfolios. Facebook (Meta), Apple, Amazon, Netflix, and Google (Alphabet). The course of 2022 so far has been extremely harsh for these companies. However, one company among these five is suffering less than the others. That's because Apple currently has virtually the same capitalization as all the other companies combined. What is behind its success? And can Apple keep on fighting for the honor of the US markets?

 

While Apple shares have written down over 20% since the beginning of the year, which is no miracle, they still manage to outperform the overall market (as measured by the S&P 500) and the other tech giants. It is all down to positive economic results, but there really has not been much to see this year.

 

Apple's Q3 results were received very positively by the market - sales were up 8% year-over-year to $90 billion and virtually all products did well. Sales of iPhones lagged by just 40 million. However, investors are already looking ahead to the current quarter's numbers. What will they be?
 

Apple shares on the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages

Apple shares on the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages

 

Although Apple has not provided an accurate outlook for the last quarter of the year, which is traditionally the strongest for Apple, the market is expecting a historical record. There is even talk of sales of over USD 125 billion. However, Apple faces several threats. Probably the biggest is the closures in China around the Foxconn factory, which is one of the most important manufacturers of iPhones. China is still uncompromisingly fighting the coronavirus which has begun to spread in Foxconn factories. Apple itself has admitted that some products may be in short supply at Christmas. The shares have already fallen by around USD 20 since the excellent quarterly results. The US dollar is also a risk, and its strength is very dangerous for such a strongly export-oriented company. However, Apple has shown several times in its history that it can prosper virtually continuously and its current price may still look attractive.

Is Tesla paying the price for Elon Musk's megalomania?

Tesla shares have long been among the most sought-after due to high volatility. As a result, it has long been one of the most traded CFD stocks among Purple Trading clients. Tesla has confirmed its reputation this year, losing more than 50% of its value since the beginning of the year. However, it has not been without significant moves either way.

 

What were Tesla's 3Q earnings results? In two words - not very positive. While earnings beat market expectations, sales fell short. For the first time ever, Tesla also delivered fewer cars than it produced. While production was a record 365,000 cars, only 343,000 were delivered (371,000 were expected). Tesla blamed the large gap between production and deliveries on ongoing international shipping difficulties.

Tesla shares in the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages

Tesla shares in the MT4 platform on the H1 timeframe along with the 50 and 100-day moving averages

 

Elon Musk has assured investors that demand for Tesla cars is still strong and that they will sell every car they produce for several years to come. He even hinted that Tesla could buy back $5 billion to $10 billion worth of its own stock next year. Elon Musk then literally shocked the world by stating his expectation that Tesla could surpass Apple and Saudi Aramco combined in capitalization within a few years. All thanks to the newly introduced Optimus robot, which should replace factory workers and help with household chores in the future.

 

But skeptics are calling for Tesla to focus more on developing the cars themselves, rather than the expensive robots that the California carmaker would supply as an additional product to homes. Robot manufacturing could be the next big thing and could bring in interesting revenues in the future. Elon Musk, after all, has proven several times that he can do almost anything. But the question is also how much power and finance Elon Musk will take from his acquisition of Twitter. Tesla stock has been taking a beating in recent days due to the megalomania of its CEO, who has been gradually selling a stake in the company to finance his purchase of Twitter. Moreover, the latter has been losing money for a long time, so funding its operations could trigger further Tesla sell-offs. We have become accustomed to Tesla stock rising and falling with Elon Musk's performance.

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