Top 3 stocks of the summer that were irresistible: Uber, Zoom, Apple

The markets rallied for most of the summer, but recent weeks have put a stop to the upward trend. High volatility continues to tempt traders who continue to reap the harvest in the markets this year. We bring you a summary of the top 3 most traded stocks at Purple Trading for July and August. What's behind their popularity and what's the outlook for the future? You can read all this in today's article.

Uber - more bumps in the road?

Uber's shares have risen by almost 40% since the beginning of July, but it hasn't been without major fluctuations - in the last month the stock has fallen by almost 10%. Uber shares have thus favored speculators in both directions. It's not too surprising, then, that Uber CFD shares were the most popular among Purple Trading clients over the summer months. Despite a relatively good last two months, Uber's ride this year has been full of bumps. The company has lost a third of its capitalization since the start of the year and has weakened equally compared to its IPO price in 2019.

Chart 1: Uber shares on the MT4 platform on the H4 timeframe along with the 50 and 100 day moving averages

The big drop in Uber's stock isn't too surprising when looking at the company's first-quarter results. While Uber's revenue grew a respectable 136% year-over-year to $6.9 billion, its net loss in USD terms came in at $5.9 billion due to failed investments in Grab, Aurora, and DiDi. The second quarter was slightly better, with the loss narrowing to USD 2.7 billion. The majority of the loss was again due to investments in Grab and Aurora.

The revenue outlook was more positive, beating expectations quite significantly to USD 8.07 billion. However, the next few months could be very difficult for Uber as high fuel prices make Uber's services more expensive and a possible recession could significantly impact the company's revenues. Uber's business can be described as rather cyclical and in times of recession, the company could suffer as a result. In addition, revenues from markets outside the US may be significantly affected by the strength of the US dollar.

However, Uber also benefits from high demand from drivers offering their services to Uber. During the second quarter, new driver applications rose 76% year-over-year. Thus, rising inflation and cost of living may have positive implications for Uber as more people look for another source of income. It is thus evident that many factors will pressure Uber and its stock will remain volatile. So Uber definitely deserves further attention.

Zoom - coronavirus winner continues to bleed

Zoom Technologies, an online call company, was one of the biggest winners of the coronavirus era. This is evidenced by the unprecedented growth this stock has experienced in 2020. In fact, they gained more than 800% in the first 10 months of the year. However, the fall that followed was steeper. In the last 12 months, Zoom shares have even fallen by more than 70%. So if you master the art of shorting, Zoom stock could be a rewarding target for you. We've covered this topic in the past as well. For example, take inspiration from our article on three of the best "shorters" in history.

Chart 2: Zoom shares in the MT4 platform on the H4 timeframe along with the 50 and 100 day moving averages

According to the economic results for the second quarter of the year, it is evident that the difficult period is not over, on the contrary. Revenues grew by only 8% year-on-year to USD 1.1 billion, which was very disappointing for the markets. Year-on-year revenue growth of 8% is very weak for a young technology company. Zoom did make a profit of $45 million. However, it declined by more than USD 270 million year-on-year. Zoom partly blamed the weaker profit on the very strong dollar, which is negatively impacting foreign sales. However, the dollar continues to strengthen and the third quarter could be even weaker. Profit is thus likely to decline further in 3Q.

Moreover, Zoom has a very strong competitor in the form of one of the largest companies in the world - Microsoft. Its Teams are stealing a large part of its clients. We must also not forget the competition in the form of Cisco and Google. With energy prices rising, it is possible that people will prefer working from the office to their own homes. Zoom, like most of us, could be in for a tough winter.

Apple - an opportunity to buy before the introduction of the iPhone 14?

The third most traded company over the summer was Apple. It has been relatively "successful" so far this year, with its shares down 14%. Of course, that's no miracle; we're used to better performances from Apple. But the company has at least outperformed the S&P 500, which has written off over 18% over the same period. Its most important component, like other companies, has had a challenging year. Just as Apple's brick-and-mortar stores around the world finally began to reopen, Russia stomped its way to Ukraine. Apple thus stopped selling its products all over Russia in early March. While Russia only accounts for about 1% of Apple's total revenue, the bigger problem is the rising cost of commodities and energy as a result of Russia's incursion into Ukraine. Like other companies, Apple is also struggling with the strong dollar, which is negatively impacting sales outside the US. In 2021, Apple will generate approximately ⅔ of its total sales outside the US.


Chart 3: Shares of Zoom Technologies on the MT4 platform on the H4 timeframe along with the 50 and 100 day moving averages

Despite the aforementioned difficulties, the company's recent economic results were quite good. Revenues grew by 2% year-on-year to USD 83 billion and profits reached USD 19.4 billion. Both indicators exceeded expectations. Margin growth is also encouraging, rising to 43.26% last quarter. In addition, Apple is expecting to introduce new products in the current quarter. We should see a new line of iPhone 14 phones, Apple Watch 8, and AirPods headphones. The Christmas season is also approaching, which is literally a goldmine for Apple. The fourth quarter is traditionally the company's strongest.

So is now a good buying opportunity? Historically, new product introductions have not had much of an impact on the stock price, so traders should focus more on fundamentals. While Apple is capable of thriving in virtually any situation, the slowing revenue growth of the services section, which has been a big driver in recent quarters, as well as the shortage of parts is alarming. The latter had a negative impact of around USD 4 billion last quarter. Thus, until the third quarter earnings are announced, Apple stock is likely to fluctuate according to the overall market sentiment. This has been rather negative in recent weeks.

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CFD - contract for difference
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It is a trading instrument; its value is derived from its underlying instrument, which can be for example a stock index or a future contract. Settlement of this instrument type is always performed financially, therefore the client speculates on future value difference of the underlying instrument while he/she does not become the owner of it.

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These include the Canadian dollar (CAD), Australian dollar (AUD), New Zealand dollar (NZD). The value of these currencies is influenced by the value of the commodities that the countries produce. For example, CAD is influenced by the price of oil, AUD by the price of gold, iron ore and coal, and NZD by the price of dairy production.
Fundamental analysis
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In fundamental analysis, the forex market is analyzed using macroeconomic data, social or political influences that can affect the demand for a given instrument.
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A long position (long speculation) is a trade that a trader enters when he expects the market to rise. Thus, the trader will buy the asset in question (BUY). The position will appreciate in value when the price of the instrument rises.
Short position
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Short positions (short speculation) are those that speculate on a decline in the price of an instrument.
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Volatility indicates the volatility of the price of the asset. It shows how much and how often the price changes. High volatility increases risk and low volatility decreases risk.
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