The Birth Of A New Stock Category
By Fri, Dec 27, 2019
Hey Scoopers,
Another calm and green December day came and gone as we get closer to finishing one of the best decades we have ever seen in the history of the stock market.
Beyond the overall market, one Chinese stock has kept most of its initial investors even after those investors had a chance to cash out while a so-called tech stock in the U.S. is failing to continue its growth stock status.
Oh, and by the way, we just noticed the birth of a new category of stocks similar to what has happened with the birth of the space tourism category in 2019. Can you guess what it is? — more on that in the “Water Cooler” section.
Also, don’t forget to scroll down to the “Overall Market,” “What’s Up?” and “What’s Down?” sections to learn more.
Market Recap
- U.S. markets: All three indices finished the first day of this short week in the green, but only barely. Scroll to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price is now hovering slightly above the $7,000 mark.
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Another calm and green December day came and gone.
The stock market indices started this short December week with a slightly upward movement, enough to finish Monday in the green. The Dow led the pack thanks to an unlikely hero.
So what happened?
The Dow moved up because investors celebrated the departure of Boeing’s CEO. It’s fascinating to see that a few percentages change in one stock has the power to set the tone for an entire index.
Beyond the specific news related to the Dow, for now, there is not much news about the trade war, and investors are ignoring the impeachment related news. All is good, and the stock market is inching upward with the hope of creating one of the best ever decades in the history of the stock market by the end of December.
Everyone is staying.
So, what happened?
Shares of Luckin Coffee (Ticker: LK) were up more than 10% on Monday. The company is also known as Starbucks (Ticker: SBUX) of China. But, it is mostly focused on the lower-end, more affordable segment of the market. One may argue, the real competitor of Luckin Coffee is not Starbucks, rather it is instant coffee providers such as Nestle (Ticker: NSRGY). Regardless of the competitors, the stock has had a few great weeks. On the one hand, the company has announced strong quarterly earnings. On the other hand, the deadline after which the initial investors of the company had a chance to sell their shares (known as the lock-up period) has passed. Despite that, most investors remained invested in the company. This is a growth story that has many believers, and stock is getting rewarded for it.
Slow-growth and tech stocks do not go together.
So, what happened?
Shares of Lyft (Ticker: LYFT) were down almost 5% on Monday. The price decline came after a downgrade by an analyst at KeyBanc. The main reason for the downgrade is the expected decline in customer growth rate, which is the consequence of reducing promotional spending and stopping aggressive discounting by the company with the hope of getting closer to profitability.
As the company struggles to find a path to profitability, side experiments are popping up. For example, Lyft has recently announced the launch of a good old car rental services. These side-trackings in search of growth do not go well with the perceived tech-stock branding that Lyft and other ride-sharing apps have been broadcasting for years. The beauty of the stock market is that big-vision storytelling only takes the companies so far. Public companies need to prove they can grow, or the stock price gets published for the lack of it.
Preparing our 2020 watchlist with two new categories of stock
So what happened?
In 2019, we all observed the birth of a new category of stocks in the space tourism industry. When a special interest public company merged with/acquired Virgin Galactic, the stock market investors got a chance to bet on the future growth potential of the space tourism industry.
Now, that not-too-far history is repeating itself, and another special interest public company is acquiring a private company known as Drafkings to give birth to a new category of sports betting stocks.
Okay, so what?
Space stocks and sports betting stocks are two new industries we are adding to our watchlist for 2020. As we write this Scoop, we are busy preparing our 2020 Watchlist, and you should get in on this too. Between feasts, family, and friends, lazy mornings, and party evenings, don’t forget to think of stocks you are watching for 2020. The end of the year holidays are the best time to think about your 2020 Watchlist and set the tone for a prosperous year of investing.
What’s on your watchlist for 2020?
| Disclosure: Authors of this Scoop own shares of Starbuck (Ticker: SBUX). |
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
