Stock futures advanced during premarket trading on Wednesday. A host of factors are helping to fuel gains for the electric-vehicle leader’s investors. Churchill Downs’ stock has rallied 122% over recent months (vs. about a 50% gain in the S&P 500) to its current level of $163 after falling to a low of $73 in late March as a rapid increase in the number Covid-19 cases outside China resulted in heightened fears of an imminent global economic…
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Author: CNBC.com staff
Why Tesla Stock Jolted Higher Today
Shares of Tesla (NASDAQ:TSLA) rose on Tuesday, bolstered by a competitor’s struggles and excitement surrounding its upcoming “Battery Day” presentation. As of 11:20 a.m. EDT, Tesla stock was up more than 6%.
Reports that the Securities and Exchange Commission (SEC) is investigating rival electric-vehicle maker Nikola (NASDAQ:NKLA) for allegations of fraud are likely helping to prop up Tesla’s shares. In a scathing report on Thursday, short-seller Hindenburg Research accused Nikola of lying to investors about the true state of its battery technology and vastly overstating its progress toward the development of its electric truck.
Tesla’s stock rallied on Tuesday on news that a rival is being probed by the SEC. Image source: Getty Images.
After Nikola responded to some of Hindenburg’s claims on Monday, Hindenburg then argued its response was a “tacit admission of securities fraud.” Should the SEC agree with Hindenburg’s view, or if its investigation uncovers other instances of wrongdoing, Nikola’s ability to compete effectively in the electric vehicle market could be severely weakened.
As its competitor wrestles with fraud allegations, Tesla is gearing up for its “Battery Day” on Sept. 22. Investors are looking forward to seeing what new technologies CEO Elon Musk unveils during his presentation. Excitement has been rising for Tesla’s battery-related growth opportunity, as fears surrounding climate change are bolstering demand for electric vehicles and clean energy storage solutions around the world.
Judging by the recent gains, many investors are choosing to buy Tesla’s stock ahead of the event in anticipation of Musk’s forthcoming announcements.
Author: Joe Tenebruso
Will Churchill Downs’ Stock Continue To Trend Higher?
Joceky Victor Espinoza riding American Pharoah, front left, leads the pack just before crossing the … [+] finish line in first place to win the 141st Kentucky Derby in Louisville, Kentucky, U.S., on Saturday, May 2, 2015. The 141st running of the Kentucky Derby will feature a field of twenty horses with the winner receiving a gold trophy and a $1.24 million payday. Photographer: Luke Sharrett/Bloomberg
Churchill Downs’ stock (NASDAQ: CHDN) has rallied 122% over recent months (vs. about a 50% gain in the S&P 500) to its current level of $163 after falling to a low of $73 in late March as a rapid increase in the number Covid-19 cases outside China resulted in heightened fears of an imminent global economic downturn. The stock has completely recovered to the levels observed before the market crash in March and we believe that further upside in the stock seems unlikely. Our interactive dashboard compares Churchill Downs’ stock performance during the current crisis with that during the 2008 recession and highlights the recovery time-frame alongside the broader market.
How Did Churchill Downs Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?
We see CHDN stock declined from levels of around $14.49 in October 2008 (the pre-crisis peak) to roughly $9 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 41% of its value from its approximate pre-crisis peak. This marked a lower drop than the broader S&P, which fell by about 51%.
However, CHDN recovered post crisis to about $11.44 in early 2010 – rising by 25% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period.
In 2020, CHDN stock lost 55% of its value between the market peak on February 19 to the low on March 23, and has already recovered since then. Keeping in mind the trajectory over 2009-10, this suggests that the stock has low upside potential as weak economic conditions are expected to remain for a couple of quarters.
Is There A Downside To This Recovery?
The rally across many industries over recent months can primarily be attributed to the Fed stimulus which put investor concerns about the near-term survival of companies to rest. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. However, the rising number of coronavirus cases has led many states to postpone re-opening plans and many have again imposed restriction measures. Considering the quick recovery in Churchill Downs’ stock despite a 60% (y-o-y) decline in second quarter revenues, we believe that the stock could observe a correction as economic conditions continue to remain weak.
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Author: Trefis Team