The S&P 500 just posted its best quarter since 2009, despite worries over a weakening global economy and some strong signals from the bond market that a recession might be just round the corner in the U.S. It seems as if there's nothing that can stop this year's surprisingly strong equity rally.
Clearly, investors are simply not ready to heed to any advice or display any caution. Instead, they’re taking cues from the prospect of a trade deal between the U.S. and China and the increased possibility of a rate cut, which would be a sharp reversal from the Fed’s monetary tightening stance of early this year.
Amid this positive momentum, below are three stocks which could see unusual price moves in the coming week, the result of company specific developments:
1. Lyft
Investors in the newly IPO'd, number-two ride-hailing company, Lyft Inc. (NASDAQ:LYFT) may see some sharp movement in the company’s share price after its successful trading debut on Friday.
The stock spiked 23% at one point during Friday's trade, jumping from the IPO price of $72 a share soon after it began trading, to $88.60. However, it fell quickly afterward to close its first day of trade at 78.29, up more than 8%.
The strong demand for Lyft shares that priced its IPO at the top of an elevated range and raised $2.34 billion in proceeds, also bodes well for many upcoming Silicon Valley companies that are lining up to go public this year including Uber, Pinterest and Slack.
After its IPO surge, Lyft shares will likely see volatile trading as investors quickly shift their focus from the public offering to the company’s efforts at cutting losses. Lyft lost $911 million on revenue of $2.2 billion in 2018. That compared with a loss of $688 million on revenue of $1.1 billion the previous year.
In an interview with Bloomberg TV, Lyft’s co-founder John Zimmer said the company’s appeal to investors hinged on the potential for ride-hailing to replace car ownership. “This massive market shift—just like entertainment has gone streaming is happening with car ownership,” he said. “We’re going after a trillion-dollar market opportunity.”
2. Walgreens
Walgreens Boots Alliance Inc. (NASDAQ:WBA), the second-largest pharmacy operator in the U.S., will report Q2 earnings on Tuesday, April 2 before the market open. Analysts expect almost flat EPS of $1.74 a share in the quarter ending February when compared to the same period a year ago, on revenue of $34.62 billion.
The stock has shed more than quarter of its value since hitting the 52-week high of $85.83 in December on concerns that the company may compromise its long-term growth potential on a substantial cost-saving plan. The stock closed Friday at $63.27.
In December, Walgreens said it plans to sharply cut costs as it restructures operations amid competition from both e-commerce players, led by Amazon (NASDAQ:AMZN) as well as from more conventional competitors such as CVS Health (NYSE:CVS) which last year bought insurer Aetna (NYSE:AET). Walgreens plans to save $1 billion a year within three years through its various austerity measures.
3. Facebook
Shares of social media giant Facebook (NASDAQ:FB) may come under renewed pressure next week after governments in the Asia-Pacific region announced they plan to accelerate their crackdown on practices that "weaponize" social media platforms.
Yesterday, Australia said it will legislate “tough” new laws to prevent social-media platforms from being co-opted by terrorists and extremists who may use them to live-stream violent crimes, such as this month’s terror attack in New Zealand. Singapore said it will introduce a law to halt the spread of “fake news,” Bloomberg News reported.
These actions follow the massacre in a New Zealand mosque earlier this month that again exposed the weakness of Facebook's platform. The killer was able to live stream the shootings through his Facebook account.
New legislation in Australia may penalize social media companies with penalties of up 10% of a company’s annual turnover and potential prison sentences for executives. Singapore said its new laws will give more power to the government to hold online outlets accountable if they’re found to be deliberately delivering false news.
Until March 13, Facebook shares had surged, rallying 30% this year, following their steep losses in 2018 on concerns that various governments will soon introduce legislation to stop the spreading of misinformation and hate speech through social media. The company is under investigation by various U.S. agencies as well. Its shares closed at $166.69 on Friday.