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AI Identifies Netflix Among Today’s Trending Stocks

Defamation lawsuits. Unjustifiable stock growth. Misinformation. And a daytime soap opera playing out in the halls of the Pentagon and NSA, courtesy of Amazon Web Services and Microsoft
MSFT
Azure.

This week, Q.ai’s trending stock list has a bit of everything. So pick up your popcorn, get comfy in your favorite chair, and prepare yourself for the down-and-dirty in what’s hot and what’s not.

Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.

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Netflix, Inc (NFLX)

Netflix, Inc closed down around 0.8% on Tuesday, trading 1.96 million shares to a final unit price of $515.84. The stock is down almost 5% for the year and trades at 48x forward earnings.

Netflix is trending this week after a federal judge determined that the streaming giant may face a defamation lawsuit from former Manhattan prosecutor Linda Fairstein. The lawsuit alleges that Fairstein, who played a part in convicting the Central Park Five, was often portrayed as “racist and unethical, if not unlawful” in the 2019 Netflix miniseries When They See Us. The lawsuit was originally filed in March 2020.

Over the last few years, Netflix’s revenue grew almost 75% to $25 billion in the most recent fiscal year compared to $15.8 billion three years prior. Operating income surged nearly 279% in the same period to $4.585 billion from $1.6 billion. Meanwhile, per-share earnings leapt 260% from $2.68 to $6.08, while return on equity inched upward from 27.5% to 29.6%.

All told, Netflix is expected to see around 6.5% revenue growth in the next 12 months. Our AI rates Netflix B in Growth and Low Volatility Momentum, C in Quality Value, and D in Technicals.

Moderna, Inc (MRNA)

Moderna, Inc traded 36.5 million shares down 5.7% Tuesday to a final price of $456.76 – before plummeting $71.43 per share, or 15.6%, by Wednesday’s bell with 53.9 million shares on the docket. The stock remains up 268.8% for the year and currently trades at 10.3x forward earnings and a per-share price of $385.33.

Moderna’s Wednesday slump comes after a report found that Europe’s drug regulator found a small number of people suffered from three new conditions – a skin rash and two kidney disorders – who received its mRNA-based Covid-19 vaccine.

And in unrelated news, just two days earlier, Bank of America
BAC
analyst Geoff Meacham slammed the stock in a scathing analysis, calling the biotech company’s stock price “unjustifiable on a fundamental basis.” The combination sent Moderna’s stock price on a downward spiral – one that, some analysts (like Meacham) claim is long overdue.

Over the last three fiscal years, Moderna’s stock price has soared an astronomical 5,096% from $135 million to $803 million. In the same period, operating income leapt from $413 million to $763 million, while return on equity nudged up from 35.7% to 40%. At the same time, per-share earnings slipped from $4.95 three years ago to $1.96 in the most recent fiscal year.

Currently, Moderna is expected to see around 57.2% revenue growth over the next 12 months. Our AI rates this biotechnology company a poor investment at this time, with Cs in Technicals and Quality Value, a D in Low Volatility Momentum, and an F in Growth.

Facebook, Inc (FB)

Facebook, Inc slipped 0.13% Tuesday to $361.13 per share, ending the day with 7.5 million shares on the books. The stock is up over 32% for the year and trades at 25.4x forward earnings.

Facebook is trending thanks to a spate of headlines on everything from misinformation to advertising algorithms.

To start, the social media giant found both praise and criticism this week after releasing a new prayer request tool for faith-based communities to seek outreach, support, and of course, your thoughts and prayers. The social media giant began testing the feature in December and has been gradually rolling it out to various Facebook groups and communities since. 

Additionally, the company came under fire for its handling of a group of researchers studying how Facebook algorithms spread misinformation around the platform. The company purported that it was merely following FTC guidelines on user privacy before the U.S. Federal Trade Commission released a letter to the contrary.

Over the last three fiscal years, Facebook’s revenue has grown from $55.8 billion to nearly $86 billion. Additionally, operating income soared to nearly $32.7 billion compared to $24.5 billion three years ago, while per-share earnings jumped from $7.57 to $10.09. That said, return on equity slipped from 27.9% to 25.4% in the same period.

All told, Facebook’s 12-month revenue is expected to grow around 7.5%. Our AI rates Facebook as an above-average investment at this time, with Bs in Technicals, Growth, and Quality Value, and a C in Low Volatility Momentum.

Nike, Inc (NKE)

Nike, Inc nicked up 0.3% Tuesday to $172.27 per share. The stock traded 3.7 million shares to a price $7 over its 22-day price average and up 21.8% for the year. Currently, Nike trades at 40x forward earnings.

Nike is trending this week after an SEC filing revealed the athleticwear retailer faces pressure to be more forthcoming on a number of issues, including executive compensation as well as diversity, equity, and inclusion (DEI) initiatives.

In the company’s annual proxy statement, it was revealed that shareholders requested the board to publish an annual progress report on issues such as the effectiveness and metrics of promotion, recruitment, and retention of protected employees. Nike noted in response that they “know there is more work to be done and will continue to focus on” these initiatives going forward.

Over the last three fiscal years, Nike has seen revenue growth approaching 14% to $44.5 billion in the most recent year compared to $39.1 billion three years prior. Operating income show up 51.5% in the period from $4.77 billion to $7.2 billion, while EPS saw around 43% growth to $3.56. Meanwhile, return on equity expanded from 42.7% to 55%.

All told, Nike is rated a mixed bag by our AI, which grades Nike B in Low Volatility Momentum and Quality Value, C in Technicals, and D in Growth.

Microsoft Corporation (MSFT)

Microsoft Corporation slipped almost 0.7% to $286.44 by Tuesday’s bell, trading 18.6 million shares to a price just pennies below its 10-day price average. The stock remains up 28.8% for the year and trades at 32.6x forward earnings.

Microsoft is trending this week after massive cloud hosting competitor Amazon Web Services quietly won a contract worth up to $10 billion from the National Security Agency. In response, Microsoft filed a bid protest with the Government Accountability Office after applying and being rejected for the opportunity. The two companies expect a decision by late October.

This recent award follows an embittered and embattled dispute between Amazon and Microsoft over the unrelated Pentagon “JEDI” contract, also priced around $10 billion, which was first awarded to Microsoft and later cancelled to allow both vendors to resubmit their proposals. 

Over the last few fiscal years, Microsoft’s revenue has grown almost 33.6% to $168 billion compared to $125.8 billion three years prior. Operating income shot up nearly 63% in the period, from $43 billion to $70 billion. Meanwhile, per-share earnings grew from $5.06 to $8.05, while return on equity climbed from 42.4% to 47%.

All told, Microsoft is rated as an above-average investment by our AI, with an A in Low Volatility Momentum, B in Growth and Quality Value, and C in Technicals.

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