Stocks on Wall Street tumbled on Friday, with the benchmark S&P 500 index breaking below key levels to wrap up another volatile week in financial markets amid worries over soaring inflation and fresh Russia-Ukraine tensions.
SPX Daily Chart
Between another batch of notable earnings reports in the coming week from companies like Walmart (NYSE:WMT), NVIDIA (NASDAQ:NVDA), Cisco (NASDAQ:CSCO), Shopify (NYSE:SHOP), Roku (NASDAQ:ROKU), DraftKings (NASDAQ:DKNG), and Roblox (NYSE:RBLX), plus more important economic data—including the latest U.S. retail sales and PPI reports—market activity is expected to be busy once again.
Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside. Note, however, that our timeframe is just for the upcoming week.
Stock To Buy: Palantir
After sliding around 27% since the start of 2022, shares of Palantir Technologies (NYSE:PLTR) look set to finally break out of their recent downtrend and resume their march higher in the coming days.
The latest positive catalyst is expected to arrive when the enterprise software company, which provides data-analytics software and services, reports fourth quarter results ahead of the opening bell at 7:00AM ET on Thursday, Feb. 17.
Consensus expectations call for Palantir—which has topped estimates for profit and sales in every quarter since going public in September 2020—to post earnings per share of $0.03 on revenue of $417.6 million.
If confirmed, Palantir’s quarterly sales total would mark the highest in its history, highlighting the robust demand for its data-analytics software tools from government agencies and large corporations around the world.
Taking that into account, Palantir’s revenue and free cash flow guidance for the current quarter and beyond could surprise to the upside, given its leading position in the burgeoning data-mining industry.
PLTR Daily Chart
Shares of PLTR, which sank to their lowest level since Nov. 5, 2020, at $11.75 on Jan. 24, closed Friday’s session at $13.13, earning the Denver, Colorado-based big data firm a valuation of $26.3 billion.
Palantir shares have lost 27.9% year-to-date, significantly underperforming the broader market, as investors flee high-growth tech companies with sky-high valuations amid worries surrounding the Federal Reserve’s plans to raise interest rates.
Stock To Dump: DoorDash
DoorDash (NYSE:DASH), which has seen its shares collapse to new lows in recent sessions, is forecast to endure another tough week as investors brace for disappointing financial results from the food delivery company, due after the U.S. market closes on Wednesday, Feb. 16.
Analysts are calling for a loss of $0.21 per share for the fourth quarter, narrowing from a loss per share of $0.36 in the same period a year earlier. Revenue, meanwhile, is forecast to rise roughly 32% year-over-year to $1.28 billion.
If confirmed, that would mark the slowest pace of sales growth since the company’s IPO in December 2020 amid strong competition from industry peers, such as Uber Eats (NYSE:UBER), and Grubhub (NYSE:GRUB).
DoorDash has seen its annualized revenue growth rates drop sharply from 351% in Q1 2021, to 242% in Q2 ‘21, to a mere 45% in Q3 ‘21, underlining worries that it may have been a pure COVID-play that just so happened to go public at its peak.
As such, we believe the food delivery service—which enjoyed booming demand during the pandemic—is likely to suffer a further slowdown in growth as pandemic-related restrictions end and rising inflation weighs on its profitability outlook.
DASH Daily Chart
DoorDash has gotten off to a rough start to 2022, with shares of the Palo Alto, California-based online-delivery platform sliding below their IPO price of $102 last week for the first time ever in its brief history as a publicly traded company.
In addition to worries surrounding a substantial slowdown in its core business, DoorDash has also come under pressure as surging bond yields sparked a selloff in highly valued growth stocks, especially those that are unprofitable or have lofty price-to-earnings ratios.
DASH stock closed Friday’s session at $95.01, within sight of a record low of $91.96 touched on Feb. 3. At current levels, DoorDash—which is down 36% year-to-date and 63% below its November all-time peak—has a market cap of $32.6 billion.
From a technical standpoint, shares are trading well below their declining 50-day, 100-day, and 200-day moving averages, which usually signals more losses ahead as sellers are still in control.