US Stock Market Overview: A Calm Day with Low Volatility
The US stock market experienced a relatively calm day with very little fluctuation. The market was almost evenly split between rising and falling stocks. The VIX (volatility index) also dropped to a relatively low level of 15.
S&P 500 and Nasdaq 100
The S&P 500 continued its year-to-date upward trend, although recent volatility has been very low, creating a feeling that further gains are difficult. Trading volume was also low across the board, with more sectors experiencing declines than gains. The Nasdaq 100 mirrored this trend, with a near-even split between rising and falling companies. The performance of major tech companies was also largely uneventful, with the exception of Meta.
Market Sentiment: Neutral to Bullish
Overall, the market sentiment can be described as neutral to bullish, with moderate gains and low volatility. The top 10 performing stocks did not contribute significantly to overall gains, and there were no particularly large increases among market leaders.
Notable Stocks and Trends
Intel's Decline
Intel experienced a significant decline (3.66%) due to actions by the US government.
Top Performing Stocks in August
Apple showed the best performance in August (11.23% growth), followed by Tesla, Google, and Nvidia.
Tesla's Chart Pattern
Tesla's long-term chart reveals a potential "cup and handle" pattern, suggesting a possible breakout above $400, which could lead to a substantial price target.
UNH: A Cautionary Note
UNH's stock appears to be in a stage where investors are being rewarded. However, further gains might be unsustainable and risky, resembling a potential "big head" pattern. Chasing UNH at its current price is not recommended.
Asset Class Performance
Gold has regained its top position among major asset classes, surpassing Bitcoin due to recent withdrawals from the cryptocurrency.
Citron Research's Bearish Report on Palantir
Citron Research released a short report targeting Palantir, a favorite among retail investors. The report assigned a very low target price of $40, arguing that even that price is generous.
Comparing Palantir to OpenAI
Citron Research's main argument compares Palantir to OpenAI (ChatGPT), positioning OpenAI as the leader in AI. They use OpenAI's high valuation (based on a potential $500 billion valuation for a financing round) to question Palantir's current stock price.
Revenue and TAM Comparison
Citron Research highlights the significant difference in revenue between OpenAI (projected $29.6 billion) and Palantir ($5.6 billion). They also point out that OpenAI's total addressable market (TAM) is significantly larger than Palantir's.
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OpenAI's TAM:
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2025: $200-300 billion
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2023: $700 billion
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Palantir's TAM:
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$120-180 billion (projected)
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2030: $130-200 billion
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Citron argues that OpenAI's market attention is broader, driven by consumer and enterprise adoption, while Palantir relies heavily on government contracts.
Diminishing Returns and Customer Value
Citron Research suggests that Palantir faces diminishing returns as the value of subsequently added data decreases, while the cost of analysis increases. This means that they feel that the solution given by Palantir, the product given by Palantir, can no longer solve customer's problems.
Skepticism Towards Wall Street Analysts
Citron Research expresses skepticism towards Wall Street analysts, portraying them as overly optimistic and potentially unreliable.
Insider Selling: Alex Karp vs. Elon Musk
Citron Research contrasts the actions of Palantir's CEO, Alex Karp, who has reportedly sold approximately $2 billion worth of Palantir stock, with Elon Musk's purchases of Tesla stock on the open market, demonstrating his conviction. They accuse Karp of using Palantir's AI rally as a personal exit strategy.
Conclusion of the Report
Citron Research believes that Palantir, even with an $86 billion valuation at $40 per share, represents a victory for the company's CEO. However, they caution investors, particularly retail investors, against comparing Palantir to OpenAI and questioning the logic behind Palantir's current valuation. The speaker encourages listeners to consider Citron Research's points neutrally and decide for themselves if the valuation makes sense.
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