Could the success of the reopening trade come at a cost?
Bank of America analysts brought that issue to their attention Monday in a note updating Booking Holdings and lowering Pinterest and Snap, announcing a tidal change on the face of a potentially flat rate crunch stock valuations stay at home.
“This is not a call that Snap or Pinterest will miss estimates,” the note said. “This is a call that stocks could be tied by range and we have better reopening ideas.”
Booking Holdings ended trading down nearly 2.5% on Monday, backing its high-time set Wednesday. Pinterest fell nearly 1%. Snap lost less than half of 1%.
“We are… bullish on reopening the trade, but I believe where we would not agree with the report we do not think it comes at the expense of some of these high-growth companies,” said Ari Wald, Oppenheimer “Trading Nation” technical analyst on Monday.
Instead, it is likely to come at the expense of higher-paying, lower-moving segments, leaving Pinterest and Snap as long-term winners, he said.
As for Booking Holdings, “it ‘s been mostly trading in a very wide range – in addition to that Covid fall – between around $ 1,600 and $ 2,200 for much of the last four years. go, “Wald said.
“Now, a year after the important market base, entering this second year of the bull market, we are seeing more stocks start to break out, taken over. -in, breaking above the top of that range, “he said. “It can be considered more optimistic than not, as long as that break holds $ 2,200 support.”
The hold closed at $ 2,231.89 on Monday.
There are still challenges on both sides of the Bank of America call despite developing speculation around the reopening, Chantico Global founder and CEO Gina Sanchez said in the same interview.
“About 20% of travel is business-related and 80% is a hobby. Reservation has about the same percentages in their income,” she said. “If you assume that their entire revenue base is going to get that kind of increase in 2021 and 2022, retention is in fact a look cheap. But if you assume that 20% of their revenue money is going to go to waste, then of course, it may be being fairly valued. “
Pinterest and Snap fares are likely to hit the investment outlook, said Sanchez, who is also Lido Advisors ’key market strategist.
“The bigger challenge there … comes with their profit and whether or not they can raise a profit,” she said.
While Sanchez expected investors to “grow at a reasonable price rather than real value,” high-growth companies still need to prove themselves, she said.
“There has to be some growth, but I really think there will be a profit, so, then, I agree with Bank of America,” she said.
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