Weekly Analyst Update — December 14th

Wall Street takes a step back

• Leading indices closed the week lower, with the DJ30 registering its third week of declines a row.
• The recent losses are attributed to uncertainty surrounding the latest coronavirus stimulus deal, which is still being negotiated by Democrats and Republicans.
• The recent losses were also felt in the sectors that were impacted by the coronavirus pandemic, including the travel and leisure sector, retail and airlines.

Are tech stocks the new safe haven?

• Since airlines and energy stocks showed gains in previous weeks because of the good news regarding the coronavirus vaccine, some money went out from tech and into those markets.
• It seems that technology is becoming a safe haven in the eyes of some investors, which is in contrast to the fact that actual valuations are getting out of proportion.
• One of the most overvalued stocks currently is Snowflake, trading at 245 times its price/sales figures.
• Zoom is trading at 62 times its price/sales, Shopify at 53 times and Tesla at 23 times. Tesla recently reached a market cap of around $600 billion. Volkswagen, Audi, Daimler, GM, BMW, Ferrari, Honda, Ford, Fiat Chrysler, Peugeot and Porsche, combined, are worth approximately the same.

Airbnb and DoorDash go public

• Short-term rental giant Airbnb finally carried out its IPO and saw its valuation more than double during the first trading day.
• DoorDash, another highly anticipated IPO, also had an impressive start, as it rose more than 80% during its first trading day.

FDA approves Pfizer vaccine

• As Covid-19 cases reached a daily all-time high last week in the US, markets seem to be indifferent to the ongoing spread of the disease, since the vaccine is on its way.
• Last week, pharma giant Pfizer received more good news, as the US Food and Drug Administration greenlit its vaccine, and it is already being shipped to various places around the world.
• The vaccination will begin in the US today and has already begun in the UK.

Brexit is almost here

• Despite the deadline for a Brexit deal passing yesterday, representatives from the UK and EU will continue discussions.
• The official deadline for finalizing a deal is December 31st, however, with the holiday season approaching, there is an increasing chance of a “no deal Brexit”.

The Week Ahead

• OPEC+ meeting; Fed rate decision (Wednesday)
• Bank of England rate decision (Thursday)
• Bank of Japan rate decision (Friday)

Written by a team of experienced financial analysts at eToro.

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.