Following the US elections, we have observed three new trends among retail investors:
- Positive: Chinese US-listed stocks, most notably EV related stocks (NIO, XPEV, KXIN, LI);
- Positive: Cannabis stocks (ACB, CGC, TLRY and APHA);
- Negative: Most of FANGMAN-stocks (FB, AAPL, MSFT and AMZN).
Two above-mentioned positive trends in retail sentiment were apparent as early as Wednesday, November 4. On Thursday, November 5, they were in full swing already in premarket, with cannabis and Chinese stocks occupying 8 of 15 places on our Top Retail Popularity list. By EOD on November 5th, related stocks occupied the top 4 places on our list:
Positive Retail Sentiment
Already on Wednesday and Thursday, in the days when there was much uncertainty about the winner of the U.S. presidental elections, the markets signaled that Joe Biden will probably prevail in the end.
This boosted two groups of stocks as the retailers quickly thought what could be the impact of a Biden victory and the election as a whole.
The first positive group of stocks consists of Chinese US-listed stocks. This group got strong support from retailers. This could well be due to the likely change of US approach towards China in the event of Biden victory. Unlike the current president Trump, Biden is likely to be less hawkish about the country. One example for all could be NIO, retail's favourite EV play based in the Asian country. The stock has surged more than 36% this week and Reddit featured the classic threads about people mortgaging their houses or selling them to buy the shares: "Sold my house and bought over 100k worth of NIO in Shares".
Elon Musk chimed in as well likely further spurring interest in the stock.
420 is ten times better than 42— Elon Musk (@elonmusk) November 6, 2020
Other stocks in this group include Xpeng (XPEV) and Kaixin (KXIN), another two EV-plays, both of which probabaly also rose on the back of the sell-side positive call on a broader group of names. We also see a surge in sentiment regarding Alibaba (BABA) the Chinese premier e-commerce company. Reddit was positive about the stock even despite the slightly negative share price action the day before as the company reported their earnings. However, some Redditors have advised caution (of all things) and mentioned BABA's connection to the Chinese government which could ultimately hurt the prospects of the business.
The second group that got a positive boost from the election consists of cannabis-related stocks. This is most likely due to some US states approving of relaxation regarding marijuana laws and the hope that Joe Biden will not stand in the way of the ongoing further deregulation.
One of the better known Twitterati's confirmed the retailer focus.
Some of the best known cannabis tickers saw the most surge as Reddit was focusing on what companies will benefit the most. Aurora Cannabis (ACB) was mentioned as it is one of the largest players. Canopy Growth (CGC) was also in the spotlight in both r/wallstreetbets and r/stocks. Aphria (APHA) was also present in the focus, here some Redditors also caught the news about the company buying craft beer brands.
Negative Retail Sentiment
Finally, we mention a group of stocks with estimated negative retail sentiment: Facebook (FB), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA).
Continuing the trend of election-effect we estimated that retailers have been somewhat negative about the tech-heavy names. This could be due to Biden's potential policy of regulating the space more heavily or a continuation of the broader tech sell-off from last week. FB itself had enough issues on the election day. AMZN saw Jeff Bezos sell some of his stake which Reddit dutifully caught. NVDA, a chip darling of retailers, got also caught on the negative side as some Redditors proposed buying puts. According to them, the company got ahead of itself due to a number of issues including AMD catching-up and game delays that will delay buyers of the new gen of video cards.
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* Note: Presented data and analytics is as of available on 2020-11-07, UTC 13:00.
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