Your portfolios in brief
MongoDB (MDB) is a rising star in the field of information technology that has captured our attention and deserves a prominent place in our portfolio.
Company profile
MongoDB is a leading software company specializing in the creation of document-oriented databases. Since its foundation in 2007, it has established itself as an undisputed leader in the NoSQL database sector, offering solutions that simplify the management, manipulation and storage of large-scale data. Their flagship product, MongoDB, is renowned for its flexibility, scalability and exceptional performance.
Key points for 2023
MongoDB has maintained an impressive upward trajectory this year, both in terms of growth and innovation. Here are some key highlights from 2023:
- Remarkable revenue growth: MongoDB reported a significant increase in revenues, mainly due to growing demand for its database services.
- Introduction of innovative security features: The company has introduced innovative features to enhance data security, consolidating customer confidence in their platform.
Why keep an eye on MongoDB stock
A recent Forbes article pointed out that MongoDB's shares have doubled this year, an increase of over 90%, and this surge is attributed to the enthusiasm surrounding the company's long-term prospects in the AI sector. More and more, customers are opting for MongoDB's Atlas cloud database as a central platform for developing and deploying new AI applications. It's a trend that MongoDB CEO Dev Ittycheria sees as beneficial for modern platforms with an extensive feature set.
The company also unveiled several new products and advanced features for its Atlas cloud platform, facilitating and accelerating the development of contemporary applications for a variety of requirements or use cases. These advances, combined with the recent launch of the Relational Migrator tool, which simplifies the migration and transformation of applications from traditional relational databases to MongoDB's document model, make the company a preferred choice for organizations looking to modernize their data management systems.
Latest financial news
According to a recent article on Yahoo Finance, MongoDB posted total sales of $423.8 million in the second quarter, up 40% year-on-year. The company generated gross profit of $318.5 million, representing a gross margin of 75%, compared with 71% the previous year. The recent launch of its new product, Atlas Vector Search, facilitates the integration of generative AI and semantic search functionality, marking a crucial step in the company's transition to AI-enabled tools and platforms. This move is reinforced by an extended partnership with Google Cloud, which enables developers to use Google Cloud's Vertex AI models and tools.
At Pratte, we are convinced that MongoDB represents significant added value to our portfolio. Its potential in the AI sector, combined with sustained growth and relentless innovation, makes it a stock to watch closely in the years ahead.
Markets in brief
Monday
-Technological momentum and renewed optimism
The markets started the week on an optimistic note, with significant gains for the major indices. The Dow closed up 0.25%, reflecting renewed stability, mainly driven by industrial leaders such as 3M and Caterpillar. Meanwhile, the NASDAQ jumped 1.14%, fueled by tech giants such as Apple (+1.15%) and Amazon (+3.52%). Several giant tech caps, such as Meta (+3.25%), rode the wave, as did much more volatile stocks like BlackBerry (+14.47%) and Rivian (+1.34%).
The S&P 500 was not outdone, posting a 0.67% rise, thanks to the strength of the healthcare and consumer goods sectors, and the solid performance of flagships such as Alphabet (+1.8%) and Microsoft (+0.7%).
-Tesla leads the charge
Tesla was the star stock of the session, with an impressive rise of over 10% in its share value. This rise was mainly attributed to optimism surrounding the potential of its supercomputer, Dojo, in the development of autonomous driving. Morgan Stanley's Adam Jonas pointed out that the Dojo project could add up to $500 billion to the company's value, making Tesla one of the bank's top picks.
-Disney: A positive resolution with Charter Communications
In the media sector, Disney saw its shares rise, closing up +1.15%. This rise is the result of the end of a conflict with Charter Communications. The entertainment colossus had been interrupting the transmission of channels on its network, including ESPN (sports), for some ten days. This resolution will enable millions of Charter customers to watch programs on Disney channels, including the very popular "Monday Night Football" on ESPN.
Tuesday
-Market fluctuations
The NASDAQ index fell by 1.04% across the board, dragged down by the disappointing performance of tech giants such as Apple. The top ten NASDAQ stocks all fell by more than 1%, with Tesla (-2.23%), Meta (-1.92%) and Microsoft (-1.83%) leading the way. By contrast, the Dow closed slightly down by 0.05%, stabilized by strong performances from banks such as Goldman Sachs (+1.93%) and JPMorgan (+1.30%), as well as stocks considered defensive, such as McDonald's (+0.34%) and Honeywell (+1.61%). The broader S&P 500 index fell by 0.57%.
-Significant drop in oracle
Oracle saw its shares fall significantly on Tuesday, recording a 13.5% drop. The fall was mainly due to slightly lower-than-expected sales and disappointing forecasts. The company, a software editor and cloud computing provider, published these disappointing results on Monday after the market close.
-Apple: lukewarm reception for the iPhone 15
Apple also had a tough day, with shares down 1.71% after the launch of the new iPhone 15. The main change from the previous version is the integration of a "USB-C" port, a requirement set by the European Union. Despite this, the presentation failed to impress investors. Following unofficially confirmed reports that Chinese authorities had banned the iPhone from a number of government institutions, the world's most valuable company saw its market capitalization plummet by over 7% last week, wiping more than $200 billion off its market value in the process.
-Geopolitical tensions and their impact on oil
Oil prices reached their highest level since November, boosted by concerns of a significant crude shortage in the fourth quarter of 2023, according to reports from the IEA and OPEC. Brent crude and West Texas Intermediate (WTI) rose by 0.49% to $92.51 and 0.52% to $89.30 respectively.
This increase is mainly due to a persistent supply shortfall on the market, with OPEC+ extending crude production and export cuts until the end of the year. This situation could result in a substantial deficit of one million barrels per day for OPEC+ countries, increasing the risk of volatility on the markets.
Wednesday
-Inflation: A significant rise fuelled by energy prices
In August 2023, the United States saw a significant rise in inflation, the biggest monthly increase of the year, mainly due to higher energy prices. The US Department of Labor reported that the Consumer Price Index (CPI) rose by 0.6% for the month, up 3.7% year-on-year. Excluding the volatile food and energy sectors, core CPI saw a monthly increase of 0.3% and an annual rise of 4.3%.
This price rise was mainly driven by a significant increase in energy prices, which climbed 5.6% over the month, including a 10.6% surge in gasoline prices. Air fares jumped by 4.9%, although they were still 13.3% down on the previous year.
Recent data suggest that the Federal Reserve may take a more cautious approach to solving the long-term inflation problem, probably avoiding an interest rate hike at its next meeting. Indeed, experts believe that we are unlikely to see an interest rate hike at the Fed's next meeting.
-US indices: A mixed day on Wall Street
The Dow fell slightly on Wednesday, losing 70.46 points, or 0.20%, to close at 34,575.53 points. By contrast, the S&P 500 and NASDAQ posted modest gains, rising 0.12% and 0.29% respectively, to close at 4,467.44 and 13,813.59 points. Shares in 3M were the main contributors to the Dow's decline, closely followed by Caterpillar and Dow Inc. However, Goldman Sachs and Microsoft offered significant support, each recording a 1.1% rise.
-Business News: Significant developments to keep an eye on
(MRNA): The company captured investors' attention on Wednesday after announcing positive results for the reformulated version of its messenger RNA-based flu vaccine, meeting its primary targets in a late-stage trial. This news boosted Moderna shares, which closed up 3.18%.
3M Co. (MMM): 3M ran into obstacles, postponing the spin-off of its healthcare division and issuing warnings about the outlook for next year. The announcement sent 3M shares tumbling, closing down 5.70%.
Spirit Airlines Inc (SAVE): Spirit revealed that rising fuel costs could affect its quarterly results, also citing "significant discounts" for forward travel over Thanksgiving. This news was not well received by the markets, with the close down 6.25%.
American Airlines (AAL): The company fell by 5.67% on Wednesday following a warning on its quarterly results. According to American Airlines, this drop is due to the rise in the price of kerosene and the recent fall in the price of airline tickets. The company expects to see its margins squeezed, and is now forecasting earnings divided by three to four compared with its previous forecasts.
Thursday
-Indices on the rise
Thursday's session was marked by a significant rise in the main stock market indices. The Dow Jones closed up 0.96%, reflecting a positive trend in the industrial sector. Similarly, the NASDAQ was up 0.81%, indicating a strong performance in the technology sector. And the S&P 500 was not to be outdone, with a notable rise of 0.84%. This rise in the indices was mainly attributed to an unexpected increase in US retail sales, which climbed by 0.6% in August, far surpassing economists' forecasts.
-Soaring oil prices: Growing tensions on the market
US crude oil prices continued their ascent on Thursday, reaching $90 a barrel in early morning trading, the first time this has happened since November 2022. This trend, which represents a 30% rise since the end of June, is fuelled by forecasts of a significant supply shortage in the months ahead. OPEC is anticipating the biggest deficit in over a decade, mainly due to robust demand in the USA and China, the two main oil consumers, while OPEC+ leaders (Saudi Arabia and Russia) are limiting supplies.
-Significant rise in PPI in August: A sign of continuing inflationary pressure
In August, the U.S. Producer Price Index (PPI) rose more sharply than expected, coming in at 0.7% on a monthly basis and 1.6% on an annual basis, according to the U.S. Department of Labor report. This monthly increase, which exceeds the Dow Jones estimate by 0.4%, represents the largest single-month increase since June 2022.
-ARM IPO a success
ARM Holdings, controlled by SoftBank, made a triumphant entry on the NASDAQ, with an initial valuation close to $60 billion. Starting at $56.10 per share, it closed the day at $63.59, an increase of around 25%. With strategic investors such as Apple and Google, ARM envisions a potential $250 billion market for its chip designs by 2025. This successful IPO could signal a revival of IPOs in the technology sector.
Friday
-Wall Street heads for a week of gains
The three main indices started the day in negative territory on Friday, but still appear to be heading for a positive weekly close. It's shaping up to be a winning week for equities, with the Dow Jones on course for a gain of around 1%, marking a second positive week out of three. The S&P 500 and NASDAQ also posted gains of around 1.1% and 1.2% respectively, putting them on course for their third positive week in four. However, the United Auto Workers strike led to the closure of three key plants. Ford shares fell 1.7% in pre-market trading, while GM shares were down 1.5%. Stellantis, on the other hand, edged up 0.7%.
Philippe Pratte's comments: quadruple witching
Over the past week, the stock markets have been in a state of ferment, culminating today in the "quadruple witching" event. This seasonal phenomenon, which occurs four times a year, is characterized by the simultaneous expiry of various types of derivative contracts, generating significant volatility on the markets. Traditionally, this day is marked by a substantial increase in trading volumes and heightened volatility, as investors strategically adjust their portfolios.
In the current environment, it is imperative for investors to remain vigilant and judiciously adjust their investment strategies. Despite the turbulence, we remain slightly constructive on risk assets, as recession expectations continue to diminish. In addition, investors are reducing the likelihood of future rate hikes, signalling growing confidence in the eventual stability of future bonds. The inversion of the bond curve continues to create volatility, and will continue to do so until it normalizes.
Looking ahead to the week ahead, markets are expected to experience significant adjustments, potentially offering opportunities for investors to capitalize on market fluctuations.
Conclusion:
As we wrap up this week's stock market news, we appreciate your engagement and insights. Please feel free to contact us with your thoughts, or share this blog with others interested in market dynamics.
PrattePM is registered with the Autorité des marchés financiers (AMF) and the Ontario Securities Commission (OSC).
Intended to provide general information on markets and securities and not to meet your specific needs, this newsletter is the result of the author's own research. The opinions (including recommendations, if any) expressed in this newsletter are those of the author only and do not necessarily represent those of Pratte Portfolio Management . They do not constitute investment advice intended to meet your specific needs.
The information contained in this newsletter has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed, and in providing it, the author and Pratte Portfolio Management assume no responsibility. This information was current as of the date of this newsletter, and neither the author nor Pratte Portfolio Management assumes any obligation to update it or to report any developments with respect to this information. This newsletter is intended for distribution in jurisdictions where the author and Pratte Portfolio Management are registered to trade in securities. Distribution or dissemination of this bulletin in any other jurisdiction is prohibited. The author,Pratte Portfolio Management its affiliates and their respective directors, officers and employees, as well as the companies with which they are associated may, from time to time, hold securities referred to in this bulletin.
