JUMP REPORT

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. Hill: We’ve got a stock up more than 15%, we have another stock up more than 30%, but we’re going to start today with Netflix (NASDAQ: NFLX).

Snap smashed through earnings expectations on a return of brand advertising. That should be a sign of better times at Facebook and Twitter, which report this week.

It was a back-and-forth trading session on Friday — what else is new — that ultimately led a slight rally on Wall Street. With that in mind, let’s look at a few top stock trades for next week.  Top Stock Trades for Monday No. 1: Twilio (TWLO) Click to EnlargeSource: Chart courtesy of StockCharts.com Twilio (NYSE:TWLO) is set to report earnings on Monday, Oct. 26. After breaking out to new highs near $340, shares have pulled back. Is it enough to warrant a post-earnings rally? If earnings weren’t around the corner, this dip into support would look pretty attractive. The prior highs near $280 to $285 held as support, as Twilio is now rallying back over $300.InvestorPlace – Stock Market News, Stock Advice & Trading Tips On the upside, bulls will be looking for a close above $340. Above that could put the 461.8% extension (from the March low to the preceding 2020 high) in play at $368. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes On the downside, though, a close below $280 would put the 100-day and 50-day moving averages on the table. Below that, and $220 could be on deck. Top Stock Trades for Monday No. 2: Snap (SNAP) Click to EnlargeSource: Chart courtesy of StockCharts.com I covered Snap (NYSE:SNAP) earlier in the week after its monstrous earnings move. That rally was met by selling at the 261.8% extension. On a move over that mark, I said investors should look for a test of the three-times range extension at near $43.50. Almost there now and investors are wondering what to do with their long position. First, pat yourself on the back. Second, consider how to proceed. Some may want to fish for a full test of the three-times range, followed by a possible move to $50. Others may consider taking some profits here and riding it higher. A few investors may even consider parking a daily stop just below the 261.8% extension. This key level has been relevant all week and a close below this mark would be bad news. Either way, there are multiple ways to proceed from this point forward. No matter what risk management principles investors implement, many will be looking to buy on the dip. In that case, consider waiting for an eventual test of the 10-day moving average. Top Trades for Monday No. 3: Spartan Energy Acquisition (SPAQ) Click to EnlargeSource: Chart courtesy of StockCharts.com We also looked at Spartan Energy Acquisition (NYSE:SPAQ) recently. In that assessment, I said bulls needed to reclaim $14 to regain control and that a move below $12.50 support would put the 200-day moving average in play. Earlier this week, SPAQ broke decisively below $12.50. On Thursday, it broke aggressively below the 200-day moving average. Perhaps aggressive bulls can justify a dip buy now, looking for a rebound back to $11, then the 200-day moving average. 4 Top Dividend Stocks That’ll Pay You Better Than 'Exciting Trailblazers' However, a close below Friday’s low will not be a good look. That said, shares are down in six of the least seven sessions, and while it’s a risky setup, SPAQ stock looks due for a bounce. Top Stock Trades for Monday No. 4: Gilead Sciences (GILD) Click to EnlargeSource: Chart courtesy of StockCharts.com Gilead Sciences (NASDAQ:GILD) continues to trade like crap. After breaking to new 2020 lows earlier this week, shares popped on Friday morning. However, those gains couldn’t be maintained, as downtrend resistance (blue line) and the 50-day moving average rejected the stock. Now what? Below $61, and the monthly lows are in play. If broken, see if the stock quickly reclaims the $60 level — known as a “look below and fail” setup. In any case, bulls need to see shares close above the 50-day moving average to get any sort of sustained rally to the upside. On the downside, a break of $60 could put the $56 to $58 area in play, which has been multi-year support. On the date of publication, Bret Kenwell held a long position in TWLO. Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post 4 Top Stock Trades for Monday: TWLO, SNAP, SPAQ, GILD appeared first on InvestorPlace.

Over the past few months, shares of Twitter (NYSE:TWTR) caught fire, with TWTR stock soaring to its highest levels since 2015 on the back of abundant optimism that the novel coronavirus pandemic permanently accelerated the shift of consumer engagement and digital ad dollars into the digital channel. Source: Worawee Meepian / Shutterstock.com This optimism is not misplaced. Covid-19 has done just that. Today, we are all more addicted to our phones, computers and social media platforms than ever before. This is not temporary. It’s a permanent shift toward a “digi-everything” society where, if it can be digitized without significant loss of quality, it will be digitized. The reason for this is digital experiences almost always offer superior convenience.InvestorPlace – Stock Market News, Stock Advice & Trading Tips But this optimism is overstated. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes TWTR stock has rushed to unsustainably high levels that are not supported by the fundamentals. The platform has had trouble monetizing its users for years. Eventually, this red-hot rally will run into a brick wall called reality. And then Twitter stock will collapse back toward the $30 level. The Digital Ad Boom Snap (NYSE:SNAP) just reported blockbuster third-quarter numbers which breezed past user, revenue and profit expectations. Those numbers broadly underscored that we are in the midst of a digital ad boom, the likes of which should boost all digital ad stocks – TWTR stock included. Here’s the story. The Covid-19 pandemic brought the global economy to a screeching halt at the end of the first quarter of 2020. With the economy not moving, companies stopped advertising. But, we adjusted to living with the virus, and economic activity rebounded. As economic activity rebounded, companies put ad dollars back to work because consumers are spending again. Yet, consumers’ Covid-19 adjustment include living a more “digital” life – i.e. consumers are spending more time than ever on social media platforms. So these ad dollars that are going skipping the TV, radio and billboard ads, and instead rushing at breakneck speeds into digital channels. The result is perfect for social media platforms. They are broadly benefiting from a simultaneous rise in engagement (because of Covid-19 restrictions) and advertiser demand (because of rebounding consumer spending). The market thinks that this rising tide will lift all boats. When Snap reported blowout earnings, all digital ad stocks rose. But I think this rising tide will actually leave out one boat – Twitter. Twitter Has Money Problems Zooming out, Twitter has had trouble monetizing its user base for several years, and therefore, not participated in the enormous revenue growth in the digital ad industry. Over the past five years, Alphabet‘s (NASDAQ:GOOG,NASDAQ:GOOGL) revenue climbed 120% and Facebook‘s (NASDAQ:FB) revenue rose320%. Over that same stretch, Twitter’s revenue increased less than 50%. The painful reality here is that Twitter and ads just don’t mix well. Twitter is a text-heavy platform in a digital world dominated by visual ads. As the old saying goes, a picture paints a thousand words. That’s why visual ads are more stimulating, engaging and effective than text ads. It’s also why all of today’s fastest growing digital ad platforms – Snap, Pinterest (NYSE:PINS), YouTube, TikTok, and Instagram – are visual-heavy. Twitter’s platform is built on 180 character text messages. It’s much harder to seamlessly integrate a compelling ad in a feed of tweets than full-screen, short-form TikTok videos. That’s why digital advertisers mostly ignore Twitter. Being text-based is part of Twitter’s DNA. It is what makes Twitter, Twitter. But it’s also what will keep advertisers at bay. Thus, for the foreseeable future, Twitter will have money problems. Unfortunately, it seems the market has forgotten this fundamental problem over the past few months, leaving TWTR stock stuck in significantly overvalued territory. The Valuation Is Unsustainable Above $50, Twitter stock is unsustainably overvalued. Of the big four publicly traded social media platforms – Twitter, Facebook, Snap and Pinterest – Twitter is the slowest growing in terms of revenue growth. Its revenue grew just 14% last year (versus 25%-plus growth at Facebook, Snap and Pinterest). Yet, based on 2025 earnings estimates, Twitter stock is the second most richly valued in the group, at 21-times 2025 earnings estimates. That represents a 5% premium to Snap’s 2025 earnings multiple (who is growing revenue four times as fast as Twitter), and a 40% premium to Facebook’s earnings multiple (who is growing revenue about two times as fast as Twitter). Pinterest is the only more richly valued social media stock, and that company is growing revenue at a 50%-plus clip. Clearly, relative to peers, TWTR stock is just wildly overvalued. That’s also true relative to the company’s long-term growth prospects. Consensus Wall Street estimates peg Twitter’s revenues in 2029 at $7 billion. I think that number will look more like $10 billion by 2030. Still, my numbers say that won’t produce more than $3.50 in earnings per share in 2030, which equates to a fair value for TWTR stock today of just $34. Thus, up above $50, Twitter stock is trading on hype and fairy dust. Eventually, that hype and fairy dust will disappear. Bottom Line on TWTR Stock I’m arguably one of the most bullish analysts in the world when it comes to digital ad stocks. Back at the height of pandemic hysteria, I told readers to buy digital ad stocks with both hands for a huge second-half rebound in digital ad spending. I’ve stuck with that bullish call all year long, as many of these stocks have risen 100% or more. But – even as a major bull on digital advertising – I’m bearish on TWTR stock. The painful reality is that the rising tide of digital advertising is not lifting all boats, and one of the boats being left behind is text-heavy Twitter. That’s not to say Twitter is a bad business. It’s a great platform, with a decent business. But it is to say that Twitter stock doesn’t deserve a $50 price tag. So don’t chase the stock up here. Instead, fade the rally. The next big move could be a plunge back to $30. On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.  The New Daily 10X Stock Report: 98.7% Accuracy – Gains Up to 466.78%. InvestorPlace’s brand-new and highly controversial newsletter… is rocking the industry… delivering one breakthrough stock recommendation each and every trading day… delivered straight to your inbox. 98.7% Accuracy to Date – Gains Up to 466.78%. Now for a limited time… you can get in for just $19. Click here to find out how. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Do Not Chase This Big Rally in Twitter Stock Above $50 appeared first on InvestorPlace.

The hammer has finally come down on GOOG stock. After years and years of legislators and politicians flirting with antitrust action against big tech companies, the U.S. Justice Department and 11 states have finally filed a landmark antitrust suit against Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL), alleging that the tech giant has employed anticompetitive practices to protect its monopoly in digital search. Source: Benny Marty / Shutterstock.com Considering this is the first major legal challenge against a U.S. tech company since the Justice Department brought antitrust claims against Microsoft (NASDAQ:MSFT) in the 1990s, one would reasonably expect GOOG stock to be hurting on this news. But it’s not.InvestorPlace – Stock Market News, Stock Advice & Trading Tips Since the suit was announced, GOOG stock has actually risen by a few percentage points, mostly because a powerful earnings report from digital ad peer Snap (NYSE:SNAP) has overshadowed the suit, underscoring that we are in the midst of a digital ad boom. Does it make sense that this digital ad boom is overshadowing the biggest antitrust suit in 20 years? Absolutely. Fundamentals trump optics. The current digital ad boom is a fundamental tailwind. The antitrust suit is an optical headwind that, fundamentally speaking, will end up being a nothing burger. Therefore, GOOG stock — despite the antitrust suit — will keep powering higher. Here’s why. Antitrust Action is a Nothing Burger While the Justice Department’s antitrust suit against Alphabet may seem like a potential company-ending headwind, it’s actually a big fat nothing burger. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes Here’s what is going to happen. The suit is going to play out. The DOJ is going to argue that Alphabet is too dominant in search, and therefore, has too much power to influence how information is surfaced across the internet. Alphabet is going to say they have a bunch of competition from Bing, and that their algorithms aren’t biased towards one political party or agenda. The two aren’t going to see eye-to-eye. It will end in a stalemate. Alphabet is going to pay a big one-time fine. There may be some restrictions put in place in terms of Alphabet’s search algorithm, which may or may not impact Alphabet’s search ad revenue. And that’s about it. The world will move on. Google Search will remain the world’s dominant search engine. Google Cloud will escape unscathed. YouTube will escape unscathed. The company’s self-driving unit, Waymo, will escape unscathed. The entire Google Home business will escape unscathed. Alphabet will remain a tech giant with enormous global reach. GOOG stock will keep powering. So don’t let this near-term, ephemeral and largely meaningless headwind scare you out of a long-term winner like Alphabet stock. Strong Earnings Coming Up Next As opposed to paying attention to the antitrust suit, investors should turn their eyes towards Alphabet’s upcoming earnings report, which should be a blockbuster print thanks to the current digital ad boom. Here’s the story. The Covid-19 pandemic brought the global economy to a screeching halt at the end of the first quarter of 2020. With the economy not moving, companies stopped advertising. But, we have since adjusted to living with the virus, and economic activity has rebounded. As economic activity has rebounded, companies have put ad dollars back to work, because consumers are spending again. Yet, consumers’ Covid-19 adjustments include living a more “digital” life — i.e. consumers are spending more time than ever on social media platforms. So these ad dollars that are going back to work, are skipping the TV, radio and billboard ads, and instead rushing at breakneck speeds into digital channels. The result is a perfect operating environment for social media platforms. They are broadly benefitting from a simultaneous rise in engagement (because of Covid-19 restrictions) and advertiser demand (because of rebounding consumer spending). This rising tide will help power strong numbers for Alphabet this earnings season. YouTube’s ad numbers will be very strong, because YouTube has turned into a go-to entertainment hub over the past few months. Google Search probably had a good quarter, because one can presume that consumers are doing more Googling than ever before. Google Cloud’s numbers will also be very strong, on the back of robust demand for cloud-hosted work solutions. Across the board, Alphabet’s numbers should knock it out of the ballpark. If they do, GOOG stock will shrug off antitrust headwinds and push to all time highs. Bottom Line on GOOG Stock GOOG stock is a long-term winner. The antitrust suit is a near-term headwind. If this near-term headwind causes pain in this long-term winner, buy the dip, especially ahead of what could a be a big earnings catalyst. On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.  The New Daily 10X Stock Report: 98.7% Accuracy – Gains Up to 466.78%. InvestorPlace’s brand-new and highly controversial newsletter… is rocking the industry… delivering one breakthrough stock recommendation each and every trading day… delivered straight to your inbox. 98.7% Accuracy to Date – Gains Up to 466.78%. Now for a limited time… you can get in for just $19. Click here to find out how. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Strong Earnings Will Trump Political Risks for GOOG Stock appeared first on InvestorPlace.