The Tumultuous Money Making Market. Today Tomorrow and Yesterday

Summary

  • Oil price continues to decline
  • Gold slumps after weeks of gains
  • Crowdstrike returns to pre virus level
  • Tesla continues it surge

Oil

The OPEC decision to cut oil at the very last moment seemed not enough to sway the oil price from falling again with Bent Crude continuing its decline following the meeting between oil producing countries earlier this week. The price of oil is down to unimaginable levels as traders are unconvinced that the historic cuts were enough to compensate for the decline in global demand.

With the recent news we saw oil collapse to even greater lows were it actually reached -$37 in some areas. These are historic lows during a history making time, its not known how the value of oil will change going forward but what is known is that the price is likely to continue to be unstable.

China is the biggest importer of oil and with China’s economy experiencing its first economic contraction in 28 years a slowdown in demand from the country will result in a further decline in the already abysmal prices of oil. To add to this the IMF added a grim economic outlook, predicting a global recession of 3%, which will again be likely to decrease the demand for oil.

Gold

On the backend of these events, gold has been a continuing winner and has found momentum in this market despite looming fears of recession due to the impact of COVID-19, it did suffer a small decline over the last few days. With other commodities such as corn at multi year lows, it raises concern on the state of the market, with analysts now increasingly skeptical that this rally will last and that another fall is just around the corner.

With US President Donal Trump planning to reopen some states come May 1st, and unemployment set to hit historic highs with some estimates reaching as high as 10%, it presents a huge concern for the global economy and the negative effect that it will have on the welfare of people. As we dive into analysing the price of gold we can see that the green support line is currently helping to prop up the price of gold, it has become increasingly difficult to estimate if the price will continue to fall in line with the blue support line. However the price of gold is significantly impacted by the fear in the market with many using gold as a safe haven asset. With a cure for the virus well under way the price has become a figure of how much damage can be done to the market before it can fully recover. 

Crowdstrike

Crowdstrike has bounced back from the lows it saw back in March, with its core business being focused on AI driven cyber security solutions it offers many similarities to blackberry’s cylance product which offers a similar service. With a goal of reinventing security for the cloud era they seem to be doing very well and continue to make strides in the advancement of their technologies. Through their falcon platform they offer security for a multitude of endpoints (laptops, servers, virtual machines etc..) and provide a subscription based model that spans across a multitude of large security markets.

Crowdstrike is in a great position for long-term benefits towards cloud security but its valuation at the moment might not support buying the stock at this level. Its continued uptrend is all well and good but the real question is whether Crowdstrike will maintain their winning streak and what sort of impact market factors such as COVID-19 will have on them. Corwdtrike currently trades for more than 12 times even the strongest of analysts earnings estimates for 2022. There is no indication that the cloud cyber security lead can maintain its current growth of 30% to achieve these earnings, but it does appear that they have benefited in some capacity with the work from home wave. Their services help with endpoint protection for products such as Google Cloud and Microsoft Azure, and with security breaches becoming easier, a remote workforce will require additional security outside the walls of their business.

Tesla

Tesla continues its upward trend on the market, blasting past lows of $454 two weeks to $754 today. The rest of the market continues its unexpected rally as well, with many companies back to value seen before the COVID-19 crisis a concern arises of the longevity of this gain. Looking deeper into Tesla with its earnings report coming soon we can use interest trend analysis to try to identify if this rally will continue moving forward.

Google trend analysis becomes an additional useful piece of information when analysing companies and with 87% of shoppers beginning their product search online it has become a very useful analytical tool to add to a wider portfolio of analytical tools. 

By looking at the trends of Tesla it’s apparent that there has been a decline in interest for the company, which could very well result in a decline in sales. Analysts are holding out for Tesla’s earning report on 29/4/20 which will announce the financial results for Q1 2020, it is expected that COVID-19 will have had some impact on sales, but it is unknown for sure what that impact will be and the magnitude of it. If the results are significantly out of line from analysts predictions it could cause a significant jump in the share price of Tesla. Looking at each of the current models individually

We can see that there has been a significant decline in interest for each model. Trend analysis has been used previously to estimate sales to some degree of success, where it has been used to estimate earnings before the actual earnings report. This type of analysis is ultimately speculative in nature and should not be used as an all determining measure but rather an aid to additional sources of analysis.

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