Beyond Meat shares continue hot streak, jumping as much as 34% to all-time high

Ethan Brown, founder and chief executive officer of Beyond Meat Inc., second right, looks at a monitor during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, May 2, 2019.

Michael Nagle | Bloomberg | Getty Images

Shares of Beyond Meat continued to move higher Monday morning as the stock continues to exceed expectations following one of the most successful public debuts so far this year.

Beyond shares jumped as much as 34%, hitting $186.43 per share — a fresh all-time high, and well above its initial public offering price of $25 per share.

Since it began trading publicly May 2, the stock has soared more than 560%. It now has a market value of about $10 billion. The stock’s unusual surge has made it the target of short sellers.

Last Thursday, the company said demand for its products drove revenue up 215% to $40.2 million, but it posted a net loss of 14 cents per share on a pro forma basis. It is forecasting full-year revenue of more than $210 million, although analysts believe that the projection is conservative.

The global market for plant-based meat substitutes is expected to reach $22.9 billion by 2023, but more suppliers are planning to enter the market soon, including Big Food players like Nestle and Tyson Foods.

The last time the S&P did this, it rallied 25% to an all-time high

It’s been a wild ride for stocks as trade tantrums and global growth fears have ignited a surge of bearish sentiment around the markets. But a top technician says the charts are signalling new highs could come sooner than investors think.

The Dow, S&P 500 and Nasdaq all notched their best week of the year as the markets digested a higher probability of a Fed rate cut. The S&P 500 shot past a key 2,800 level, testing a technical hurdle Wall Street is watching very closely.

“2,800-2,810 [is] the most important level here from a tactical perspective,” said Stephen Suttmeier, chief equity technical strategist at Bank of America on CNBC’s “Futures Now” on Thursday. “If the trade war doesn’t kill this market it would only make it stronger and what that would mean is that you’d be able to have a base and project the market higher.”

Furthermore, Suttmeier notes the S&P 500 is testing what’s been a historically key level of support at its 40-week moving average.

“[The] same thing happened in 2016, you had Brexit and had a lot of macro risks but the market rallied and was able to hold a 38% retracement and was able to rally off of that [sharply],” he said.

Yet as trade uncertainties still loom, investors are now the most bearish they’ve been since those December lows. However, according to Suttmeier, that could actually mean good news for stocks.

“People are pretty negative on equities here if you look at the AAII bulls-bear ratio — basically, back as bearish as they were in December of last year,” he said. “[But] if investors are this bearish, this gloomy — I mean my guess is we should be able to continue to work our way up here.”

The S&P 500 rallied more than 25% from its low on December 24 to its high on May 1.

Starbucks’ China challenger Luckin Coffee will likely price IPO at high end of range or above

A logo of Luckin Coffee is seen at a store in Beijing.

Wang Zhao | AFP | Getty Images

Luckin Coffee will likely price its initial public offering at the high end of its expected range, or possible above that, a source with knowledge of the deal told CNBC on Thursday.

The company and its advisors are set to begin final pricing discussions shortly, but the source said investors may expect the IPO to price as high as $18 per share. The person said that there’s a possibility that Luckin may upsize the amount of American depository shares sold in this offering.

The Chinese coffee company’s expected range was $15 to $17 per share, according to a regulatory filing last week. Luckin plans to list Friday on the Nasdaq with the ticker “LK.”

In its most recent funding round, the Beijing-based chain was valued at $2.9 billion.

“Not since the dotcom bubble of 1999-00 has a company achieved a $3 billion public valuation less than two years after its launch,” said Kathleen Smith, a principal at Renaissance Capital, which tracks and invests in IPOs.

With 2,370 stores open at the end of the first quarter and plans to add 2,500 this year alone, Luckin is trying to overtake Starbucks as the biggest coffee chain in China. Since it was founded less than two years ago, the company has tried to build a customer base with smaller locations formatted for convenience and offering steep discounts.

In 2018, the chain reported net sales of $125.3 million and a net loss of $241.3 million. To cover its losses and pay for its ambitious expansion plans, Luckin has raised $550 million so far, according to Crunchbase.

“As a result, the key controversy is whether Luckin can generate sales in the absence of discounts,” Bernstein analyst Sara Senatore wrote in a research note last week.

China is one of Starbucks’ long-term growth markets, along with the U.S. The global coffee giant, which is celebrating its 20th year in China, wants customers to treat its stores as a third place — the spot aside from home and work where consumers hang out and relax. The Seattle-based company has tried to meet Chinese customers’ eagerness for convenience by partnering with Alibaba to deliver its drinks.

Starbucks saw transactions at stores in China open at least a year fall 1% during its second quarter, meaning that traffic was declining. But customers were spending more, leading to same-store sales growth of 3%.

Starbucks’ stock, which has a market value of $95.8 billion, is up 22% so far this year.

CEO Kevin Johnson has said the company’s rivals in China are focused on short-term gains, while Starbucks is using a long-term strategy.

“Some of those competitors are competing through heavy, heavy discounts that we don’t believe are sustainable,” Johnson said recently on CNBC’s “Squawk on the Street. “

Luckin’s debut will not only depend on how investors view its ability to compete with Starbucks, but also current market conditions. Recent escalations in the trade war between China and the U.S. have led to market volatility as investors brace for a new round of tariffs.

So far this year, 54 companies have raised $20 billion in the U.S. IPO market, with Uber’s debut responsible for about 40% of that number, according to Renaissance Capital data. Uber and rival ride-hailing giant Lyft have struggled since their debuts, but the rest of this year’s newly public companies are doing well. Of the year’s IPOs, 63% are trading above their IPO price, Smith said.

Main Street on a high as US economic expansion rolls on: CNBC

Small business confidence ticked up and remains at a high level, according to the latest CNBC|SurveyMonkey Small Business Survey for the second quarter. The CNBC|Survey Monkey Small Business Confidence Index reading of 59 (up from 58 in the first quarter 2019) indicates that small business owners are optimistic about the direction of their business over the next 12 months.

“Businesses are feeling pretty good, the economy is doing well, and confidence is still at high levels,” said Todd McCracken, president and CEO of the National Small Business Association.

Two key survey questions showed the most confidence since Q3 2018. Fifty-six percent of small business owners describe business conditions as good, while 60% say they expect revenue to increase in the next year. The percentage of small business owners who expect revenue to decrease (6%) is at its lowest level since Q1 2018. The percentage of owners who describe business conditions as bad (5%) also was a low in the survey’s history.

The largest businesses (those with 50 or more employees) are particularly optimistic, with 77% describing business conditions as good and only 1% saying conditions are bad.

Small business owner confidence

The Small Business Confidence Index reading of 59 is three points lower than its all-time high of 62, which was recorded in both Q1 2018 and Q3 2018. The CNBC|SurveyMonkey Small Business Survey for Q2 included responses from 2,100 small business owners across the country collected between April 15 and April 22.

Tax cuts, job market keep confidence off record

The stock market has been riding high for most of 2019 — the survey was conducted before the latest trade war headlines sent stocks into a tailspin this week. The Fed is signaling that conditions in the economy remain strong, but it has no current plans to raise rates, which could dampen enthusiasm. Still, small business confidence has not yet hit its 2018 record level.

The waning benefits from the 2017 tax cuts and competition for workers are likely factors weighing on the business outlook.

“Most small companies know they are temporary, and some are already getting close to beginning to phase out,” McCracken said. “With a divided power in Washington, businesses know that not much is going to happen to change that. Congress has to take proactive action to make sure those tax cuts stay in place beyond the next two to three years.”

The percentage of small business owners who said tax policy will be a positive for their business over the next 12 months fell to 28%, the lowest level in the history of the survey. Business owners saying tax policy will be a negative for their business over the next 12 months rose from 29% to 35% in Q2. Thirty-nine percent of small business owners expect no impact from tax policy.

He said the labor market is an inevitable by-product of the strong economy. “This is the nature of a strong economy — when you are at full employment, this is what happens.”

The majority of small businesses do not expect to either increase or decrease full-time staff (63%), a number that has moved between a low of 59% in Q3 of last year, and a high of 64% last quarter.

The labor market can have the biggest influence on the smallest businesses.

“The unique problems businesses face are greater. Large companies have more ability to survey the marketplace and find people, but small businesses have an information gap in terms of finding employees and employees finding them, McCracken said. “A lot of small companies have to train their workers which is a big investment. If they leave in a year or six months, businesses don’t get that repaid.”

Sixty-five percent of businesses of 50 or more employees say they expect to increase staff in the next year, versus only 19% of firms with four or fewer employees. The biggest gap exists between the smallest and largest small businesses. Among business with five to nine employees, 46% expect to increase staff; 44% of business with between 10 and 49 employees expect to add staff.

The CNBC|SurveyMonkey Small Business Survey for Q2 was conducted across 2,100 small business owners between April 15 and April 22. The survey is conducted quarterly using SurveyMonkey‘s online platform and based on its survey methodology.

Nvidia, Micron, AMD lag as chip stocks hit all-time high

Call it the semi struggle.

While the chips have rallied to an all-time high, with the VanEck Vectors Semiconductor ETF notching a record of $120.71 a share on Tuesday, some of the group’s best-known names have been left in the dust.

Nvidia, Micron, Applied Materials and Advanced Micro Devices are far off their 52-week highs, with Nvidia down about 34% from its peak last October.

The conflicting action comes as investors, and companies themselves, question how long the typically boom-and-bust cycle of the semiconductor business can last — and whether it will stay boom-bust over the long term as more and more companies use semiconductors in their products.

As earnings season heats up, some investors have their eyes on the estimates for companies in the iShares PHLX Semiconductor ETF, which include the likes of Qualcomm and Nvidia. The PHLX hit a fresh high on Wednesday, ending the day more than 1% higher at $1,596. The estimates are forecasting a peak in forward valuation for the group, meaning this round of earnings could be where the space tops out.

“Companies and investors continue to debate whether the semiconductor cycle is turning higher. Buyers of the group up here better hope so, given peak forward valuation,” CNBC markets commentator Mike Santoli said in a tweet.

But some market watchers aren’t getting bearish just yet. Matt Maley, managing director and equity strategist at Miller Tabak, said that while the semiconductor rally is “starting to get a little bit extended,” there’s still time to turn a profit.

“This rally’s been a fabulous one, and it shows that the tech rally in general has been much broader than it was the last time we came out of a correction when the FANG stocks were the only ones really taking us higher. So that’s positive,” he said Wednesday on CNBC’s “Trading Nation.” “But, you know, we have some negative news: Texas Instruments talking about weakening demand or soft demand; J.P. Morgan and Morgan Stanley [saying] things about DRAM pricing that are cautious.”

But with chip stocks more than 50% higher since their December lows, their strong momentum should be taken into account, Maley said.

“You look at the [Relative Strength Index] chart on the [PHLX Semiconductor Sector Index], and it’s getting to levels where it’s usually followed by a pullback,” he said. “So I’m just starting to think that it’s had this great run. Pullbacks … are normal and healthy, and therefore I’d want to be a buyer on weakness rather than … chase them way up at these levels.”

Joule Financial Managing Director Quint Tatro had a more specific pick in mind.

“Normally, I do not take that type of trade. I stay far away from laggards,” he admitted. “But, in this case, we believe that money is going to chase things that have not yet run but are still attractively valued.”

And, out of the semiconductor stocks still lagging the index, Micron was the one Tatro liked most.

“Last year was an anomaly with their incredible [earnings per share],” he said. “But if you look at 2017 versus 2019, that’s still about a 34% jump in EPS, and the stock is trading 7 times those forward earnings. That’s about a $30 per share book value. … Ultimately, we believe that this stock is not even close to being bought up to where it is and is going to produce some pretty good returns. So, we see money probably rotating out of the hot stocks and into a stock like Micron. We own it. We’d still be a buyer here.”

Disclosure: Joule Financial has a position in Micron.

Transports heading to new high once they top one level, analyst says

Transportation stocks are on a roll.

The Dow Jones Transportation Average — composed of 20 airline, rail and trucking stocks — has gained nearly 20% this year, outpacing the broader market’s roughly 16% rise.

The index advanced about 1% on Wednesday, pushed higher by strong earnings from companies like Kansas City Southern, CSX, and United Continental, and is within 5% of its all-time high.

According to MKM Partners’ JC O’Hara there’s no sign of a slowdown for the group. After looking at the charts, O’Hara said the index might soon soar to new highs.

“I think the risk/reward setup right here is very favorable,” he said Wednesday on CNBC’s “Trading Nation.” “If we look at the Dow Jones Industrial Transport index, you know we’ve seen over the last few months that this pattern has been a bullish accumulation pattern taking the shape of an inverse head and shoulders and we’re actually breaking out of that pattern today,” he said.

During Wednesday’s trading session the index was hovering around 10,935. O’Hara believes the key level to watch is 11,000, since once the index can break above that mark “there’s really not much to stop [it] from running to the 2018 highs.”

The index is currently about 6% below its September 2018 all-time intraday high of 11,002.39.

The transports index is widely followed by the Street because some view it as a barometer for the overall health of the economy. It is also one part of the “Dow Theory,” which is the idea that if either the industrial average or the transportation average moves above a previous high, the other is likely to follow.

Like O’Hara, Chantico Global’s Gina Sanchez believes the group as a whole looks healthy, particularly on a valuation basis. However, she does believe that given the rapid rise this year, the index might soon take a slight breather.

“Remember the transports are coming off of 20-year high volumes in 2018, so they’re going to naturally slow. … The ride isn’t going to be quite as solid as the S&P on average, but it would still be very, very good. They’re expected to grow at an earnings rate at about 10% growth for the rest of the year, so that’s still pretty good,” she concluded.

CSX hit an all-time high on Wednesday, while Kansas City Southern hit a 52-week high.

— CNBC’s Elizabeth Gurdus contributed reporting.

Inflation worries in India amid high oil prices, monsoon fears, easing

“The longer-term concern is that the RBI’s independence is being eroded,” the research firm warned, saying that. “Any perception that policy is being kept loose for the benefit of the government could reverse the success the central bank has had in reining in price pressures over the past five years, and lead to a permanent rise in both inflation expectations and actual inflation over the medium term.”

India has managed to bring down its price pressures rather significantly in the last few years. According to data from the World Bank, CPI rose by 3.328 percent in 2017, compared to an increase of 10.908 percent in 2013.

“I view two RBI policy rate cuts this year being premature, non-proactive moves. Indeed, growth is slowing. But not to the extent of warranting an aggressive move,” said ING’s Sakpal.

There’s “nothing the RBI policy can do” about supply-side influences on inflation, such as monsoon season and oil prices driving food and fuel prices, he said. Rather, the central bank should use higher rates to adjust future consumer demand for food and fuel.

“Monetary policy is more effective in influencing the demand and it could have been proactively guided toward pre-empting future demand-pull price pressure. Not fueling it by cutting the interest rates,” Sakpal said.

Biswas of IHS Markit, however, said inflation numbers are currently still well within the central bank’s target range. But with core inflation already past 5 percent and the headline CPI expected to inch up, he said it signals the RBI “is unlikely to have scope” for further rate cuts in the near term.

The stock market is poised to overtake its record high set back in September

Over the past six months, the stock market has gone from inconsolable to imperturbable.

From October through December, every upbeat fundamental trend or would-be positive catalyst was ignored or mocked by a seller-dominated market that dropped just about 20 percent from high to low over three months.

Third-quarter earnings up 20 percent? Cute, but old news, the market answered. Corporate buyback window re-opens in November? Not a factor, they’ll have to buy them lower. Mid-term elections “always” followed by gains? Not this time. December “never” the worst month of a year? Just watch.

The market simply had to go lower, and lower still, to exhaust the determined liquidation and price in the end-of-cycle anxieties before any bullish inputs found traction.

Flash to this year, when it’s the cautious or ominous headlines and signals that are being shrugged off.

Dramatic market lows after a bad correction are usually “retested” within several weeks, you say? Nope, the S&P 500 is up 23 percent in three-and-a-half months with little more than a 3 percent pullback along the way. Earnings forecasts have been slashed by the most in years, and are now posing 4 percent drop for the first quarter? Stocks are apparently looking ahead, and the more-stable-earning sectors have led the upside. Global growth is near stall speed? Sure, but look at those dovish central banks and the “green shoots” in China.

Does this mean the market simply has to go higher, and higher, in order for the downbeat factors to challenge the rally, in a mirror image of last year?

Could well be the case. The S&P 500 is less than a 1.5-percent chip shot from matching its record high set in September, so it would be perverse if the bulls didn’t make a closer run at it before too long.

To state what should be obvious: Markets that ignore bad news and turn stubborn investor caution into the best start to a year in 21 years, as this one has, are strong and should get the benefit of the doubt unless and until a routine pullback proves something more than that.

After all, the S&P is simply at levels it first reached some 15 months ago in the furious, giddy rally following the big 2017 corporate tax cut — and markets that reclaim a new high after more than a year going sideways in a jagged range can be said to have formed some kind of base, as happened from 2015-2016.

Credit conditions are steady, Treasury yields are helpfully off their lows — all consistent with equities remaining well-supported.

The stock market likes nothing better than a Federal Reserve that’s more dovish than domestic economic conditions seem to warrant, which is what we seem to have, based on the way the U.S. job market has remained strong and the first-quarter stutter-step in GDP growth could turn out quite modest.

But given the firmer data, how much incremental dovishness can be expected, White House calls for a half-percent rate cut notwithstanding?

Jim O’Neill says his fears over China are at a 30-year high

The renowned economist who coined the acronym BRICS told CNBC that he’s started to worry about some parts of the Chinese economy after several decades of stellar growth.

Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Jim O’Neill said that China has become an integral part of the global economy, and any slump would have the potential to drag other major economies lower.

“I have to say, for the past year, for the first time in 30 years I have been a bit more troubled about some aspects of China’s path than I have been before,” the former Goldman Sachs Asset Management chairman told CNBC’s Steve Sedgwick on Thursday.

The world’s second-largest economy grew 6.6 percent in 2018 — the slowest pace since 1990. Recent consumer data has also spooked market watchers. Retail sales growth in 2018 declined to 6.9 percent year-on-year, from a 9.1 percent increase the year before. There’s also been plummeting auto sales, fears over household debt, and firms like Apple warning about falling demand in the country of 1.4 billion.

Levi Strauss IPO seeing high demand, more than 10 times oversubscribed: Sources

In this photo illustration Levi's 501 blue jeans by U.S. clothing manufacturer Levi Strauss are seen on March 8, 2018 in Berlin, Germany.

Sean Gallup | Getty Images

In this photo illustration Levi’s 501 blue jeans by U.S. clothing manufacturer Levi Strauss are seen on March 8, 2018 in Berlin, Germany.

Blue jeans giant Levi Strauss & Co.’s Thursday initial public offering is more than 10 times oversubscribed, three sources familiar tell CNBC.

The world’s largest jeans seller is expected to list nearly 37 million shares on the New York Stock Exchange at a price between $14 and $16 under the symbol LEVI.

The sources said it was likely to price above that range, but the situation is still fluid and dependent on market conditions.

Members of the Haas family will sell more than 21 million shares in the IPO. At $15 a share, the midpoint of the expected range, the value of the family’s collective proceeds would be nearly $317 million.

The 166-year-old company first went public in 1971, but has been private for the last 34 years. Levi declined to comment on the offering demand.

Over the last 10 years, global jeans sales have climbed at a 3.5 percent compounded annual growth rate, slower than the entire apparel category, according to Bernstein analyst Jamie Merriman.

The newly public company hopes to improve market share with women, on the internet and in China. Its men’s business accounted for $4 billion of Levi’s $5.6 billion 2018 revenue, while just 3 percent of its revenue came from China.

— With reporting by
Courtney Reagan