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PreMarket Prep Recap: Merger Monday, Tesla Two-Step, Street Fades Netflix Downgrade

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PreMarket Prep Recap: Merger Monday, Tesla Two-Step, Street Fades Netflix Downgrade

It was a busy Monday on the PreMarket Prep Show as investors head into the shortened trading week.

Merger Monday

A few rumored deals came to fruition over the weekend.

Louis Vuitton (OTC: LVMUY) upped the price to for Tiffany & Co. (NYSE: TIF) to $135, a number co-host Dennis Dick mentioned last week as a possibility for the deal to happen.

Charles Schwab's (NASDAQ: SCHW) offer to purchase TD Ameritrade (NASDAQ: AMTD) for $26 billion was finalized. Since the deal won't close until mid-2020, Dennis Dick is looking forward to being active in the arbitrage that will take place between the two companies until the deal is complete.

Finally, Novartis (NYSE: NVS) agreed to purchase Medicines Co. (NASDAQ: MDCO) for $85 per share. The rumored deal attracted buyers in Medicines Co. as it added nearly $10 last week. The stock ended Friday's session at $68.55.

Tesla Two-Step

Tesla Inc. (NASDAQ: TSLA) was rebounding from the shellacking it took on Friday, when the rollout of its Cybertruck didn't go as planned. The catalyst for the rebound was news over the weekend that the company has received 200,000 preorders for the truck.

After shedding $21.70 on Friday (falling from $354.83 to $333.04), the issue was in the green by $15 when it was being discussed on the show. Both co-hosts were very skeptical of the rally for a few reasons.

First of all, investors caught in Friday's cascade would be more than willing to lighten up into the unexpected rally. Also, the preorders only required a refundable $100 deposit, so it's hard to speculate on how many will actually purchase, in the words of Dennis Dick, the "ugly truck" he was considering purchasing until he saw the design.

After a much higher open, Tesla rallied briefly before sharply reversing course. The issue is back under $340.

How Will Netflix React To Wells Fargo Downgrade?

Before the open, Wells Fargo downgraded Netflix (NASDAQ: NFLX) to Underperform, which means "sell" in Wells Fargo tongue. Often on the show, the hosts comment on how a particular issue is reacting to a major ratings change. Although the issue was in the red in pre-market trading, it was well off the pre-market low and grinding higher.

The author of this article noted that the pre-market low ($204.38) coincided with its two prior daily lows and the downside would be limited unless that level was breached in early trading.

After a lower open, it continued lower but found support ahead of that key area at $305.25 and was green by $3 at the time of this article being written.

Sean Emory Joins The Show

Midway through the broadcast Sean Emory, founder and CIO of The Avory Company was our guest. He provided detailed commentary on Square Inc. (NYSE: SQ) and other holdings in his portfolio.

On Tuesday's show, our audience will hear from two different guests.

At 8:15 a.m. EST, Ryan Craver, Retail Expert and Found Of Commerce Canal, will break down the winners and losers from retail earnings season.

At 8:35 a.m. EST, Scott Bauer of the Prosper Trading Academy will provide commentary on the overall market as well as individual issues.

Posted-In: PreMarket PrepLong Ideas M&A Short Ideas Small Cap Analysis Trading Ideas

 

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