3 Stocks Making Headlines: Opportunity or Obstacle?
News events, whether conveyed via social media or mainstream outlets, continually sway the stock market. Both positive and negative reports play a role in this influence. Investors must navigate these waters with caution. This has led to the rise of stocks in the news.
Investors are tasked with assessing the risks and rewards of various stocks, guided by the most recent data and trends. However, it’s crucial not to become overly engrossed in these news-driven narratives. Balance and perspective are key.
In the forthcoming article, we’ll delve into three specific stocks currently in the news. Each has been making headlines, either for commendable achievements or less favorable reasons.
Arm Holdings (ARM)
Arm Holdings (NASDAQ:ARM) has dominated headlines over the past week due to investors and market-watchers alike anticipating the semiconductor company’s U.S. initial public offering. Softbank, the Japanese investing giant, purchased Arm for $32 billion back in 2016.
Desiring to cash out on its long-term investment, the Japanese investor sought to sell Arm to Nvidia (NASDAQ:NVDA) in 2022, but under increasing scrutiny by regulators, the deal eventually collapsed. Nonetheless, Arm’s blockbuster IPO has marked a return to form for both Softbank, whose flagship Vision Fund has been struggling recently to perform, and the United States IPO market in general. Shares skyrocketed around 25% on the company’s trading debut and have the possibility to go even higher.
The case for a long-term bet on Arm is the following. The semiconductor company already holds the intellectual property that underpins the software and architecture used to develop systems-on-a-chip (SoCs) for smartphones, tablets, and Internet of Things (IoT) devices. Moreover, Arm’s management team hopes to successfully reorient the company to play a critical role in AI chip technology. The chip designer has already helped to develop Nvidia’s Grace Hopper Superchip, which combines Arm’s Neoverse processor cores with Nvidia’s H100 Tensor Core GPU to achieve record performance levels.
The chip designer’s core architecture and partnership with a plethora of large technology firms spell positive news for its future, making an investment in the company’s shares a clear opportunity. This makes it one of those stocks in the news to pay attention to.
General Motors (GM)
In contrast, General Motors (NYSE:GM), one of the largest and oldest automakers in the world, has made headlines for less pleasant reasons. The automaker, which employs more than 167,000 people, is undergoing tough negotiations with the United Auto Workers union, who are demanding higher wages amidst a tough economic environment. Last Friday, once negotiations failed to materialize meaningful solutions, nearly 13,000 unionized autoworkers from GM, Chrysler, and Ford (NYSE:F) went on strike. GM and its Detroit-based competitors have invested heavily in electric vehicles, but if the strike continues onward, they could lose out on the EV race.
General Motors, in particular, has been one of the most aggressive players in the electric vehicle space, aiming to sell more than 1 million EVs annually by 2025 and achieve an all-electric portfolio by 2035. The legacy automaker has increased its exposure to battery development boasting its own battery platform called Ultium, which can power a variety of EV models with different sizes, shapes, and performance levels. However, there are fears that if GM gives into the union and offers substantial wage increases, the automaker could lose its competitiveness to pure-play electric vehicle companies such as Tesla (NASDAQ:TSLA).
The Biden Administration having sided with union workers ultimately gives a lesser likelihood to an outcome that benefits GM. Stock market investors looking to benefit from the burgeoning EV market should definitely exercise caution here. All in all, it’s one of those stocks in the news to keep an eye on.
VinFast (VFS)
Once obscure to Western observers, the Vietnamese carmaker VinFast (NASDAQ:VFS) catapulted into U.S. news headlines after its NYSE debut saw shares eclipse the value of legacy automakers, such as Ford and General Motors.
VinFast was originally formed as a unit of Vietnam’s largest conglomerate Vingroup. However, it is not particularly clear how VinFast will be able to compete in a market crowded with well-established, formidable players. I also must emphasize, that VinFast has yet to capture a significant market share in Vietnam. If you glanced at a list of popular cars, by number of sales, in Vietnam in 2022, you would see a number of well-known Japanese and Korean brands, suggesting VinFast has a long way to go in terms of meaningful market penetration even in its home market. Thus, successfully selling in the U.S. and E.U. markets will likely be a timely, arduous task.
There also are not a lot of positive aspects regarding VinFast’s financials. The Vietnamese automaker’s first-quarter revenue dropped 49% from the previous year, and it posted a net loss of $598 million. In 2022, the company posted a loss of $2.1 billion. Though, it has started construction on a $4 billion plant in North Carolina, early reviews of the automaker’s flagship VF8 SUV have not been positive. With shares trading around $17.53 a share, significantly below their $82.35 high, it’s hard to have a positive outlook on VinFast, especially as the automaker maintains relatively sluggish growth.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
