Brian's Big Idea: Buy and Hold

Donald Trump's decisive victory in the 2024 presidential election has quickly reshaped market expectations across multiple sectors. The triumph particularly resonated with Elon Musk, whose early endorsement and platform support proved instrumental in Trump's campaign success.

As CEO of Tesla and X, Musk's influence reaches far beyond tech - but it's his space venture that's catching Wall Street's attention. While traditional aerospace stocks nudged higher post-election, a relatively obscure ETF called Destiny Tech100 shot up 37% in a single day after the votes rolled in, and has now more than doubled in the past week.

The catalyst? DXYZ holds the largest accessible stake in SpaceX, Musk's private space exploration company, reportedly valued around $200 billion. Trump's pro-space stance and SpaceX's expanding ambitions - from Mars missions to Starlink's global deployment - has created a remarkable post-election scenario for this typically under-the-radar exchange-traded fund (ETF), which also offers exposure to an elite handful of other privately held market movers (OpenAI, anyone?).

So, while direct investment in Elon Musk's aerospace giant remains out of reach for most retail investors, through DXYZ, Main Street now has a ticket to what was once an exclusive billionaire's club. Here's a look under the hood.

DXYZ’s Recent Performance

DXYZ has demonstrated remarkable momentum after Trump's election win, and the shares have now more than tripled in value over the last month. This dramatic uptick coincided with heightened trading activity, as daily volume skyrocketed from an average of around 275,400 shares to a new record high of 20.2 million in Monday's session.

Behind this stellar performance lies a perfect storm of catalysts. Trump's electoral momentum has reignited enthusiasm in the space sector, reminiscent of his previous administration's pro-space policies. This political tailwind, coupled with SpaceX's operational excellence in completing its 100th launch of 2024, has amplified market interest in space-related securities.

What makes this surge particularly significant is the broader context of the U.S. space economy's robust growth, which has outpaced general economic expansion by contributing $131.8 billion to GDP. As DXYZ maintains its position as one of the few vehicles offering exposure to private space ventures - but most notably SpaceX, a top NASA contractor - its recent performance underscores the market's appetite for space technology investments.

Investment Structure and Portfolio Exposure

DXYZ stands out as a pioneering closed-end fund, currently managing a concentrated portfolio of 22 elite private technology companies, with SpaceX commanding the largest position at 37.6% of holdings. The fund's structure enables direct exposure to previously inaccessible private market leaders, including OpenAI at 3.5% and Axiom Space at 9.1% of the portfolio, and also features well-known names like Stripe, Discord, and Klarna.

The fund's approach is notably flexible, participating in both primary funding rounds and secondary market purchases to secure optimal entry points. This dual-track strategy has proven effective in building positions in companies like Revolut (4.7%) and Epic Games (4.5%), while maintaining a clear focus on established private enterprises valued above $750 million.

Management fees are set at 2.5% annually, positioning DXYZ competitively against traditional private market vehicles that often charge "2 and 20" or even "3 and 30" fee structures. The fund's transparent pricing and daily liquidity on the NYSE differentiate it from typical private investment options, which frequently require substantial minimum investments and lengthy lock-up periods.

The portfolio construction targets an eventual expansion to 100 companies, focusing on two key segments: established tech giants valued above $10 billion and emerging leaders in the $750 million to $10 billion range. This balanced approach aims to capture both stability and growth potential while maintaining strict investment criteria - companies must have raised over $50 million from reputable institutional backers and demonstrate solid financial health.

Trading with a market capitalization of $461 million, DXYZ has established itself as a unique gateway to pre-IPO/ private market opportunities. The fund's structure allows positions to be maintained even after portfolio companies go public, with proceeds either reinvested or distributed as dividends to shareholders.

Political Momentum Fuels Space Sector Growth

The space industry is hitting its stride, and the timing couldn't be better. SpaceX just nailed its 100th launch of 2024, and successfully used its mechanical “chopsticks” to catch a Starship booster - a major feat in the aerospace industry. Meanwhile OpenAI shook things up with massive cloud partnerships worth $12.5 billion in Q4. This isn't just coincidence; we're seeing a perfect storm of space tech and AI coming together at exactly the right moment.

Trump's return to the White House has lit a fire under these growth-fueled industries. His previous administration's pro-business stance and the potential loosening of FAA regulations for rocket launches have sparked renewed interest. SpaceX stands ready to capitalize, especially with Starlink's expanding satellite network and rural internet ambitions aligning perfectly with potential policy shifts.

What's particularly exciting is how these pieces fit together. The commercial space race has intensified, particularly in low Earth orbit, where reduced launch costs and technological advances are creating new opportunities. Musk's suggestion for a new government efficiency position could be the catalyst needed to merge AI capabilities with space operations more effectively.

Looking ahead, we're not just seeing growth - we're watching a transformation. The blend of policy support, technological breakthroughs, and strategic partnerships between tech giants and space companies is creating something entirely new. It's not just about sending rockets up anymore; it's about building an entirely new economic frontier.

Conclusion

The stars are aligning for space technology investments, quite literally. With DXYZ shares soaring to new heights on its unique exposure to SpaceX, this ETF offers a chance to invest in tomorrow's

“unicorn” economy. Trump's expected policies, combined with SpaceX's record-breaking launch streak and the emerging fusion of AI with space technology, creates a solid opportunity for investors seeking to capitalize on growth opportunities beyond the stratosphere.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Drifting toward 52-week highs in recent weeks, Shopify SHOP shares soared another +20% on Tuesday after reporting strong Q3 results this morning.

With SHOP sitting on nearly +40% gains for the year, let’s review Shopify’s Q3 report and see if it's still time to buy stock in the internet-commerce platform provider.

Shopify’s Q3 Results

Stating its unified commerce platform is becoming the go to choice for merchants of all sizes, Shopify highlighted a sixth consecutive quarter of 25% revenue growth or greater. Third quarter sales stretched 26% to $2.15 billion versus $1.71 billion in the comparative quarter. This topped Q3 sales estimates of $2.1 billion by 2%.

Shopify was able to turn a higher profit with net income spiking to $828 million compared to $718 million in Q3 2024 (GAAP). SHOP produced adjusted earnings of $0.36 per share which surpassed the Zacks EPS Consensus of $0.27 by 33% and was nicely up from $0.24 a share in the prior period.

More reassuring is that Shopify has surpassed top and bottom line expectations for nine consecutive quarters, posting an average sales and earnings surprise of 2.41% and 24.5% in its last four quarterly reports respectively.

Holiday Season Optimism

Shopify attributed its stronger than expected financial results to a growing number of major retailers that are using its online software platform for commerce. This includes the likes of Reebok, Lions Gate Entertainment LGF.A, Vera Bradley VRA, and HanesBrands HBI among others.

Serving as a further catalyst to the post-earnings rally was Shopify’s optimism for the holiday shopping season. For Q4, Shopify expects revenue growth in the mid-to high twenties percentage point range which is aimed above the current Zacks Consensus of roughly 23% growth or $2.11 billion (Current Qtr below).

Based on Zacks estimates, Shopify’s total sales are expected to increase 22% in fiscal 2024 and are projected to expand another 19% in FY25 to $10.32 billion.

EPS Growth & Revisions

Shopify is currently expected to post 51% EPS growth in FY24 with projections at $1.12 versus earnings of $0.74 a share last year. Plus, FY25 EPS is projected to increase another 18% to $1.33. Notably, FY24 earnings estimate revisions have remained unchanged over the last 30 days while FY25 EPS estimates are slightly up.

Bottom Line

Reconfirming its appealing growth trajectory, Shopify’s stock sports a Zacks Rank #2 (Buy). Amid a very sharp post-earnings rally, it would be no surprise if SHOP keeps moving higher. To that point, earnings estimate revisions are likely to rise for Shopify in the coming weeks in correlation with the company’s strong Q3 results and upbeat guidance.

Zacks Investment Research

The S&P 500 Index Tuesday closed down -0.29%, the Dow Jones Industrials Index closed down -0.86%, and the Nasdaq 100 Index closed down -0.17%.

Stock indexes settled moderately lower on Tuesday as they consolidated the past week’s rally to record highs. Higher bond yields Tuesday fueled some profit-taking pressures in stocks following five straight sessions of gains. Also, long liquidation in stocks ahead of Wednesday's US consumer price report weighed on the overall market.

Stocks have rallied sharply over the past week, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new record highs on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.

Positive Fed comments on Tuesday were bullish for stocks. Richmond Fed President Barkin said the US economy looks "pretty good," and the Fed is in a position to respond however the economy evolves. Also, Minneapolis Fed President Kashkari said only inflation could derail a Fed rate cut in December, and "if we saw inflation surprises to the upside between now and then, that might give us pause."

The markets are looking ahead to Wednesday’s US consumer price report for October, with Oct CPI expected to climb to +2.6% y/y, up from +2.4% y/y in Sep, and core Oct CPI expected to remain unchanged from Sep at +3.3% y/y. Also, Friday’s report on retail sales will be looked at to see if consumer spending is holding up. Oct retail sales are expected to be up +0.3% m/m, and Oct retail sales ex-autos are also expected to be up +0.3% m/m.

Of the 85% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average. According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.4% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 62% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets Tuesday settled lower. The Euro Stoxx 50 tumbled to a 2-month low and closed down -2.25%. China's Shanghai Composite Index closed down -1.39%. Japan's Nikkei Stock 225 closed down -0.40%.

Interest Rates

December 10-year T-notes (ZNZ24) Tuesday closed down by -15.5 ticks. The 10-year T-note yield rose +13.1 bp to 4.435%. T-notes were under pressure Tuesday from carryover weakness in European government bonds. Also, upbeat comments Tuesday from Richmond Fed President Barkin curbed safe-haven demand for T-notes when he said the US economy looks "pretty good." In addition, concerns about inflationary pressures of future policies from President-elect Trump are weighing on T-notes.

European government bond yields Tuesday moved higher. The 10-year German bund yield rebounded from a 1-1/2 week low of 2.299% and finished up +3.6 bp to 2.362%. The 10-year UK gilt yield rose +7.4 bp to 4.499%.

The German Nov ZEW survey expectations of economic growth unexpectedly fell -3.7 to 7.4 versus expectations of an increase to 13.2.

ECB Governing Council member Rehn said disinflation in the Eurozone is "well on track," and the growth outlook "seems to be weakening," and "that strengthens the case for an ECB rate cut in December."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 23% for a -50 bp rate cut at the same meeting.

US Stock Movers

Mosaic closed down more than -7% to lead losers in the S&P 500 after reporting Q3 net sales of $2.8 billion, weaker than the consensus of $3.14 billion.

GE Vernova closed down more than -7% after the Financial Times reported that CEO Strazik said the company plans to postpone searching for new offshore turbine orders until market conditions improve.

Home builders retreated Tuesday after the 10-year T-note yield jumped more than +13 bp, which boosts mortgage rates and is negative for housing demand. As a result, PulteGroup , Lennar , DR Horton , and Toll Brothers closed down more than -3%.

Elevance Health closed down more than -2% after the CFO said he sees pressure in Medicaid persisting in 2025 and sees Medicare Advantage margins missing their 2025 targets.

Neurogene closed down more than -43% after a disclosure indicated an emerging serious adverse event in a trial participant for the experimental Rett syndrome drug.

Alnylam Pharmaceuticals closed down more than -3% after Wolfe Research downgraded the stock to underperform from peer perform with a price target of $205.

Knight-Swift Transportation Holdings closed down more than -4% after Citigroup downgraded the stock to sell from neutral with a price target of $56.

Airbnb closed down more than -2% after Phillip Securities downgraded the stock to reduce from neutral with a price target of $120.

Tyson Foods closed up more than +6% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of 92 cents, stronger than the consensus of 72 cents.

Honeywell International closed up more than +3% to lead gainers in the Dow Jones Industrials and Nasdaq 100 after Elliot Investment Management said it built a $5 billion stake in the company and is calling for a breakup of the company.

Live Nation Entertainment closed up more than +4% after reporting Q3 adjusted operating income of $909.8 million, stronger than the consensus of $856.6 million.

Nvidia closed up more than +2% after Redburn initiated coverage on the stock with a buy recommendation and a price target of $178.

Shopify closed up more than +21% after reporting Q3 revenue of $2.16 billion, better than the consensus of $2.12 billion.

Twilio closed up more than +2% after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $120.

Molson Coors Beverage closed up more than +2% after JPMorgan Chase said the latest data showed improving trends for the company as the latest 4-week trend to November 2 saw dollar takeaway down -1.9%, an improvement of 200 bp over the prior 4-week period.

Earnings Reports (11/13/2024)

Cisco Systems Inc (CSCO), Loar Holdings Inc (LOAR), NU Holdings Ltd/Cayman Islands (NU), Tetra Tech Inc (TTEK).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

While the final House votes are still being tallied, the latest projections indicate that Republicans are set to take control of the lower chamber of Congress alongside the Senate, clearing the path a full GOP sweep of the executive and legislative branches. Investors have been quick to cheer an expected pro-business agenda from President-elect Trump, which is broadly anticipated to feature investments in domestic manufacturing and infrastructure, widespread deregulation, and fresh tax incentives. Additionally, shifts in environmental policies could affect the renewable energy and waste management industries.

Against this backdrop, analysts at Oppenheimer have highlighted three stocks that could benefit from anticipated policy changes under the incoming “Red Wave” in Washington, D.C.: Caterpillar , a leader in heavy equipment manufacturing expected to benefit from infrastructure spending and reshoring trends; Tesla , the domestic electric vehicle (EV) leader whose CEO Elon Musk is a close ally of Trump's; and Republic Services , a top player in waste management and recycling that could see a boost for its landfill biogas initiatives. Here's a closer look at all three.

#1. Tesla

Tesla has already experienced a meteoric rise following Donald Trump's election win. The stock has surged 32% in the past week, reaching a 52-week high above $358 in the process and reclaiming a $1 trillion market cap. TSLA is now up 33.8% on a YTD basis after spending most of 2024 in the red, although the shares remain down about 15% from their 2021 highs.

The Toronto Stock Exchange closed at a record high on Tuesday, pushed up as investors continue to add risk following the U.S. elections while Shopify rose 21% following its third-quarter earnings release.

The S&P/TSX Composite Index closed up 133.73 points to 24,923.01, topping the prior high of 24,845,93 on Nov.7. Information Technology, up 6.38%, was the day's biggest gainer following Shopify's results, while Base and Battery Metals, down 2.3%, were the biggest decliners.

Shopify closed up $26.89 to $152.26, its highest since January, 2022. National Bank Financial reiterated its outperform rating on the shares while boosting its price target to US$140.00 from US$100.00.

"Shopify reported strong FQ3 results. While revenue was essentially in line - profitability was firmly ahead of expectations. Importantly, that profitability was confirmation of the company's narrative this past year towards (increased) capital discipline which began less than a year ago at the company's investor day when it laid out a number of initiatives in that effort. The FQ3 results (and outlook) confirmed that narrative," the investment bank wrote.

West Texas Intermediate (WTI) crude oil closed with a minor gain on Tuesday, rebounding from two losing sessions that pushed prices 6% lower, even after OPEC again lowered its demand forecast for this year and next.

WTI crude for December delivery closed up US$0.08 to settle at US$68.12 per barrel, while January Brent crude, the global benchmark, closed up US$0.06 to US$71.89.

Gold traded late afternoon on Tuesday as the dollar and treasury yields continued their post-election advance. Gold for December delivery was last seen down US$10.60 to US$2,607.10 per ounce.

Scotiabank today noted new data that confirms most Canadian households are "holding up," albeit "not all." For the first time since 2019, the bank said, Canada provided a more granular look at the financial health of households with the release of the 2023 Survey of Financial Security. Scotia added it corroborates its earlier effort to piece together such a picture using more timely but aggregated data.

According to Scotia, "the picture is remarkable". It noted the median net worth of all households jumped by over a third, to $520,000, in 2023 relative to its pre-pandemic, inflation-adjusted level. The imputed annual pace of wealth accumulation at 8% was twice the average of the previous two decades. And, it also noted, survey data would already reflect house price corrections that occurred mostly in 2022.

But, Scotia said, there are new cracks emerging. It noted private pension assets largely flatlined for the first time ever with a serious contraction in employee-sponsored pension assets, masked by otherwise exceptional financial asset gains. It also noted lifetime renters also continue to confront compounding vulnerabilities, though the statistical agency notes more young households are amassing wealth outside home ownership.

"Sentiment remains weak and these data points are not going to tip the balance. Nor are they likely to repeat given exceptional pandemic related drivers behind the broad based gains," Scotia said, before adding, "Policymakers should double-down on fixing the cracks — not plastering the walls — while reinforcing the foundational drivers of sustainable wealth creation."