1 Stock To Buy, 1 To Dump When Markets Open: CrowdStrike, Pinduoduo
Stocks on Wall Street rose on Friday, with the S&P 500 closing at another new record after the latest jobs report boosted optimism over the U.S. economic recovery.
The holiday-shortened week ahead—which will see U.S. stock markets closed on Monday for the Independence Day holiday—is expected to be a quiet one on Wall Street, with little data and subdued pre-earnings season trading.
No matter which direction the market may take, below we highlight one stock likely to be in demand and another which could see further downside.
Remember though, our timeframe is just for the upcoming week.
Stock To Buy: CrowdStrike
One of the largest and most sophisticated ransomware attacks in history continued to spread over the weekend, hitting thousands of businesses across the globe.
That could result in more positive action for cloud-based cybersecurity firm Crowdstrike Holdings (NASDAQ:CRWD), whose technology is used to detect and prevent security breaches.
The ransomware gang known as ‘REvil’ is suspected of hijacking widely used desktop management software provided by Miami, Florida-based tech supplier Kaseya. The impacted businesses had files encrypted and were left electronic messages asking for ransom payments of thousands or millions of dollars.
In a statement late on Saturday, the FBI said it was investigating the ransomware attack in coordination with the U.S. Cybersecurity and Infrastructure Security Agency.
CRWD stock—which rose to a new record high of $260.79 on June 28—closed Friday’s session at $252.59, earning the Sunnyvale, California-based cybersecurity specialist a valuation of $57 billion.
Shares of the endpoint security leader have gained 19% year-to-date, reflecting soaring demand for its Falcon cloud-based cybersecurity platform.
CrowdStrike reported a massive beat on earnings and revenue when it released fiscal first quarter financial results on June 3, benefitting from a jump in enterprise cybersecurity spending.
The fast-growing tech firm, which counts nearly half of the Fortune 100 companies as clients, said it had a total of 11,420 customers as of the end of its most recent quarter, up 82% from the year-ago period.
CrowdStrike is primed to outperform in the week ahead, as it looks to be one of the main beneficiaries of the increase in cybersecurity spending amid the rampant surge in cyberattacks.
Stock To Dump: Pinduoduo
Shares of Shanghai-based, e-commerce giant Pinduoduo (NASDAQ:PDD) look set to remain on the back foot in the days ahead as investors fret over the negative impact of ongoing scrutiny by Chinese authorities cracking down on the country’s booming platform economy.
PDD stock—which has fallen 11% in the last month and 33% year-to-date—ended at $119.20 by close of trade on Friday. It now stands more than 40% below its all-time high of $212.30 touched on Feb. 16.
At current levels, Pinduoduo has a market cap of $149.4 billion, making it the third largest e-commerce company in China in terms of annual revenue, trailing only Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD).
The latest negative news came after China’s market regulator issued draft rules to punish illegal pricing activities by e-commerce platforms, such as providing steep discounts as well as the practice of charging different prices based on customers’ purchasing behavior.
The rules are the latest in an ongoing effort by China’s State Administration for Market Regulation (SAMR) to rein in tech behemoths that play a dominant role in China’s consumer sector.
Ultimately, market players are concerned that Chinese authorities will further escalate their attempts to clampdown on the country’s booming e-commerce sector, including imposing fines, and launching antitrust investigations.
Taking that into consideration, PDD shares look set to remain on the defensive in the days ahead as the online marketplace platform provider faces tough challenges ahead.