This week, we’re watching three high-profile names–Palantir (PLTR), Uber (UBER), and Coinbase (COIN)–as they gear up for earnings. These stocks could offer up some interesting setups with favorable risk/reward entry points. Let’s break down what’s happening with each one.
Palantir (PLTR): Watching for an AI-Driven Breakout
PLTR stock almost got back to its all-time highs after a sell-off that saw the stock price drop by as much as 47% from its February peak. Two key factors will be in focus: AI and government-backed contracts.
Palantir’s Artificial Intelligence Platform (AIP) is a big piece of the puzzle. Analysts anticipate commercial revenue to increase by 35% year-over-year, driven by the company’s efforts to penetrate industries such as healthcare, energy, and finance.
Government contracts account for about 55% of the company’s total revenue. Investor concerns revolve around the ability to secure and maintain these contracts amid potential Department of Defense budget cuts.
FIGURE 1. DAILY CHART OF PLTR STOCK. The stock closed below its all-time high and has a history of big gaps on earnings day.Chart source: StockCharts.com. For educational purposes.
Technically, PLTR stock is at a key inflection point. The stock closed right under its all-time high and has a history of big gaps on earnings day. It traded higher in five of the last six earnings reports, with an average gain of 21%.
Watch the gaps… Gap ups tend to continue in that direction and lead to sustained uptrends. Use any upside gap to enter and manage risk, with stops set to exit if it starts to reverse and fill. A gap in this case, and given its momentum, could see shares eclipse the $150 mark.
On the downside, there are several levels of support. The biggest area is in the purple-shaded area surrounding the 50-day moving average. The $84 area would fill the gap from last earnings and could become a solid floor, going forward.
Either way, it’s a coin flip technically entering earnings, but the next move should set up interesting entry points.
Uber Technology (UBER)
Uber’s stock price has performed extremely well compared to the rest of the market this year. The stock is up 40% year-to-date. As UBER heads into earnings on May 7, expectations are rising. The stock price has already broken out and is trading near all-time highs.
Last quarter’s guidance fell short of expectations. That will be a big focus again. Investors will also be looking to see if UBER can sustain gross bookings numbers. They’re supposed to grow by 17%-21% year-over-year. We may also hear about Uber’s strategic moves in the evolving landscape of autonomous transportation.
FIGURE 2: DAILY CHART OF UBER STOCK. Uber has been trading in a broad range in the past year.Chart source: StockCharts.com. For educational purposes.
Technically, Uber shares have traded in a broad range in the past year. During this time, there was one failed breakdown and one failed breakout. We enter this week’s report on the heels of another breakout.
This could be an example of price leading the news. We will find out when Uber reports on Wednesday morning. An upside target of $100 should be in the cards, with confirmation of this move out of this rectangular neutral trend. If it fails to hold above the $80/$82 level, then a drop to its key moving averages is likely.
While the stock is nearing overbought territory, shares have remained overbought for an extended period during major moves higher. Use any break below 70 in the relative strength index (RSI) to take profits or sell.
Coinbase (COIN): Looking to Break a Losing Streak
Coinbase will be looking to snap a four-quarter losing streak post-earnings when it reports on Thursday. Shares of the cryptocurrency platform have been quite volatile and began the week lower by -16.5% year-to-date.
Investors will be looking for insights into Uber’s ability to capitalize on increased trading volumes, along with any news on plans to diversify revenue streams and strategically position itself within the current regulatory landscape.
FIGURE 3: DAILY CHART OF COINBASE STOCK PRICE. Fibonacci levels help identify areas of interest.Chart source: StockCharts.com. For educational purposes.
Technically, shares have taken quite a ride over the past two years. The Fibonacci extension lines on the chart demonstrate the significance and help identify levels of interest where traders may gain opportunities.
The stock remains in its near-term downtrend going back to its December peak. The floor seems to be established for now, with support levels around $180 and major support by the “golden ratio” around $150. If there is any weakness, then look to these levels to possibly add to the name.
The upside seems more challenging. Shares remain weaker than many of its peers and are still mired in a near-term downtrend with clear resistance around the 200-day moving average at $226. If COIN were to break and close above this threshold, then there is a lot to reverse given a much clearer reward than risk set-up. For now, it’s one to watch to see what price action does when the company reports on Thursday afternoon.