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Is FUTU Stock Ready For a Major Upswing?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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Futu Holdings Limited’s stocks have surged on Monday by 12.72 percent, likely influenced by recent positive developments and market sentiment. Notably, the company’s robust quarterly earnings and strides in partnerships have captured investor enthusiasm, driving the stock price upwards. This remarkable performance reflects growing confidence in Futu’s strategic initiatives and market positioning.

Here’s Why Investors Are Excited About FUTU Right Now

  • Bank of America has raised Futu Holdings’ price target to $90 from $80.20, maintaining a Buy rating, driven by positive Q3 guidance and potential asset reallocations following Fed rate cuts.
  • Tencent Holdings sold a portion of Futu stock, fetching $206 million in proceeds with a 5.9% premium over the last closing price, driving an 8% increase in FUTU’s stock.
  • Futu saw its stock rise by 3.1%, performing solidly among Asian ADRs in the US markets.

Candlestick Chart

Live Update at 10:44:41 EST: On Monday, September 30, 2024 Futu Holdings Limited stock [NASDAQ: FUTU] is trending up by 12.72%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Futu Holdings Limited: Quick Overview and Earnings Report

Let’s dive into the recent earnings report and key financial metrics of Futu Holdings Limited, a name that has garnered much attention lately. Looking at the past few days, FUTU stock climbed to an impressive high of $102.99 on Sep 30, 2024, after starting the monitoring period at just $93.01.

A closer look at Futu’s earnings report reveals a plethora of key indicators that signal strong financial health and promising future performance:
– Revenue and Profit Margins: FUTU reported total revenue of approximately $9.12 billion. The company exhibits a stellar pretax profit margin of about 48.3%. This reflects excellent cost management and operational efficiency.
– Valuation Ratios: The price-to-earnings ratio (P/E) stands at 17.52, which, when compared to the industry average, indicates that the stock is reasonably priced given its earnings potential. The price-to-book ratio is 3.74, suggesting that the stock is not overvalued relative to its book value.
– Financial Strength: A leverage ratio of 4 and robust equity sell-off positions Futu in a solid place for future financial stability without exposing it to excessive borrowing risks.

Trading Activity and Market Behavior

Futu’s stock has been buzzing with activity, cresting an impressive peak just shy of $103 by Sep 30, 2024. Such a bullish surge signals growing investor confidence, heightened by the combined news events and positive outlook.

Even during intraday trading, the volatility reflected varying investor sentiments. On high trading volumes, stock prices experienced sharp peaks and valleys. For instance, the stock price oscillated notably between $98 and $102 during market hours on Sep 30, underpinning the excitement around recent developments.

How the Latest News Impacted FUTU’s Market Behavior

Bank of America’s Upgrade:

Bank of America’s optimistic outlook for Futu Holdings is a beacon of hope for investors. Their updated price target from $80.20 to $90 translates into a significant confidence boost. The factors contributing to this upgrade include positive third-quarter guidance and potential asset reallocation post-Fed rate cuts. These events create a robust environment for future earnings expansion, suggesting that Futu is primed for growth. Bank of America’s estimates also account for higher client assets, increased trading velocity, and favorable policy movements in China, adding to the investment credibility.

More Breaking News

Tencent’s Stock Sale:

A remarkable move by Tencent Holdings was its decision to cash in $206 million by selling a chunk of Futu stock, which traded at a 5.9% premium above its last closing price. This strategy put a spotlight on Futu, instilling further investor excitement. The market reacted positively, driving FUTU’s stock price up by 8%. Tencent’s decision is proof that strategic movements by significant shareholders have a considerable impact on stock prices. This event was part of broader trends among Chinese investors, which are signaling potential long-term support from Beijing alongside economic policies that are headlined by significant rate reductions by the People’s Bank of China.

Solid Performance Among Asian ADRs:

Futu’s 3.1% rise in stock demonstrates its strong competitive position among Asian ADRs in the US. This achievement underscores Futu’s growing prominence and capability to attract and hold investor interest on a global scale, especially in times of broader market rallies in Hong Kong and China. Emerging as a leader among its peers, Futu’s impressive performance reflects the optimism and bullish sentiment surrounding the company.

Conclusion: Potential Impact on FUTU and the Road Ahead

The recent series of events has placed Futu Holdings Limited on a promising trajectory. Bank of America’s price target upgrade and Tencent Holdings’ stock sale have jointly bolstered investor confidence, leading to significant stock price appreciation. The solid performance among Asian ADRs further adds to the bullish outlook for FUTU.

The combination of favorable news, financial strength, and strategic activities positions Futu as an exciting stock to watch. Its increasing trading volumes, sharp price movements, and robust key ratios are strong indicators of future potential.

In conclusion, the enthusiasm around Futu Holdings Limited is driven by well-founded optimism. If the current trends sustain, FUTU could see continued upward momentum, presenting compelling opportunities for savvy investors and traders alike.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”