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Is It Too Late to Buy FUTU Holdings Stock After the Recent Surge?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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Futu Holdings Limited saw increased trading activity, buoyed by optimistic developments including strong quarterly earnings and strategic partnerships, as reported in the news. Another notable highlight is the company’s expansion into new market sectors, demonstrating its adaptive business strategy. Consequently, on Tuesday, Futu Holdings Limited’s stocks have been trading up by 9.25 percent.

Despite overall market fluctuation, FUTU Holdings made significant strides due to strategic moves and market sentiments

Candlestick Chart

Live Update at 10:44:20 EST: On Tuesday, October 01, 2024 Futu Holdings Limited stock [NASDAQ: FUTU] is trending up by 9.25%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • BofA has increased its price target for FUTU Holdings to $90 from $80.20. This move follows positive guidance for Q3 and optimistic asset reallocation, influenced by Fed rate cuts and rallies in Hong Kong and China markets.
  • Tencent Holdings sold a portion of FUTU stock, resulting in an 8% increase in FUTU share price. The sale was at a 5.9% premium over the last closing price, generating $206M.
  • FUTU Holdings, a brokerage and wealth management platform, saw a hike of 3.1% in its stock value, performing robustly among Asian ADRs in the US stock market.

FUTU Holdings Limited’s Recent Financial Performance

The latest posts about FUTU Holdings have sparked interest, but let’s dive deeper into why this company is catching everyone’s attention. The first thing to highlight is BofA’s recent upgrade. BofA raised the price target for FUTU Holdings from $80.20 to $90, based on a very positive Q3 outlook. They expect a rally in the markets of Hong Kong and China, driven by rate cuts from the Fed. These changes have also been reflected in FUTU’s earnings estimates for 2024 to 2026. Increased client assets and trading velocity add more to the positive outlook.

Likewise, the sale of FUTU stock by Tencent Holdings couldn’t have come at a better time. This transaction wasn’t just another random selling; it garnered $206M in gross proceeds. The premium of 5.9% over the latest closing price added an 8% climb to FUTU’s share value. For Tencent, it was a cakewalk. They sold off a portion, bagged the profit, and moved on—why not? Many investors hold such stock sales as cautionary signs, indicating they may soon follow the trend of top stakeholders.

Additionally, FUTU Holdings’ stock performance on the brokerage and wealth management platform has been notable. There was a 3.1% rise in stock price, indicative of a stronger performance among Asian ADRs in the US. This uptick illustrates renewed investor confidence and a solid foundation that FUTU is building upon in international markets.

Chart Data Insights

Here’s a more nuanced understanding of FUTU Holdings’ stock movement lately. Let’s break down their price action with daily and intraday data.

Daily charts show a significant upward trajectory:
* On Oct 1, shares opened at $96.05 and closed at $104.50, hitting a high of $104.60.
* This was following a positive closing on Sep 30, where FUTU opened at $93.01 and ended at $95.65.

Now, peep into the 5-minute intraday chart data to see the smaller, yet telling, movements:
* At 11:43, shares peaked at $104.60, with a previous close at $104.50.
* Between 09:30 and 09:40, FUTU moved from $96.08 to $97.7895.

Both data levels—daily and intraday—show a bullish trend. It’s as if the market collectively decided to put a spotlight on FUTU. The volume spikes during these intervals are a testament to the high volatility and trading activity around FUTU’s stocks.

Quick Overview of Key Metrics and Financial Insights

So how do FUTU’s fundamental numbers stack up against its recent performances? It’s important to connect the dots here.

Profitability:

  • The pre-tax profit margin is a solid 48.3%. It indicates that nearly half of FUTU’s revenues convert to pre-tax profits.
  • Despite some missing data on EBIT margins, this ratio alone showcases FUTU’s strong earning capabilities.

Income Statements:

  • Total revenue stands at a whopping $9.12B.
  • The per-share revenue calculation aligns at approximately $97.67.
  • Looking back, the revenue grew into the negatives over three and five years, but it’s an indicative caution and opportunities.

Valuation Measures:

  • The PE ratio at 17.52 further adds value, reflective of current earnings against stock prices.
  • FUTU’s price-to-sales ratio stands at 11.24 and the price-to-book ratio at 4.17.
  • Considering a five-year high PE ratio of 22.22, there’s some headroom for growth still.

Financial Strength:

  • No significant debt-to-equity figures are available, but the leverage ratio stands at a modest 4.
  • The long-term debt-to-capital ratio is zero, illustrating FUTU’s minimal dependency on long-term borrowing.

Financial Reports:

Looking at the finer details from their balance sheets:
* Goodwill & Other Intangible Assets: $72M.
Total Assets: $97.13B.
 Cash and Cash Equivalents: $49.31B.

Their low long-term debt and a healthy current ratio point towards substantial liquidity, which is integral during volatility. The company has marked itself as trustworthy, with assets hugely outweighing liabilities, and no struggle to cover short-term financing needs.

More Breaking News

Impact Of Selected News Articles On FUTU’s Stock

Each piece of news leaves a footprint, influencing trades and forming market sentiments. Let’s unpick why these bullets matter.

BofA Price Target Upgrade:

The upgrade reflects high expectations for coming quarters and potentially broader market trends. That alone may justify purchasing more FUTU shares—hoping the forecast materializes. Positive guidance, rallying markets in Asia, and the Fed’s rate cuts provide a fertile ground for growth. Investors such as yourself might see this as a credible signal to buy.

Tencent’s Partial Sale:

Tencent’s divestment rang encouraging alarms! Picture it this way—major shareholders reshuffling brings an air of credibility and stability to the stock. Tencent isn’t a small player; them averaging a part of FUTU’s stock creates a reinforcing effect for FUTU’s valuation. Investors see this as a high-confidence move with potential for high returns.

FUTU’s Brokerage & Wealth Management Gains:

Even the 3.1% rise underscored FUTU’s resilience among Asian ADRs. FUTU’s dominant stance among its peers on US platforms signals growing confidence. For people in stock markets, such performance tips the scales towards stability, potentially leading to more pronounced long-term gains.

Are We There Yet?

The market isn’t devoid of risks. From the data reviewed, FUTU’s landscape glows with affirmative signs. Strong financial metrics, smart stakeholder movements, and positive updates stack the deck in FUTU’s favor. Yet, no stock is immune to inherent market risks. Investors always weigh the pros and cons, peering through clouds of optimism.

Continued Upward Trend or a Bubble Burst Waiting to Happen?

Future projections suggest substantial optimism. If current market conditions persist, FUTU might soar even higher. But in volatile markets, investor caution is paramount. Just a misplaced market sentiment or geopolitical tension—like a surprise move from the People’s Bank—might shake the stability.

From the data shared and analyzed, FUTU’s journey upwards isn’t fleeting; it carries solid arguments. Owners interested in growing their portfolio within prominently performing Asian markets may find FUTU an attractive pick. But remember, it’s always the most agile who escape unplanned ramifications.

In essence, FUTU emerges from these metrics and latest news stories as a stock with solid groundwork. Calculated bets could prove advantageous, particularly while the Asian markets bloom with positive prospects. Here, a cogent entry point might be more about timing and less about chance, leveraging market and policy nuances for maximum gains.

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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”