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Futu Holdings’ Stock Soars as Investors Look to New Heights with Softbank’s Involvement: A Turning Point?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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Futu Holdings Limited experiences industry momentum despite prior regulatory concerns, while Tiger Brokers gains 7.08% shares.

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Futu Holdings Limited is trading up by 7.08 percent on Thursday, buoyed by a positive outlook in the industry. Gain shared in Tiger Brokers further adds to the upliftment in market sentiment. Additionally, the focus on growth stocks, including notable competitors and consumer brands, could drive increased market interest, boosting the company’s trading performance amid recovering regulatory pressures.

Unraveling Latest Moves and Market Trends

  • Bank of America has raised Futu Holdings’ price target to $90 from $80.20, maintaining a Buy rating. This upgrade follows positive Q3 guidance and market rallies in Hong Kong and China, with expectations of asset reallocation due to potential Fed rate cuts contributing to the robust outlook.

Candlestick Chart

Live Update at 13:32:25 EST: On Thursday, October 03, 2024 Futu Holdings Limited stock [NASDAQ: FUTU] is trending up by 7.08%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Shares of Futu jumped nearly 8% thanks to Tencent Holdings selling a stake at a premium, netting $206 million from the transaction. This sale marks a broader trend seen in Chinese companies, aligning with the People’s Bank of China’s rate cut and economic support from Beijing.

  • On Sep 23, 2024, Futu was trading at a 3.1% increase, underscoring solid performance among Asian ADRs in the US. This rise is part of a commendable track record portrayed on the global stage by the asset-light, fintech-empowered brokerage firm.

Quick Dive into Futu Holdings’ Financial Health

Futu Holdings, a tech-driven brokerage and wealth management juggernaut, is making waves not just in the headlines but also on the financial statement charts. The company, with its magnified four-quadrant approach to capturing and engaging clients, appears strong. Looking at Futu’s recent performance metrics, the numbers tell a fascinating story.

In its last earnings phase, Futu showcased a staggering total asset volume of over $97B, capitalizing on opportunities where others might hesitate. This asset-heavy approach, paired with strong cash and equivalents totaling an eye-catching $49B, signals a fortress-like balance sheet. Yet, more astonishing is their total debt being dwarfed by their equity, showcasing a conservative 4-to-1 leverage ratio. Such financial muscle provides a safety net and room for maneuvering amid market storms.

Adding to this robust balance sheet, revenue figures stood impressively at almost $9.12B. But the kicker? Its pretax profit margin sits handsomely at 48.3%. Put simply, for every dollar coming in, nearly half is profit even before accounting for taxes—an efficiency testament few can claim. With such staggering profit figures, even nature’s wildest waves seem a manageable dance for Futu’s agile boat.

The PE ratio, a critical marker of valuation, hovers around 17.52. Considering Futu’s lofty earnings, this ratio feels like a ticket to a profitable journey in the foreseeable long run. Yet, caution remains an investor’s ally as counselors wonder—is this a moment of buoyancy following the financial storm or the eye of a larger whirlwind to come?

Reading Deeper into Pricing Patterns and Stock Dance

Tracing Futu Holding’s path through the weekly winding roads of the stock market, the price journey outlines a comet-like trajectory. Starting at $58.79 on Sep 13, 2024, and launching upwards to $120.84 on Oct 3, 2024, the stock’s rocket-like motion leaves one to wonder about gravity’s role in financial markets. This dramatic climb unfolds across pivotal dates where waves crashed over the $95 mark and never looked back.

The intraday candle chart furthers the enigma—often showcasing rises of god-tier exuberance and dips of heart-stopping anxiety in mere 5-minute spans. For example, within the hours on Oct 3, 2024, leaps were seen past markers of 121, noting the wrangling strength of the investor’s resolve, zealously pushing past thresholds like 120 and testing new highs like 124, untamed and unperturbed.

Yet, what drives such fire? Is it soft whispers of economic support from Beijing? Or can the drumbeat of interest spikes from America be heard beneath? The price jiggles and dances, a testament not solely to financial numbers but to the swirling sentiments and stories that investors read between the lines.

The Invisible Hand of the Market’s Whispering Winds

Delving into the contagious exuberance wrapping around Futu Holdings’ recent rallies, the winds of movement seem to be orchestrated by BofA’s confident serenade and Tencent’s methods of stock shuffle. Both softly nodding towards heightened value-yield, sparking intrigued, speculative anticipation among traders globally.

BofA’s endorsement, akin to raising a lighthouse during financial fog, brings assurance to the navigation of mysterious seas. An upgrade not only elevates potential buyer confidence but hints at future progress charted by aligning favorable economic policies, trading velocity, and asset reallocations across seas.

Meanwhile, Tencent’s stock allocation generates a mirrored story—a selling spree turned profitable venture, whereby a discretionary stake sale, bought at premium prices, turns heads and clinches eye-brows among curious investor circles. Even the smallest whiffs of policies from Beijing lure thunderings of support to the frame, drawing eager eyes from spectators hoping this could lead to a clearer financial horizon.

Together, they forge a beguiling storm—where optimism dances with pragmatism, a nod to the glorious unpredictability of markets. In the epic story of financial theater, this mutative force invites all to be vigilant, eager narrators, and watchers as balance tips effortlessly between risk and reward.

Conclusion: An Investor’s Reverie

Navigating the oceanic vastness of financial markets reminds one of explorers braving uncharted seas, guided by charts and stories from ancient legends. In this light, Futu Holdings emerges as a captivating tale—a beacon for some, a potential juggernaut, an overextended comet to others. The narrative, driven by news winds and pivotal numbers, asks investors a simple yet profound introspection—drawn to push, steer, or hold.

The whirlwind of deeply-rooted analytics, entrepreneurship ambition, and market sentiment does not merely offer a standstill portrait: it waves a tapestry awaiting its next stroke. The question of Futu’s long-term financial health, growth promise, and resilience—crafted by market machinations and strategic choices—graces numerous tomorrows, a page yet to turn in the vibrant book of business chronicles.

Could there be more to Futu’s uptick than meets the eye? It’s a pondering worth pondering more—a gilded curiosity inviting questions, patience, and strategy. Financial wisdom navigates as much by what remains unseen as by bold strokes painted before us—a voyage that calls investors to participate, scrutinize, and unfold. After all, prosperity in market realms often hinges less on certainty and more on storytelling, gleaning insights hidden beneath numbers, and understanding the symphony created by soft societal footfalls.

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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”