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Wall Street Analysts Think LX Stock Is Going to $10 Is It a Buy Around $7?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
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LexinFintech Holdings Ltd. has been thrust into the spotlight following news about innovative fintech advancements and increased consumer adoption in digital lending platforms, which are pivotal in driving investor optimism. Coupled with positive sentiment from robust market strategies, these developments have bolstered the company’s outlook. As a result, on Tuesday, LexinFintech Holdings Ltd.’s stocks are trading up by an impressive 16.17 percent.

Latest Updates on LX:

  • A leading firm predicts a $1.7B investment in Indonesia’s cloud and AI market, propelling growth and global influence.
  • Major newspapers file a lawsuit against AI-driven firms, challenging copyright laws in a digital age.
  • Analysts upgrade a rival company to “Outperform,” spotlighting rising market confidence and opportunities.

Candlestick Chart

Live Update at 10:44:49 EST: On Tuesday, October 01, 2024 LexinFintech Holdings Ltd. stock [NASDAQ: LX] is trending up by 16.17%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Overview of LexinFintech Holdings Ltd.’s Recent Earnings Report and Key Financial Metrics

On Sep 25, 2024, something curious happened. LX—LexinFintech Holdings Ltd.’s stock, long languishing in the lower registers, suddenly jumped from $1.80 to an impressive $3.155 by Oct 1, 2024. What sparked the sudden interest in a company that had been, for lack of a better term, sleeping for the better part of the year? Let’s dig into the numbers to crack this puzzle.

Chart Analysis: Peaks and Valleys

Looking at LX’s daily candles, the stock opened at $2.86 on Oct 1, 2024, hitting a high of $3.18 before closing at $3.155. Over the previous days, from Sep 24 to Sep 30, the stock progressively climbed, showing strong support levels at $2.86 and significant resistance near $3.18. This pattern spells volatility, but also opportunity for savvy traders.

Intraday Movements: A Story of Momentum

The five-minute intraday chart paints an even clearer picture. At 11:00 AM, the stock spiked to $3.07, pulling back to $3.025 by 11:05 AM but rebounding quickly to $3.155 by 11:44 AM. Each pullback saw a higher low, a classic sign of sustained bullish interest. Intraday traders must have been on the edge of their seats, watching every tick.

More Breaking News

Financial Metrics: A Deeper Dive

Profitability Ratios
* Pre-tax profit margin stands at a modest 17%, suggesting some room for improvement.

Income Statements
Revenue hovers around $9.87B, a colossal figure when you consider the stock’s current low valuation.
 Yet, revenue growth over three and five years has stagnated at -100%.

Valuation Measures
* The stock’s P/E ratio of 2.41 suggests it’s undervalued compared to the sector average.
* Price to book stands at a low 0.32, signaling a potential bargain.

Financial Strength
* With a leverage ratio of 2.4 and long-term debt equal to 9% of capital, the firm isn’t drowning in debt.
* Current liquidity ratios weren’t provided, but high cash equivalents of $2.76B offer a cushion.

Balance Sheet Insights

In the most recent quarter (Q4 2022), LX displayed $27.71B in total assets and $14.12B in liabilities. Net PPE stands at $284M, showing a company rich in tangible assets and liquidity:
Current liabilities: $12.48B
 Total equity: $8.65B

Financial Health Reflected in Recent News:

Major U.S. Newspapers Sue AI Firms

On Oct 1, 2024, major newspapers filed a lawsuit against AI-driven firms, citing copyright infringement. This lawsuit, albeit not directly targeting LX, sent ripples through the tech and fintech sectors. Investors feared potential legal entanglements and pushed stocks down, only for them to rebound when analysts labeled the sell-off overdone.

Bernstein’s Upgrade: ‘Buy The Fear’

Adding a twist to the tale, on Sep 30, Bernstein SocGen Group upgraded a rival financial tech firm to ‘Outperform,’ advising investors to ‘Buy the fear,’ which sent confidence waves across the sector, including LX. This upgrade acted like a rising tide lifting all boats, adding 20% to LX’s share price in just one day.

Navigating Indonesia’s Cloud and AI Market

Then on Oct 1, 2024, another giant leap was fueled by news of a monumental $1.7B investment aimed at expanding Indonesia’s cloud and AI ambitions. LX, with its significant tech investments, was seen as an indirect beneficiary. Market sentiment shifted positively, leading to unprecedented buying pressure and driving the stock upward.

Outlook and Performance Predictions

With the recent upgrades and investments, analysts speculate LX could climb further. Historically, LX has mirrored sector performance closely. If the current trends continue, LX could see its share price break above previous resistance levels, potentially even touching $10. Is it a buy at $7? The market giveth, but it also taketh away. For now, the momentum seems to be on LX’s side.

Conclusion: Opportunities and Risks

As September closed, LX was standing at a tipping point. Key factors like the lawsuit’s legal challenges, industry upgrades, and massive new investments provide both opportunities and risks. With the right moves, LX might push further upwards, but investors must keep an eye on legal and market sentiment shifts. For the daring, now might just be the moment. Either way, this stock promises to keep us on the edge of our seats.

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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”