VIDEO: Here's a Bullish Data Point for IT Spending and 3 Portfolio Holdings
Chris discusses a recent survey that's a positive for several stocks, what we want to see out of the CoreWeave IPO, and today’s exit from a position.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
In today’s Daily Rundown, Chris Versace discusses the The Street Pro Portfolio’s decision to build up its cash position earlier today by exiting its remaining Mastercard MA holdings.
We remind folks the two key items we’ll be focusing on today are Dutch Bros’s BROS Investor Day and the IPO pricing for CoreWeave (CRWV) after the market close. We are hearing reports the transaction could price below the targeted price range of $47-$55, but as Chris explains that would be just fine with us given the potential alternative.
Closing out today’s video, Chris shares a bullish data point from a Scotiabank survey regarding IT spending that supports three of the portfolio’s holdings.
Transcript
CHRIS VERSACE: Hey, folks. Chris Versace here, Thursday, March 27. The market started off kind of mixed, but it is rebounding a little bit today. But if you gathered from our opening comments this morning, uncertainty is escalating in the market. And we say this due to a combination of, yes, auto tariffs, and the potential for more that President Trump talked about should other countries try to combat the tariffs that he has instilled and plans to instill further, but also due to a another bout of layoffs.
Our thinking is that the combination and the uncertainty is really going to result in a few things. One, it's going to add to our concern about consumer spending. It's going to raise questions about the overall speed of the economy. And for companies that are poised to issue their guidance, that increasing level of uncertainty-- well, we've talked about it, but I think what we've seen in the last 24 hours only adds to it. It's more likely than not that they are going to issue conservative guidance, in part because they have to. But we're already seeing other companies tied to the auto sector talk about the impact on margins. They're also talking about, in some cases, raising prices.
So all of this builds on some of the concerns that we've been talking about with you. It's for that reason that we closed out our remaining position of Mastercard today. Yes, we locked in a gain of more than 50% on that last slug of shares. And even though the shares are trading a little bit higher since we made that trade, we're not going to quibble, largely because of the things that are lining up and suggest that we're going to continue to see a challenging market ahead. And in that environment, we would much rather have some additional cash, especially since the outlook for payment volumes tied to low- to middle-income consumers are likely to be pressured. And again, some of the developments in the last 24 hours really only adds to our thinking that it's likely to be the case.
Now, we laid out today's focus for us in yesterday's video, but if you missed it, just quickly, there are really two big things that are unfolding today. First is Dutch Bros is going to have their 2025 Investor Day, and after today's market close, CoreWeave is expected to price its IPO. With Dutch Bros, we will have some comments this afternoon once we've parsed what management has to say. Remember, geographic expansion plans, expanding of the menu to include food, and whatever else they might say is what we'll be focused on.
As it relates to CoreWeave, now, this is pretty interesting because we're hearing reports that the company might actually shrink the size of the offering. The original price target range was $47 to $55, and today, we're hearing it could be priced closer to $40. Now, on the one hand, folks might be disappointed by that. But A, we're not involved in the IPO. We're not going to be buying CoreWeave shares anytime soon. So from our perspective, if this means a more smartly priced offering with better after-market performance that can open the IPO transaction window, we are all for it.
I would rather see that than CoreWeave and the investment bankers really try to price a deal at the high end of the range, or even higher, only to see the share price crumble in the ensuing days and weeks. That's not helpful for the IPO market. We would much rather, again, see a smartly priced deal. So that's what we'll be looking for as it relates to our shares of Morgan Stanley, Bank of America, and the overall IPO market.
Now, before I jump to Dutch Bros' Investor Day, I just want to share something that I came across regarding IT buying decisions. And I'm particularly interested in this because as you know, shares of Elastic have been bouncing around, as have our shares for ServiceNow. And our position has been that we continue to see a lot of data points pointing to continued AI adoption, not just in companies in the enterprise, but in other institutions as well. Well, this morning, Scotiabank shared the findings of an IT survey that it conducted. And the key question here is it asked if IT buying decisions have changed or slowed since the start of this month.
90% of the respondents said no. To me, that is rather confirming for those signals that we share with you, but it's also a nice data point for Elastic and ServiceNow. And remember, as we think about this, yeah, there is the AI adoption that's unfolding. But as companies, and including the federal government, look to trim their headcounts, there's going to be the continued push for productivity. And we think that these companies are well positioned to address that, as is Palantir.
Now, as it relates to Palantir, we will be addressing our price target. The shares have really performed extremely well for us since we added them first at $79, and we bought a little more after that, and our average cost basis is around $80. So while we are likely to adjust our Palantir price target higher, I will say this. I would not chase the shares here. OK, members?
So if you missed out, wait for it. If we're right and the market becomes a little turbulent, whether it's next week with what we learn on reciprocal tariffs and/or ensuing responses from other countries, or with the March quarter earnings season and June quarter guidance, we may get another bite at that apple. Be patient. And, of course, we'll be sharing our thoughts with you regarding Dutch Bros later today and, when the time is right, with Palantir. So be sure to check your emails later this afternoon. We're going to have a lot more coming at you. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long BROS and PLTR.
