more pain in the markets today assalamu alaikum today is october twenty third and bitcoin is trading at under sixty six thousand about sixty five thousand five hundred dogecoin is at thirteen and a half cents and salon is at a hundred and sixty six We're going to look at the main things impacting the markets today, and then we're going to talk about Enphase Energy, a company that I've spoken about previously. I was an investor in this company some time ago. Ended up selling and that did end up working out well, considering what transpired after that. Assalamu alaikum, chocolate. Nice to see you. So looking at the indexes today, basically everything is down. Dow Jones is down one point one percentage points. Nasdaq is down one point eight five. S&P is down one point one. Russell, two thousand is down one point three percent. The dollar index is up close to half a percentage point. And the big news item, the big impactor on the markets today is the VIX. The VIX is up seven point six four percent. Investors are more nervous about the markets today than they were yesterday. And that translates into lower equity prices. So for Tesla, down around two percent today, even energy stocks are down. So PLL is down close to ten percent. Iris and Bitdeer taking it on the chin yet again today. solar has taken a big hit if we look at first solar down five percent and phase energy down fifteen percent today after earnings and the uh nuclear stocks that were doing great last week have uh pulled back and retraced some of their gains that is to be expected Now, what is going on here? Now, if you tune into CNBC, they talk a lot about nervousness about rate cuts and perhaps the rate cuts don't happen. I don't really think that's the case. If you look at the Fed watch tool, you can see that the market is still pricing in. a uh ninety one percent chance of a twenty five base point cut in november and if you look to december you can see a thirty percent chance that we get at least one twenty five base point cut, a sixty six percent chance that we get a fifty basis point cut by December and only a two percent chance that we are at the same levels that we are today. So I don't really think It is the monetary policy and the expectations of what is to come in terms of monetary policy that is causing pain in the market today. Nor do I think that the elections necessarily are and their prospects are causing the pain that we're seeing in the markets today. If you look at the percentages, probabilities for candidates winning you can see that donald trump is still ahead of kamala harris by some twenty percentage points and so that's as wide of a margin as you're gonna get in terms of a presidential election before the election save for some really outlandish event that uh could happen that's really as big a margin as one can expect. I've seen some prediction markets north of sixty percent for Donald Trump winning. So there's not much more certainty than that you can get prior to the election regarding the result and what we have right now. So I don't think the elections necessarily are the source of nervousness in the market. Primarily, I think it's two things. Number one, we've had a pretty strong run up up until this week, and the last three days have all been down days for the market. And so some profit taking is happening. I think that's logical to assume. And also, I think the geopolitical risks are what they are and perhaps are more acute now than ever. All indications So all indications appear to point towards an escalation in the Middle East and perhaps even in Taiwan as well. But I think obviously the probabilities for that are a lot less than escalations in the Middle East are or the probabilities of that. If you look at the map for equities today, you can see that this is basically red all around. Even the green that we do see is pretty modest. So GE, for example, up three and a half percent. That's the greenest on this map that you're going to find. And that's not really much. Even energy today is down. So a red day across the board here. If we look at the stock and focus for today, Enphase Energy down fifteen percent. This is a company that produces primarily microinverters. And so microinverters are basically pieces of hardware that you add to solar panels to make them autonomous in terms of their uptime and downtime and makes... solar panel installations are more resilient considering each solar panel is basically independent. This is a technology that Enphase Energy actually pioneered and it expanded from that initial product into other products, including batteries and including software systems to manage solar panel installations. So basically everything solar is what Enphase Energy does. and right now we're looking at a stock that is year to date down forty percent and it's and it's basically at its fifty two week low um so fifty two week low as per this chart at least seventy five uh we're at seventy eight right now If we look at the reason for that, well, that's their third quarter results that they announced yesterday, which included a slowdown of a europe and also a revised guidance downwards for revenue moving forward and nothing really kills a stock more than management revising down previous estimates because that means there's going to be a slew of analysts coming out with reduced targets for the stock after all I mean the analysts can't really go against what management is predicting for itself so many times management management's guidance is basically what analysts are relying primarily on and so revision downwards will cause Area of vision downwards for all analyst stock price targets, or at least the majority of them. If we look at the details here, that being said, honestly, I don't really think that the report was that bad. There's definitely some bright spots here in this report and we'll refer to them. So quarterly revenue, three hundred eighty million. Just to put this in context, this is a. a company that currently at its one year low it's it's trading at uh ten point five billion in terms of market cap and also it does have one point six billion in cash that being said it does have net uh it does have a debt as well so they had quarterly revenue of let's say uh four hundred million if you analyze that that's one point six billion and therefore a you know market cap of ten and a half billion not really that unreasonable considering that their gross margins are close to fifty fifty percent so gap gross margins of forty six point eight percent so going by the generally accepted accounting principles that is in case you're wondering what gap stands for gross margin of forty six point eight percent now they do They do have IRA benefits, so Inflation Reduction Act that is helping their margins. So if we were to take out the benefits that they're getting from subsidies, gross margin would be closer to forty percent. So the subsidies are adding close to ten percent in terms of a in terms of gross margin to their results. So that's something to keep in mind. That being said, even without subsidies, a gross margin of forty percent is pretty good. It's not it's not bad at all. Their operating income was one hundred and one million dollars for the quarter. Free cash flow, which I think is a bright spot for this company. Free cash flow is one hundred and sixty one million. That's pretty strong. Ending cash and cash cash equivalents and marketable securities. One point seven billion. Sorry, I think I said one point six earlier. One point seven seven billion for the cash that they have on hand. You can see gross margins are pretty much steady. They did improve in Q three, twenty twenty four versus Q two. So forty six point eight versus forty five point two. In. Q two. and if you compare with last year and this is punishing the stock a bit gross margins are down a bit but not too much I don't think anything to necessarily cause a deep concern for the company it was forty eight point one percent gross margins were in q three of uh twenty twenty four in q three twenty twenty three it was Forty eight point four. And so, you know, a difference of less than one percentage point between the gross margin numbers if we're comparing year over year. So from that aspect, from a profitability perspective, I think they're doing well. very decent in terms of maintaining their profitability, which is extremely important, especially when you're analyzing solar product companies, because you just want to make sure that their product isn't a commodity. It's not something that China is just going to compete out and any rivals that they have, because that's typically what happens with commodity components of the solar industry supply chain. China ends up controlling all of the commodity components in that supply chain. And you want to make sure whatever A company you invest in is not producing a commodity product, something that can be easily replicated that doesn't have any moat around it. And one of the ways to verify this is to check their profitability, their gross margin, their pricing power. If it's high, then this is a good indication that what they are selling has pricing power and has somewhat of a technological moat around it. Total revenue, especially if that gross margin is consistent over time. So that means that the gross margins are not a function of simply demand outstripping supply for a limited period of time. It's actually more likely attributable to a technology or a technical moat that they have around their business. So from that aspect, gross margins are maintaining pretty strong. And I did mention that revenue in Europe decreased approximately fifteen percent for the third quarter of twenty twenty four. However, it is notable that revenue in the United States for the third quarter of twenty twenty four increased forty three percent. compared to second quarter of twenty twenty four. So, yeah, Europe slowed down. United States picked up. Gross margin was forty one forty eight point one percent in the third quarter, as we mentioned, compared to forty seven point one in the second quarter of twenty twenty four non gap gross margin, excluding the net IRA benefits or excluding the subsidies was thirty eight point nine percent in the third quarter. compared to forty one percent in the second quarter of twenty twenty four. Again here, just a small difference in the in the gross margins quarter over quarter. And. They exited with one point seven seven billion in cash, we mentioned that. Now, something that is encouraging about this company is that they repurchased shares and they have a pretty strong history of doing that. And the average price that they repurchased their shares at was a hundred and fourteen dollars. Again, recall, it's trading at seventy eight dollars per share. The company purchased its own shares at one hundred and fourteen dollars. So this is very this is a very encouraging fact. The company knows itself more than anyone else does. And it thought that a hundred and fourteen dollars a share was a good use of its money. Buying its own shares at a hundred and fourteen dollars a piece was a good use of its money. So if the company thinks that. Then, you know, investors looking at a seventy eight dollar per share price may be encouraged to pick up some shares. And they also mentioned that in the third quarter, this is another thing that I like about the company. They launched the AI-based software that is designed to optimize energy use by integrating solar and consumption forecasting with electricity tariffs. So what I like about this company is that they do seem to be constantly upgrading their line of products. They seem like a well-managed company. One of the reasons why a company is able to maintain gross profits and maintain profitability over time is effective management and management that is always cutting the fat out of its operations. And it seems like Enphase has that. If you look at the business highlights for the company, there's a lot in the way of expanding into different countries and into different product lines and upgrading the products that they're currently selling. So all of that is, I think, positive for the company. If you look at this company and the short float this is ten point six two percent so anything above you know ten in terms of the percentage of shares that are shorted I think is high and will distort price movements it'll distort them on the way down and on the way up and so This makes for opportunities to buy on the way down and makes opportunities to sell on the way up. And if we look at Enphase's multiples here, it does seem like, so we're not interested in trailing valuation, we're interested in forward valuation. So if we look at forward price to sales or forward price to earnings for the next twelve months, we can see that currently at twenty point eight, it is the lowest multiple that we've had at least for a year in terms of M phase stock. And the same with price to sales at six point nine for the next twelve months. It's the lowest that we've had in a year. So not only is the price the lowest, but the multiples that we're using to get to the price the market is using to get to the price are the lowest that they have been. So To summarize here in terms of Enphase, we have a company that's in a secular trend, which is solar. We understand that the energy consumption per person on Earth is going to increase with time and new energy sources are needed. One of the main sources of energy will be solar in the future. We understand that the margins for this company have been consistently high. We understand that this is a company that is in a often very cyclical industry that is very interest rate sensitive because a lot of purchases are done using financing. And we are approaching, in fact, we've already started the process of monetary easing. And so the difficulty that... we are experiencing with this or investors are experiencing with this company, I think is temporary. There may be another quarter or two of relative weakness in a growth for this company. But I think that at these prices, I think that it's a reasonable pickup. that being said I'm not sure that this is the fastest horse in the solar space and so that's really what I would like to look at in more detail if I if I were to so currently I don't hold any end phase energy but if I were to buy I want to make sure that the best return to risk ratio is what I'm getting in this industry. I've mentioned before, I do want to get exposure to this industry because I think that, you know, growth is going to be phenomenal in the next few years. But I don't want to invest in a company that's, you know, producing commodity like products, nor do I want anything that is in direct competition with Chinese, similar Chinese companies, because I do think that the Chinese have an advantage here with regards to solar. And so all of this needs to be taken into consideration before investing. That being said, to summarize here my viewpoint on this particular stock, I think it's probably a good pickup at these prices. That being said, it's not financial advice and full disclosure, I haven't picked up any shares and I don't hold this company either. So make of that what you will. How would the market react if it will be a split, a government versus red sweep? I think a red sweep would be more encouraging for the market. I think a split would mean that not much is going to get done. Not much is going to get passed. We already know that the two political parties can't really work together at all. So a red sweep would be more advantageous. Wassalamu alaikum. Nice seeing you, especially during days like this. Should we buy the dip or will there be further dipping? Well, if you're a member, you should, I think, take notice to what I end up doing. Okay. Thanks. I'm glad you liked the session, wise man. Allah bless you. Rashad said, your statement is... Okay. Sorry. That was not for me. Thanks, Tuskeen. Really appreciate it. I'm glad you liked it. Yeah, that would be... Khalid says, will election have a significant impact on the market if you ask how to secure gains at the same time of vote for FOMO if things go north or south? Well, inshallah, just tuning into these lives will be helpful in gauging where we're at. And I do think that election, post-election, I think the market will have more momentum than it has right now. Even though the the probability seem in favor of one candidate that this is, you know, it's not over until it's over. You don't know how many people show up for each party and so on. And therefore removing that source of uncertainty will be good for markets. I would say Metastock is one of the most uncomfortable stocks to hold for me on the market, period. Next only, maybe Palantir. Only because I think Meta, if you look at Facebook, Instagram, I don't think they make people happier. I think they make people less happy. And I think that they typically promote negativity and they promote... promote things that are you know contrary to Islamic values and so I wouldn't touch it at all um Do I think Tesla will drop below two hundred? It's very hard to say. I do think that Tesla is a good value where it is right now. I can't predict near-term movements. I will obviously be very closely watching and listening to the earnings report today, which Tesla is scheduled to have after the market closes. So we'll get a lot more color. Hopefully we get a lot more color with regards to what they revealed in the Robotaxi event. It would be really great if we could get some more on the economics or the timelines for the release of some of the new products that they mentioned. But, you know, these things can be known ahead of time. That's why we'll be tuning in. Hassan says, thanks, Jazakallah. Wayaikum inshallah. Hey, leave a like if you haven't already. Always nice to see you. And if you haven't become a PIF number yet, do become a PIF number. Until next time, make sure to take care of yourself. Assalamualaikum and peace be upon you all.