Sell Alkami (ALKT)
While there have been some crazy moves in the market this week, it’s somewhat encouraging that, as of 12:00 PM ET, the broad market isn’t off that much compared to Friday’s close.
That statement has a shelf life of about 30 seconds.
It may be that the Trump administration is getting the message – which is coming in loud and clear from every angle – that they should put more emphasis on how they are open to tariff negotiations and see a path forward, rather than a hard-line, “our way or the highway” approach.
That said, a few days of market “stabilization” is not a trend. Where we go from here is anybody’s guess.
It’ll depend on how the Trump administration plays things next and how the market interprets the various big-picture results, i.e., recession risk, Fed policy, U.S. dollar and U.S. deficit, to name a few.
One thing that’s clear is recession risks have risen. And financial stocks look terrible.
This is extremely frustrating since we’ve quickly gone from an environment where consumers seemed OK, M&A and IPO activity were picking up, rates were set to go a little lower, thereby boosting loan growth, etc.
Now, it seems like consumers are ready to pull way back, the IPO market has shut down, and who knows what will happen with rates. The Fed may cut to push out a recession, or rates may rise since inflation risk is back on the table.
The bottom line is that the backdrop for banks went from being pretty darn good to being pretty darn awful. That’s a good setup for our Alkami (ALKT) position.
The company sells digital banking software to credit unions and smaller banks. I love the space, but given what’s going on, it’s hard to see banks committing to significant tech projects, even if they can help boost account openings and loan applications, if total banking activity falls off.
Other stocks in this arena, including QTWO, FIS and JKHY, are likely weak for the same reasons.
I can just picture Alkami management on the next conference talking about implementations getting pushed out.
Long story short, we’re stepping aside. SELL
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