Friday, February 18th, 2021 – Volume 2 – Issue 159

Crypto Newsletter

Dow Jones: 34,079 (-0.68%)

S&P 500: 4,348 (-0.72%)

Nasdaq: 13,548 (-1.23%)

Russell 2000: 2,009 (-0.93%)

Bitcoin: $40,096 (-0.58%)

Ethereum: $2,799 (-2.47%)

 

Two straight weeks of market losses… Not fun, but #itiswhatitis.

Stocks fell today, continuing the sell-off from yesterday as investors took risk off the table ahead of the three-day weekend. Also affecting stocks was the major options expiries today (usually occurs on the 3rd Friday of every month).

Reminder — Monday is President’s Day! That means no trading (markets will be closed).

Tensions between Russia and Ukraine are still on the rise, contributing to the market de-risking. U.S. officials are expecting a Russian attack in just a few days, and Biden is expected to move more troops closer to Ukraine. However, oil posted its first weekly loss in two months.

Earnings: Draftkings (DKNG) was the latest victim in the #EarningsCrash series, falling 21% after losing less per share than expected and beating revenue estimates.

Crypto: Bitcoin briefly dipped below the $40k support level today for the first time in two weeks. BTC is currently testing that support after failing to break above its 40-week moving average ($45,724) earlier this week.

Source: Heat Map & Sector Performance — Finviz.com

Ford Splitting Up? What You Need to Know

Despite the rest of the market having yet another depressing day, Ford shares were able to convincingly outperform… Here’s why.

Shares of Ford (F) spiked as much as 5% this morning following a Bloomberg report that Ford CEO Jim Farley is considering spinning off the company’s EV business into its very own entity. 

  • This report comes just a few weeks after previous rumors that Ford was looking to split off a portion of its EV business in order to attract more capital from EV-specific investors.

Wall Street has been urging General Motors to spin off its EV business as well, but GM President Mark Reuss has said that the company determined it wasn’t the right thing for them to do at this point.

So here’s the question: Why would a spin-off? And why would the stock rise today based on those rumors?

Business spin-offs could be lucrative for both shareholders and the business itself — after all, operating as two separate entities allows for greater flexibility, concentration, and segment-specific returns.

Also, spinning off allows for investors to better understand the business they are investing in (and could attract more investments from those only interested in that side of the business). 

  • Think about it, if you’re investing in Ford’s future as an EV company, do you really want your business spending all that money producing combustion engine vehicles? Probably not…

But don’t go crazy on short-term F stock options just yetBecause these reports are still based on rumors and rumors alone. In fact, Ford said in an emailed statement that it currently has no plans to spin off its EVs or traditional biz — so make sure you keep an eye out for any official press releases.

Legendary Record Label Plans to Drop A-List NFTs

It seems like the music industry is ripe for Cathie Wood’s favorite word… disruption.

With the emergence of NFT collectibles and metaverse concerts, top record labels are looking for additional revenue streams so that they don’t have to be so dependent on streaming alone. And Universal Music Group just announced a plan to do that with Web 3.

Universal Music said it plans to work with Curio to develop collectibles and digital artwork for its artists. Curio is an NFT platform that makes it easy for creators to sell official NFTs to fans (and they can buy them using non-crypto methods as well, like with a credit or debit card).

So what does music have to do with Web 3?

Well, ever since streaming took over buying physical records (which is still cool, btw) artists have really only been able to sell access to themselves through events, meet & greets, and of course, concerts.

  • But with NFTs, “We have an opportunity, with Web 3, to have ownership on top of access,” said Michael Nash, UMG’s executive vice president of digital strategy.

This means that top fans can now collect digitally scarce assets from their favorite artists, adding another layer to the fandom… And who knows, maybe some of these NFTs will come with utility like VIP/Backstage passes, or serve as tickets to special events as well.

The roster: Universal Music Group is a massive music conglomerate (and one of the largest rights-holding companies in the entire world). Some of their top artists include Drake, Justin Bieber, Nicki Minaj, Kendrick Lamar, Billie Eilish, and Ariana Grande.

But don’t expect any of those names to be the guinea pigs… The first NFT issue will launch in March with British singer-songwriter Calum Scott.

Homes Are at a Record Low Supply…

The bidding wars are going strong in the housing market as buyers are trying to lock in favorable rates before mortgages start to surge.

According to the National Association of Realtors, sales of previously owned homes actually jumped 6.7% from December to January (significantly higher than Wall Street expectations). However, sales were still 2.3% lower compared to January 2021.

But it gets more interesting than that… The supply of homes for sale fell to a record low in January, falling 16.5% from a year ago. 

    • There were just 860,000 homes for sale at the end of January, representing just 1.6 months of inventory (a balanced market generally has 4 to 6 months of supply).
    • Low supply and high demand pushed the median home sale in January to $350,300 (up 15.4% YOY).
    • Homes are selling fastThe average home is taking just 19 days to go under contract.

“Seller traffic is very very low, implying that inventory is struggling to make the turn. Realtors are indicating multiple bidding wars are still happening,” Lawrence Yun, chief economist for the Realtors, told CNBC.

Interestingly, recent home sales are being skewed towards the higher end of the market, but supply of homes is the thinnest at the lower end.

  • Homes between $100,000 and $250,000: supply down 23% YOY
  • Homes between $750,000 and $1 million: supply up 33% YOY

Here come the investors… “Investors are really popping out, and this may be why we’re seeing a pop in home sales,” said Yun. The investor share in the real estate market rose from 15% to 22% over the past year.

Chamath Says He’s Done — SPCE Falls Even More

Chamath is finished… with Virgin Galactic, that is.

After taking Sir Richard Branson’s space tourism company public through his SPAC back in October 2019, Chamath Palihapitiya is stepping down from his position as Chairman of the Board, effective immediately.

Chamath says that he’s leaving to “focus on other existing and upcoming public board responsibilities,” but he is looking forward to getting the chance of “one day flying to space with them.”

Background: Shortly after SPCE surged over 120% in just one month in January 2021, Chamath decided to cash out of his personal stake (then worth around $200 million). Based on reports from news networks at the time, it seems like his average sale price was around $34.

  • The year between now and then has been extremely volatile — shares of SPCE are now trading for $8.39, nearly 20% below the SPAC price of $10.

No hard feelings… It seems like the company isn’t taking the departure as a surprise, and CEO Michael Colglazier doesn’t seem salty at all. “We’ve always known the time would come when he would shift his focus to new projects and pursuits,” said Colglazier. “I’m grateful for everything Chamath has done for our company and wish him all the best.”

In fact, Virgin Galactic has been making a lot of changes to its structure and brand ever since Colglazier took the reins as CEO. 

Even Sir Richard Branson seems to be distancing himself as the face of the company — earlier this week, Virgin Galactic made the decision to replace the image of Branson on its logo with an outline of the company’s spacecraft.

Crypto Whales’ Risky $712 Million Bet

Do you really gamble invest in crypto if you don’t follow those Twitter accounts that point out crazy ‘whale’ buys and sells? 

Well, if you do keep up with that stuff, you may have noticed a recent trend in everyone’s favorite underdog story: XRP.

So-called ‘mega whales’ (those with at least 10 million native units in their wallets) have been accumulating XRP over the past three months like there’s no tomorrow — showing similar signs to when XRP exploded in late 2020.

Since December 2021, there’s been a 76% jump in these mega whale addresses. And as of today, they’ve added nearly 897 million XRP tokens (or $712 million) into their reserves.

  • This is big… According to analytics firm Santiment, the XRP accumulation over the last three months was the second-largest in the token’s entire existence. The largest was back in November and December of 2020.

Zooming Out: XRP surged over 45% in the first 7 days of February as reports hinted to the market that the long-standing battle with the SEC over being a “security” could finally be coming to an end soon.

Accumulators are betting that when things finally get cleared up with the regulators, XRP will explode in value as institutions start feeling more comfortable using Ripple’s technology to efficiently transfer funds cross-account.

Stay up to date with all things crypto, with the number one crypto newsletter, the Daily Bull.

Bulls

Dollar Tree (DLTR) +5.22% – Executive Chairman Bob Sassar announced his retirement today. Dollar tree is now officially up YTD. 

Ford (F) +2.82% – CEO Jim Farley is supposedly exploring options to spin off Ford’s EV business, causing the stock to pop. 

Macy’s (M) +1.90% – Macy’s stock moves up today ahead of its earnings report on the 22nd amid bullish sentiment. 

Bears

Roku (ROKU) -22.29% – Roku beat on earnings expectations by double but missed revenue by $30 million. Guidance came in lower than expected due to supply chain issues.

DraftKings (DKNG) -21.62% – DraftKings told investors today it didn’t expect to reach profitability until late 2023, causing the stock to get demolished today. 

RedFin (RDFN) -20.18% –  RedFin beat EPS estimates by 11.61% and Revenue by 7.40%, but forward guidance showed expanded loss expectations as iBuying business grows. 

Roku (ROKU) – Pivotal downgraded shares of Roku from hold to sell saying it sees too many negative catalysts. “The bottom line is with increasing competition, a potential significantly weakening global economy, a market that is NOT rewarding nonprofitable tech names with long pathways to profitability, and our new target price we are reducing our rating on ROKU from HOLD to SELL.”

Block (SQ)Daiwa initiated coverage of Block as a Buy seeing “sustained top-line expansion” for the company.“Block is one of the few firms in the payments space that reaches both merchants and consumers, and it is focusing on potential synergies between the two business domains.”

Fastly (FSLY) – Raymond James upgraded Fastly from outperform to strong buy saying the fundamentals are stronger than investors think. “We are upgrading shares of FSLY to Strong Buy on what we believe is an overreaction to the conservative top-line guidance management unveiled for 2022. We believe the downdraft in the shares is in response to the top-line guide that consists of two camps: The bears believe it is a sign that some mix of pricing and volume are weakening, and management lacks confidence in the business.”

Quote of the Day: “Always look for the fool in the deal. If you don’t find one, it’s you.” — Mark Cuban

Fun Fact: Data from the Survey of Business Owners found that 2.9% of all businesses in the U.S. are franchises, like Burger King, Pizza Hut, and Pinkberry.

  • SpaceX is splitting its common stock in a 10-for-1 stock split
  • GM seeks U.S. approval to deploy self-driving vehicle
  • Spotify stock (SPOT) falls after Joe Rogan podcast briefly not accessible
  • Russian-backed rebels in Ukraine begin evacuating civilians from embattled regions
  • Intel delays 2023 chips to 2024
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