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24.11.2022
Major Risks for Tech Giants: Tesla

Tesla is unique in terms of its share price. TSLA stocks rallied long before the company established the production of viable and steady electric vehicles (EV) and also thanks to the reputation of its leader Elon Musk. It is true that Tesla sometimes misses its mark and deadlines to launch new models and products but it seems that the crowd invests in Tesla not for its hit-and-run strategy but because of their belief in Musk’s ability to transform our everyday life in the long run.

Tesla stocks are trading 60% off their peak prices thanks to the market correction that has been squeezing the market since the end of 2021. Nevertheless, market participants are discussing some drivers that may hit the company’s business. For example, lower gasoline prices may hamper EV sales. It is true that Americans are now paying around $3.6 per gallon compared to $5 a few months ago. But this driver is largely exaggerated as gasoline prices is not the major reason for someone to buy an electric car. A move towards green energy and minimising carbon footprints is not a short term affair, but a sustainable long-term trend that is supported by governments, including the United States and China. Besides. oil producers forecast global demand will outweigh the supply side over the coming years while also betting on higher prices of fuel. So, no short-term movements of gasoline prices would affect EV buyers, as well as TSLA stock buyers.

The more serious issue is the declining prices for Tesla’s second-hand EVs. Tesla used cars are now 15% cheaper after a summer peak. If this downtrend is sustained pressure on sales of new model could mount. Tesla is planning to increase EV’s quarterly production to 500,000 by the end of 2022 and it is likely to increase production further after launching new production facilities in Berlin and Austin. But Tesla is not a mass market. So, Tesla fans are unlikely to pay much more to get a brand-new Tesla.

06.10.2022
Top 3 Financial Stocks: CME Group

CME Group is the largest market place for derivatives. CME stocks dropped by 25% from the beginning of 2022. The only reason for such a decline is the overall market correction and not any business issues. High volatility is a benefit for the company as it offers the most important derivatives to mitigate financial risks. Among those are the most popular S&P 500 index futures and other indexes linked to derivatives, agricultural products, gold, silver, and crude derivatives. So, the company continues to receive decent profit that allows for the payment of high dividends to its investors.

Free Cash Flow (FCF) of the company in 2022 is expected to hit $2.8 billion. CME is improving its efficiency as every Dollar received in 2021 was converted into $0.48 of FCF, while this year this figure is expected to rise to $0.55, and in 2023 to $0.57. Regular annual dividends is at $4 or 2.3% of share value. CME is also paying interim dividends. By doing so, it paid $3.6 regular dividend and $3.25 interim dividends in 2021, or $6.85 per share, slightly above FCF per share at $6.77.

CME has a solid business model and sound financials without substantial debt. These facts allow the management to take more care of the company’s shareholders. The current overall downside configuration offers great opportunities for investors to add CME stocks to their long-term investment portfolios.

11.08.2022
Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12th position by market cap with $7.8 billion, which is 4% less than Ethereum’s market cap. AVAX prices dropped by 82% of its peak values, allowing investors to buy it at early 2021 prices. Avalanche’s infrastructure consists of three logically isolated networks, each of these with their own processing, validators, and own set of rules.

This platform is often compared to the existing internet web infrastructure with core connection protocols like HTTP, surrounded by a huge number of networks to their apps. Avalanche allow for the creation of public and private systems as a blockchain or DAG (Directed Acyclic Graph) and for the use of different virtual machines for apps, including EVM engine (Ethereum Virtual Machine) that allows Enthereum network programs to be developed.

Avalanche includes C-chain to create smart contracts that are processed on an advanced EVM engine, P-Chain that coordinates validators that process transactions and also allows for the creation and management of new subnetworks, and X-Chain which is a directed acyclic graph regulating issuance and trade of cryptoassets. DAG systems record new transactions on top of the old ones, allowing for processing speed to be increased and for capacity substantially. It is quite different to other blockchains, where transactions are compiled in blocks in order to be processed.

The advantage of Avalanche is that it provides anyone with the opportunity to create his or her own isolated blockchain with its own set of parameters, including access to apps and the programming language with which it will work. Every subnetwork can process around 4,500 transactions per second compared to 14 processed by the Ethereum network.

15.12.2022
Three Undervalued Value Stocks: Costco

Costco Wholesale Corporation has presented quite disappointing earnings report for the Fiscal Q1 2023. Revenues were reported up 8.1% year-on-year to $54.44 billion missing expectations of $54.65 billion. This is obviously not the reason for long-term investors to remove COST stocks from their portfolios as the company is set to maintain strong financial discipline and cost structure, not to stimulate high growth in the short term at any cost.

The operational margin in financial Q1 2022 was at 3.4%, and in Q1 2023 it was 3.2%. Costco is aiming to provide the most reasonable prices on their products to keep their clients loyal. That is why the operational margin is suffering. Meanwhile, EPS was up by 4.4% to $3.1, and membership fees rose by 6% year-on-year. So, the strategy seems to be buying itself.

Inflation in the United States is expected to return under control over the next year. So, there will be no need to deliver various marketing activities like coupon sales and others while loyal clients will be grateful for the support during the period of uncertainty. Costco is planning to open 24 new stores in 2023, increasing its potential to generate revenues.

11.01.2023
Advanced Crypto Assets: dYdX

DYDX tokens suffered a lot during the ongoing market correction and lost over 95% off their peak prices. dYdX is an advanced decentralised exchange, where clients can exchange cryptocurrencies and derivatives with marginal collateral. There are no KYC procedures to be followed within the exchange, as well as no need to disclose your personal data.

dYdX is runs on the Ethereum blockchain, known for its expensive transaction fees. However, StarkWare solution allows for lower fees as only commissions for trading are charged. The platform now runs on Layer 2 protocol which is incorporated into Ethereum’s  main network. This solution allows for transactions to be conducted instantly, while traders do not have to pay miners for validating transactions.

Market players are closely monitoring the dYdX V4 vehicle, which is  a standalone Cosmos blockchain, featuring a fully decentralised, off-chain, orderbook and matching engine. In other words, developers are going to create the entire trading infrastructure to scale up processes without involving any third-party applications. The service  cancelled two stimulus programs in order to lessen the effects of inflation within the dYdX platform and to support token prices.

Unfair Sell-Off: AirBNB

The famous marketplace for short-term apartment rental saw its stocks go down by 15% after the release of its very strong quarter report. Revenues and earnings beat analyst’s expectations and reached $2.9 billion, up by 29% year-on-year, and $1.2 billion, up by 46% year-on-year, respectively. The number of homestays grew by 25% year-on-year to 99.7 million, or by 31% year-on-year to $15.6 billion. Free cash flow (FCF) over the last 12 months was generated at $3.3 billion or 40% of the revenue. These are extremely strong solid numbers for a relatively young and rapidly growing venture.

Impressions are considered to become the  fastest growing drivers for the company in the forthcoming future. The sales of photo sessions, excursions, and master classes – which are additional services for rentals - are expanding. Even the idea of traveling is being redesigned by AirBNB as now the user may scan interesting apartments he or she wants to rent, and then decide if they want to travel to the seaside or to snowy mountains.

BNB stocks are seen to be very attractive for long-term investments. The hospitality industry has greatly recovered from the pandemic, and is looking for a vast number of employees.

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Tech Giants Are Sliding into a Correction: Microsoft

MSFT stocks lost more than 30% off their peak prices but the company is keeping strong positions across all business sectors. Its wide scale product line is highly appreciated by its business clients and there are no signs that point to the situation changing somehow in the future.

According to the Q3 2022 earnings report the company’s revenues are up by 16% year-on-year to $50.122 billion, while net income us up by 8% to $16,728 billion, and EPS rose by 11% due to the buybacks from the market. Strong corporate business segment results overshoot the retail segment as business applications such as Microsoft 365 E5 and cloud services reported growth of 15% and 26% respectively, while the personal computing segment delivered 3% growth year-on-year amid falling personal computer sales.

The three major business drivers for Microsoft and from which revenue is accumulated are: the Azure cloud computing segment, that is the second in the market after Amazon’s AWS, advertising on LinkedIn and Bing, and gaming. Business Fortune Insights has forecasted that the gaming industry would go up by 13.2% CAGR from 2021 to 2028 to $545.98 billion. Microsoft currently occupies 20% of this market  and may boost its share up to 27% by 2026. So, the company has strong possibilities of delivering rising revenues in the future.

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Tech Giants Are Sliding into a Correction: Alphabet

GOOG stocks lost 35% of their peak prices. The recent Q3 2022 earnings report added negative sentiment to the company’s business perspectives and sent stocks even lower. Investors were disappointed by weak Google search financial performances and Youtube’s falling advertising revenues. Overall Google adjusted revenues were reported at $69.1 billion, up by 6% year-on-year. A stronger U.S. Dollar hammered revenues of most of U.S. corporations, including Google. Without this factor Google could have seen Q3 revenues above $70 billion.

Other Bets Alphabet venture fund reported losses of $1.6 billion or over $6.4 billion for the financial year and this is certainly not the result investors wanted to see at a time when the company is seeking for new growth drivers. Google cloud business is also struggling with the loss of $699 million in the Q3 2022 compared to losses of $644 million in the Q3 2021 despite growing revenues by 37% year-on-year.

Google is seen to be faced with rising overall costs by $8 billion compared to the same quarter of 2021 and a rise of $1.8 billion during the previous quarter to $52 billion. These figures are very disturbing amid slowly growing revenues so it is seen to be very risky at the moment to invest in Google stocks. 

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Tech Giants Are Sliding into a Correction: Amazon

Amazon stocks lost 45% over the last twelve months. The company reported Q3 2022 revenues of $127.1, up by 15% year-on-year. Net profit was reported down by 9% year-on-year to $2.78 billion. The company is suffering from the uneasy external economic conditions.

Amazon Web Services (AWS) sector, that is responsible for cloud computing services and is a major driver for Amazon business, now delivered revenues of 20.5 billion, or is up by only 27% year-on-year. Users are moving to cheaper subscription plans amid uncertainty. So reported figures are the lowest in the last seven quarters. With this said it does not mean the company is suffering badly. AWS backlog of orders reached $104 billion at the end of Q3 2022. These long-term liabilities do not guarantee immediate conversion into revenues, as clients may not execute their obligations in full at the start. But AWS has a great chance to grow to $100 billion over the coming two years. AWS plays a huge role in amazon business as it is generating 100% of operational income at the moment.

Globally AMZN stocks may go down to $90 per share, where it can meet even greater demand by investors.

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