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15.09.2022
Safe Haven Assets for Long-Term Investments: Broadcom

Broadcom is an American semiconductor and infrastructure software development company. Soon it is expected to close a merger deal with VMware, a cloud computing and visualization company, that will open new cross-sales opportunities for Broadcom to boost its revenues. Broadcom stocks are now 25% off their peak values.

According to the Q3 FY 2022 financial report that ended July 31, consolidated revenues grew by 25% year-over-year to $8.46 billion, and EPS went up by 40% to $9.73 per share. The semiconductors segment, that added 32% year-over-year, was the primary driver for the company’s profit. The company’s free cash flows (FCF) topped $4.3 billion, allowing it to spend $1.7 billion on dividends and 1.5 billion on the shares repurchase program. The company is planning to continue spending at least 50% of FCF on dividends that added 43% every year on average since 2016. 

According to the Q4 FY 2022 forward guidance, the company is expecting its revenues to go up by 20% year-over-year to $8.9 billion and for EDITDA to go up by 25% to $5.6 billion. Broadcom has great experience in expanding its product portfolio by M&A operations, and apparently it will continue on this way. The company is also expected to benefit greatly from the $52.7 billion CHIPS bill in the United States.


04.08.2022
Ethereum’s Most Important Update

ETH is a native token for the Ethereum blockchain and is one of the two most reliable digital assets in the market along with Bitcoin. Ethereum is the first platform that became a hub for thousands of blockchain apps and other digital solutions. The recovery of ETH prices to November 2021 peaks at $4,900 would bring investors 190% profit.

Second layer solutions (Layer2) were introduced to improve stability and effectiveness of the Ethereum blockchain. These are blockchain network add-ons that are added on top of the primary blockchain. The most popular add-ons are Arbitrum, Loopring, Immutable X, and Polygon that have recently partnered with Meta (Facebook owner). In other words, the Ethereum blockchain network has a much broader use than the native blockchain itself.

Ethereum developers promise to release a new Proof-of-Stake (PoS) consensus protocol in late 2022. This protocol will allow miners to stake tokens to a special deposit to mine blocks. Some networks within the Ethereum blockchain have moved to PoS protocol this summer, while others are expected to move to this protocol in the middle of September.  This move will allow for the increase of processing capacity of the network to almost 100,000 transactions a second from the existing 30 transactions and lower commissions. This would also allow for ETH to switch to the deflation model when coins are algorithmically burned, while some coins would be removed from circulation as they would be blocked by staking - more than 13 million ETH or 10% of overall coins in circulation are blocked by staking. The problem is that coins are blocked for a long period of time and cannot be sold or exchanged for fiat currency.

16.06.2022
Not Every Tech Stocks are Equally Strong: SAP

SAP stocks have lost 30% since the beginning of 2022. The German tech company develops enterprise software and solutions to manage business operations. For example, one of its services can be used  to manage all business travel financial activities and related spending. In other words, it is quite a routine company with  a stable and strong cash flow. Once SAP software is installed on a corporate level it is hard to do without it as it is deeply integrated into the business core processes. Moreover, SAP is restructuring its business model around its subscription base and this will allow for cash flows to be even more predictable and balanced through the financial year. Such a model is in favourable to Wall Streel investors.

The war in Ukraine has a 300-million-euro negative effect on SAP business, and it is only a marginal 1% of the overall revenue base for the company, while its dominance in the ERP segment is secure. The revenues added 11% year-on-year to 7.08 euros in Q1 2022. The revenues grew by 6% in  Q4 2021.

The company has made some successful M&A deals, acquiring Qualtrics, a cloud-based subscription software platform, that delivered +48% revenue in Q1 2022. This company had a gross margin above 90% in 2021 while SAP’s gross margin was at 70% for the same year.

SAP management promised to triple its cloud-based business by 2025, and boost revenues to 22 billion euros, while operational profit is forecasted to grow by 40% from the current 8.4 billion euros. This is a very extensive growth for the company that has a high P/E ratio at 17. The company may not perform very high growth rates as its younger tech sector peers, but it may certainly recover to new all-time highs in the long-term perspective. However, the sector may require several quarters to recover, and the recovery would be headed by such reliable companies as SAP with a low risk profile.

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.

26.04.2023
Diversification Inside Tech Sector: Taiwan Semiconductor

TMS is the most valuable semiconductor producer in the world. Its stock went down by 40% during the recent market correction, and rebounded slightly after a strong Q1 2023 earnings report. The company reported an operational margin at 45.5% as production of 5 nm and 7 nm chips is increasing. The company continues to generate profit despite decreasing demand for personal computers after surging during the pandemic in 2020-2021. Its financials are looking much stronger than its major peer Intel. In the worst-case scenario TSM’s operational margin is expected to decline to 40%, while Intel is expected to deliver a 39% operational margin with a negative net cash flow in Q1 2023. Taiwan Semiconductor is planning to spent between $32 billion to $36 billion on CAPEX this year, while Intel has cut CAPEX to $20 billion despite being 30% co-funded by the U.S. government.  On the negative side, the company is quite vulnerable to geopolitical risks as tensions between China and Taiwan are mounting. Although, it is hard to believe that Beijing will take the island by force, these threats could not be discounted. China is building its image as a global peacemaker while promoting its roadmap to establish peace between Russia and Ukraine, and the recent China-brokered agreement between Iran and Saudi Arabia. Economic ambitions of China are also a major hurdle for a military solution of the long-lasting conflict as the destruction of the chip production facilities of TSM will make such military operations pointless in the economic sense. In other words, TSM stocks may interest very optimistic investors that are seeking extra profit amid recovering demand for chips in the second half of` 2023.  

Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
GRT Fells to a Weaker Side

The Graph (GRT) has dropped by 17.6% this week to $0.2634, underperforming the broader cryptocurrency market. Bitcoin (BTC) declined by 2.0% to $98,024, and Ethereum (ETH) pulled back by 7.3% to $3,700. GRT’s steep decline follows a rapid rise earlier in December, with the altcoin returning below its trend resistance at $0.2870 after peaking at $0.3488 on December 5.

A broader market pullback contributed to GRT’s 30.0% slide to $0.2368, driven by heightened selling pressure. The introduction of Alphabet’s next-generation chip, Willow, served as a formal trigger for the correction. Although concerns about potential threats to Bitcoin’s blockchain have surfaced, these speculations are premature. Willow would require a millionfold increase in processing speed to challenge Bitcoin’s security, underscoring the limited immediate impact of this technological advancement. Nonetheless, market sentiment remains fragile, amplifying the downside pressure across cryptocurrencies.

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Buying Dips in Oracle Coming Soon

The market value of Oracle Corporation (ORCL) grew by more than a quarter since our latest estimate in mid-September when we pointed out that its database software products would be sold faster due to beneficial collaborations with Amazon Web Services, Microsoft Azure and Google Cloud, as well as building more powerful supercomputers with the AI monster NVidia. These considerations turned out to be totally correct, so that the stock quite predictably continued to climb over a three-month period to approach the next intermediate target price at about $200 per share just before Oracle's quarterly results which came out this Tuesday night, on December 9. The numbers actually showed solid cloud growth yet the Wall Street crowd was not satisfied now, as both profit and revenue were generally in line with expert consensus expectations but failed to beat them. This was the reason why Oracle stock price dropped almost 9.5% after the opening bell on Tuesday, and the large force of inertia may drive it even dipper in the nearest couple of weeks, but we would consider such a temporarily negative dynamics as another good chance of buying dips to come even before the end of the calendar year. Oracle's revenue in Q3 was up 9% on an annual basis, which means its growth accelerated from 7% in the previous quarter. It also added more than $0.75 billion for the last three months to reach $14.06 billion vs $13.3 billion in Q2. The corporate profit increased by 9.7% YoY and 5.75% QoQ. The total cloud revenue was reported at $59 billion, up 24% YoY, with the cloud infrastructure segment growing as much as 52%, which was "a much higher growth rate than any of our hyperscale cloud infrastructure competitors," according to Oracle CEO, Safra Catz. Remaining performance obligations (RPO), which is usually a gauge of "pre-booked" revenue, also climbed by 49% to $97 bln, which is nearly an equivalent for the seven quarterly performance ahead. Looking ahead, Oracle CEOs projected sales in the current quarter to grow "between 7% and 9%", or even "9% and 11% in constant currency". Total cloud sales growth is anticipated "between 23% and 25% (or 25%-27% in constant currency)". And so, the only "fault" at the moment was that Oracle has reported its equity per share of $1.47 on revenue of $14.06 billion in the previous quarter to nominally miss too greedy Wall Street expert pool's preliminary estimates for $1.48 per share on revenue of $14.12 billion, which seems to be of little matter. This means that all the positive facts about Oracle are still here, only against a technically corrective background. Our conclusion is that price goals well above $200, let's say between $200 and $225 per share, would come back on the table.

One could also take a look at some other authoritative opinions. "We acknowledge Oracle is headed toward revenue acceleration," analysts at The Bank of America wrote in their immediate post-earnings note, only adding that "with a higher mix of cloud revenue, our concern is that scale on capex [capital expenditures] could be more challenging over time given the outsized growth from database on OCI [Oracle Cloud Infrastructure] versus apps and cross-sell of other high value cloud infrastructure services seen by hyperscalers". "ORCL remains one of the few companies in our coverage seeing a product cycle, augmented by strong execution and a tangible AI narrative, further supporting growth acceleration at scale," analysts at Wolfe Research commented, while even raising their price target immediately from $195 to $205. Evercore ISI updated its forecast on Oracle by increasing its price target area to above $200 from $190, while also maintaining an Outperform rating. They considered a "slight pullback" in share prices as a result of profit-taking after an "impressive 82.85% year-to-date return" rather than a shift in the company's prospects. Thus, confidence remains high "regarding the capacity expansion planned for the calendar year of 2025". Piper Sandler raised its price target on the stock to $210 from $185 while indicating an "overweight" rating, while feeling a shift "from a multi-quarter to a multi-year growth acceleration", based on Oracle's AI infrastructure attraction for large new customers including Meta, NVidia and Canadian-rooted Cohere.

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Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
CNE Is Likely to Pull Back

Coin 98 (CNE) has declined 18.1% this week, trading at $0.2219 and significantly underperforming the broader market, with Bitcoin (BTC) down a modest 2.2% to $97,740. After an impressive 81.0% rally to $0.2200 in November and a further 135.0% surge to $0.2835 in December, Coin 98 faced a sharp correction, retreating to $0.2200 and briefly dipping to $0.1850.

The altcoin continues to exhibit heightened volatility and struggles to regain momentum, with $0.2500 acting as a key resistance level. Should it manage to recover to this threshold, a pullback to $0.2000 appears likely as the baseline scenario. Persistent overbought conditions and a lack of strong fundamental drivers are expected to limit any sustained move above $0.2500.

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Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Opening Short on Bitcoin Correction

Bitcoin (BTC) has surged by 38.0% to $97,200 since the beginning of November, retreating slightly from its all-time high of $104,498. This rally has created record overbought conditions, surpassing those seen in December 2017, March and November 2021, and March 2024, when the 173% spot BTC-ETF rally began. In each of these instances, corrections of 40.0-50.0% followed. However, this time, the correction may be less severe. I anticipate a decline of 25.0-30.0%, targeting a range of $70,000-80,000 per coin. Based on this analysis, I plan to open a short trade at $100,000-110,000 with a stop-loss set at $125,000.

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