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24.11.2022

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.

28.12.2022

The Most Generous Corporates: Capital One

Capital One Financial corporation shares are trading at 50% off their peak prices. This has inspired the management of the company to deliver a massive buyback program bringing the buyback yield to 19.3%. Together with 2.7% dividend yield, this has made the company one of the most generous in the market. COF shares are in great demand among investors that are focused on value stocks, such as Oakmark Fund with more than $45 billion in assets under management.

The specialisation of Capital One is mostly credit cards, auto loans provided to substandard borrowers, or in other words, people with high credit risk profiles. This business is highly profitable, although it does bear high risks too. The company says it has a reliable risk assessment model in place to run the business. The lender generates not only higher margins compared to its peers, but overruns regulators’ requirements of capital adequacy with 13.6% vs required 6%. Considering these criteria, the company is in line with some of the largest banking institutions in the world, like JP Morgan with 14.1% and the Bank of America with 12.8%.

The company’s capital base, which is built on clients’ deposits, is enough to conduct high-margin lending. Such a model of cheap resources is not only profitable but it is also stable. Capital One has a margin of 10-15% on its tangible equity. The interest for the company’s services is unlikely to decline in the foreseeable future considering the current economic environment. So, COF shares could be selected for long term investments with the upside potential of 30-40% once the market starts recovering.

24.11.2022

Major Risks for Tech Giants: Apple

Apple stocks have had a very impressive performance amid a clearly bearish market while losing only 20% of their peak values. However, investors should be prepared for elevated turbulence in these stocks considering the situation in China.

China’s zero-tolerance policy to COVID-19 led to a massive exit of employees from Zhengzhou city plant amid fears over tightening curbs. Over 200,000 workers are rumoured to have left the plant. If this is true, the production of iPhone 14 Pro and iPhone 14 Pro Max would be very complicated with no clear outlook on when it could be resumed. The delivery delay shown on Apple’s website has already hit six weeks. Americans who ordered the brand new IPhone for Thanksgiving Day will only receive it for Christmas now. Meanwhile the last two months of the year are very valuable for any mass-market company in terms of holiday sales.

Apple is planning to move iPhone production to India. But that would require years. The company has already invested $75 billion in the Chinese market and now this investment may be at risk as the ruling Communist party in China may put a local ban on the sale of Apple products. China is the third largest market for Apple with the United States at the first place with $153 billion and Europe at the second with $95 billion. Wall Street is expecting Apple’s earning to go up by five percent over the next three years. So, any troubles with production in China may alter these forecasts.

28.12.2022

The Most Generous Corporates: eBay

eBay stocks are trading 50% off their peak prices despite significant progress in key businesses that increase the possibility of an increasing turnover of the auction platform. The dividend yield of the company is at 2.2%, while its buyback yield is at an impressive 24.4%. So, the overall reward for investors is at 26.6% in 2022, a record among public corporates. eBay has bought back shares for $5.3 billion during the last four quarters. So, outstanding shares have been reduced to 551 million from 685 million a year ago.

The company is actively developing collectable trading, including an acquisition of TCGplayer, a marketplace where enthusiasts exchange their collectables like Pokemon, Magic: The Gathering and others. The most important service that the platform provides is guaranteed authenticity of the collectables that ensures the buyers will not be subject to scams and also protect sellers from any malicious fraud. eBay has recently made this service available for jewellery above $500.

The company has published strong forward guidance for Q4 2022 with turnover at $17.8 billion, revenues at $2.46 billion, and EPS at $1.06. The EPS in the Q4 2021 was at $1.05. So, considering the tense situation in the retail market this year, any figures above record values of 2021 should be considered an achievement. eBay stocks will be able to recover rapidly to their peak prices once the market reverses to the upside, and that would mean 100% profit from the current values.

11.08.2022

Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12^th 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.

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/

01.11.2024

VeChain Is Struggling to Recover

VeChain (VET) is down 4.7% this week, trading at $0.02100, underperforming the broader crypto market as Bitcoin (BTC) continues to rally with a 3.2% gain to over $70,000. VET has remained within a tight trading range of $0.02000-$0.02500 over the past three months, and it is currently nearing the lower support of this range. A rebound from this level could occur if buying interest strengthens.

The recent launch of VeChain's Blockchain-Powered Digital Passport has bolstered security, a positive development for long-term utility. However, this feature also introduced additional complexity for users, potentially impacting adoption and putting pressure on VET's price.

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MetadoroIn-house analytics

31.10.2024

How Deep Can Eli Lilly Sink?

One of the major pharmaceutical manufacturers in the world, which showed 10x growth in value for the last 5 years, dropped by double digit percentage this week. Eli Lilly lost more than $200 per share, or nearly 20% of its peaking market caps, compared to the company's all-time highs at $972.5 in August. This story gives us a tremendous opportunity to acquire a clearly attractive asset at a very good price. A fast bounce back to the northern border of the new range above $850, from the opening price below $800 on October 30 with local intraday dips detected at $769.75, freshly confirmed a flurry of interest among the investing crowd for a stronger recovery potential. At the same time, a wide daily range already in the first hours after Eli Lilly's earnings' report gives everyone additional time to choose a better price to enter the market, as we may expect more dips below $800 or even an attempt to slide further with an exclusively brief visit to the levels between $700 and $750, where risk-on strategies may even strengthen bullish positioning.

The reason behind Eli Lilly's sharp plunge was that its weight-loss drug sales substantially missed overly optimistic expectations. Analyst polls forecasted $4.20 billion for quarterly sales of diabetes treatment Mounjaro and $1.69 billion for Zepbound, which is another brand name for the same medication tirzepatide, regulatory approved for weight management in the U.S. and some other countries. Consensus saw the drug may provide the company with $19 billion of revenue before the end of this year. Now the market found that this would not happen, because sales of Mounjaro from July to September was $3.11 billion only, while sales of Zepbound were $1.26 billion. Of course, the firm posted EPS (earnings per share) of $1.18 only for Q3, failing much of the consensus at $1.45. Its total revenue came in at $11.44 billion instead of $12.09 billion, even though the number rose by 20% YoY.

Lilly commented this still reflected "continued strong demand", yet had to cut its full-year profit projection from the previous range between $16.10 and $16.60 per share to a much lower range between $13.02 and $13.52. Eli Lilly tried to reference $2.8 billion acquisition-related charges in the third quarter, yet also "higher manufacturing costs" was cited as well. The company kept the lower end for supposed sales range at $45.4 billion but lowered the upper end by $600 million to $46 billion.

As to the two tirzepatide-based drugs, Eli Lilly's CEO David Ricks admitted "there is an excess supply... but we haven't been stimulating demand the way we had originally planned," adding that his company delayed plans to advertise weight-loss drug Zepbound while also postponing international launches of production and distribution to focus on "increasing inventory levels in the U.S." Thus, sales of both Mounjaro and Zepbound "decreased by mid-single digits", derailed by "inventory changes" after Eli Lilly reportedly invested $7 billion in its Indiana site and facilities in Ireland to expand production. From our point of view, this may be a planning error that led to a partial deflation of a vast bubble of expectations, but it does not mean that the whole project was something like a big bubble. Discounting market price may reflect only a temporary and rather small trouble with marketing promotion plans for very popular new products, which are still in a bid demand. And so, a 20% or 25% correction of market value could be enough to revive the investment interest for the stock. Eventual recovery to the levels above $950 looks almost inevitable.

LLY

MetadoroIn-house analytics

31.10.2024

AI Curse and Blessing

All eyes turn to the next $500 target when discussing Microsoft's ability to accelerate its long-term rally on markets. In this context, a moderate price gains were initially detected on Wednesday at the very first moment after announcing another historically record levels at $3.3 of quarterly profit per share on even better than expected 16% annual surplus in sales, also beating all-time highs at $65.6 billion from July to September vs the most encouraging peak at $64.7 billion in the previous quarter. Azure, Microsoft's cloud business, added 33% YoY above consensus estimates of around 32%. However, the company's own guidance for potentially slowing cloud business progress in the current quarter was a key to a nearly 4% drop in market values afterwards, so that immediate price corrections hit $415 per share in the pre-market trading activity on the last day of October, vs $432.50 as the last daily close before the news.

The unfortunate sentence by Microsoft chief financial officer Amy Hood, which a picky crowd didn't like, foresees fiscal second-quarter Azure revenue growth of 31% to 32%, instead of 32.25% expected on average by the Wall Street's pool of analysts, after it’s slowed from its maximum speed of 35% just one quarter before now. She added that the CapEx (capital expenditures), which already came at $20 billion per quarter, is going to expand more due to ongoing investments into building out more powerful data centres based on AI capacities. From our point of view, large cash investments to consolidate the clear success of Azure cloud division's closer partnership with ChatGPT-maker OpenAI seems justified as the entire pattern of previous expenditures of this kind has really paid off. Moreover, Microsoft is happily optimizing costs in other parts of its business, which is justified by an overall increase in marginality.

Therefore, we feel that a shy and jumpy wing of the market, fearing a decrease in Microsoft profits because of somewhat rising costs for artificial intelligence, which is undertaken by the flagship of the industry, is surely not the majority. All temporary price dips, which are still leading to a discounted value of the world's number one company in terms of market caps, will be repurchased very soon, if not during the next couple of weeks. The negative dynamics may be short-lived, even though the technical correction has some chance to retest a one-month low at $408.17 or even dive slightly below a two-month low at $400.80 under certain circumstances, as the move down may coincide with a wave of U.S. election vulnerability. In the same way, a part of investors was focused on elevated AI expenditures at Meta Platforms, when the Facebook father Mark Zuckerberg noted the spending was showing "strong momentum", when highlighting his brainchild's "significant" surge in capital investments in 2025 to run the wider and modernized AI infrastructure. Yet, we continue to believe in the new heights well above $600 for Meta, as well as returning to an uphill climb to the round figure of $500 by Microsoft.

MSFT

Rafael Quintana Martinez

31.10.2024

Monero Seen Up Soon

Monero (XMR) is down by 1.6% to $160.74, underperforming the broader crypto market, while Bitcoin (BTC) has gained 6.9% to $72,656. XMR's decline follows Kraken’s decision to delist the token for its European users, with any remaining XMR on the exchange set to be converted to Bitcoin at market rates by January 6.

This isn’t the first instance of Monero facing delistings, so there’s no immediate need to sell your XMR holdings. Price action shows signs of recovery, and a breakout from the current ascending triangle pattern could potentially drive prices 25-30% higher, signaling a promising rally ahead.

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