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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.

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 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.

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: 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.

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/
Cardano is Sinking

Cardano (ADA) is losing 3.0% to $0.3700, outperforming Bitcoin (BTC), which is declining by 4.2% to $61,200. The decline in ADA comes after a retest of the support at $0.4000. If ADA prices continue to fall, they could head towards $0.2000, representing a potential 46.0% downside. However, the decline might not be that steep and could stop at $0.2500-0.3500 within a downside flag pattern. According to IntoTheBlock, the largest buy positions, worth $1.3 billion, are located at $0.3733 and $0.3028. ADA prices may reverse to the upside at these levels.

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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/
Maker is Set to Rise

Maker (MKR) is rising by 1.0% to $2440 this week, outperforming the market. Meanwhile, Bitcoin (BTC) has declined by 4.1% to $63,845, its lowest level since May 15. The positive potential for MKR is supported by the upcoming transformation of the DAI network, set to begin this summer. MKR, one of the largest stablecoins by market cap, is used to back up DAI, a cryptocurrency pegged to the U.S. Dollar.

The DAI transformation, according to the Endgame roadmap, aims to position MakerDAO towards scalable resilience and sustainable user growth. The project's founder, Rune Christensen, envisions a massive expansion of the Maker project, targeting 100 billion DAI and beyond. This expansion will include the release of new stablecoins, innovative revenue generation methods, and potentially limitless new business opportunities through the creation of "subDAOs." Christensen suggests this could lead to a DeFi summer lasting until 2025-2026.

With these developments, Maker has strong prospects for continued growth, with a target of reaching the $3000 resistance level.

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Way to Profit, Adobe!

The market's attitude to Adobe stocks is finally beginning to synchronize with my own opinion, I described more than three months ago, in mid-March. My ideas on the company's undervaluation were essentially correct but premature. It happened to be too early for purchasing shares of Adobe immediately after a 13.5% decline. The price persistently tried to bounce for more than two weeks, then it dropped by another 10% in April and May. The narrative transformed into positive only at the end of last week, following the latest quarterly report. The share price gapped from nearly $460 to above $530 in one night after the report, adding more than 15% to follow the creative software developer's positive revision of its total sales forecast for 2024. The owner of Photoshop, Illustrator, Acrobat Reader and other well-known software that also invented the PDF format for graphic files is now focused on Adobe Creative Cloud services, betting on growing demand for artificial intelligence features. Many investment houses responded by raising their "fair values" for Adobe after its CEOs shifted to higher estimates for the next quarter guidance, including a revenue range of $5.33 billion to $5.38 billion, and $4.50 to $4.55 for EPS (equity per share). The last quarter's revenue increased by 11% YoY in constant currency to $5.31 billion. So, the forecast update was rather solid, resulting to the full year potential of $21.40 billion to $21.50 billion in revenue (from previous numbers announced between $21.30 billion and $21.50 billion) and of $18.00 to $18.20 in EPS (from $17.60 to $18.00 only). Adobe also raised its new digital media subscription metric from $1.90 billion to $1.95 billion.

Consumption for enterprise customers is good and may grow further because of Adobe’s generative AI solution, named Firefly. This web application is widening the door for new customers, offering "new ways to ideate, create, and communicate while significantly improving creative workflows", according to the software description. Adobe Acrobat also has AI-powered advancements. That's probably why the operating margin reached 46.0%, compared with 45.3% in the same season of 2023.

Yet, there is also a fresh reason for Adobe share price to be stalled at new higher levels, and that is the US governmental trade commission's lawsuit to the company for allegedly hiding some hefty termination fees (in the fine print, or behind text boxes and hyperlinks), concerning its most popular "annual paid monthly" subscription plan, while making it difficult for subscribers to cancel. It is said that early termination fees amounted to up to 50% of the remaining payments when consumers tried to cancel subscriptions in their first year, while Adobe also "forced" subscribers, who want to cancel online to navigate through numerous pages, while some clients, who tried cancelling by phone were disconnected and then had to repeat their claims to multiple representatives. Accusations in setting the sign-up trap for its clients and violating consumer protection laws needs at least some time, and maybe money, to be settled down.

Meanwhile, there is nothing new in the matter itself, as a similar lawsuit was filed against Amazon, about one year ago, where the US government accused Amazon of making it too hard for its customers to cancel their Prime memberships. And you are right that nothing principally bad happened with mid-term prospects in Amazon shares. So, I do not think any serious damage would be done to Adobe as well. Therefore, personally I feel that any price decline in the stock would only give a better opportunity to buy for those who refrained from doing so in the three previous months. At least, my buy positions, which I opened in mid-March have already begun to bring profit.

By the way, a very similar technical pattern was formed on Adobe charts in early summer 2023, with a reverse break up through the previously (in September 2022), temporary and falsely broken support level (a bit below $350). After that, the stock successfully recovered and set its new all-time high soon. I'm not insinuating anything, I'm just speculating!

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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/
Soft, Non-Aggressive Buy of Apple

Apple gains are still limited by a range between $213 and $217 per share, except on initial take-off days on June 11-12 when it just updated all-time highs to show a beautiful number of $220.20 at some moment. It is unsurprising that Wall Street crowds are not in a rush to touch it again, not to mention testing the next psychological milestone at $225. Although this will probably happen eventually, the iPhone maker is clearly lagging behind the major AI (artificial intelligence) rally, led by the current market's favourites, as a widely announced Apple Intelligence instead of usual artificial intelligence is mostly based on using Apple's partnership on several other companies' know-hows and NVIDIA's chips. Apple's assistant Siri mostly studies AI wisdom through the language, previously invented by OpenAI's ChatGPT, which is now Microsoft's best friend, even if Apple would benefit from this technology by its potential new iPhones sales increase.

Maybe that's why many investment houses are ready to revise their target price outlook for Apple at a slower pace compared to other IT segment leaders. They are not talking about its raising by factors like 1.4 or 1.5. As a bright example, JPMorgan analysts were careful enough to improve their Apple's share price projections from $225 to $245, explaining the move with iPhone sales forecast growth. The reputable financial group is now expecting 250 million devices to be sold in 2025 and 275 million in 2026, while a more or less modest annual profit surplus could be seen compared to the surge in sales driven by 5G technology in previous years. JPMorgan's forecast provides for a revision of EPS for fiscal years of 2025 and 2026 to $8.10 and $9.69 per share, respectively, which looks better than contrasts the market consensus after the WWDS, which predicts $7.26 and $7.64 per share for the same periods.

Apple delivered 234.6 million smartphones to the global market in 2023, surpassing Samsung by 8 million units and becoming the world's leading smartphone manufacturer. Samsung chief Jay Y. Lee discusses cooperation with Meta, Amazon and Qualcomm with their meeting topics including AI plus cloud services and chips. Meta's founder Mark Zuckerberg invited Jay Y. Lee to his home on June 18, and their discussions "spanned AI as well as virtual and augmented reality", Samsung Electronics officially noted in a statement. Lee also met with Amazon CEO Andy Jassy and Qualcomm CEO Cristiano Amon to discuss "cooperation in semiconductors, including memory chips for Amazon's data centres and cloud services as well as chip contract manufacturing for Qualcomm's mobile processors", Samsung added. The news suspended further purchases of Apple shares on Wall Street, leading to their decline within a couple of percent.

iPhone sales reportedly declined in China since the beginning of 2024. Some forecasts also try to take into account conservative estimates of the frequency of phone replacement by loyal customers, with a gradual two-year growth to maximum sales volumes, as there is also a chance for using some AI features in earlier iPhone 15 Pro/Pro Max models. Based on these assessments, testing levels around $225 and then $230 per share seems to us as being a matter of several months, while soft purchases when (and if) descending to levels below $210 per share look more appropriate than an aggressive buy directly from current levels, which may be appropriate for smaller trading volumes.

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