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08.12.2022

To The Moon Stocks: Toyota

Toyota stocks are trading 20% off their peaks. The company has made a strategic target hybrid, electric and hydrogen vehicles manufacturing. EV makers are now experiencing some issues with the production of batteries. So, prices on new electric vehicles rose sharply. Car makers and battery producers are working together to increase production, but this is not a one time story and may have an effect in a few years.

Electric vehicles are considered to be rather luxury cars, but they are even more expensive now. Tesla has recently raised its prices for some models by $6,000. Whatever the case, EV production is expensive and prices start at $50,000 per car. Hybrids are more affordable as it may cost around $30,000 for Toyota’s popular RAV4 model, while the same model with the combustion engine would cost $27,500. But the Hybrid version can make up to 51% more miles and leave a significantly lower carbon footprint.

Humanity is moving toward electric transport, but now they are considered to be more of a status vehicle. So, hybrids will be in demand for now and that would allow Toyota to raise its revenues along with improving electric vehicle technology.

Toyota has EV / EDITDA ratio at 11.8 while Tesla has it at the sky-high level of 32 with the same comparable business margins. So, TM stocks are a long term perspective bet.

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.

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.

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.

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.

MetadoroIn-house analytics

14.07.2022

How Apple is Affecting Alphabet?

The strategy to open long positions for Google and short positions for Apple stocks may become a balanced hedge opportunity in times of economic downturn. Apple stock prices were expected to benefit from the development of VR and Apple car segments, but there are no details on the progress on Apple cars so far. It is not even clear if Apple will create these cars on its own or if it will cooperate with third-party car manufacturers.

Alphabet, a Google parent company, has already been testing self-driving vehicles in San Francisco, and is cooperating with Uber Freight to facilitate highway unmanned cargo transports. More than a half of the 4.1 million miles travelled by self-driving vehicles in the United States last year were made by Alphabet vehicles. Apple self-driven car prototypes may not appear before 2024.

Google Glasses are created with technology that was bought together with Focal startup in 2020. Together with Google cloud, Youtube and Waymo, an autonomous driving technology development company, and also a subsidiary of Alphabet, revenues are expected to grow fast over the coming years. The revenues of Alphabet are expected to add 19% in 2023 vs 6.5% by Apple, in 2024 they are planned to grow by 13.8% and 5.5% respectively. In other words, revenues of Alphabet are expected to grow three times more than Apple, while their P/E ratio in 2022 is expected at 14 and 20 respectively.

The mid-term target price for GOOGL shares is at $2,700.

GOOGL

965

MetadoroIn-house analytics

14.07.2022

How Apple is Affecting Qualcomm?

Qualcomm stock prices are highly dependent on the success of Apple’s development of its 5G modems for the Iphone division. This division was recently acquired by Apple from Intel in order to dump chip supplies from Qualcomm that has the monopoly of this type of chip manufacturing. The U.S. Supreme Court gas finally declined Apples bid to continue fighting over two related Qualcomm patents. Qualcomm has estimated that a positive effect will come from an additional $2 of EPS from this trial as the company would receive royalties from Apple even if its smartphones and computers would be equipped only with their own chips. Thus, the decision of Apple to replace Qualcomm CPU chips in Macbooks with their own came as a surprise because Apple would have to pay royalties anyway.

The leading role of Qualcomm in 5G chip manufacturing secures stable cash flows, while Apple is rumored to be failing to create an appropriate replacement for third-party chips, leaving Qualcomm an exclusive chip maker for new Iphone models. Apple forecasted that it would acquire 20% of third-party 5G chips, but now it seems this figure would be close to 100%.

Qualcomm is also benefiting from electric vehicles and self-driving vehicles, as producers secured $16 billion from digital devices that are planned to be produced. According to the company’s management it will boost this business revenue to $3.5 billion a year in the 2024-2026 period. QCOM shares are traded 30% off its peak values with P/E ratio at 9. This ratio is seen to be underestimated as Qualcomm is likely to lower its dependence from Apple as its major client is considering significant progress in many other company divisions, including IoT.

The mid-term target price for QCOM shares is at $150.

QCOM

1401

MetadoroIn-house analytics

07.07.2022

An Undeserved Penalty for AMD

AMD stocks have lost 50% since January 2022 despite elevated demand for semiconductors from data centers and the car manufacturing industry. The major concern of investors was prompted by a statement by the company’s rival Intel that the demand for personal computers is contracting. Intel has lower prices than Alder Lake processors and suspended any recruitments for its production facilities. The company has stopped the construction of new factories as U.S. Congress voted against contributing to the project’s finances. The U.S. Administration had planned to co-fund the project by putting in 30% of $10 billion needed for this project.

How will all this affect AMD? It won’t in anyway. The company continues to hire new employees, and its major market is not personal computers but expensive server equipment. This segment was mostly unaffected by the COVID pandemic. The company had a share of 9% in the segment before the pandemic and it has been increased to 12% in 2022. AMD also increased its share in the smartphone segment to 23% compared to 18% a year ago.

AMD

1412

MetadoroIn-house analytics

07.07.2022

An Undeserved Penalty for Meta

Meta shares (Facebook platform owner) has lost 50% since the beginning of 2022. Facebook and Instagram have dominated the social media industry for a long time with a minor contribution from the Snapchat that was populated mostly by teenagers. A dramatic change came when TikTok emerged - a rapidly expanding short video social media platform. The launch of Instagram Reels and efforts by the U.S. Administration to crack down on TikTok within the U.S. territory were not quite successful in discouraging new Chinese social media expansion. Nevertheless, it is too early for Facebook to be dismissed.

The adult audience spends 38 minutes a day on TikTok, while Facebook and Instagram have these reading at 31 and 30 minutes respectively. The Meta platform is still popular for communication purposes and for posting photos, but not so popular for video content as people prefer to consume videos on other social media platforms. Meanwhile, video content is very important in terms of audience retention. Meta Platform’s CEO Mark Zuckerberg said that people spend over 50% of their time on Facebook using Reels while only 20% of their time is spent on Instagram. New Meta efforts to introduce artificial intelligence algorithms to increase audience involvement in video content may increase Meta revenues even if the platform’s numbers do lack behind that of TikTok. TikTok had one billion active users a month in 2021 with a revenue of $20 billion. Reels have 1.3 billion active users while revenue from reels was recorded at $1.2 billion. Increasing monetization and audience engagement may boost revenues up to $5.6 billion in 2022.

Meta is also likely to decrease financing of it Metaverse as the Reality labs division posted $3 billion losses during the first three months of 2022. The decrease of spending and rising Reels revenues will upgrade price targets for META stocks for the mid-term.