Daily General Discussion and spitballin thread Investing |
- Daily General Discussion and spitballin thread
- Daily Advice Thread - All basic help or advice questions must be posted here.
- S&P 500 since 1950 - graph showing all crashes
- Bitcoin could become the “currency of choice for international trade”, says Citi analysts
- Analysis of Berkshire Hathaway's Annual Letter
- Senseonics ($SENS) Continuous Glucose Monitor
- Can a bubble pop when VIX is > 20
- Hunt for Bloomberg alternatives: Geographic insights
- Lindy Effect and Valuations
- Anyone Who’s Anyone Has a SPAC Right Now A once obscure financial maneuver becomes a celebrity flex.
- All P/Es are not created equal - Lowe's vs Home Depot
- Airbnb stock enjoys best day since IPO
- Why it is usually a mistake for investors to take profits
- Taal Distributed Information Technologies Inc. (TAAL) DD
- Comparison of Housing Price History, Crude Birth Rate, and an Inflation Index.
- Bitcoin rises 6% as risk assets rally; Citi says at a "tipping point"
- Moderna (MRNA) DD – Why a 60B Company is Still Undervalued
- Making sense of the record-breaking 5G spectrum auction
- My $RIDE or die - Lordstown Motors
- Lets talk about the Apple Car
| Daily General Discussion and spitballin thread Posted: 01 Mar 2021 02:01 AM PST Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! This thread is for:
Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google. If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions. Any posts that should be comments in this thread will likely be removed. [link] [comments]  |
| Daily Advice Thread - All basic help or advice questions must be posted here. Posted: 01 Mar 2021 02:00 AM PST If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments]  |
| S&P 500 since 1950 - graph showing all crashes Posted: 28 Feb 2021 08:15 AM PST S&P 500 Since 1950 - 7 crashes Hi guys just wanted to put things in perspective for you all since some of you seem to be quite nervous with the recent week of stock movement. I've summarised a list all stock market crashes since 1950. There has been 7 stock market crashes since 1950, averaging one every 10 years. The stock market crashes ranges from inflation (10%+), to oil price rises (4x) due to war, dot com bubble, housing market collapse, covid-19 etc. The graph is a log graph meaning that the space changes are proportional to the percentage change. This is useful for looking at long term charts since the % change for a dollar increase is smaller as the index value goes up. The S&P 500 has averaged a compound annual growth rate of 8.22% since 1950. This is illustrated by the trend lines, and as you can see the S&P 500 is trading right in the middle of the range (the two blue trend lines). I noted a few reasons in the box for each crash for a brief understanding of why it had happened. Note, that the only one with a 'fear of overvaluation' was only the dotcom crash where the PE's were over 200 and many companies were just cash burning shells with massive negative free cash flows. I'm not saying a crash / correction won't happen, but i just wanted to put things into perspective and give a bigger picture of the overall stock market since pretty much before all of us were born. By no means am i an economist but I didn't include anything earlier than 1950s because that was pre WW2/WW1 - before the US was a superpower / the global financial hub / USD = world trade currency etc. Edit: some of you noted that its only 8.22% if you bought at the start but I want to clarify that yes and no! Yes for the people that literally buy in once once at the beginning of 1950. No because if you buy throughout the years (DCA every month let's say) you'll buy within the range - both lower and higher range! So it's more or less 8%! For example during 1960s-1980s the sp500 traded sideways! So if you constantly bought in those 20 years, the accumulation of money in this period would have a higher CAGR of > 8% because of where it is in the range. Just follow the lines! It makes it easier. There's roughly same amount of periods above and below the middle trend line. Edit: Changed enron scandal to lehman brothers as some pointed out my mistake. Edit: Further Log Graph explanation (why log is preferred) If the scale has a large range (i.e. 100 to 3000) then log should be used because its important to show the % changes as opposed to the point changes. A 1 point increase in the SP500 now is only 1/3811 = 0.02% whereas a 1 point increase 10 years ago was 1/1000= 0.1%. It's important to look at it in terms of % change because companies grow in terms of % as well. For example you don't quote apple has grown its business by 30 billion this year ( random number), instead you say apple grew its sales by 20% this year. Its so that its comparable. [link] [comments]  |
| Bitcoin could become the “currency of choice for international trade”, says Citi analysts Posted: 01 Mar 2021 03:47 AM PST https://ir.citi.com/_tpHpW8MfaZ1QXwGmP1JGMGXXI95qXm3IMJzUJScLMb6XIjtOls6EbDehXMR3B_o9Opi7mdc5tQ%3D US banking giant Citi has authored a new report which suggests bitcoin could become "an international trade currency" as it evolves. The report, entitled "Bitcoin: At the Tipping Point", charts the evolution of bitcoin from a form of payment to its current status as a store of value. The authors forecast that bitcoin's core properties combined with its global reach and neutrality could see it morph into the "currency of choice" for international trade in around seven years. "Perceptions about what makes bitcoin important continue to evolve and create new opportunities while increasing its perception towards becoming mainstream," the report states. "A focus on global reach and neutrality could see bitcoin become an international trade currency. This would take advantage of bitcoin's decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability." Citi's report explain that bitcoin, in the role of a global trade currency, could be used by importers and exporters to pay for goods and services directly – simplifying the process of international trade. A decentralized cryptocurrency may be preferred to a Central Bank Digital Currency, it argues, because "no government or outside entity can take steps that might affect the supply of the trade currency, helping to decouple trade from political considerations." [link] [comments]  |
| Analysis of Berkshire Hathaway's Annual Letter Posted: 28 Feb 2021 09:37 PM PST As many of you rightfully complain, Buffett has failed to find elephant deals for many years. He's complained himself about this every year and warned every year that BRK will lag SPY in the short term. In the meantime, he's fiddled with new ways to put the cash to use with sector bets on airlines, banks, japanese conglomerates, etc. With this backdrop, remember that Buffett is from the Silent Generation. So, what he didn't say in the report is really important. He didn't complain at all about not knowing what to do with cash and didn't warn that BRK might lag SPY. Let me explain. The reason he's been fiddling with sector bets is because these are his replacement for the elephants. In fact, he explains in his letter linked above that they're even better. He no longer needs to pay a control premium to own them. Plus he can buy into better businesses that are too valued by their shareholders to be sold entirely to any one owner. A lot of you also think that Warren missed buying last year's dip. This is not true. When BRK repurchased their own stock at a discount to intrinsic value through all of last year, you as a shareholder got more of everything they own at an additional discount to the bargain prices that existed last year. So not only did they in effect buy at the severely discounted prices, but they bought at an additional discount to those bargain prices. Over the next year, the market will transition from an easy money market to one where economic principles and free cash flows matter. There's no one more adept at navigating such markets than Warren and his colossal BRK cash machine. Also, here's some simple math for you. SP500 P/E ratio: 38.8. BRK P/E ratio: 13.5. [Yes, I included unrealized capital gains in calculating BRK's P/E. That's because BRK's portfolio is actively managed and it is part of their business model and reported net income. Plus 2020 was a year with a crash in it, so this makes even more sense.] This means BRK's underperformace relative to SPY lately was due to earnings multiple contraction in BRK while SPY experienced multiple expansion! This is why Buffett didn't warn that BRK might underperform. He's back in his mojo and about to whoop the SP500 again. The repurchases will only accelerate this. [link] [comments]  |
| Senseonics ($SENS) Continuous Glucose Monitor Posted: 28 Feb 2021 10:22 PM PST
For more information, check here. [link] [comments]  |
| Can a bubble pop when VIX is > 20 Posted: 28 Feb 2021 02:45 PM PST I would like to talk about whether or not a "bubble" can pop while the VIX is still trading at above-average levels. Let's first look at what the VIX is, some refer to it as the "fear index", and that's because it tracks assumed volatility in the next 16-44 days. The way it is calculated is by taking the weighted average of all the OTM calls and OTM puts that are being purchased. The demand for OTM puts is what causes the VIX to rise. We've also heard and seen that once the stock market reaches complacency, and everyone believes that the market is going to only head higher, that is when a bubble can pop. If fewer people buy OTM puts, that means that the VIX is lower, which also holds the assumption that everyone is buying into the market, and there is less money on the sideline. Well, even though we have recovered from the COVID lows, VIX has never closed below 20. Typically, during a calm period in a bull market, VIX tends to stay comfortably below 20, Let's look at what VIX was before the dotcom crash, banking crash, and the covid crash:
Those are all the readings the month before the crash. With the close of February 2021, the VIX is at 27.95. In January, the VIX closed at 33.09. In other words, the VIX is extremely elevated at the moment, and going back in history, we really haven't seen a full-blown crash while the VIX is already this elevated going into it. Circling back, this just tells us that throughout the last 6 months, investors have continued to purchase "insurance" in the market, and we haven't hit the full-on euphoria that some might believe we have hit. To wrap this up, I don't believe that the current drop is the start of a major correction. We would need to see more complacency on a further bull run before we truly see the bubble popping that many of us expect. [link] [comments]  |
| Hunt for Bloomberg alternatives: Geographic insights Posted: 28 Feb 2021 06:46 PM PST Hello, I have been trying to track down various free/affordable financial info services that combined provide the power of a Bloomberg terminal I've had much success using brokerage software for charts, Atom finance and Koyfin for fundamentals, and Bloomberg news, FT, and Twitter for news What I've had a tough time tracking down is industry wide information Specifically I'm thinking of the Bloomberg MAPS function where you can find maps of pipelines, development projects, etc. Is anyone aware of a website/service that provides financial geographic insight? Thanks for reading [link] [comments]  |
| Posted: 28 Feb 2021 07:29 PM PST Some of you might have heard of the Lindy Effect. Essentially, however long a given technology or idea has existed, it will probably exist for a time proportional to that. The thing that strikes me is that equity valuations are a story we tell ourselves, an idea. Although the market is in the long run a weighing machine (weighing intrinsic value), it is made of human participants that believe and reinforce stories. Does the Lindy Effect hold for equity valuations? Not valuations in general, but potentially for specific industries or stocks. For example, AMZN has traded at a hefty premium to the market for quite some time. Personally, I kick myself for not diving in earlier, but it just never seemed rational to pay close to 100x earnings ever. But AMZN continues to demand a premium. Some might say that this is because of the consistent growth, but what if it's just a story that keeps going? Consequently, does it make sense to look at time weighted valuations? Does it make sense to look at volatility of multiples? Potentially, a traditionally overvalued company might be stable at that multiple and continue to demand a premium, signaling that it is OK to buy at the current level as long as one's other requirements are met. [link] [comments]  |
| Anyone Who’s Anyone Has a SPAC Right Now A once obscure financial maneuver becomes a celebrity flex. Posted: 28 Feb 2021 04:25 PM PST I've been chastised for saying this. Anyone Who's Anyone Has a SPAC Right Now A once obscure financial maneuver becomes a celebrity flex. Image From left, EVAN AGOSTINI/Invision, via Associated Press; JULIO CORTEZ/Associated Press; TODD KIRKLAND/Associated Press; CAMERON SPENCER Spencer/Getty Images; MARK J. REBILAS/USA Today Sports, via Reuters; GREG ALLEN/Invision, via Associated Press By Steven Kurutz Feb. 27, 2021, 5:00 a.m. ET In simpler times, famous-people-turned-entrepreneurs bought wineries or invested in car dealerships — or simply created multi-billion-dollar lifestyle companies on the strength of their family brand. But in the pandemic economy, there's a new way for the rich and recognized to flex their status and wealth: through a SPAC. (That's a "special purpose acquisition company," but more on that later.) Jay-Z is involved with one. Shaquille O'Neal has one. Ciara Wilson sits on the board of one, as does Serena Williams. Sports figures seem especially enthusiastic about them: Alex Rodriguez, Steph Curry and the activist and former NFL quarterback Colin Kaepernick — or should we say, "SPAC-ERNICK" — all have one. So does Billy Beane, the former Oakland A's general manager and subject of the book and film "Moneyball." Websites like SPAC Track and SPACinsider help obsessives keep up on the latest. Political types are getting in on the SPAC action, too. (Former House Speaker Paul Ryan joined one.) And, naturally, there's a media-crowned "SPAC King" — Chamath Palihapitiya, a former Facebook employee and billionaire investor who posts images of his ripped abs on Twitter and has sponsored six SPACs that raised a total of $4.34 billion, according to Bloomberg. Perhaps if there was a little more in-person socializing going on, you'd hear people discussing celebrities and SPACs over canapés, and be asked to offer an opinion. At which point you might be saying to yourself, quizzically, what the heck is a SPAC? Like "leveraged buyout" and "collateralized debt obligation," SPAC is an arcane Wall Street term that has stumbled into the mainstream lexicon. SPACs are shell corporations that list on a stock exchange, with the goal of buying a private business and taking it public. In essence, a SPAC is a way to do an I.P.O. without all the time, expense and regulatory oversight traditionally required. The sponsors of a SPAC typically have two years to identify acquisitions or must return their investors' money. Everyday investors can put money into SPACs — they are traded on various exchanges — and before the SPAC has bought a company, its funds are typically invested in government bonds. Also known as "blank check companies," SPACs have been around in their current form since the 1990s, and for years were viewed as a scam-prone backwater of the finance world, but they have caught fire during the pandemic. And SPAC mania is only growing: SPACs raised $42.7 billion in the first six weeks of 2021, more than half the amount they raised all of last year, according to the Financial Times. So why are celebrities jumping on the bandwagon? To get richer, of course. Barry Ritholtz, the chairman and chief investment officer of Ritholtz Wealth Management and a scholar of Wall Street, explained the play. "I imagine that some business manager somewhere says to them, 'Hey, listen, there's this hot new financial offering. Let's put your name and celebrity on it,'" Mr. Ritholtz said. "'You're going to bring some fairy dust to a SPAC and the potential upside is tens if not hundreds of millions of dollars.'" The celebrities aren't so much the financial decision makers but rather the promoters brought in to attract investors ("strategic advisers," in prospectus parlance). Like marketers of soft drinks or sneakers, SPAC managers are tapping into the power of celebrity to sell a product — in this case, a financial instrument The New York Times has likened to an "empty shell." Hypothetically, let's say a SPAC prices at $10 a share, and raises $500 million in the public markets. If a celebrity adviser had negotiated 1 percent of that deal, they are rewarded with a stake in the company that is worth $5 million. But now let's say the same SPAC also finds a successful merger candidate, brings in other investors and a deal is done at $10 billion. The celebrity's 1 percent stake has netted them (on paper) a $100 million payday. Basically, celebrities are risking their reputations for, let's say, a few million dollars initially, "but if it works out, it's $100 million," Mr. Ritholtz said. "Humans love asymmetrical risk-reward situations." He added, "I can't believe we haven't seen a Kim Kardashian SPAC yet." Not unlike a stock market boom during a global pandemic, the term SPAC has a silly, absurdist quality to it, lending itself to wordplay: SPAC-tacular! SPAC-tastic! It was a missed branding opportunity that Mr. O'Neal's investment vehicle was named Forest Road Acquisition Corp and not Shaq SPAC. The hosts of Bloomberg's morning show, "Surveillance," have made SPACs a running joke, since every day brings news of more, along with head-scratching over the speculative mania. "Who are these people? Why would I trust them with billions of dollars?" asked the co-host Paul Sweeney one recent morning. (Many SPACs lose money after finding a company to acquire, especially in the year following a merger.) Jim Cramer, the host of "Mad Money" on CNBC, is similarly dubious, saying on a recent program he thinks SPACs have "jumped the shark." His reasoning? The involvement of so many celebrities with minimal investing experience. "These newer SPACs increasingly feel like an inside joke for the superrich and a way for celebrities to monetize their reputations," Mr. Cramer told his viewers, adding that the whole celebrity SPAC thing seems "gimmicky." For his part, Mr. Ritholtz, ever the student of human nature as it relates to money, cited one of his favorite adages, Sturgeon's law. Coined by Theodore Sturgeon, a science-fiction writer, it holds that "90 percent of everything is crap." A handful of SPACs performed really well over the last two years, Mr. Ritholtz said. That doesn't mean the Shaq SPAC will, too. "What always happens with investors, no matter the asset class or the decade, somebody hits the lottery and everyone else piles in," he said. "The SPAC enthusiasm is just investor behavior. People look at these as lottery tickets, and very often they're not." The Misfits Shaking Wall Street Jan. 29, 2021 Steven Kurutz joined The Times in 2011 and wrote for the City and Home sections before joining Style. He was previously a reporter at The Wall Street Journal and Details. @skurutz Anyone Who's Anyone Has a SPAC Right Now https://www.nytimes.com/2021/02/27/style/SPACS-celebrity-craze.html [link] [comments]  |
| All P/Es are not created equal - Lowe's vs Home Depot Posted: 28 Feb 2021 12:00 PM PST This article is a little dated, but very relevant to investors starting out. All too often I'll see comments indicating it isn't good "value" based on some arbitrary P/E. A company can appear to be more "expensive", but still generate better returns than a similar company that trades at a lower P/E, but has inferior returns on invested capital (ROIC). Two companies I've been looking at are Home Depot ($HD) and Lowe's ($LOW). Both are excellent companies and both have handily outperformed the market over the last 10 years. At the start of 2011, both companies were trading at a trailing P/E of approx 18 and both are currently trading at a trailing P/E of approx 22. Lowe's A $1000, investment in $LOW would be worth $7668. CAGR of 22.18% (very impressive compared to SPY's 13.6%) EPS grew from $1.42 to $7.10 in that period at a CAGR of approx 17.5% (the rest of the returns can be attributed to P/E expansion) Home Depot A $1000, investment in $HD would be worth $9267. CAGR of 24.48% EPS grew from $2.01 to $11.57 in that period at a CAGR of approx 19.13% (the rest of the returns can be attributed to P/E expansion) The same amount invested in HD resulted in a 20% higher total return over a 10 year period. I want to be clear that a high ROIC isn't the be-all and end-all of an investment thesis. The price you pay absolutely matters. But when I screen for stocks, I like to find a company with a solid track record of generating high ROIC over a 10-15 year period. A superior ROIC can be considered a company's "moat" as it seems to have some secret sauce that lets it generate profits more efficiently than its peers. A healthy ROIC is indicative of a company that is capable of growing the top line efficiently and/or commands strong margins (both of which translate to EPS growth). Keep in mind, when looking at a company's ROIC, you want to measure it with respect to their peers and the company's cost of capital. I'd say my investment strategy is to find high ROIC businesses in sectors I somewhat understand (consumer staples, consumer goods and retail), build a position when the stock is at a price I find appealing and then hold for as long as the company keeps generating high ROICs (however long that may be). There's a few variations to the formula that calculates a company's ROIC, but here's a simple version that works pretty well (assuming you want to calculate it yourself from the financial statements as opposed to looking it up on Morningstar/ValueLine etc) ROIC = Operating Profit/(Total Assets - Current portion of Debt - Cash) So for those of you that may be interested in following that investment strategy, here's my watchlist (some of which I own). Consumer Staples - Brown Forman ($BF.A,) Colgate ($CL), Clorox ($CLX), Hershey ($HSY), Coca-Cola ($KO), Altria ($MO), Philip Morris ($PM), Monster Beverage ($MNST), Boston Beer Co ($SAM) and Unilever ($UL). Consumer Goods - Apple ($AAPL), Lululemon Athletica ($LULU) and Nike ($NKE). Retail and Restaurants - Dominos ($DPZ), Home Depot ($HD), McDonalds ($MCD), O'Reilly Auto Parts (ORLY) and Starbucks ($SBUX), Ross Stores ($ROST) and TJX Companies ($TJX). Financial Services - Mastercard ($MA) and S&P Global Inc ($SPGI) There's no guarantee that such stocks will always outperform or that they can maintain high ROICs indefinitely. However, it's a good place to start. TLDR: High ROIC companies generally trade at a premium. This is because they are able to grow earnings faster and/or return more capital to shareholders in the form of dividends and buybacks. [link] [comments]  |
| Airbnb stock enjoys best day since IPO Posted: 28 Feb 2021 02:46 PM PST After first earnings report since IPO, Airbnb stock flies toward record high as analysts say the results 'stand out in a still very difficult travel environment' As the company's first quarter out of the gate, Airbnb displayed its travel demand recovery is nearly double that of its peers with gross bookings -31% vs. 2019 levels compared to Booking at -65% and Expedia at -67%," Ross Sandler of Barclays wrote in a note to investors, comparing Airbnb to rival online-travel companies Booking Holdings Inc. BKNG, +2.43% and Expedia Group Inc. EXPE, +2.43%. Barclays, which has an equal-weight rating on Airbnb's stock, raised its price target from $140 to $180. [link] [comments]  |
| Why it is usually a mistake for investors to take profits Posted: 01 Mar 2021 02:31 AM PST
https://www.ft.com/content/f8f8b067-e663-4afe-90dd-6a243929af86 [link] [comments]  |
| Taal Distributed Information Technologies Inc. (TAAL) DD Posted: 01 Mar 2021 05:27 AM PST I've spent a while trying to figure out the blockchain space for companies that are long-term investable. Miners don't seem to have a sustainable business model for long term investing due to the block rewards dropping and competition increasing as BTC price increases. I think I have finally found one that can be invested in for the long term; TAAL. Taal is positioning itself as a transaction processor, which includes mining, but is also so much more. Taal's president has recently touted the company as aiming to be the Amazon Web Services of blockchain. Sounds lucrative! The company is still small and in the very early stages of operations, which means I think the risk/reward is very favourable. Skip to the section titled "Taal's Business Operations and Prospects" on page 6 if you want the meat and potatoes of the report. Since this is r/investing discussion should attempt to link back investing wherever possible despite the company operating in the blockchain sector. TL;DR: TAAL stock looks like a great long-term investment. [link] [comments]  |
| Comparison of Housing Price History, Crude Birth Rate, and an Inflation Index. Posted: 28 Feb 2021 09:52 PM PST So I was reading through some financial independence blogs that are claiming real estate is a fantastic investment for everyone. I don't necessarily agree with this statement for a number of reasons, but one of them is that less on average people are being born every year in the US. The UN is also predicting birthrate decline for the forseeable future. Armed with that information, I created this basic FRED graph that lays Crude Birth Rate, Personal Consumption Expenditures, and Average House Sale Price in the US over time.The home price line is adjusted for inflation via the PCEPI. Why do average home sale prices keep going up if less and less people are being born each year? The average home sale price seems to lag behind the birth rate, which makes sense to me. However, I understand that there are many more factors at play here, and correlation does not imply causation. One thing that makes sense to me about the increase in home sales price is that houses are a real asset, and typically are a great hedge against inflation. TLDR; Is real estate still the great long-term investment that boomer FI blogs say it is with declining birth rates? I made this graph that probably doesn't mean what I think it does, so please tell me why I am wrong. [link] [comments]  |
| Bitcoin rises 6% as risk assets rally; Citi says at a "tipping point" Posted: 01 Mar 2021 04:51 AM PST Bitcoin rose nearly 6% on Monday as risk assets rallied after last week's bond rout cooled, and Citi said the most popular cryptocurrency was at a "tipping point" and could become the preferred currency for international trade. With the recent embrace of the likes of Tesla Inc and Mastercard Inc, Bitcoin could be at the start of a "massive transformation" into the mainstream, Citi added. Bitcoin, which has risen to $47,000 from $4,700 last March, could in the future become the preferred currency for international trade or face a "speculative implosion," the investment bank said. It was up 5.7% at $47,834 as of 1127 GMT on the Bitstamp exchange. Smaller rival ether rallied 7.5% to $1,525. Bitcoin's recent performance has come with the growing involvement of institutional investors in recent years, contrasting with its heavy retail investor focus for most of the past decade, Citi added. If businesses and individuals gain access via digital wallets to planned central bank digital cash and so-called stablecoins, bitcoin's global reach, traceability and potential for quick payments would see it "optimally positioned" to become the preferred currency for international trade, Citi said. Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions. Still, it has over the past year gained traction in some emerging markets such as Nigeria. Such a dramatic transformation for bitcoin to the de facto currency of world trade - a status currently held by the dollar - would depend on changes to its market to allow wider institutional participation and closer oversight by financial regulators, Citi said. Still, shifts in the macro-economic environment may also make the demand for bitcoin less pressing, it added. The recent surge in interest in bitcoin, sparked by a narrative that it can act as a hedge against inflation, has driven the cryptocurrency to a record high of $58,354 and a $1 trillion market capitalisation. But it has pulled back more than $11,000 from those levels in the last week on questions over the sustainability of such high prices. "There are a host of risks and obstacles that stand in the way of Bitcoin progress," Citi's analysts wrote. "But weighing these potential hurdles against the opportunities leads to the conclusion that Bitcoin is at a tipping point." [link] [comments]  |
| Moderna (MRNA) DD – Why a 60B Company is Still Undervalued Posted: 28 Feb 2021 09:07 AM PST *This will be my first DD post so let me know if you would like to hear about anything I didn't touch on, or if you disagree on any particular points. Hopefully you find it useful! Overview This is going to be a long post, so I'm not going to waste your time by explaining who Moderna is. They've been in the news for the last year and everyone and their mother knows what they've accomplished. They (along with Pfizer/BioNTech) are the big dogs when it comes to COVID-19 vaccination in the U.S., and their dominance in the market will likely continue. But Moderna isn't just a COVID-19 vaccine company, as their CEO repeatedly stressed in their most recent earnings call. Moderna is a true pharmaceutical giant in the making. They are currently developing 24 different products ranging from viral vaccines, to treatments for autoimmune disease, to cancer and heart disease therapeutics.1 The vast majority of these modalities are using mRNA technology to attempt to accomplish the desired effect. Not so coincidentally sharing the same name as Moderna's ticker, mRNA technology is a relatively new modality that is just beginning to take hold as a game-changer in the biotech/pharma space. Let's talk a little more about it so we can understand why it has the potential to create a major-shake up in the pharmaceutical industry. History of mRNA Technology mRNA was discovered in the 60's in mice, but it wasn't seriously considered for a possible therapeutic target until the 90's. Various studies in vitro and in mice since this period have been done, demonstrating potential for the treatment of HIV, cancer, degenerative disease, autoimmune disease… I could go on. As we know, pharmaceuticals move slowly, and serious development of these products didn't really take off until the 2010's.2 Prior to December 2020, there were only two medications utilizing mRNA technology that have received FDA approval. Inotersan and Patisiran were both developed and FDA approved in 2018 to treat a rare hereditary condition called hATTR which involves pathologic deposition of amyloid into the tissues of those affected. Without going into too much detail, this condition has a mean survival time of 15 years after diagnosis and leads to significant patient morbidity and suffering in the interim. Inotersan is the more successful of the two drugs and looks to be potentially curative for some patients with a disease which used to be a death sentence. Routine imaging since the phase III trials for Inotersan shows little to no progression of the disease in most patients, laying out the possibility that these patients may live a normal life moving forward.3 With two more successful examples of mRNA technology being used in the COVID-19 vaccines, I expect that interest in the technology will skyrocket and subsequently so will funding and development. First Mover's Advantage This will be a short section; Moderna is THE biggest player in developing mRNA therapeutics. There are other companies like BioNTech, CureVac, Gradalis, and Ionis, and of these only BioNTech (BNTX) can compete in sheer breadth of product development as well as having a history of success. For the sake of time I won't address the other companies, but a key advantage that Moderna has over BioNTech is that they have moved more quickly through their clinical trials than BNTX has. Outside of COVID-19, Moderna currently has 4 products in Phase II trials (with their CMV vaccine moving to Phase III very soon), while BNTX only has 1.4 Long term I believe both of these companies will be highly successful, but Moderna is a more mature company that will be seeing the fruits of their labors more quickly than their competitor(s). The Future of COVID-19 Vaccination, and Vaccination in General Moderna currently has about 60% market share, distributing 40M of the 70M total doses the U.S. has received. I expect that number to drop slightly, but I would expect that Moderna ends up vaccinating approximately 40% of all Americans when it's all said and done, with Pfizer vaccinating a large chunk of the rest. After that, Moderna will likely shift distribution to other countries and deliver on their agreements abroad. "But what about NovaVax, J&J, and AstraZenica?" you might ask. Without undercutting these companies and their potential, they are simply too late to the game in the U.S. to grab meaningful market share from Moderna and Pfizer.5,6 Johnson and Johnson was just recommended for authorization yesterday (2/26/2021) and will likely begin distribution in the coming weeks, however they are only expected to deliver 100M vaccines by the end of June. Moderna will deliver 300M by July7, on top of the approximately 40M they have already delivered. The U.S. has agreed to purchase more than 1.2B doses of the vaccine from a number of companies, but much of that will go overseas after American citizens have received their 2 doses. Moderna is establishing relationships and trust globally with the successful development and distribution of their COVID-19 vaccine, but why is this important? Let's think back to what the CEO said in their recent earnings call – Moderna is NOT a COVID-19 company. Digging into their therapeutics pipeline, we can see mRNA candidates targeting Influenza, Cytomegalovirus, Nipah Virus, Respiratory Syncytial Virus, Epstein-Barr, Zika, Chikungunya… Relationships established during this pandemic will serve them well in the development and distribution of future vaccine candidates like those listed above. WAIT there's more: back in January, Moderna announced plans to create a combination Influenza/COVID-19 vaccine, with the possibility of adding more candidates to the mix if they were to receive approval. With the number of viruses that they are targeting, Moderna has the potential to become the leader in vaccination globally, period. Their ability to create combination vaccines targeting a host of common viruses could be the new standard in vaccination. Certain candidates like RSV, CMV, and EBV are likely to become standard vaccinations given in childhood like other vaccines we are familiar with such as MMR and Varicella. The potential of this company in the vaccination industry is endless, and right now they are just scratching the surface. Future Revenue Projections – $18 Billion --> ??? During their most recent earnings call, Moderna reported that they have orders for their vaccine totaling $18 billion8, and they are expecting more orders throughout the year. The COVID vaccine market is likely to cool off a little after that, but experts currently predict that COVID-19 boosters will become a routine part of care in the future, likely needing a new dose every 2-3 years.9 Now this would likely represent a major hit to revenue if Moderna was just a COVID-19 vaccine company but once again, they are not. Lets briefly talk about a virus you may have never heard of before – cytomegalovirus. Cytomegalovirus (CMV) is something you've likely had in the past and didn't know it, so why is it a problem? Oddly enough, this seemingly benign little virus causes about 25,000 birth defects per year in the U.S. Globally, it is estimated that 1 in 1000 babies will be born with a birth defect due to CMV. Currently there is no vaccine, but do you know who has the most promising candidate that is already enrolling participants for phase III trials? You guessed it – Moderna. The addressable market for this vaccine is conservatively estimated at $2-5 billion/year.10 I expect that if it is approved by the FDA that it will likely see global adoption and that revenue number is likely to be much higher. Repeat the above for RSV, EBV, Zika, etc. and it is not hard to envision a company that is bringing in $30-50 billion a year in annual vaccination income alone. If they were to succeed in any of their more lofty quests to develop an HIV vaccine, or therapeutics for autoimmune hepatitis, or personalized cancer vaccines… the sky is the limit. Justifying Current Valuation, and Then Some Moderna's current market cap is 62.16B. Their orders for 2021 currently exceed $18B with room to grow. The average revenue multiple for a biotech company is between 6-8x, and Moderna is trading at less than 4x. If you consider Moderna a pharmaceutical company, than the average multiple would be about 5x, still under.11 I know we are looking at unrealized revenue with Moderna at this point, as that $18B will be earned throughout the year, so I understand that technically speaking they are still trading at an obscene P/S ratio compared to other more mature companies. However, I think it's safe to say that demand for their product isn't going away anytime this year and they have proven that they are able to execute and even exceed expectations when it comes to manufacturing and distributing their product. Looking at their most recent earnings report for Q420 which was released on 2/25/21, their balance sheet is stellar. They are holding around $3B in cash from recent deposits, and they have almost no debt to speak of. Simply put, they are undervalued at their current price. Without even factoring in the potential of everything else in their pipeline, they should be worth more as just a COVID-19 company with stellar financials and a relatively palatable multiple going into the later part of this year. My personal price target: $220/share. With 396M outstanding shares, a $220 share price would place Moderna at $87B, which I believe to be a fair valuation through this year. This would represent a 4.8x multiple to their projected revenue in 2021. This represents a 41% increase in price from where Moderna is trading at currently which is ~$155/share. Closing Understand that this company has enormous potential for growth, but also potential to fail. Most pharmaceutical products fail in clinical trials before ever reaching market, and the same could be true for most if not all of Moderna's pipeline. I personally believe that mRNA products have a higher chance of success than traditional therapeutics, but I'm not going to go into my reasoning for that in this post. Every trade carries risk, and the risk with buying Moderna is that the market for COVID-19 vaccines shrinks as the world gradually develops herd immunity, the rest of their products fail in clinical trials, and they die a slow death without ever bringing another product to market. Nonetheless, I am confident and hopeful that this will not happen, and Moderna will become the next company to join the ranks of Merck, Novartis, Pfizer, and company as a true juggernaut of the biotech/pharma sector. Disclosures: I own shares in Moderna, and I am considering buying leaps at some point next week. I am not a financial advisor, always do your own due diligence before investing in the market. References
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| Making sense of the record-breaking 5G spectrum auction Posted: 28 Feb 2021 10:56 AM PST
https://seekingalpha.com/news/3667408-making-sense-of-the-record-breaking-5g-spectrum-auction [link] [comments]  |
| My $RIDE or die - Lordstown Motors Posted: 28 Feb 2021 02:03 PM PST I will start with my "why" for this DD post – I'm from Ohio. Born and raised. There has been a lot of pain for us Ohioans over the years. The weather here sucks, the Browns were complete GARBAGE for over 2 decades, and recently, a huge General Motors plant closed and cost our state thousands of jobs. Enter Lordstown Motors and CEO Steve Burns who saw an opportunity to acquire the 3rd most productive automotive plant in the country for pennies on the dollar and initially target fleet customers (a very specific niche) with disruptive technology in their vehicles. LM is just a start-up.. Is this another Nikola? No. This is very real, and yet Nikola's market cap is somehow over 2x LM's. Recent confirmation by the CEO indicates that LM's flagship Endurance truck is 97% ready, and will be shown in action as a proof of concept in April. Production will begin this September – the first ever electric pick-up truck to hit the road. How in the world will a company from small-town Ohio scale across the country? To help scale and increase a country-wide presence, LM recently partnered with Camping World. This partnership will allow LM to leverage over 170 Service and Collision Centers across the US, with thousands of technicians and service bays, a 24/7 tech hotline and Good Sam's Roadside Assistance Program, Lordstown Motors customers are expected to enjoy one of the most comprehensive EV support systems ever designed. This partnership might not seem like a big deal on the surface, but it's basically giving LM an instant country-wide presence for its customers at a tiny fraction of the cost that it would take to build their own service centers. This is HUGE. Anything else besides a truck? Two other vehicles have been officially announced: an electric van and an electric RV in partnership with Camping World. Areas for concern: This is pretty obvious. Some folks are skeptical because Lordstown Motors is a "start-up" and will have to compete against larger companies. Analyst price targets range from as low as $18 to as high as $50. But speaking of being skeptical, I thought THIS TWEET from the Camping World CEO yesterday was interesting. He seems to be VERY confident in what LM is doing. My position: 950 shares. The CEO Steve Burns is a very intelligent man, and I have all the confidence in the world in his ability to execute. Most people don't know that 17 years ago, he developed the technology patents that were eventually used for Apple's Siri. Final comment: I made this post to increase awareness for a company that I think is flying under the radar to most investors. There is also a really high short interest right now as the whole EV market has sold off. I think all of the shorts are about to get squeezed. Additional links from the past few months: Lordstown Motors Is Riding on Hopes with Biden and Ryan Lordstown Motors Electric Pickup Will Use "Tesla Batteries" From LG Lordstown Motors helps submit a bill in Ohio state to sell direct to consumer. [link] [comments]  |
| Posted: 28 Feb 2021 06:46 AM PST The Apple Car is looking more and more likely to be released around 2024. https://youtu.be/4ZP82uVz040 If it does, this makes an Apple investment a very smart decision for long-term investors. Let's not forget that Warren Buffett has half of assets tied up in Apple - why? Because Buffett understands the signs of a successful long-term investment. Apple has consistently transformed industries with their pioneering ideas and execution. The macintosh, ipod, iphone, airpods, macs, apple watch, apple pay, apple music etc etc you name it. Indeed, it's not easy to set up an automobile manufacturing plant. However, Apple has proved throughout the 21st century that when they shoot, they don't miss. Let's not forget they have over $100 billion in revenue, and so much cash in hand to deploy. So if it fails, no problem. (Also Apple Glasses to be expected soon: https://macdailynews.com/2021/02/04/where-will-apples-share-price-be-in-5-years/) Comments welcome. My conclusion is that Apple is too good of an investment to miss out on if you're a long-term investor (>5 years). I've added more shares this week during the dip. [link] [comments]  |
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