Let’s Go Bitcoin Crazy?
Dearly beloved, we are gathered here today to get through this thing call “cryptocurrency.”
An electric word, “cryptocurrency,” it means gains forever … and that’s a mighty long time. But I’m here to tell you there’s something else — the futures market.
A world of never-ending happiness…
OK, I can’t type that with a straight face. Thanks for the intro, Prince, but I’ll take it from here.
So, in case you haven’t heard, cryptocurrencies are going back to the future … erm, futures. ProShares is launching a Bitcoin (BTC)-based ETF on Tuesday, October 19. That’s tomorrow for all of you regular Great Ones. The ETF will trade on the NYSE under the symbol BITO.
There’s a fair amount of hype surrounding this new bitcoin-based ProShares ETF. But, just like the ETF itself, most of that hype is centered on the future. You see, this new bitcoin ETF is based on bitcoin futures.
If you’re not familiar with futures, good for you. They’re not meant for regular-Joe investors like you and I … though, that doesn’t stop retail investors from getting tangled up in the futures trading web.
The quick-and-dirty explanation is that futures are like options on crack. Futures contracts allow you to speculate on the future price of any stock, commodity, security or practically any other financial instrument. The most popular are based on commodities like oil, corn, rice, gold, etc.
Futures contracts obligate the buyer to purchase an asset or a seller to sell an asset at a set price at a predetermined date. This is very similar to options trading but with more obligation to adhere to the contract and very little wiggle room to save yourself if things go pear-shaped.
In short, futures contracts are considerably riskier than options contracts. And if that doesn’t get your hackles up, I don’t know what will. For those of you who want a more technical definition of futures, click here.
Back at the ranch, ProShares is launching a bitcoin futures ETF. We’re at, like, derivatives of derivatives at this point, folding realities or something… Where’s Dr. Strange when you need him?
As you can probably tell, I won’t recommend Great Ones buy this new bitcoin ETF. It’s just too risky for the regular retail investor.
But, then, I know I can’t stop you … I’m looking at you, James S., you crazy crypto trader you. Be careful, man … futures are a whole other animal.
With all of that said, the ProShares bitcoin futures ETF is excellent news for crypto traders. The launch of this ETF means that the SEC is finally — but silently — kinda sorta endorsing cryptocurrencies.
But you don’t have to take my word for it. Here’s Ian Balina, Token Metrics CEO, with his take on this new ETF:
A bitcoin futures ETF certainly isn’t what cryptocurrency traders want. What they really want is an ETF with direct exposure to cryptocurrencies … such as a bitcoin spot-price ETF like the SPDR Gold Shares ETF (NYSE: GLD).
But while this new ProShares ETF doesn’t give them that, it does give investors hope that a direct-exposure ETF could be on the horizon. And that, Great Ones, is why the crypto market is practically euphoric over this new bitcoin futures ETF: hope for the future of cryptocurrencies.
More capital, more money flowing into cryptocurrency products — even futures products — means more mainstream acceptance. And more acceptance means even more money flowing into cryptocurrencies like Bitcoin, Ethereum and even Dogecoin.
We’re nearing a watershed moment on cryptos, and it’s one you don’t want to miss out on. Just … don’t go crazy on this futures ETF, OK? You don’t want to end up like Sang-Woo from Squid Game, trust me.
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Going: Tale As Old As Time
Reports of Disney+’s death were greatly exaggerated all across the papers today, but those rumors still didn’t stop Walt Disney (NYSE: DIS) shares from sinking about 2%.
Barclays Analyst Kannan Venkateshwar downgraded Disney from overweight to equal weight and dropped his price target from $210 to $175. The reason for Kannan’s sudden change of heart? A significant slowdown in Disney’s streaming subscriber growth. Supposedly.
Let’s take a look at this “significant slowdown,” shall we?
Frankly, the analyst crowd isn’t breaking any big news here today. Bob Chapek already warned that subscriber growth would slow down this quarter … like, last month. The market slapped DIS on the pessimistic wrist for it in September when everybody else was freaking out. C’mon, Barclays, catch up.
My main takeaway with Disney right now is that, contrary to Wall Street’s expectations of ever-increasing growth … Disney+ was bound to report some kind of slowdown in sub growth eventually.
Even if you’re Disney — the mouse’s moneymaking machine — you don’t keep adding subs at that initial explosive growth rate forever. Just ask Netflix (Nasdaq: NFLX).
Disney’s service isn’t even two years old yet, and it already has roughly half of Netflix’s subscriber count on Disney+ alone, not to mention all its other millions of viewers on Hulu and ESPN+. All while keeping a “very small churn” of existing subs, in Chapek’s own words.
The company expects subscriber growth in the single-digit millions this quarter. This is indeed down slightly from 12.4 million additions last quarter, but don’t be fooled: This is still insane growth. Netflix would be lucky to see that kind of growth again, but its glory days of growth are long gone, pandemic or no pandemic.
Are analysts once again missing the big picture on investing in Disney? I mean, Great Stuff Picks didn’t recommend DIS just because of Disney+ — it’s because Disney has perfected its revenue flywheel.
The what now?
Disney is always making bank somewhere. This teeny-tiny slowdown in streaming subscriber growth comes right as Disney’s theme park revenue is roaring back — up threefold from last year. When one revenue stream slips, another picks up the slack — just like how Disney relied on streaming revenue during the pandemic’s park closures.
Now that the tables have turned, some Johnny-come-lately analysts think that Disney’s doomed just because it’s going through the normal life cycle of a maturing service. Frankly, that’s a paltry excuse to downgrade DIS but hey, streaming opinions are like mouse holes — everyone’s got one.
Going: That Didn’t Even Phase Me
Biogen (Nasdaq: BIIB) investors came down with a case of the Mondays this morning after the company released disappointing Phase 3 clinical trial results for its ALS drug, tofersen. While some of the drug’s secondary biomarkers looked promising, tofersen ultimately failed to reach its end goal:
BIIB investors wouldn’t know it from this ho-hum statement, but Biogen’s ALS drug isn’t automatically a wash following this latest trial.
You see, drug companies get to control all the variables in Phase 1 and Phase 2 testing to prove their drugs really work. So, if a drug doesn’t make it through those phases … it’s really, really bad.
But if something’s off in Phase 3 — which is when drugs are pitted against a crap-ton of other variables that drugmakers deliberately didn’t account for — it’s not the end of the world. Maybe something was off with the testing procedure itself, or maybe some weird bio-genetic issue came up that wasn’t a factor in prior limited, controlled studies.
Regardless of what went wrong, not passing Phase 3 clinical trials doesn’t automatically mean that Biogen’s drug is a complete failure. If the proof of concept is good, it can still come back from this temporary setback (which isn’t the case for many Phase 1 or Phase 2 issues).
While Biogen stock is down around 4% following today’s mixed data, don’t automatically head for the hills. Tofersen is just one of the promising drugs already in Biogen’s pipeline, and the company will have the chance to resubmit tofersen for further testing once it goes over the results from this latest trial.
As far as investing in biotech stocks goes, this is just par for the course.
Gone: Oh No, Zillow!
Online real estate firm Zillow (Nasdaq: Z) dropped a bomb on investors this morning: Starting this week, the company’s Zillow Offers business — which buys and flips houses — will temporarily suspend all new home purchases due to “overwhelming demand.”
But wait … isn’t high homebuying demand a good thing for Zillow?
Well, yes. But only if Zillow has enough boots-on-the-ground real estate agents to sell the homes it preemptively bought earlier in the year … and apparently, Zillow does not.
Adding insult to injury, Opendoor — Zillow’s direct competitor in the online real estate business — appears to be handling this high homebuying volume just fine. Never mind that Opendoor bought twice the number of homes as Zillow in the second quarter.
What we have going on here is a tech company that failed to remember the human aspect of its business.
While Zillow’s algorithms do a swell job of showing you the kind of homes you’d like to buy in neighborhoods that meet your price range … they can’t replace traditional real estate agents when it comes to closing sales. Go figure.
But all’s not lost according to Zillow. The company remains optimistic about the upcoming fourth quarter and says it still expects home purchases to grow into December.
The thing is, that ongoing revenue stream will largely come from the huge backlog of houses that Zillow already has under contract. And by the time Zillow claws its way out from underneath all that paperwork, its competitors will already be leagues ahead of it in terms of adding new homes to their balance sheets. Not great, Bob!
Unsurprisingly, Zillow stock is down roughly 9% following today’s announcement. And if Zillow Offers can’t clear its backlog and get back on track before the year’s out, you can expect Z shares to continue to tumble.
Great Ones, it has begun!
The slow creeping crawl of corporate zombies lulled out of their slumber to invade the earnings confessional … or something like that.
Today’s a sleepy start to a monstrous earnings week. Take a look at the packed docket in the chart below, from EarningsWhispers over on Twitter:
You see it, I see it, the big name everybody’s looking at this week — IBM! Sike…
Sorry, Big Blue, but literally any other report would pack more excitement than IBM (NYSE: IBM) this week. Just look at all those big names! Those blue chips! And, now that I notice it, so many blue logos too. Hmmm…
Anyway, this is the week of Netflix and Tesla (Nasdaq: TSLA). You know what that means, Great Ones: Earnings season is alive and well. And we’re just at the tip of the market-melting iceberg of juicy corporate reports.
Don’t tell anyone this, but while everyone’s waiting to overreact or underreact to whatever Tesla does … Winnebago (NYSE: WGO) has had more interesting earnings reports for over a year now, crushing analysts’ expectations left and right all throughout the pandemic.
Personally, I hope investors hear more about Winnebago’s electrification efforts in future earnings reports and company announcements. The automaker has one electric RV right now that doesn’t seem to impact sales all too heavily just yet, given its wimpy-dimpy 125-mile range frankly kills a lot of that cross-country wanderlust.
But if cleaner energy is your bag, look no further than Next Era Energy’s (NYSE: NEE) report this week. We’ve long touted NEE as a play on the green energy trend that’s already at the power plant stage of energy production using renewables — including hydrogen!
I can always trust you to shoehorn hydrogen into any conversation…
It’s a gift, really. As far as chip stocks go this week, we’ll have Lam Research (Nasdaq: LRCX), ASML Holding (Nasdaq: ASML) and Intel (Nasdaq: INTC) in the spotlight. I’m done holding my breath on Intel recapturing any of its former glory, but ASML might be a name to watch if you tuned into our deep dive on the chip stock this past weekend.
We’ll also get a look at how the airlines are managing the crosswinds of rising air traffic and rising fuel costs that Delta (NYSE: DAL) reported last week. Keep an eye on United (Nasdaq: UAL), Southwest (NYSE: LUV) and American (Nasdaq: AAL) this week for your fix of flight facts.
Last but not least, I want to see if Boston Beer (NYSE: SAM) is still under the table on its poorly planned seltzer saga — or if the demand for that swill somehow suddenly exploded in the time since the company accepted its bubbly defeat last month, dropping seltzer sales expectations.
Which reports are you holding out for this week? Are any of your personal picks reporting soon? Let us know in the inbox what you think about earnings season, bitcoin ETFs and biotech bust-outs. We’d love to hear from you!
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Until next time, stay Great!
Editor, Great Stuff
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