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RECAP OF LAST WEEK AND RESULTS:
Autodesk: Increased to $300 a share from $293 a share. Mostly due to correlation with an increasing market. Looking for a breakout past this if the market stays on the upside next week.
Taiwan Semiconductor Mfg: Ended down a bit from last week at $118 a share from $123.63
IN THIS ISSUE
Initial Public offering occurred this week.
May benefit from hiked prices due to chip shortages worldwide and may hedge against possible inflation.
“Coinbase Global, Inc. operates as a securely hosted bitcoin wallet to purchase and use bitcoin. It provides merchant tools that enable companies to accept payments in bitcoin by incorporating a single button.” This Company also allows you to buy other well-known cryptocurrencies like Etheruem, Cardano, Litecoin, and several others. This company has been around since 2012 but just went public yesterday. The company was originally supposed to IPO at around $250 but opened at $409 before falling and ending the day close at $330. Coinbase lets you buy into the actual cryptocurrency versus Robinhood where you buy it more like a stock. The advantage of buying it on Coinbase is the access to a crypto wallet which would let you send and receive your crypto of choice (as long as it is supported).
Expect the price to fluctuate. It may move upwards some before moving back down.
Current Price: $322.00
One Month Target: $300
One Year Target: $350
Two Year Target: $400
Realistically this stock is going to be a bit of a rollercoaster. As are most stocks after they IPO. However, Coinbases IPO set records and also would value the company over a $100 billion valuation. “Investors expect that valuations could top $100 billion, given that the company just published a stellar set of preliminary Q1 2021 results with revenue jumping 9x year-over-year.” We will add the companies earning highlights to show what earned them such an impressive IPO. “Verified Users of 56 million. Monthly Transacting Users (MTUs) of 6.1 million. Assets on Platform of $223 billion, representing 11.3% crypto asset market share. Includes $122 billion of Assets on Platform from Institutions Trading Volume of $335 billion Total Revenue of approximately $1.8 billion. Net Income of approximately $730 million to $800 million.” Extremely impressive numbers from a sector that is still growing rapidly.
A couple of things to consider with this stock would be it will likely mirror the crypto market more than the actual stock market. A more positive outlook on crypto would probably lead to an increase in the stock’s value and vice versa. This stock is also the first major cryptocurrency company to go public in the United States. One of the negatives of this stock would be if the crypto market crashes or takes a large hit the stock will most likely suffer as a result. Coinbase looks to have a fairly good upside with being the first listed company on the stock exchange as well as providing very sound numbers on their balance sheet.
This is a stock we will keep an eye on until we find the right time to enter in. If you are someone who likes crypto and thinks it could be even bigger than it already is this stock would be something you should have in your portfolio. However, Cryptocurrency was started in 2009 (with the creation of the bitcoin) so, it is a young asset that could make this a risky investment. This is one to keep an eye on.
COIN Option Idea: Unable to get options data due to the IPO and options not being established yet.
Virgin Galactic: SPCE
This company is aiming to take people to space expensive tour rides. They also have ambitions to do supersonic transport which is further down the road. We believe this company has a vast amount of growth potential. At the reduced prices we think there is an opportunity here.
The big news surrounding this company is it has dropped to a low this week of around $22.80 from $27 a share. Richard Branson sold $150 Million of his shares of the company. This reduced his stake in the company by 9%. After this was disclosed to the public, the stock price dropped and many saw this as Richard Branson losing faith in the company. After researching further into this situation, Richard Branson has leisure and travel companies that have been hit by the pandemic. We think that this was a market overreaction and shares could still go down, but will most likely continue to $25 a share before their next test flight. It is highly possible that more selling continues since this company has not produced any meaningful results. The key to watch here is the next test flight results. If they do not succeed, then maybe reduce your position sizes here. They have been promising investors test flights and then keep pushing it back due to technical delays. At this point, we believe they are being truthful about the delays and management needs to gauge their guidance better to show investors the true story in the company’s progress. We still think this stock could go to $50-60 a share within a year or so. Be prepared for liftoff if test flights lead them to the path of FAA approval of their systems! The next test flight is scheduled for sometime in May. Virgin Galactic should announce this event soon.
Another consideration is how the business leaders are deciding to broaden their moat of potential revenue streams. They seem to be showing some more designs than actual results which are a bit concerning. Their burn rate is around 66 Million a year, and they have 660 Million of cash on hand. In our opinion, they should be focusing solely on generating revenue from tourism then branch out. This is because they need to start revenue streams rather than create more cash burn in other areas and defocus their business.
We expect this stock to be pretty volatile
Current Price: $23.36
One Month Target: $25
One Year Target: $40
Two Year Target: $50
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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