Please click the link below to listen to the 60th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.
Welcome to Two Minute Crypto, today’s episode addresses the financial elephant in the crypto room – gains. Let’s be blunt – 90% of people who first come to crypto do so because of the lure of monetary gain. Sure, some folks find their way to the space because of a prior interest in Libertarianism, financial systems, tech or the nebulas intersection of all three. This path, however, is the exception to the ‘looking for sick gainz’ entry point.
Blockchain has become popular precisely because it has been proven to offer spectacular returns on investment over time or more accurately investment in Bitcoin has offered stupendous returns over the long-term. Year after year it has printed higher highs and higher lows. A popular meme for BTC is ‘Number go up.’ Number go up is powerful juju. Naturally, investors have been attracted by the allure of huge gains.
Those profits remain a possibility but anyone who has spent more than a few months engaged with crypto can attest to the very real downsides that prevail throughout the crypto market. If your approach to the space is to seek out hidden gems and the like, in truth, you are much more likely to lose money than make it. Unfortunately, far too many investors glance at the current price of Bitcoin and come to the entirely mistaken conclusion that value can only be found elsewhere leading to a focus on Alts in all their shiny glory. In fact, BTC has out-performed all other cryptos through time if you measure their performance over a multi-year horizon. A belief that BTC has topped out is simply a reflection of a very surface understanding of the disruptive potential of Bitcoin.
The likelihood of losing money also applies to the large-cap projects – unless you are willing to hold for years.
And this is the key point – there are no reliably sick gainz in crypto unless you are willing to weather the storm of crypto volatility and hold for the long-term. Long term means many years – not one, two or even five but closer to a decade and beyond. This market is plagued by short-term perspectives, hyperbole, and flat-out lies. It’s all going to take time and a lot of it. Sure, you might be lucky and pick a winner that increases 800% in two weeks but you can pursue such luck just as efficiently at a casino or the racecourse. If you are serious about building wealth through crypto investing -shed the rose-tinted glasses -take your time, do your research, make your investments and let them play out for a decade or so.
After watching the financial news yesterday, I just realized Beyond Meat and Grubhub have a lot in common. Both are in the food industry, both are in burgeoning markets, both had “first to market” head starts over the competition and both companies saw their stock price rise like a Tesla rocket and…well read the rest of the post.
Convenience, accessibility and just pure laziness are major factors driving the global online on-demand food delivery services market.
GrubHub was at once upon a time the world’s leading online and mobile food ordering company. Despite competition from the likes of Uber, DoorDash, Postmates, Square and Amazon, GrubHub controlled 50% of the U.S. food delivery market just under two years ago.
The way the business model works is restaurants do not have to pay anything up-front or any subscription fees, just a commission fee for every order the platform generates.
However, the valuation was crazy. Grubhub was a first to market mover and shares of Grubhub returned 5X from 2016 to 2018 and in 2018 even went as high as $140. The valuation got out of hand. At one point, the P/E was over 80.
But then the competition started coming and their market share went from 50% to 34%, quick fast. So order to stay ahead of the competition, Grubhub grew in other cities, which meant increasing their customer acquisition cost, which meant lower margins. While that was happening, many of Grubhub’s critical metrics like initial diner spend and peak diner spend were all decreasing because customers were using the services of the competition as well. Wall Street started to smell the blood.
Jim Chanos is an American investment manager and currently serves as president and founder of Kynikos Associates, a New York City registered investment advisor who is focused on short selling said Grubhub was a short just last month.
“Right now, GrubHub is making almost no money per order — it’s something like 15 cents,” Chanos said. “There’s just no margin in this business.”
“We believe that this pressure is occurring at both ends of the spectrum for the delivery companies,” Chanos said. “Not only are we seeing pressure on the labor side with the California law, we believe that the labor arbitrage — calling these guys contractors — works in insidious ways.
Chanos said that the company can’t afford to be as aggressive as Uber, which has its own food delivery service Uber Eats, because it doesn’t have the “financial wherewithal.” Competing with Uber, Chanos said, is like being “locked in a cage with a psychopath with an ax.”
And while there’s competition, Chanos said growth in the restaurant business itself has been stagnant.
“The restaurant business is a tough business,” he said. “Even if this all works, and all four of these delivery companies grow to 20 or 25% of all meals, you are growing into a no growth business.”
Yesterday, GrubHub short-sellers made $504 million when shares of the company fell 42% after announcing their third-quarter earnings according to data from financial-analytics provider S3 Partners.
GrubHub received five downgrades, including double downgrades from both Bank of America Merrill Lynch and Oppenheimer following its disappointing third-quarter results.
The food delivery company missed on revenue and posted a fourth-quarter forecast well below Wall Street’s expectations and received five downgrades, including double downgrades from both Bank of America Merrill Lynch and Oppenheimer.
I don’t know where the bottom is, although there is some demand on a smaller timeframe at $30. However, this is a no touch stock in my opinion.
Beyond Meat priced its initial public offering at $25 and now the stock is up more than 200% in less than a week. Beyond Meat, a maker of plant-based meat products is the new IT THING on Wall Street and sold at a supermarket and restaurant near you.
Beyond Meat is also trailblazing a new secular movement away from animal protein.
So yes, although plant-based meats in the U.S. rose 23% last year, it still represents only 1% of the total meat sales in the US. So yes, because Beyond Meat controlling about 10% of the plant based meat market in 2018, what you have is FOMO in the stock price.
But Beyond Meat is beyond over-valued. For example, with $80 million in sales last year, you get a sales to price ratio of 44 vs. Hormel Foods and Conagra with a sales to price ratio of 2.3 and 1.6, respectively.
Beyond Meat priced its initial public offering at $25 and skyrocket 800% in less than four months. Beyond Meat, a maker of plant-based meat controls about 10% of the plant based meat market. And because they have achieved “first to market” status, they are the new IT THING on Wall Street.
Beyond Meat is also trailblazing a new secular movement away from animal protein. Although plant-based meats in the U.S. rose 23% last year, it still represents only 1% of the total meat sales in the US, with Beyond Meat controlling about 10% of the plant based meat market in 2018.
But there valuation is beyond ridiculous. Their valuation was at one point higher than roughly 25% of the companies in the S&P 500 index. For example, with $80 million in sales last year, you get a sales to price ratio of 44 vs. Hormel Foods and Conagra with a sales to price ratio of 2.3 and 1.6, respectively.
But now the competition is coming.
Kellogg (K) introduced “Incogmeato,” which is a plant-based meat alternative made from non-GMO soy. Kellogg’s plant-based burger patties, Chik’n tenders, and Chik’n nuggets which go on sale in early 2020.
Kroger said they will sell a new line of branded plant-based burgers, other meatless products like dips, pasta sauces and cookie dough in the coming months under their Simple Truth Plant Based label.
Hormel Foods once a piece of the action too and announced its plant-based meat substitute called “Happy Little Plants” is available at select retailers.
Then there is Impossible Foods which launched the Impossible Burger through Burger King in August and now have product along Beyond Burger on the shelves in supermarkets.
Yesterday, Beyond Meat announced third quarter earnings.
Beyond Meat, which has a market value of about $6.4 billion, on Monday topped analysts’ expectations for its fiscal third-quarter earnings and revenue. The company reported earnings of 6 cents on revenue of $92 million, while analysts forecast earnings of 3 cents on revenue of $82.2 million, according to Refinitiv. Beyond Meat saw sales grow across both its grocery and restaurant divisions, as its meatless products drew in more customers and kept existing customers coming back.
“Despite solid results the likelihood of early stage investors cashing out on a stock which is still up about 4x since its IPO, remains a drag in coming trading sessions,” said Barclays analyst Benjamin Theurer in a note to clients Tuesday.
Tuesday is the first time since the IPO that insiders can sell the stock, which could cause short-term pressure, analysts said. Roughly 75% to 80% of the outstanding stock is available to trade after the lockup expiration.
So is the weekly demand at $81 the time to get in, the chart suggests so, but I think this stock is a no touch as well.
As you can see, Grubhub and Beyond Meat are almost like twins. The question now becomes can both companies remain twins in the form of a comeback story?
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Valero Energy Corporation
operates as an independent petroleum refining and ethanol producing company in
the United States, Canada, the United Kingdom, Ireland, and internationally. The
company is involved in oil and gas refining, marketing, and bulk selling activities.
It produces conventional and premium gasolines, diesel fuels and other distillates.
This past week, Valero
Energy Corp. beat analysts’ expectations in the third quarter, reporting a
profit of $609 million, or $1.48 per share.
It was a better-than-expected quarter despite making $250 million less
in profit than the company reported during the same period last year, when the
company reported $856 million in profit, or $2.01 per share.
Valero also makes ethanol. Ethanol is made from corn and almost 50% of corn
crop in the US is used to make ethanol.
However, this past Spring into Summer the Midwest was hit with massive
flooding, which lead to record slow planting season for corn. The end result was corn prices were high, which
is an input cost for Valero, which lead to low margins.
Valero can utilize its midstream network to process cheaper crude oils. However, the fall in spreads between discounted (medium or heavy) crudes and Brent affected the company’s refining earnings. The Brent-WTI, Brent-LLS (Louisiana Light Sweet), Brent-ANS (Alaskan North Sweet), Brent-Maya, and Brent-ASCI (Argus Sour Crude Index) spreads narrowed YoY in the third quarter.
The Brent-ANS spread fell from $0.4 per barrel in the third quarter of 2018 to -$0.9 per barrel in the third quarter of 2019. The Brent-Maya spread also narrowed from $9.7 per barrel to $5.4 per barrel. Similarly, the Brent-ASCI spread fell from $5.1 per barrel in the third quarter of 2018 to $3.2 per barrel in the third quarter of 2019. The most important of all, Brent-WTI, fell from $6.2 per barrel in the third quarter of 2018 to $5.6 per barrel in the third quarter of 2019.
Further, in the third quarter, gasoline cracks declined in the US Gulf Coast, US Midcontinent, and North Atlantic. However, the crack rose in the US West Coast. Diesel cracks also put up a mixed trend.
The crack spread is the one parameter that determines a refiner’s earnings. The crack spread entails the cost of the raw material input, oil and what the finished product, gasoline, diesel, and jet fuel can be sold for.
Since there are 42
gallons of oil in a barrel, you can multiply this ratio by 42 to get the actual
profit margin per unit. At today’s ratio of .0295, multiplying by 42 gives us
1.24. That means a profit margin of 24% for every gallon of crude oil refined into gasoline.
But during the earnings call, Valero forecasted favorable market conditions for the current quarter, based on improved gasoline and distillate cracks from the lower levels and sour crude weakness resulting from the IMO low-sulfur fuel oil mandate, which goes into effect on January 1, 2020. And this is why Valero broke out after consolidating for the past 10 months.
Thus, the chart suggests there is room for price to run up to $108, which would represent another 9% increase in price.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Bitcoin fan and Twitter CEO Jack Dorsey said today at a Twitter media event in New York City. He said “hell no” when asked if he would join the Libra Association.
He then went on to explain that the Facebook-created stablecoin didn’t need to be a cryptocurrency to pull off its broader goals of democratizing the financial system.
“I don’t know if it’s a gimmick,” said Dorsey “but a cryptocurrency wasn’t necessary to make that work”
“It’s not an internet open standard that was born on the internet,”
“It was born out of a company’s intention, and it’s not consistent with what I personally believe and what I want our company to stand for.”
Jack is the CEO of not only Twitter, but Square as well. Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.
I have come to like Square over the last two years, not because I’m a customer, but because I see them as a Disruptor. I’m bias to Square because of their first to market initiatives into Cryptocurrencies. Back in April of 2018, Square allowed customers buy and sell bitcoins via its Cash App in all 50 U.S. states.
Then in March Square announced Square Crypto. Square Crypto’s goal is to help improve the Bitcoin ecosystem. Team members include: Valentine Wallace joins from Lightning Labs, Jeffrey Czyz from Google, and Arik Sozman from Facebook, where he was building the Calibra wallet for Facebook’s blockchain project, Libra and Matt Corallo, co-founder of Blockstream.
But is not just the crypto space that Square is focused on. Over the next few weeks, Square will start allowing customers to buy and sells stocks for free on its cash payments app. And yesterday Square announced the rollout of fractional stock trading services on its Cash App. As an example, this means you can buy just a fraction of one Amazon stock vs. dishing out over $1700 / share.
So where is the price of Square heading next, the last several weeks, price has been sideways, but if price gets down to the weekly demand at $46, the chart suggests to buy and go long.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Now that got our collective attention, didn’t it? China seems to have put a rocket under crypto – let’s see whether this massive price surge has any staying power. Closing above the 200-day moving average would seem to suggest so.
Lots to share this week – I could have tagged the majority of this recap ‘highly recommended’ from reflections on censorship resistance to a discussion of Bitcoin Maximalism and a whole lot in between.
Perhaps it’s worth restating that the goal of this series is to highlight the developments and narratives that comprise this space. News per se is not the focus but rather broader trends, tech, debates, and discussions.
Picks of the Week
Charles Hoskinson on crypto is a rabbit hole you will benefit from going down. This analysis of Bakkt’s underwhelming performance to date is also well worth checking out as is this article on the true value of crypto.
Once again, I learned a lot this week in crypto. As always, looking forward to your comments and suggestions.
Note on Sources:
Twitter & Reddit (cryptos current meta-brains) / Medium / Trybe / Hackernoon / Whaleshares / TIMM and so on/ YouTube / various podcasts and whatever else I stumble upon. The aim is a useful weekly aggregator of ideas rather than news. Though I try to keep the sources current – I’ll reference these articles and podcasts etc. as I encounter them – they may have been published just a couple of days ago or in some cases quite a bit earlier.
World Wrestling Entertainment, Inc., an integrated media and entertainment company, engages in the sports entertainment business in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America.
Along with watching the kung fu movies on Sat. it was all about watching wrestling on TV as well. My era of wrestlers didn’t involve WWE superstar, John Cena, and his signature “you can’t see me” hand gesture. Nor did I ever see Dwayne “The Rock” Johnson wrestle. The only screen I ever see Dwayne on are the moving screen. My era involved André the Giant and Hulk Hogan. The rivalry that had is perhaps is one of the most important in professional wrestling history.
Andre the Giant’s real name was André René Roussimoff who also happen to be a French actor as well. But his wrestling name was so fitting. By the time Andre was 12, he was already 6 foot 3 and 240 lbs and later grew to 7 foot 4 and 540 lbs.
Terry Gene Bollea aka Hulk Hogan, was the Man. He was the face of the WWE back then and is one the most popular professional wrestlers of all-time. However, I never got the pleasure to play his video game, Hulk Hogan’s Main Event.
Then I grew up and found out the WWE doesn’t exist to really entertain us, it’s about making money. If you had held the stock in the last five years, well you would be up about 400% with EPS growth of 45% per year the last three years. But if you still hold the stock, well you would be down about 30% since April. The decline in the stock in recent months is largely due to declines in their viewership. For example, SmackDown TV ratings declined 13% in the first quarter 2019 and the average attendance at WWE’s live events across North America fell 4% in June.
However, with the company’s third-quarter earnings report less than a week away, analysts remain bullish on WWE’s longer-term outlook.
Morgan Stanley Weighs In
On Wednesday, Morgan Stanley analyst Benjamin Swinburne reiterated his Overweight rating and $85 price target for WWE.
Swinburne said WWE has simply been struggling to meet high expectations in the past two quarters, but he said little has changed about the company’s fundamental outlook.
“Expectations aside, WWE continues to offer exposure to an asset with unique IP, rapidly growing revenues and FCF, and now at its lowest multiple since late ’17,” he wrote in a note.
Morgan Stanley is forecasting high single-digit EBITDA growth for WWE through 2025, and Swinburne said the 2019 sell-off is a buying opportunity.
And the Smart Money is taking notice because today I noticed bullish buying in the January $75 call options where they bought over 6,000 contracts.
At the moment, the momentum is to the downside, but limit. With three months before these contracts expire, there is plenty of time for momentum to reverse…and the catalyst could be when WWE announces earnings next week.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
PPT seen from the temporality of 1D we can see how the price has made a throwback to the resistance previously broken during the movement occurred in October 2019, the price has tested the area very well and the candle is showing a strong momentum of more than 20%, we can also see how the candle is so far above the support located at 0.00005310, indicated in the chart above by the horizontal black color, this is a key level of reclaim, if the price manages to close this way, it is very possible that we will see a next impulse towards our profit target located within the price range of 0.00007213 – 0.00007774, within that area the price could find strong resistance that makes the price fall.
PPT seen from the temporality of 4H, we can observe more closely the current movement of candles, where we see the momentum that has taken the price after testing the diagonal and enter the 1D demand zone, in this chart I just want to show the area of supply located at 0.00006561, indicated by the red horizontal color, this is an important supply level to take into account during the bullish movement, and is usually reversed once reached that level.
In conclusion, PPT shows a clean diagonal test so far, the current candle in 1D has found strong imposed, that if we manage to close above 0.00005310, it is very possible that we have a next bullish movement during the development of the current movement, however, if the price falls below the zone of demand located within the price range of 0.00004372 – 0.00004666, the price could go down in search of the bottom located at 0.00003438, with high probabilities of a greater reversal, therefore, I recommend to be very attentive to the action of the price in 1D and always remember to place your stop loss in all your operations to avoid possible invalidations during the movement.
As I always say, you have to be aware of the movement, invalidations can occur, there is no 100% reliable analysis, take your own precautions when trading.
AE seen from the temporality of 1D we can observe how the structure is forming a rounded floor, an upward pattern that should drive the price if we manage to stay above the zone of demand located within the price range of 0.00002114 – 0.00002248, indicated on the graph by the light blue rectangle, our first target profit is located within the price range of 0.00002748 – 0.00003145, this is an offer level where it is very possible that the price finds strong resistance and we have a correction towards the support delimited with the curvature of the rounded floor, the possible trajectory that the price could follow I have drawn in the chart above.
AE seen from the temporality of 4H, we can observe more closely the current movement of candles, the minor figure has formed an ascending wedge where the price has been contracting during its development, in the chart I have placed a yellow circle that indicates the important area to take into account during the next candles within this temporality, the price has to close tightly above the resistance of the figure so that we can reach our first target, otherwise the price could lean towards the theoretical target of this pattern and go in search of the first zone of demand in 1D.
In conclusion, the price has remained forming a series of HH and HL from the point where it found the support located at 0.00001760, until now has granted a 40% profit, which is something we must have very present to ensure our next move, for now the most advisable would be to wait for the reaction of the price in the resistance of the lower figure and look for some reversal in case of not closing up with sufficient force, always remember to place their stop loss in all their operations to avoid possible invalidations during the movement.
As I always say, you have to be aware of the movement, invalidations can occur, there is no 100% reliable analysis, take your own precautions when trading.
Please click the link below to listen to the 59th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.
Welcome to Two Minute Crypto. This episode is a little more personalized in tone and explores my own particular process of identifying the term which best exemplifies my crypto investment thesis.
If you’ve spent any time at all surveying the crypto landscape you’ve doubtless encountered the Alt Coiner – BTC Maximalist fault line. These two camps rarely have much good to say about each other though Bitcoin does generally seem to have the upper hand in any proof of concept argument. Regular listeners will know that I favour BTC over any other project in crypto. I won’t rehash this oft-stated position. However, I’m certainly not a BTC Maximalist – a crypto worldview I attempted to shed light on in last week’s episode.
As previously discussed, BTC accounts for approximately 70% of my crypto portfolio. It is also the only crypto I dollar-cost average into each and every week. Nonetheless, there are a number of Altcoin projects which I believe have obvious and sustainable potential – Ethereum, EOS and Cardano primary among them. In addition, I have a number of small positions in ‘wildcard’ projects such as Elastos, Nuls, NEO and others. Bitcoin Maximalist, therefore, is definitely not a good fit nor however, is Alt-Coiner. If I had to pick only one – it would be Bitcoin but, of course, I don’t. While I’m fairly confident BTC will remain unchallenged in terms of its claim as a store of value – blockchain offers so much more and there’s absolutely no proof that there, ‘can be only one.’
In pondering this I’ve finally decided on the nomenclature that correctly reflects my crypto investment thesis – I’m a Bitcoin Majoritarian. Yep, I just invented a word but I’m sure you get my meaning. The majority of my holdings are BTC. The majority of my future planned investments remain targeted on BTC. In addition, the majority of my time is spent researching BTC tech, developments, and market conditions – ergo I’m a BTC Majoritarian. Mostly Bitcoin but with a minority interest in other applications and iterations of crypto. So now I can rest easy and spend the next few years spreading BTC Majoritarianism to my heart’s content!
APPC seen from the temporality of 1W we can see how the structure of candles has remained following an excellent curvature, which represents a good sign of a close reversal of trend, the current series of candles has maintained a bullish movement from the double floor formed on 2 September 2019, the movement is being strongly supported by the RSI indicator, which shows bullish divergence, signaled within the indicator by a dark blue diagonal, the price could continue to rise from the current position to reach our first target profit located within the price range of 0 to reach our first target located within the price range of 0.00000758 – 0.00000929, indicated in the graph by the light blue rectangle, however, we could also have a backward movement close to the demand zone located at 0.00000333, indicated in the graph by the lower horizontal dark blue color before continuing towards our profit targets, in the graph I have traced through the drawing tool, the possible trajectory that the price should follow during its movement (the drawing only expresses the movement and not the time period).
APPC seen from the temporality of 1D we can observe more closely the current movement of candles, we see how the price has formed us 2 important HL after the double floor created in the zone of demand, this is a very good bullish signal, it is quite possible that this is the reason why we are currently seeing the formation of a symmetrical triangle that we can see in the chart delimited by the 2 dark blue diagonals, the price should continue to move within this continuation pattern before the bullish break, the black arrow within the chart indicates the target that should reach the next impulse.
In conclusion, APPC has an excellent candlestick structure that should result in a next bullish move towards the price range of 0.00000758 – 0.00000929, currently the formation of the triangle should give rise to an HL close to the support of the figure, before looking for the break, the safest position would be after confirming the break of the pattern, in the 1W chart I have also placed the next gain target located at 0.00002194 and the third profit target located at 0.00003791 which should be long term objectives if the price maintains the trend, for the moment I recommend to be very attentive to the development of the price within the lower figure to look for the best position in the long run, always remember to place stop loss in all your operations to avoid the possible invalidations during the movement.
As I always say, you have to be aware of the movement, invalidations can occur, there is no 100% reliable analysis, take your own precautions when trading.
