Does Bitcoin Have Inherent Net Worth?

 

Dear Reader,

I have read many leading investors and portfolio managers, especially high-ranking employees of large asset managers, say that Bitcoin does not have inherent worth. Or with other words that Bitcoin is worth nothing.

Does Tesla or other hugely loss making technology companies, now valued at many billions USD, have inherent net worth, then? When investors basically hope these companies will one day become profitable.

Apparently, the aforementioned portfolio managers base their claim that Bitcoin does not have inherent net worth on standard finance theory which says that an asset's value is equal to the future cash flows the asset, government bond or company will produce in the future, discounted back to the present day. That said, have Facebook, Tesla or Amazon paid out any dividends? Amazon is listed on the Nasdaq bourse since 1997, that is for 24 years, and Amazon has not paid a single US cent in dividends. So the future cash flows are expected when? In the next 24 years?

Bitcoin, actually serves as the infrastructure for all the other cryptocurrencies. Many companies minted newly created cryptocurrencies to finance their businesses. Bitcoin is decentralized, that is no one actually owns the whole thing, so its is difficult to say to whom future dividends will flow to. Bitcoin could actually pay out dividends if its ownership structure is figured out.

Bitcoin is now widely considered money. Do the United States Dollar, the Euro, the British Pound or the Japanese Yen pay out dividends? No. But they are worth a lot. I read an article by the head of one of the leading asset managers in the world that the United States Dollar, the Euro, the British Pound or the Japanese Yen have value because they are backed by the flow of money from taxes their respective governments collect, the militaries of the respective countries and the organization of the USA, the European Union, Great Britain or Japan as large and influential countries or unions in the European Union's case.

And? When you have a military behind you, you are worth something? Or are you? Does the fact that because Bitcoin's distributed blockchain is owned by the people mean it is not worth anything? The military is there to serve the people, right?

Bitcoin actually provides huge cost efficiencies for many businesses which are yet to be realized in the future. Business are created to make profit. That happens when revenue is above costs. And with the distributed blockchain businesses can save on costs a lot and thus increase their profits. Bitcoin is well on the way of becoming a legitimate store of value, unit of account and means of exchange or with other words money. Governments, however, still have not figured a way to control Bitcoin and other cryptocurrencies, though. Which is not necessarily a bad thing.

What are cryptocurrencies actually? They give the freedom for every company to issue its own currency. Commercial banks, in fact, have been issuing their own currencies since centuries. Commercial banks' own currencies are just called monetary reserves creation or reserves multiplicator and they are just cloaked in the official currencies like the USD or EUR, where the banks do business.

Yes, I am a libertarian and Bitcoin and other cryptocurrencies are another libertarian dream. However, Bitcoin and the distributed ledger provide many benefits, which if used widely, could move the world forward. A lot.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Virgin Galactic Valuation

Dear Reader,

Virgin Galactic Holdings Inc, the space travel company with a NYSE ticker SPCE, is currently valued at 7.12 bln. USD.

I personally think Virgin Galactic's market capitalization could rise to 200 billion USD or more. Space mining is hugely lucrative as many asteroids and planets hold huge reserves of base, precious metals and also diamonds and many other valuable natural resources.

Yes, Virgin Galactic is a story stock with no significant revenue. Yes, many people have booked space flights with Virgin Galactic, but Virgin Galactic is yet to record meaningful revenue.

Virgin Galactic recently completed its first successful outer space flight. The acquired technology and know-how provide Virgin Galactic with huge competitive advantage/edge in the future race for space. Virgin Galactic could use this breakthrough for piloted missions in space which could mine asteroids and planets for valuable base and precious metals deposits. Space is limitless, basically. Tesla is valued at more than 600 billion USD consistently in the last 4-5 months by holding the promise to dominate only one industry, namely car manufacturing on planet Earth. It is easy to forecast that a leading company in space exploration like Virgin Galactic could be worth at least as much as Tesla, if not significantly more, if it starts to earn significant revenue.

For now, Virgin Galactic's main asset is its technological edge. But technology could prove a great advantage as evidenced by the extraordinary success of companies like Apple, Alphabet, the producer of the Google search engine, Microsoft, Amazon and Facebook.

Yes, Virgin Galactic's prognosis is based mainly on the potentially limitless size of the space exploration market, its current technology and the skill of the company's management. 

That said, I do believe Virgin Galactic could end up being worth more than 200 billion USD.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Will Bitcoin Become Money?

Dear Reader,

Bitcoin, the most popular and most liquid cryptocurrency is expected by many investment analysts to become real money.

But what is money, actually. The definition of money is threefold:  1) Store of value, 2) Means of exchange and 3) Unit of account.

Bitcoin more or less fulfills, at least partially, these criteria. The real problem with Bitcoin becoming fully fledged money in the long-term is two fold: 1) Bitcoin's price is still too volatile and 2) There is still a real danger that after a concerted global effort, the largest and most powerful countries like USA, China, India, Russia, Germany, UK, France etc. could decide to outlaw Bitcoin and other cryptocurrencies and order their central banks to ban Bitcoin trades clearing.

However, Bitcoin's benefits are just too large for even the largest countries to ignore. What do actually governments want? Governments want to fulfill the promises they gave to the people. Which is done mainly by spending money, and lots of it. Bitcoin's popularity has driven many newbie investors like people from information technology, healthcare, energy industries to invest first in Bitcoin, then later in stocks for example. Which increases the trading fees that flow to banks, which in turn increases banks' profits and they transfer more money to governments in the form of taxes on profit. In the same way, Bitcoin, by facilitating money transfers, brings more revenue to governments. In addition the blockchain  technology, underlying Bitcoin could provide many efficiencies which will make many industries more profitable. All these developments lessen the risk of global governments banning cryptocurrencies.

As regards to liquidity, Bitcoin's growing popularity should solve that problem too. Stock market liquidity, for example, rests on two pillars: institutional investors, like pension funds, brokerages, investment banks, asset managers, hedge funds and retail investors. Both institutions and retail investors contribute to stock market liquidity which is quite large especially on the USA and other large developed markets' bourses. With Bitcoin retail investors, like mainly information technologists first, then financial markets and banking professionals were the pioneers to trade Bitcoin and other cryptocurrencies actively. Slowly, however, from six months ago news are flowing that more and more institutional investors like hedge funds, asset managers are buying into Bitcoin. What is more, the two largest investment banks by revenue JPMorgan Chase and Goldman Sachs are taking up more and more actions to facilitate clearing of trading with Bitcoin.

I forecast that slowly, in the space of 5-7 years, Bitcoin will be able to take up 2-3% of the global transaction volume of the major currencies. As with other new financial assets' adoption a lot depends on people's psychology. But things are now definitely in motion, momentum is building ad success begets success.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Tesla's Future

Dear Reader,

Tesla Inc, the electric vehicle manufacturer, is currently regarded as a de facto monopolist on a market which many analysts claim has huge potential, namely electric vehicles.

Actually, Tesla's future seems to be reflected in its current market valuation of 625.45 bln. USD. Investors seem to hold for certain that not only Tesla will dominate electric mobility, but also that electric vehicles will almost fully displace internal combustion engine vehicles.

Actually, I see Tesla becoming a niche player in the cars market. Something like BMW, Daimler with its brand Mercedes Benz and Volkswagen's Audi luxury brand. Yes, Tesla is trying to offer also more affordable cars. However, even Tesla's higher priced cars are not produced profitably if subsidies credits are excluded. I find it difficult to believe Tesla will soon start producing 30 000 USD priced cars profitably in the next 5 years.

Tesla should actually focus on the luxury space more. Another focus for Tesla should be research and development.  Through higher research and development spending Tesla could achieve a technological breakthrough through which Tesla would be able to produce cars with a net profit. Tesla's need for a technological breakthrough is dire. That is because the money from the stock market could soon dry up, if a technology stocks valuation reset or crash sets in.

As Warren Buffett wisely said: "When the tide turns, you see who was swimming naked."

Selling dreams, stories and narratives works only up to a point. Sooner or later Tesla has to achieve a consistent net profit margin of at least 5 %.

Yes, Tesla could open up new verticals of growth like electric vehicles, for example.

But for now Tesla is concentrating on the car market. I estimate the intrinsic value of Tesla is around 120 billion USD.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

How to Analyze Cryptocurrencies Investments?

Dear Reader,

Investing in Bitcoin and other cryptocurrencies has gotten quite popular of late. Many both retail and institutional investors that previously invested in stocks are now investing in Bitcoin and other cryptocurrencies.

Basically, there are two ways to analyze cryptocurrency investments.

The first approach is what I would call the macro approach. It involves forecasting the future adoption of mainly Bitcoin, but also other cryptocurrencies as money or longer said as a means of exchange, unit of account and store of value. This depends a lot on people psychology including the benevolence of central banks and other regulators toward the asset class.

The second approach I would call a micro approach. It involves analyzing the financial statements, respectively financial results of companies that issue cryptocurrencies, or cryptocurrency tokens. The logic is as follows: if a company does well, increases profit, grows sales, its projects have higher future value and the cryptocurrency token issued in connection with these projects becomes more valuable and its price increases. This approach is almost 100 % identical to analyzing a company public stock's price prospects. That is why the majority of cryptocurrencies investors have previously traded stocks.

Actually the macro approach influences the micro approach and vice versa. The adoption of Bitcoin as money helps increase both the issuance and value of cryptocurrency tokens. The proliferation of cryptocurrency tokens helps people decide to use Bitcoin as money.

One has to always bear in mind, though, that Bitcoin and other cryptocurrencies are a new asset class. And as every new asset class Bitcoin and other cryptocurrencies have relatively low liquidity and exhibit large price swings or with other word are quite risky to invest in. Only recently Bitcoin's price fell by circa 50 % from its recent peak.

Actually, at the moment the macro approach, or the general adoption of Bitcoin and other cryptocurrencies as money, is the stronger driving factor of Bitcoin. In the 2015-2017 period it was more the micro factor, cryptocurrencies issuance, the main factor driving the price of Bitcoin and other cryptocurrencies up.

Actually, the principle is the same as with television advertisements or news. If a product, like Bitcoin, gets show often on the media or is often in the news, it gets bought. Or in the case of Bitcoin and other cryptocurrencies, their prices go up as more and more as they people become interested in the subject and buy in into the cryptocurrencies asset class.

I am of the opinion that the future of Bitcoin and other cryptocurrencies is bright. Bitcoin and other cryptocurrencies create value for people by serving as a means of exchange, unit of account and store of value. Thus they save people time, money and effort. If global central banks do not decide concertedly on a global effort to outlaw cryptocurrencies, Bitcoin and other cryptocurrencies will slowly proliferate. Bitcoin will even become a global reserve currency, a small enhancement to the USD as the now global reserve currency.

Actually, a lot depends on people's psychology. If one correctly forecasts the neural answer of humanity to cryptocurrencies he or she would be able to prognosticate the future prices of this exciting new financial asset class.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Apple's Future Opportunities

Dear Reader,

Apple Inc, the smartphone, personal computer and tablet computer maker, is at a relative peak in its development. Apple is currently valued at 2.44 trillion USD by public markets.

Apple is looking to develop its services offering which which would complement its much larger hardware business.

Yes, revenue from Apple's services products is already big in both nominal terms and as share of Apple's revenues.

Actually, I think if Apple are to justify its current valuation, Apple has to develop, market and distribute a new hit hardware product. Now Apple's hardware products serve as a channel based on which services are sold.

In my opinion, Apple is worth around 1.4 trillion USD or much less than its current 2.44 trillion USD. Investors in Apple seem to be pricing in that the company will develop and start selling a hit hardware product. This is easier said then done. Microsoft for example, has not been able to develop a hit hardware product for decades.

However, as long as Apple is profitable the company will be able to invest in developing a new hardware product, which could change the fortunes of the company to even new highs.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Robinhood IPO

Dear Reader,

Robinhood, the no fees brokerage company, is planning an IPO.

Private markets value Robinhood markets at 40 billion USD.

Robinhood's IPO prospect records the following stats:

For the year ended December 31, 2020, as compared to the year ended December 31, 2019:

•our total revenue grew 245% to $959 million, up from $278 million;

•we recorded net income of $7 million, compared to a net loss of $107 million; and

•our Adjusted EBITDA was $155 million, compared to negative $74 million.

In addition, for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020:

•our total revenue grew 309% to $522 million, up from $128 million;

•we recorded net loss of $1.4 billion, which included a $1.5 billion fair value adjustment to our convertible notes and warrant liability, compared to a net loss of $53 million; and

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•our Adjusted EBITDA was $115 million, compared to negative $47 million.

I personally think Robinhood markets is worth 20 billion USD, and this is predicated on Robinhood becoming a sustainably profitable company in the future.

Basically, Robinhood's main clients traders are millennials with low volume accounts of around 3 500 USD on average and a large cryptocurrency trading offering. When the stock market turns, the obvious technology stocks bubble bursts, Robinhood's clients will be hurt the most.

If Robinhood is not consistently profitable by then and does not have a large cash cushion, Robinhood's existence as a going concern might be in threat i.e. bankruptcy could threaten Robinhood in the case of a stock market crash. Robinhood's clients trade a lot of stock options and stocks on margin. Given the inherent risks in options and stocks traded on margin, the settlement risk and the size of Robinhood's business, a 50 % S&P 500, DJIA or Nasdaq Composite stock market crash could threaten not only Robinhood, but to a large extent the entire US and by default global financial system.

In short, according to my estimates, Robinhood is worth around 20 billion USD, if it becomes profitable.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Is Bitcoin USD 2.0?

Dear Reader,

Bitcoin, the main cryptocurrency, is steadily being accepted as a means of payment, unit of account and a store of value or with other words money.

Some analysts claim Bitcoin is USD 2.0 or a global reserve policy, but in electronic form.

Does Bitcoin stand a chance to become a global electronic reserve currency, much like the United States Dollar is now?

There are many factors at play. Fist there is no strong economy or military backing the Bitcoin. Second Bitcoin's liquidity is far from USD's.

Bitcoin, however, lacks the backing of a government which in turn could prove actually an advantage in that people trust the Bitcoin more than the USD. Bitcoin is already a global reserve currency but of much lower stature than the USD in the sense  that you can exchange Bitcoins for USD or EUR at any point in the world.

Yes, I think Bitcoin has its place as a global reserve currency, but it will be a lot less powerful than the USD in the beginning. With the passage of time Bitcoin's role as a reserve currency will continue to grow.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Bitcoin's Prospects

Dear Reader, 

Bitcoin's price has fallen a lot in the past one month and is hovering around 34 700 USD per 1 Bitcoin.

I personally think Bitcoin's price could rise above 100 000 USD in the next 5 years.

Sooner, rather than later, companies will start again issuing cryptocurrencies to finance their business. This will create a frenzy similar to the dot-com euphoria in 2000. Naturally the price of Bitcoin will rise a lot.

What is more, in pure business terms, the financial industry is being changed profoundly by Bitcoin. On the investing side ever more leading investment banks are either announcing or building Bitcoin trade clearing capabilities. More and more asset management funds and hedge funds and many individual investors are investing in Bitcoin.

Bitcoin's underlying blockchain algorithm can change many other industries as well.

Bitcoin, it seems, is gradually being accepted by the general public as money, which will only increase its value in the future.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Is Apple a Value or a Growth Stock?

Dear Reader,

At 2.33 market capitalization and Price/Earnings and Price/Sales ratios of  31.39 and 8.49 Apple seems to be more of a growth stock.

That said, as far as technology stocks are concerned, Apple passes for a value stock.

Actually, I think Apple is overvalued. I estimate Apple is worth 1.4 trillion USD in the long-run. Apple's revenue has grown at 5 % on average for the last 5 years, so the last reported five calendar years of Apple's revenue and earnings do not speak of explosive future growth.

However, many other growth stocks are trading at ridiculous Price/Earnings levels of 100 or more and many are not even making profit. Apparently many institutional investors are attracted to Apple' stature and relative mild valuation metrics, a sort of utility in the technology world. The asset management funds, hedge funds and pension funds' money flowing into Apple's stock aided by monetary reserves creation of central banks, which is an euphemism for printing money, helps keep Apple valued at 2.33 trillion USD, which is a staggering sum of money. To put into perspective, this is around 10 % of all goods and services the whole of the USA produces in a year.

That is why, I think Apple is worth 1.4 trillion in the long-run. 

Apple is even distributing a dividend, but to be a value stock, Apple should trade at Price/Earning ratio of 14, for example.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich