Coinbase Valuation As Of 31st Of July 2023

Coinbase is undervalued long-term.

Today the financial media is reporting that the Securities and Exchange Commission was on the verge of banning all trading of all cryptocurrencies, apart from Bitcoin on the Coinbase exchange.

Barring an unforeseen regulatory action barring outright Bitcoin, cryptocurrency trading on the Coinbase exchange, Coinbase is undevalued according to Wolfteam Ltd.'s corporate estimates and in the long-term can surpass its IPO valuation, which reflects a stock price of circa 343 USD and market capitalization of 70 billion USD compared with the current Coinbase's price of 95 USD and market capitalization of approximately 22.2 billion USD.

Bitcoin, cryptocurrencies are financial innovation and Coinbase is the modern day foundation of Bitcoin, cryptocurrencies trading.

US Stock Markets. The Day Ahead. 31st Of July 2023

 

Stock markets should continue rising with earnings momentum. 

Easy money is sill being multiplicated throughout the global economy. The Federal Reserve is raising interest rates, but not withdrawing enough money from the global financial system.

The surplus money is being lent out and finds its way into global stock markets and US stock markets thus have a rising tendency.

What is more, earnings season is going relatively well, so US stock markets today should have an upward tendency.

Crypto And The Federal Reserve

Bitcoin, crypto are generally inversely related to interest rate hikes.

The Federal Reserve, US financial regulators have love hate relationship with Bitcoin and cryptocurrencies in general.

Bitcoin, cryptocurrencies, however, epitomise financial innovation and the Federal Reserve’s FOMC and other US finance regulators seem to be willed into not impeding crypto, fintech innovation thrive is Wolfteam Ltd.’s opinion.

The Week Ahead. Starting 31st of July

Wolfteam Ltd.’s view is that US stock markets could continue going up until the beginning of October 2023 when possible quickening of inflation can take place.

In any case, earnings season is going good for now.

An Investment Choice Between Bitcoin, Gold And The USD

Bitcoin is showing a negative correlation to the USD.

Bitcoin, Crypto's correlation to gold is more nuanced. But Bitcoin, cryptocurrencies usually exhibit negative correlation to gold, since gold is considered a safe heaven asset, while Bitcoin, cryptocurrencies are considered a risky asset, similar to small capitalization technology stocks.

The Federal Reserve and the European Central Bank raising rates, however, changes many things.

Still, a strategy of equally weighted sums in Bitcoin, USD and gold could prove a useful investing strategy.

Bitcoin is slowly proving, at least partly a safe heaven asset, that is slowly taking market share from the USD.

Respectively, crypto's future looks bright.

Gold And The Federal Reserve

Gold's price increase stalled in its tracks after both the Federal Reserve and the European Central Bank raised their leading rates by 0.25 %.

The gold and interest rates' inverse relationship is well documented.

Wolfteam Ltd.'s view is that until the Federal Funds Rate target goes below 2.50 % from the current 5.50 %, gold’s price will not go up markedly.

Wolfteam Ltd.

www.wolfteamedge.com

Will Bitcoin and Cryptocurrencies Replace The USD Soon?

 

Bitcoin and cryptocurrencies are not yet ready to fully replace the United States Dollar, USD.

The interesting thing is that Bitcoin, crypto seem to function as a safe heaven asset as of late. Which is odd, since the risk profile of Bitcoin, crypto is akin to small capitalization moonshot type technology stocks, which is natural given the nature of the Blockchain technology underlying Bitcoin.

In the Russia Ukraine conflict cryptocurrencies are used by both sides to store and transfer wealth. Here the term money is not used on purpose, since it is more and more obvious that Bitcoin and cryptocurrencies have partially replaced the USD in Russia and Ukraine, which were dolarized economies in the first place.

Bitcoin and crypto are slowly chipping away at the United States Dollar, the USD by finding niche usage in the global conflict areas.

Actully, analysts have expressed the view that Bitcoin is a new digital USD. Whether this will turn out to be true remains to be observed. However, for now at least partially Bitcoin, cryptocurrencies, crypto for short are finding niches where they take market share of the USD.

Bitcoin And The FOMC Decision

 

The Federal Open Market Committee, FOMC of the Federal Reserve decided to raise the Federal Funds Rate to a target of 5.50 %.

Rising interest rates puts downward pressure on Bitcoin and cryptocurrencies, which are regarded as a risky asset.

That said, in the current geopolitical turmoil Bitcoin is regarded as a safe heaven asset via which to execute anonymous transactions.

Wolfteam Ltd.'s view is that the long-term up trend of Bitcoin is intact despite the latest Federal Open Market Committee, FOMC Board of Governors of the Federal Reserve decision to increase the target of the Federal Funds Rate to 5.50%

The Federal Reserve Raising The Federal Funds Rate to 5.5%

 

The Federal Open Market Committee of the Federal Reserve raised  yesterday the target for the Federal Funds Rate to 5.5 % and guided again to one more hike of the Federal Funds Rate.

Apparently, most market participants think the next guided hike and the Federal Reserve will stop.

Wolfteam Ltd.'s corporate view is that there will be more hikes of the Federal Funds Rate from the Federal Reserve . I expect the Federal Funds Rate to surpass 7.0 % in the next two years.

Russia's withdrawal from the Black Sea grain exports corridor deal can again fan inflation big time. Wheat, corn coming from Russia, Ukraine is vital for bread production and consumption in the Middle East and Africa. 

 

High energy inflation is not good, but if the prices of bread and bakery start increasing markedly this could turn out to be a catastrophe, causing social unrest in the Middle East and Africa.

Social unrest in the Middle East could close the Hormuz strait, the shortest way to transport oil from the Middle East and North Africa to consumers in China, India, Europe and the United States. That, on its turn could cause the price of oil to spike fanning inflation even more.

An inflation spiral could start, which will force the Federal Reserve to raise the Federal Funds Rate again aggressively.

How To Value Bitcoin?

 

 

To Bitcoin the traditional dividend discounting models cannot be applied, since Bitcoin does not distribute dividends is the narrative on Wall Street and among many investors and analysts. But also Meta, Alphabet and Amazon do not pay out and have never paid out any dividends.

And yet Wall Street research analysts apply dividend discount models to Meta, Alphabet and Amazon and value them with dividend discount models.

So if Bitcoin starts distributing dividends in 20 years, to suppose, than dividend discount models can be applied to Bitcoin. This is not so a farfetched assumption, if one looks at Wikipedia. Wikipedia is also community created, but can easily make a lot of money by accepting paid internet advertisements on www.wikipedia.org or via donations.

Sooner or later, Bitcoin's public ownership in practice can be structured as a foundation or firm and work for profit.

In addition, many firms which are using Bitcoin and the underlying blockchain technology could end up paying royalties to the Bitcoin community or the world, for that matter, which does own Bitcoin and can finally put a structure to its Bitcoin ownership as a firm or foundation.

 So Bitcoin is valuable, Bitcoin can be valued, that is.

Ripple Court Decision Effect On Bitcoin, Cryptocurrencies And Initital Coin Offerings

The recent US court decision that Ripple's tokens are not stocks is a game changer for Initial Coin Offerings, a way to issue cryptocurrencies tokens.

The Securities and Exchange Commission, SEC in 2015 effectively banned cryptocurrencies issuance via Initial Coin Offerings when it banned the Telegram Initial Coin Offerings. Cryptocurrency tokens issuance via Initial Coin Offerings is a way to disrupt investment banking, the underwriting of equity Initial Pubic Offerings, debt underwriting and mergers and acquisitions and venture capital funding.

The Ripple court decision is a game changer for cryptocurrencies issuance, because it can restart the issuance of cryptocurrency tokens via Initial Coin Offerings. The Ripple court decision can have profound effects on Bitcoin, cryptocurrencies and drive Bitcoin's price to above 100 000 USD in 2 years.

Spotify Earnings. Spotify Is Undervalued

Spotify reported its Second Quarter 2023 earnings.

Monthly average users grew by 27 % year on year. Spotify's stock fell a lot after hours.

This price development makes Spotify even more undervalued.

According to Wolfteam Ltd.'s estimates Spotify's intrinsic worth is 120 billion USD.

Several times above its current market capitalization. Spotify just has too many users and too high a revenue and is even profitable for such a comparatively low market capitalization of 27.15 billion USD.

Spotify did raise prices for its premium plan, which could hurt user growth in the long-run, but according to Wolfteam Ltd.'s assumptions user growth will not stall so much as some analysts assume.

AI Stocks Are Overvalued Short-Term, Long-Term Undervalued

 

AI, Artificial stocks like NVIDIA, C3i, Amazon, AMD, Microsoft, Alphabet are overvalued short-term, but undervalued long-term.

Like every new technology, there are boom and busts. The world is currently going through the initial boom phase of AI.

NVIDIA, for example is three times the market capitalization it should have, based on rational intrinsic value calculations. NVIDIA is that much overvalued. Amazon is also grossly overvalued, even on cloud computing,

Alphabet, Microsoft less so.

Bitcoin, Cryptocurrencies And The Russia Ukraine Conflict

 

Bitcoin, cryptocurrencies seem to be the financial means of choice of various Russian and Ukrainian counterparties involved in the Russia Ukraine conflict.

Russians and Ukrainians are using cryptocurrencies or crypto for short to store wealth, transfer wealth and as a unit of account, which are the three basic functions of money. It seems, in times of conflict Bitcoin, crypto does function as money and when its anonymity is added to that, crypto becomes a local reserve currency.

The fact that Bitcoin, cryptocurrencies have become local reserve tender currencies in the Russian Ukraine conflict points to the almost limitless opportunity for crypto. Cryptocurrencies are regarded as a risky asset. As peculiarity would have it Bitcoin, crypto seem actually to function as a safe heaven asset in times of conflict.

Such safe heaven status actually makes Bitcoin, ETH, Ripple and other cryptocurrencies potentially very valuable.

Bitcoin, crypto's durability and agility is yet to be tested to 100 %, though.

Exxon Mobil Valuation. July 2023

Exxon Mobil's intrinsic worth is 1.7 trillion USD compared to Exxon Mobil's current market capitalization of 426.6 billion USD.

The current Exxon Mobil's Price/Earnings ratio of 7.14 is ridiculous, really for a company that is at the bedrock of the global economy. The ESG trend suppresses the multiples of energy, industrial and financials stocks.

Exxon Mobil has a very good net profit margin of 13.9 %, its revenue grew by 44.17 % year on year in 2022. In short, Exxon Mobil has fundamentals justifying a much higher capitalization, namely 1.7 trillion USD, but the ESG trend is attracting the freshest capital flows to ESG companies, not "old economy" companies like Exxon Mobil.

In addition, Exxon Mobil distributes a dividend yield of 3.45 % a year

Top 5 Tech Valuation

 

Alphabet, Amazon, Apple, Meta, Microsoft, are overvalued by 50 % on average.

Meta Platforms Inc, formerly Facebook Inc is with the smallest overvaluation, namely Meta is overvalued by 25 %. 

Apple is grossly overvalued by 70 %, if China invades Taiwan, where 90 % of the GPU chips for Macintosh computers and iPhones are manufactured.

Alphabet in the short-run is overvalued by 32 %, but deeply undervalued in the long-run.

Amazon is overvalued by 35 % in the short-run, but undervalued in the long-run.

Spotify Is Undervalued

 

Spotify's intrinsic worth is 150 billion USD compared with its current 33.2 billion market capitalization, according to Wolfteam Ltd.'s estimates and projections.

Commodities Stocks

 

Commodities stocks are undervalued, all over.

Oil producing companies' stocks in general should have a market capitalization 2.3 times higher than current, on average. Gold producing companies' stocks should have 3 times higher market capitalization on average.

Wheat and corn producing companies should have 3 times higher market capitalization on average, than their current market capitalization.

Base metals producing companies' market capitalization should be 1.7 times higher on average.

Commodities producing companies are undervalued in general, partly due to the fact that much capital flows into top technology companies. 

Commodities producing companies' undervaluation will not last long is Wolfteam Ltd. www.wolfteamedge.com corporate opinion.

The Russian Ukraine conflict is a likely catalyst for the ceasing of the commodities' current erroneous valuation.

Banks and Bitcoin, Cryptocurrencies

 

Banks are globally undervalued, but not in the short-term.

In the short-term the Federal Reserve is raising rates and that influences banks' business in a negative way, because due to the higher rates corporate clients take out lower amounts of loans or cannot pay their current outstanding obligations.

This caused on its turn corporate clients to do less corporate deals, mergers and acquisitions, equity and debt capital raising, which influences negatively the investment banking business of banks.

In addition, banks too slowly embrace the blockchain technology and Bitcoin, cryptocurrencies, which can be an avenue for growth for banks in the current rising rates environment.

By depriving themselves and their client from the advantages of Bitcoin, crypto banks are loosing billions of USD in revenue and risking falling behind and ultimately loosing clients to more nimble, agile fintech competitors that offer crypto.

Bitcoin, cryptocurrencies are actually financial technology or fintech these days. Fintech is crypto and crypto is fintech.

And the financial companies that embrace crypto will become tomorrow's fintech leaders. Due to the computing power it requires, Bitcoin, cryptocurrencies can be done via cloud computing and thus banks can ease up on the infrastructure costs for crypto. Infrastructure costs are often cited as one of the reasons for the slow adoption of cryptocurrencies. Cloud computing can alleviate that.

www.wolfteamedge.com

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Investment Banks Valuation

Goldman Sachs and Morgan Stanley, which by revenue still remain predominantly banks with investment banking business, also bank holding companies, are undervalued.

Goldman Sachs' intrinsic worth is 340 billion USD, while Morgan Stanley's intrinsic worth is 260 billion USD.

Goldman Sachs is grossly undervalued on mismanagement, namely the 1MDB scandal and the lack of full punishment of the guilty parties, especially the highest ranking, at least according to media reports.

Such a brazen fraud as the 1MDB scandal turns clients away, because the 1MDB scandal shows gross misconduct at Goldman Sachs and a lack of proper controls and oversight to correct it.

Goldman Sachs still has an excellent mergers and acquisitions, equity and debt underwriting franchise, by many rankings top of the world coupled by a first in class merchant banking/private equity like business. Goldman Sachs' wealth management is also excellent.

In short, Goldman Sachs is grossly undervalued and with time Goldman's valuation and market capitalization will slowly go where they should be.

Morgan Stanley is also undervalued, but not so much as Goldman Sachs. Morgan Stanley' wealth and asset management business is doing extremely well and driving Morgan Stanley's higher valuation multiples compared to Goldman Sachs. That said, trading and mergers and acquisitions, equity and debt underwriting still make the majority of revenue at Morgan Stanley. True, large part of the stocks trading revenues comes from the private banking wealth clients, but the integrated full service investment bank model is one of the most important competitive advantages of Morgan Stanley.

Compared to technology companies, artificial intelligence and cloud computing companies especially, all other sectors of the economy's publicly listed companies look undervalued.

Financials, industrials and commodities are the value oriented sectors currently.

Goldman Sachs and Morgan Stanley from the investment banking business are especially undervalued among banks is Wolfteam Ltd.'s corporate opinion.

Tesla Amazon Comparison

 

Many analysts and investors compare Tesla with Amazon stressing that Amazon also remained unprofitable for a long time.

Amazon, however rarely exceeded 5-7 % negative net profit margin, while Tesla, if one takes out the tax credit subsidy is on a negative net profit margin of (-) 22 %.

Amazon benefited from the fact that no value added tax is applied on electronic trade. Tesla benefits from tax credit of circa 7 500 USD for each sale of its vehicles.

Wolfteam Ltd.'s corporate opinion is that Tesla is grossly overvalued and the comparison with Amazon is not just as things stand, because the negative net profit margin, if one takes out the tax credit Tesla does is several times higher than Amazon's past negative net profit margins.

 

www.wolfteamedge.com

#mergersandacqusitions #capitalmarkets #valuations #AI #marketriskmanagement

Grain Stocks Are Undervlaued

 

Grain, wheat, corn producing companies stocks are undervalued significantly on Russia breaking out of the Black Sea grains transport accord. Multiple-fold of grain companies stocks' prices is possible.

USD And Bitcoin. The Federal Reserve

 

The USD will appreciate coming the Jackson Hole Federal Reserve Symposium the coming end of August 2023 is Wolfteam Ltd.'s coporate opinion.

And Bitcoin and related stocks' prices like Coinbase and Robinhood will fall a lot.

The USD Bitcoin negative correlation has not broken down. It is still alive and well.

Bitcoin and cryptocurrencies are slowly chipping away at United States Dollar's power, though. First as means of payments transfer.

The Russia Lead Grain Deal

 

Russia is withdrawing from the grain deal that lets wheat, corn carrying ships go through the Black Sea straits undisturbed.

These ships carry vital wheat, corn that supply large parts of the Middle East and Africa with food, basically. Ukraine and Russia's  wheat, corn exports combined make up for 30 % of the world's total wheat, corn consumption.

Thus any blockade of the Black Sea straits that limits wheat, corn trade will raise the prices of bread and all other food produced from wheat, corn.

This will shoot up inflation again and will most probably force the Federal Reserve and the European Central Bank hands into raising interest rates gain to stymie inflation and on such a vital product as bread at that and in such a food sensitive region as the Africa and the Middle East.

Basically, if the price of wheat, corn shoots up the price of bread and makes it scarce, social unrest would follow, which could disrupt the transport of oil through the Hormuz strait and even more raise price levels upwards.

And the vicious circle of inflation and inflation caused interest rate hikes by the world's major banks could start spinning again and cause first a banking, then financial and finally a global economic crisis similar or even bigger than the Great Recession in 2008-2009.

Tesla 2 Quarter 2023 Earnings. An Evaluation

 

Tesla yesterday reported 2 Quarter 2023 Earnings.

Year on year Tesla's total revenue grew by 47 %. Tesla's net profit margin sits at around 10 % but this is with the tax subsidy and other subsidies. So, if subsidies are taken out, Tesla's net profit margin goes at at around negative (-) 10 % 

At circa 912.7 billion USD market capitalization Tesla is trading at Price/Sales ratio of 45 compared to around 3 Price/Sales ratio for Volkswagen and Toyota. 

Tesla Inc is astoundingly, grossly overpriced is Wolfteam Ltd.'s corporate view.

Wolfteam Ltd. estimates that Tesla's intrinsic worth is 140 billion USD and that estimate and projections reflect the value of Tesla's electric vehicles technology and the software and electrical, machine engineers an financiers on Tesla's payroll.