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Reddit, Astera Labs, Rubrik. There has been a wave of technology IPOs lately.
The IPOs have definitely given the stock market a boost. The money from Initial Public Offerings gets recycled in both public and private companies, which gives a boost to both the technology and overall market ecosystem.
As long as the IPO wave goes on, the US stock markets and by extension global stock markets should go on marching higher, in Wolfteam Ltd.'s view.
Rubrik, Inc the cybersecurity company staged an IPO on the New York Stock Exchange during the week.
At its current market capitalization of 6.67 billion USD, Rubrik is overvalued. Rubrik Inc exhibits too high a negative profit margin of regularly more than - 50 % net profit margin, which is unsustainable for Rubrik's current valuation, in Wolfteam Ltd.'s projections and estimates.
It is true that Rubrik states it has a path to profitability, but this is not be seen in its financial results. Yes, cybersecurity is a hot sector, but for niche product Rubrik just has to show better operational results.
Rubrik's intrinsic value is 3.7 billion USD, according to Wolfteam Ltd.'s projections and estimates.
The Federal Reserve will still do 3 Federal Funds Rate cuts in 2024, according to Wolfteam Ltd.'s projections and estimates, primarily on expectations inflation will not rise too much and on political pressure form both parties.
Snap Inc, Snapchat's owner, Pinterest and Reddit are all vying to become a viable competitor to Facebook in social networking.
Snapchat has the highest chance to vie with Facebook for social media supremacy, in Wolfteam Ltd.'s view. Snap Inc, however is unprofitable, which limits currently the upside of Snap Inc to circa 24 billion USD market capitalization compared with Meta, Facebook owner's 1.12 trillion USD market capitalization.
Snapchat, Pinterest and Reddit are basically discounters in social network advertisements. That is, it costs much less to advertise on Snapchat, Pinterest and Reddit than on Facebook, LinkedIn and Twitter.
That is why Snap, Pinterest and Reddit are unprofitable, with the slight exception of Pinterest.
If Snap achieves 5 % net profit margin, Snap could have a market capitalization of 60 billion USD.
If Snap achieves 10 % net profit margin, Snap could have a market capitalization of 80 billion USD.
If Snap achieves 15 % net profit margin, Snap could have a market capitalization of 120 billion USD.
If Snap achieves 20 % net profit margin, Snap could have a market capitalization of 190 billion USD.
According to Wolfteam Ltd.'s projections and estimates.
Snap Inc, the owner of the Snapchat application beat on earnings and Snap's stock price is up 26 % today.
Snapchat, along with Pinterest are the two most viable Facebook competitors as social networks. Meta, Facebook owner's stock market capitalization is 1.12 trillion USD , while Snap and Pinterest's market capitalization hover around 24 billion USD currently.
Both Snapchat and Pinterest could make inroads into becoming even a minor competitor as a social network to Facebook, which could increase multiple fold their market capitalization, especially Snapchat Snap owner's, according to Wolfteam Ltd.'s projections and estimates.
The US stock market is currently in a bubble lead by AI and Bitcoin.
There could be more than 27 % fall in the main US stock market indices in the next 3 years, triggered by the Federal Reserve raising rates followed by a large bank failure, according to Wolfteam Ltd.'s projections and estimates.
Both Apple and Microsoft are overvalued mainly on the seeming over-promise of artificial intelligence, AI. Markets and investors seem to be expecting the benefits of AI to accrue far too quickly and in too large quantities.
In addition, if China Taiwan tensions erupt, Apple could lose 80 % of its chips for Macintosh computers, iPhones, iPads production overnight. If China Taiwan enter encounter, inevitably US and China tensions will be pulled, which will affect both the demand for Apple's Macintosh computers, iPhones, iPads and Microsoft's Windows and MS Office software.
Apple and Microsoft are both overvalued by around 57 %, according to Wolfteam Ltd.'s projections and estimates.
Both stock market and bond market volatility is bound to increase, according to Wolfteam Ltd.'s projections and estimates.
Inflation guessing is a wild card at the moment, as the tensions between Iran and Israel could easily increase.
Inflation is stated as currently the leading metric the Federal Reserve follows. The Federal Reserve, USA's central bank is the leading central bank globally, as the USD is the leading global reserve currency. The Federal Reserve interest rate levels actions are followed closely and usually emulated the world over.
The Federal Reserve ended 2023 by forecasting 3 or 4 four cuts of the Federal Funds Rate target. Now both Federal Reserve officials and market participants imply the lowering of the interest rates levels targets by the Federal Reserve might be 2 or 1 or even none, whatsoever.
These expectations for volatility is yet to manifest themselves on the markets for stocks, bonds, foreign exchange and commodities and the associated derivatives. The worst kind of trigger could be difficulties for a major bank, which could translate into a credit crunch and huge downside financial market volatility and ultimately plunge the global economy into a recession, much as in the Great Recession in 2008 - 2009.
Much depends on the path of inflation.
It all depends on Israel's counter offensive.
Investors and analysts seem to be underestimating the probability of a disproportional Israeli counter response to Iran's recent attack, in Wolfteam Ltd.'s view.
Israel was hurt and surprisingly so by the Hamas' initial encounter and answered very actively. A severe attack on Iran could evoke a harsh embargo on Iran oil's produce, close the Hormuz straight and disrupt Middle East and Africa's oil and other commodities shipments.
All these possible events are not improbable and could drive oil's price to 120 USD both Brent and West Texas Intermediate oil prices, according to Wolfteam Ltd.'s projections and estimates.
Silver, as a leveraged play on gold is undervalued on geopolitics.
Silver, as a metal with broad industrial usage is undervalued on industrial demand, partially in military equipment, but more in commodities alloys.
Silver is undervalued as a store of value, much less and untruly appreciated than gold as a safe haven, according to Wolfteam Ltd.'s projections and estimates.
Currently, the stock market measured by the main indices S&P 500, Nasdaq Composite and DJIA could really fall 10 % from its peak due to calibration of Federal Reserve interest rate actions.
We could easily see just one Federal Funds Rate target cut in 2024, which will cut 12 % of the S&P 500 expectations level for 2024, in Wolfteam Ltd.'s view
The Federal Reserve will cut interest rates 2 or 3 times, mainly on political pressure, desire for financial stability and less high than expected inflation, according to Wolfteam Ltd.'s expectations and estimates.
The market for Initial Public Offerings seems to have opened up.
The newly recycled IPO money via the IPOs of Astera Labs, Reddit will find their way into venture capital funds again and thus via being invested anew will benefit the whole global technology ecosystem.
A possible headwind is the Federal Reserve not cutting interest rates at all which will be detrimental for the entire technology sector.
All in all, the technology sector boom is bound to continue for the next 2-3 years, in Wolfteam Ltd.'s view.
Oil and gold and oil and gold stocks are undervalued on the latest geopolitical tensions.
Oil could easily top 100 USD, while gold's price can surpass 3 000 USD, in Wolfteam Ltd.'s view.
The current geopolitcal tensions are the highest they have been for decades.
If oil and other commodities' prices shoot up, inflation rates will rise and the Federal Reserve might not lower the Federal Funds Rate target or interest rates at all. Which could tank the US and global stock markets. And the negative wealth effect could trigger a mild global recession.
Apple plans to add additional artificial intelligence, AI computations capabilities to its entire Macintosh computers line via new enhanced M4 in-house developed computer processing units.
On the news Apple's stock price climbed 4.3 % last Thursday.
AI narratives are catchy currently and tend to shoot up the prices of the major technology companies that announce AI improvements or even AI technology leaps.
AI consumer technology is a way for Apple to still utilize AI's potential without compromising the vast treasure trove of users' data Apple possesses by mining, harvesting and analyzing it.
The Apple Inc. in-house developed processors are still mainly assembled in Taiwan, less in China and India, which is the key risk for Apple's stock price, which could tank the company's market capitalization if a major event disrupts Apple's Asian supply chain.
For now, however, Apple should benefit handsomely from the new bettered AI M4 processors, which will empower users to model, predict via AI and enjoy movies, songs and entertainment via better algorithms processing.
After the strong inflation print of 3.5 % there are now analysts and experts who predict that the Federal Reserve might not lower the target for the Federal Funds Rate at all, far from the previous forecasts of 3-4 lowering of interest rates levels targets.
If the Federal Reserve ends up not lowering the target interest rate in 2024 and if geopolitical tensions flare anew between Iran and Israel, the price of oil and oil producers' stocks will shoot up, gold will also rise, while technology stocks may fall, in Wolfteam Ltd.'s view.
It will be interesting to observe whether the probable fall of US technology stocks prices will affect the general stock market level lower and possibly trigger an economic slowdown, possibly a mild recession.
Tesla's intrinsic worth is 120 billion USD, according to Wolfteam Ltd.'s projections and estimates.
That compares with Tesla's current market capitalization of circa 535 billion USD.
The 120 billion USD is the value of Tesla's manufacturing staff, the value of the electric vehicle production technology, the AI specialists, the software engineers and financial staff working for Tesla.
Tesla's market capitalization has fallen by about 57 % from its all time high.
Even so, Tesla is overvalued by about 55 %, in Wolfteam Ltd.'s view.
Reddit's intrinsic value is 17 billion USD, according to Wolfteam Ltd.'s projections and estimates.
At its current market capitalization of 7.53 billion USD Reddit is undervalued.
Reddit could turn to a semi viable competitor to Facebook.
If the price of Bitcoin reaches 100 000 USD, Coinbase's stock market capitalization could double from current levels.
Coinbase, however, does have legal challenges in the form of a couple of lawsuits from the US Department of Justice alleging Coinbase illegally offers for sale and trading securities, akin to stocks without having a proper license for that.
There is non-negligible chance of the Department of Justice winning this case, in Wolfteam Ltd.'s view.
So there is a price cap of Coinbase's stock price of about 350 USD currently, according to Wolfteam Ltd.'s projections and estimates.
There seems to be two ways leading technology companies tackle AI.
One is to develop their own AI with available data as in Palantir's case. Microsoft is doing this indirectly by taking non-majority stakes with 49 % in OpenAI and some percentage in Mistral.
Apple is taking the circumventing route by taking onboard Google's Gemini in its search.
Apparently, Microsoft is trying to prove it does not track users. At least not directly. A difficult proposition given that OpenAI in which Microsoft has a 49 % stake gathers, parses and analyzes users' data.
Anyhow, companies have to dabble in AI, since AI is the fourth industrial revolution changing the way we work and live.
The Federal Reserve will lower the target for the Federal Funds Rate three times, according to Wolfteam Ltd.'s projections and estimates.
Lowering the Federal Funds rate is beneficial for both Joe Biden's reelection campaign and Donald Trump's election bid. Which makes three interest rate cuts good for the reelection of Jerome Powell as Chair of the Federal Reserve.
In short, three rate cuts seems like a good middle, well balanced outcome.
The current AI boom depends 37 % on easy Federal Reserve policy, according to Wolfteam Ltd.'s projections and estimates. Contrary to the critics' opinions the AI boom has been going on since 2013, along with Bitcoin, despite the Federal Reserve raising the interest rates levels target beginning in 2021.
AI innovation is very strong and is pulling the whole technology market forward, despite the Federal Reserve raising interest rates.
The Magnificent 7 technology stocks, namely Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla are innovating very quickly based on the powerful AI GPUs from NVIDIA. The analysis and predictive modelling is at a very good level now. Many tasks are automated. Many new jobs are created, though.
In short, the AI is pulling the whole global economy forward via breakthrough innovation, despite the Federal Reserve and other global central banks tightening financial conditions.
The market for artificial intelligence services or AI is difficult to measure. One proxy is the market for cloud services which stands at around 700 billion USD a year, according to various sources.
That said the market for AI is triple the market for AI or around 2.1 trillion USD a years, according to Wolfteam Ltd.'s estimates.
This includes various verticals like chat bots, predictive modelling, automation etc.
AI will bring about many new work places of course.
Gold is undervalued, according to Wolfteam Ltd.'s projections and estimates.
Gold has long been undervalued on safe haven demand, geopolitical risk, investment demand.
The Federal Reserve lowering interest rate levels target is just a trigger for the pent up demand for gold to cause the price of gold to jump higher, in Wolfteam Ltd.'s view.
NVIDIA, Intel, AMD, Broadcom, Arista Networks have benefited tremendously from the artificial intelligence, AI boom. Their stock market capitalization have risen several-fold on the AI driven computer processing chips and graphical processing units booms in sales.
With the multiple rise of their revenue, their profit margins have also increased. The AI boom could end in 3 years, according to Wolfteam Ltd.'s projections and estimates. The artificial intelligence, AI boom could end with a 65 % decline in the Nasdaq Composite lead by NVIDIA and other computer chips producers.
Afterwards, however, after several years or one decade artificial intelligence, AI will again start to increase in value as AI changes our lives in the long-term. The developments will be similar to the dot-com boom and then bust and then boom driven by the advent of the Internet.
'Human nature rarely changes.' Warren Buffett.
Amazon.com Inc's value is derived 71 % from its cloud computing business, according to Wolfteam Ltd.'s projections and estimates.
Amazon's Amazon Web Services business on its hand is driven to a large extent by heavy computing connected with Bitcoin mining and companies using AWS.
Artificial intelligence, AI computing is another factor driving the growth of Amazon's AWS and other cloud services. Predictive modelling analytics requires enormous computing power, which is now readily available in the pay as you go model of cloud computing services. The need for complicated modelling is only going to increase, thus raising the intrinsic worth of Amazon AWS and respectively the intrinsic value of Amazon, Inc.
Gold is undervalued on geopolitical tensions, Bitcoin's rise and money tightening by the Federal Reserve.
The only thing holding a remarkable rise of the price of gold up until now was the relatively high target for the Federal Funds Rate of 5.50 %. Now, that the Federal Reserve is intent on lowering the interest rate target and another geopolitical conflict emerged, the price of gold could reach 2 500 USD a troy ounce in 2024, according to Wolfteam Ltd.'s estimates.
Gold mining stocks are thus undervalued.
The chance of Bitcoin's price touching and surpassing 100 000 USD in 2024 is 71 %, according to Wolfteam Ltd.'s projections and estimates.
Several factors are in place for Bitcoin's price to grow: the Federal Reserve targeting lower interest rate levels in 2024, enough computing power to drive artificial intelligence, AI which drives Bitcoin mining and the Bitcoin price action upward.
The computer chips and GPUs produced by NVIDIA, Intel and AMD are now enough to help drive the algorithms powering artificial intelligence, AI and Bitcoin mining. This provides for exponential development of AI and the associated products like artificial intelligence, machine learning, predictive statistical analysis and Bitcoin.
The power of computer chips to process neural networks information modelling is now very high and complex modelling, impossible ten years ago can be performed.
In addition, regulators are seemingly benevolent towards Bitcoin and other cryptocurrencies. That said, regulators and law upholding institutions are there to ward off criminal activity in Bitcoin, cryptocurrencies. And there is always the possibility that Bitcoin could be pressed by regulators and outright banned, which will hinder AI's process.
In short, the stars seem to be aligned for Bitcoin's price to relatively soon touch and cross the level of 100 000 USDs.
The artificial intelligence, AI hype is primarily driven by Bitcoin and the blockchain algorithm, according to Wolfteam Ltd.'s projections and estimates. NVIDIA is the most prolific AI stock and its growth is primarily driven by GPUs and server chips needed to mine Bitcoin.
The blockchain algorithm requires huge computing power which drives the computer chips manufacturing and software production.
Oil is grossly undervalued on geopolitical conflicts. The global economy is moving along well.
Barring a global recession the intrinsic worth of oil is 110 USD.
Oil majors like Exxon Mobil, Chevron, BP, Shell, Total and medium sized oil drilling companies like Occidental Petroleum, Marathon Oil Corporation, Chesapeake, Devon Energy and Petroleo Brasileiro are undervalued.
The upside for oil majors is 60 %, while medium sized oil companies could gain 120 % in the next 3 years, if the world does not slip into an economic recession lead by either the technology or the banking sector.
Tesla's intrinsic worth is 120 billion USD, according to Wolfteam Ltd.'s projections and estimates.
And this includes the electric vehicle production technologies, software programmers, AI engineers and staff.
Apple chose to use Google Gemini in its search engine.
Apple is striving to show it does not gather and utilize users data of iPhone, iPad, Macintosh users. By using Gemini's AI Apple is outsourcing data gathering to Alphabet's Google and Apple is unrelated to user data gathering and analysis.
This is a risk for Apple. Investors and analysts might claim that Apple is not fully utilizing AI.
However, by remaining free of user data usage and manipulation scandals, Apple could well increase a lot its intrinsic value in the future.
NVIDIA, the poster child of the current artificial intelligence, AI boom is overvalued by more than 60 %.
Yes, AI will change profoundly our world, but akin to the dot-com boom and bust in 2000, the artificial intelligence, AI expectations are getting ahead of themselves.
Wall Street equity research analysts are forecasting too optimistic revenue and earnings per share for the Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA and generally technology stocks.
On the other hand, Wall Street economists are forecasting too rosy economic growth and employment numbers.
The global stock markets rally and the global economy and labor market are a 'house of cards' at the moment, in Wolfteam Ltd.'s view, which any macroeconomic negative shock, mid-sized bank failure or negative developments could tumble and cause a 60 % + stock market fall measure by leading US and global stock market indices and a - 6 % economic recession in the first year, - 4 % recession in the second year and -2 % recession in the third consecutive year. Stocks fall and recession numbers that come close, but do not equal Great Depression numbers.
Again, NVIDIA as the most famous stock driving the AI stock market rally is intrinsically overvalued by more than 60 %.
A window for Initial Public Offerings or IPOs has opened as Reddit, Astera, Galderma staged multi billion USD IPOs in the US and Switzerland.
IPOs are usually good for the stock market rallies because by selling shares in IPOs venture capital funds and asset managers get liquidity in the form of electronic money, which gets freed and invested in other startups and both private and public larger companies. Since its is invested in many in number companies the money freed form the IPOs is actually multiplied. And since the money also goes in other public stocks this fans stocks prices higher.
In addition the news coverage of initial public offerings brings in even more investors' money flows. All asset managers, hedge funds, pension funds and individual investors have fee cash to invest. A flurry of IPO new in both mainstream and financial media makes these investors invest the free money.
Thus new IPOs are attracting new money to the stock market and supporting stock market rallies.
With 800 million USD in revenue in 2023 and 156 mln. USD net loss in 2022 Reddit Inc is worth 17 billion USD, much above the likely valuation on the New York Stock Exchange IPO tomorrow of around 6.5 billion USD, according to Wolfteam Ltd.'s projections and revenues.
Reddit's data is just too valuable as Alphabet's recent purchase of Reddit's user comments data for 60 million USD to power and teach Google search to improve its algorithms showed.
Reddit could vie for a partial Meta's Facebook social networking alternative in the long run.
Coinbase, Robinhood Markets, Nu Bank Holdings Ltd. and Microstrategy are ways one can invest in the current Bitcoin boom.
Bitcoin's price could touch 100 000 USD this year, in Wolfteam Ltd.'s view.
Coinbase, Robinhood Markets, Nu Bank Holdings Ltd. and Microstrategy can double from current levels in 2024. Robinhood Markets looks particularly undervalued in the current environment, according to Wolfteam Ltd.'s projections and estimates.
AI technology stocks are in a bubble. AI stocks are overvalued by 54 % on average, in Wolfteam Ltd.'s view. The Nasdaq Composite could correct by more than 60 % in the next three years.
Wall Street investment banks' equity research analysts present too rosy, optimistic forecasts for AI stocks' future revenues and profits partly influenced by the recent upwards movement of AI stocks prices, according to Wolfteam Ltd. It is true that success usually begets success, but sometimes expectations can fall off a cliff.
Wall Street investment banks' economists present too optimistic forecasts of the US and global economy by recent economic performance and apparently trusting too much the ability of the Federal Reserve to handle any economic dislocations.
In Wolfteam Ltd.'s view the next financial crisis will be triggered by the negative wealth effect of AI stocks falling more than 50 %, which will cause an economic recession or macroeconomic dislocations, which will spread via the loan and general economy channel to the banking sector. And again major Wall Street banks could face difficulties.
However, the Federal Reserve has shrewdly raised rates, so the Federal Reserve has room to lower interest rates levels in the face of an economic crisis.
With the Russia Ukraine and the Israel Hamas war oil seems undervalued.
Warren Buffett is often a proponent to the thesis that since gold is not a revenue generating asset it is not worth as much as a revenue producing asset. Actually, gold is a revenue producing asset because once it is dug out of the ground it can be sold and generates revenue. Furthermore, the gold mining companies that mine, dig out and clear out gold deposits, pay out dividends, which is revenue to asset managers like Warren Buffett.
The same is true for oil.
With two super regional conflict raging oil does seem undervalued. Also what is going on in the Red Sea and the Yemen Houthis attacks on ships carrying oil and liquefied natural gas also exudes upward pressure on the price of oil.
Oil super majors like Exxon Mobil, Chevron, BP, Shell, Total and mid-sized oil drillers like Occidental Petroleum, Marathon Oil Corporation, Devon Energy, Chesapeake are undervalued, according to Wolfteam Ltd.'s projections and estimates.
The current artificial intelligence, AI technology boom will lead to a bust, akin to the dot-com boom and bust in 2000 in 3 years, according to Wolfteam Ltd.'s projections and estimates.
The Nasdaq Composite could correct 80 % from its peak within 5 years, in Wolfteam Ltd.'s view. The Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla AI technology stocks' market capitalization imply too high growth rates for revenue and profits.
At Apple's Price/Sales ratio Apple's revenue must grow by 20 % 5 years in a row to substantiate Apple's current market capitalization of 2.66 trillion USD.
Microsoft's Price/Sales ratio of circa 15 presupposes even more stunning growth of 25 % for 7 straight years to substantiate Microsoft's current market capitalization of 3.09 trillion USD.
Wall Street equity research analysts driven by the recent Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla price action keep coming with overoptimistic, unrealistic estimates for the Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla's future revenue and profits, even though the US and the World's economy is practically stagnating with growth rates in the statistical margin of error.
These overoptimistic forecasts of revenue and profit of Wall Street equity research analysts are most probably forced partially be influence from the investment banking, mergers and acquisitions, IPO, stocks sales and debt sales underwriting departments. Much what Eliot Spitzer fought against.
Investment banking, especially mergers and acquisitions and IPO underwriting is a very lucrative sales business, while the analysis or equity research and risk management divisions of investment banks are pushed aside as 'second fiddle' so investment banks can drum up sales and trading, investment banking business and lending business for corporate banks, according to many articles, rumors and Wolfteam Ltd.'s view, also from the personal banking experience of the Wolfteam Ltd.'s founder.
This brings too optimistic forecasts for he Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla and generally technology stocks' future revenue and profits. And on their side asset managers and hedge fund managers do not want to pay for equity research and they use the overly optimistic equity and fixed income research of Wall Street investment banks and thus their stocks and fixed income portfolio choices are practically influence by too rosy revenue and profit forecasts and the AI technology stocks bubble keeps blowing.
If the Nasdaq composite does correct by more than 80 % this will cause a global recession of 5 % in one year and 3 % recession in the next, in Wolfteam Ltd.'s view. For a change global central banks could decide not to intervene and the market could clear from inflation generating zombie companies.
NVIDIA can become the world's most valuable company on the AI boom we are experiencing, surpassing 3.2 trillion USD, the recent market capitalization of Microsoft.
NVIDIA's market capitalization could touch 5 trillion USD, before the artificial intelligence, AI technology driven boom goes bust.
NVIDIA is currently overvalued by 65 %, according to Wolfteam Ltd.'s projections and estimates.
Amphenol Corporation, a leading provider of high-technology interconnect, sensor and antenna solutions is overvalued.
Amphenol Corporation is overvalued, according to Wolfteam Ltd.'s projections and estimates. With 12.55 billion USD in revenue, declining at - 0.54 %, net profit margin of 15.36 % for 2023 Amphenol's intrinsic value is 48 billion USD, in Wolfteam Ltd.'s view, compared to Amphenol's current market capitalization of 65.61 billion USD.
This is an excerpt from Amphenol's fourth quarter 2023 financial results:
Fourth Quarter 2023 Highlights:
Full Year 2023 Highlights:
When Bitcoin's price nears 100 000 USD, Bitcoin's price could correct by more than 30 %.
Many investment algorithms will use the 100 000 USD target to sell off the Bitcoin rally. Bitcoin's price will reach 100 000 USD in 2024, in Wolfteam Ltd.'s view on safe haven demand, the Federal Reserve lowering interest rates and money multiplication via venture capital funds' fintech startups investments
US inflation came out higher than expected yesterday.
Despite inflation being higher than target, the Federal Reserve will lower interest rates in 2024 3 or 4 times due to political pressure. Lower rates spur economic growth, which is good for both Joe Biden and Donald Trump. Fed's chair Jerome Powell will hedge his bets, in Wolfteam Ltd.'s view.
Hot AI stocks like currently the Magnificent 7 AI technology stocks Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla can be modeled and valued using the discounted cash flows model, comparables and asset base approach like all other companies.
The difference and what stock market participants seem to be projecting is the much higher, intangible value of the information these companies possess. That is why 6 of the above companies, outside Tesla are worth more than 1 trillion USD. The stock market seems to think that the Magnificent 7 technology stocks can monetize much better the information gathered during their activity.
The Magnificent 7 AI technology stocks Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla are overvalued by 44 % on average, according to Wolfteam Ltd.
Reddit starts this Monday the road show for its much awaited IPO.
According to media reports Reddit could be valued at as much as 6.4 billion USD.
This is significantly down from the last money raising round of Reddit, which valued the social networking and comments company at 10 billion USD.
According to Wolfteam Ltd.'s projections and estimates the projected IPO value of 6.4 billion USD significantly undervalues Reddit.
With 800 million USD in revenue for 2023 and 156 million USD loss for 2022, Reddit's intrinsic value is 17 billion USD, in Wolfteam Ltd.'s view. Recently Alphabet Inc, the Google owner signed a deal to purchase and use the information stored in Reddit's comments for 60 million USD. The idea is to use Reddit's comments board to train Alphabet, Google's algorithms, including the artificial intelligence, AI chat bot Bard, lately Gemini Large Language Model of Alphabet. Such a deal could open a whole new revenue avenue for Reddit, which could bring hundreds of millions of recurring revenue for Reddit a year.
Detractors point to the fact that Reddit has been loss making in the last several years. Reddit's comments board model is very scalable and with higher revenue Reddit could soon start making profits. Palantir was notoriously loss making exhibiting negative net profit margins of between - 20 % and - 40 %, but now Palantir, the scalable AI company is profitable and worth 57.59 billion USD on public stock markets.
Reddit possesses a treasure trove of information, which could quickly evoke new artificial intelligence, AI revenue streams for Reddit. In addition, via the meme stocks in mania in 2022, Reddit is very popular on Wall Street and many Wall Street investment banks' equity research analysts are likely to put in favorable research reports for Reddit.
Initially, immediately after the IPO Reddit's stock price and respectively market capitalization could fall as many insiders and many Reddit users sell their stock, which could turn Reddit into an even more undervalued company. Facebook, owned by Meta Platforms is the long dominant social network. Snapchat, owned by Snap Inc and Pinterest turned to be only a partial competition to Facebook. If Reddit achieves even a partial further success in social networking, which Wolfteam Ltd. believes it will, Reddit's market capitalization could even surpass 20 billion USD in the next 3 years. Reddit's brand is well known, which could provide further value to Reddit.
All in all, Reddit is undervlaued, according to Wolfteam Ltd.
Bitcoin is the main reason behind the AI boom, in Wolfteam Ltd.'s view.
Bitcoin mining or the creation of Bitcoins requires the usage of the complicated hashing tree algorithms or blockchain, which require powerful computing power. Translation: one needs powerful computer chips, GPUs to create Bitcoin.
The demand for powerful computer chips drives upwards the market capitalization of NVIDIA, surpassing 2 trillion USD. NVIDIA's computer processing chips or GPUs were mainly used by electronic games players who turned out to be the most prolific Bitcoin miners. NVIDIA's wealth creation drives the increase of the market value and the stock price of others from the Magnificent 7 technology stocks, namely Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla by powering with computer chips Apple, Microsoft, Alphabet, Amazon, Meta and Tesla's software and hardware
NVIDIA currently has higher market capitalization of 2.19 trillion USD than all from the Magnificent 7 technology stocks, but Apple and Microsoft, chiefly influenced by the current Bitcoin, cryptocurrencies boom.
Coinbase Global Inc, the cryptocurrency exchange could surpass its all time high of 342.98 USD achieved on 12 November 2021, according to Wolfteam Ltd.'s projections and estimates.
Bitcoin's price could surpass 100 000 USD in 2024, a record high, in Wolfteam Ltd.'s view, which will drive up the prices of all major cryptocurrencies and even more obscure cryptocurrencies to record highs.
These possible developments will increase the trading fees revenue for Coinbase, because higher cryptocurrencies prices will bring new investment flows and cryptocurrencies trades from existing and new cryptocurrencies investors. The Bitcoin, cryptocurrencies trading volumes that are routed through Coinbase could increase exponentially, if more hedge funds and asset managers start to enter Bitcoin, cryptocurrencies investments. Bitcoin, cryptocurrencies' low liquidity is what deterred hedge funds and asset managers up till now, but higher Bitcoin, cryptocurrencies prices will translate naturally into higher liquidity.
All these possible developments will turn into probable higher revenues and profits for Coinabse, increasing the fundamental investor base for Coinbase, which could drive the company's stock price and market capitalization to record highs.
