Snap Inc is expected to report earnings on 22 April, 2021 after the market closes. The stock has skyrocketed since the pandemic started last year. The stock price is around $58 on Wednesday, but a strong set of numbers could push the price even higher.
The consensus EPS Estsimate is -$0,05 (+37,5% YoY), and the consensus revenue estimatae is $740,89 million (+60,2% YoY). Snap is without any doubt a pandemic winner, but the company can remain at this level when countries are opening up again.
Snap`s average revenue per user (ARPU) which increased by 33% to $3,44 is far away from the king of social media; Facebook, which generated a staggering $32 per user in the period. As you can see, there is room for growth in here and innovation can help Snap in the future.
Earlier this month, Snap acquired the fashion recommendation app Screenshop. A company that analyzes photos to provide clothing suggestions. In March, they acquired FitAnalytics, a machine learning platform that helps customers pick the right clothing size when they shop online.
Both companies will be integrated into the Snapchat app very soon.
Snap is also working with PayPal to expand into new industries like cryptocurrencies and e-commerce. These are growth drivers that can help them both to boost their growth rate make investors and money makers happy.
Snapchat is popular among Gen Z (13-24) and their DAU is growing. DAUs were 265 million in the last quarter, and they are growing in Europe, North America and the rest of the world. Snap offers one of the most-used camera applications globally. 5 million snaps is created daily.
First-quarter top-line growth might have been impacted by lower ad spending. Also, a continued decline in price per ad impression and increasing competition might have weighed on advertising revenues, the only source of revenues for Snap.
Usage of augmented reality (AR), one of the fastest-growing digital technologies during the pandemic, is anticipaated to expand four-fold by 2023.
China`s new digital currency e-yuan is a big threat to the US dollar. E-yuan is expected to give China`s government vast new tools to monitor both its economy and its people. This is not only about the CCP`s ability to control China`s economy but also about their increasing global power, and it`s long running battle with the US dollar.
China has long said they are in war on Bitcoin. What some people don`t like is that Bitcoin is decentralized, but China`s digital currency is controlled by the CCP. In other words; the CCP can see everything you are doing with it.
Nearly 90% of foreign-exchange transactions involve dollars and more than 60% of all global central-bank reserves are held in dollar-denominated assets, and that gives the US tremendous power. But China doesn`t like that at all.
This is obviously a US security issue, but it doesn`t look like the Biden administration care much about right now. But they should, and that very fast if you ask me. The US often use sanctions on other countries, but now China can use their digital currency as a weapon on the US.
The communist China are pushing the IMF to the SDR (special drawing rights) issue. The currency value of the SDR is determined by summing the values in U.S dollars, based on market exchange rates, of a basket of major currencies.
The IMF`s SDR, the international reserve asset created in 1969 to prepare for a new dollar crisis, is undergoing a renaissance, with important worldwide repercussions. The announcement of by far the largest-ever increase in SDR allocations, which will greatly improve the liquidity of many developing nations, signals alignment between the US and China in a key area of global monetary power.
The US now agrees with using the IMF`s balance sheet to boost world liquidity. They are planning to more than triple SDR allocations by at least $500bn. This reflects a change in US policy to back measures strongly advocated last year by China as well as leading European and African countries.
Rich nations with large reserves will distribute part of their plentiful SDR stocks to poor countries.
The massive increase in SDR reserves, which can be converted into its five constituents; the dollar (42%), euro (31%), renminbi (11%), yen (8%) and sterling (8%) will indirectly boosts the Chiniese currency`s international reserve role, according to OMFIF (Official Monetary and Financial Institutions Forum).
In 2009, the United Nations suggested a new SDR-based global reserve system, feasible non-inflationary, and easily implemented, including in ways which mitigate the difficulties caused by asymmetric adjustment between surplus and deficit countries.
That same year, Zhou Xiaochuan, governor of the People`s Bank of China, proposed that the SDR could become the pivotal internationall reserve currency, disconnected from individual nations, as the light in the tunnel for the reform of the international monetary system.
Is this how they`re gonna reset the international monetary system?
Coinbase went public last week and insiders and early investors sold about $5 billion in shares on the first trading day. The stock price started at $250 and went straight up to about $400 before it went down again to about $330.
CEO Brian Armstrong sold 749,999 shares at a price ranging from $381 to $410. According to SEC filings released on Friday, Armstrong`s total gain was $291,8 million. That is telling us that he sold about 1,5% of his stake in Coinbase.
But he was not the only one to sell shares in the company. Director and venture capitalist Frederick Wilson sold 4,70 million shares for proceeds of $1,82 billion. Wilson is a holder of at least 10% of the shares of Coinbase and that is a market cap of $63,6 billion.
Another 10% owner of Coinbase shares is Union Square Partners, and they sold $4,70 million shares for proceeds of $1,82 billion. Wilson is a partner in Union Square Partners and he and his firm`s fund accounted for more than 2/3rds of the total $5 billion worth of shares sold when Coinbase went public.
Marc Andreessen, who is a software engineer, venture capitalist and Coinbase director, is a holder of more than 10% of the exchange`s shares. He and his company Andreessen Horowitz sold a total of 1,18 million shares for $449,2 million, according to SEC.
As I pointed out in my recent article about the DPO (direct listing) last week, there is a huge difference between IPO and DPO. In this case; a direct listing is a liquidity event while an IPO is a capital-raising event.
This is why Armstrong and his team sold shares when they went public, and this is the whole point of their direct listing. The fact is that Coinbase doesn`t need money, so they are offering the public existing shares. That`s why we see where the shares is coming from.
In an IPO we see new shares being offered by the company to raise money that goes to the treasury. Coinbase doesn`t gain any proceeds with this DPO, but more holders are coming in and that will give the company the opportunity to raise more money in the future. If they need.
Coinbase went public a few days ago and that helped crytocurrencies like Bitcoin and Etherium. But the biggest winner this week was a little dog. A cryptocurrency called Dogecoin. That coin has gone up 400% in a week. Not bad for a little dog, eh?
Fortune wrote about the «Coinbase Effect» which is a new phenomenon in the world of cryptocurrency. The idea is that the price of cryptocurrencies that are going to be listed for sale on a dominant crypto exchange such as Coinbase, begin to rise in the days after the news becomes public.
According to Barron`s, the effect of getting a cryptocurrency listed on the exchange plays a big role in what cryptocurrencies gain acceptance and which ones may get left behind. One of those who seems to survive is Dogecoin, but some people are worried it`s already a bubble. Time will show.
To contact the author: firstname.lastname@example.org
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Wednesday will be a historic day. Coinbase will make stock market history as the first company specializing in cryptocurrencies to launch an initial public offering. Well, it`s not a traditional IPO but a direct listing called DPO.
This can probably be the most important IPO/DPO of 2021, and the most interesting thing about this IPO/DPO is the difference between the traditional centralized market and the decentralized cryptocurrency market.
I wrote about Bitcoin 8 years ago and the price at that time was $100 – $200, and it has been a wild ride since then. The Coinbase IPO comes at a time were Bitcoin is trading at an all-time high around $63,000.
A lot of people are very sceptical about the cryptocurrency market, but this IPO/DPO can reduce this scepticizm and make more people to invest in this market which is a great alternative currency in the future.
The company is founded in 2012 but have a valuation of around $100 billion. They have 56 million users in over 100 countries, and last week, Coinbase reported a revenue of $1,8 billion for the first quarter of 2021. In 2020 they reported revenue of $1,14 billion. Up 139% from 2019.
There is great oportunities, but Coinbase also comes with its own set of risks.
The company said in its prospectus that its revenue is «substantially dependent on the prices of crypto assets and volume of transactions conduted on our platform» and that 56% of its revenue comes from Bitcoin and Etherium transactions.
Coinbase warns that if cryptocurrency prices, demand or volume declines, its business would be severely affected. While the company has established security protocols, it also noted that there is always potential for cyber attacks or security breaches.
«We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities,» Coinbase wrote in its prospectus.
«Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our system and facilities, as well as those of our customers, partners, and third-party service providers.»
In addition, Coinbase cites «significant regulatory uncertainty» as one of its major business concerns, noting that regulators around the globe have increased their scrutiny of digital currencies.
A valuation of $100 billion will make Coinbase the biggest financial exchange in the world. Its operating margin of around 55% is far from that of Wall Street banks last year.
Coinbase generated 0,46% on each dollar it traded in cryptocurrrencies for customers. Last year, ICE and Nasdaq made an average of 0,01% on each dollar of securities traded. As you can see, this is big business for Coinbase, but for how long will it last?
They`re not alone in the crytocurrecy market, and sooner or later, I believe that competitors like Binance, Gemini, Kraken or Bitstamp to name a few, will follow Coinbase and push the fees down.
The operating margins for the largest investment banks is about 23%. If Coinbase drops to that level, with a revenue growth at a strong 21%, the company will be worth $18,9 billion, according to Fortune. Keep in mind that 21% revenue growth is what Nasdaq achieved in its rapid growth phase.
Keep in mind that the Coinbase IPO media is talking about is not an IPO. It is a DPO, which is a direct listing and I don`t know why media mistakenly describe it as an IPO. The difference is that IPO shares get allocated at a pre-established price. Direct listing shares do not.
In an IPO, investment bankers set the share price as high as they think the market will pay for the shares. In an DPO, there is no pre-set price dedicated by a group of investment bankers. IPO raise new capital, but direct listings do not.
The DPO will not fill Coinbase`s pockets with cash, but it will make it more easy for them to raise capital going forward. A DPO is a liquidity event. An IPO is a capital-raising event. That`s the difference.
Therefore; an IPO is less volatile than an DPO, because large institutions and other shareholders are typically locked up in the first 6-12 months. A DPO doesn`t have that kind of lockup and can dump the shares the same day they go public.
We didn`t see unexpected volatility in Spotify and Slack when they went public in their DPO, but Palantir`s shares slumped the day the lockup expired.
Coinbase shareholders will probably wait and see how trading is going before submitting their offers, and that can affect the nubmer of shares being traded and could exacerbate price swings. But that`s exactly how it is in the crypto space right now.
Coinbase has registered 114,850,769 shares eligible for sale, but nobody knows how many shares will change hands on Wednesday. It is a direct listing and the market sets the initial price. Not a group of investment bankers in an IPO. That`s exactly how it is in the crypto space. Open and transparent.
Wednesday will be a historic day and this week will be a good week for the crypto market. Let the crypto party begin.