As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
BITCOIN FALLS AFTER AMAZON RUMORS: Amazon (AMZN) posted a job advertisement for a cryptocurrency and blockchain lead last week, but an Amazon spokesperson denied the company would accept the cryptocurrency for payments this year, Bloomberg’s Joanna Ossinger and Vildana Hajric reported Monday. The denials came after London newspaper City A.M. reported the e-commerce giant would accept payments in bitcoin by year-end and evaluate its own token for 2022. After surpassing $40,000 briefly on the report that was later denied, Bitcoin fell below $38,000.
MICROSTRATEGY REPORTS Q2 RESULTS: On Thursday, MicroStrategy (MSTR) reported second quarter earnings per share of $1.72 on a revenue of $125.4M, which compared to analyst estimates of $1.03 and $120.45M respectively. "MicroStrategy continued its strong 2021 by delivering an outstanding operational performance across the board and completing another successful capital raise to expand our digital asset holdings. We had one of our best operational quarters in our software business in years, highlighted by 13% revenue growth. Our success in the market is being driven by the investments we have made and the broad adoption of our innovative MicroStrategy platform," said CEO Michael Saylor. "We continue to be pleased by the results of the implementation of our digital asset strategy. Our latest capital raise allowed us to expand our digital holdings, which now exceed 105,000 bitcoins. Going forward, we intend to continue to deploy additional capital into our digital asset strategy."
Following earnings, BTIG analyst Mark Palmer raised the firm's price target on MicroStrategy to $950 from $850 and kept a Buy rating on the shares. The company reported top- and bottom-line beats versus consensus estimates for Q2, and management raised the midpoint of their fiscal 2021 operating income forecast range by about 13% to $90M as a result of the strong operating trends of its enterprise business intelligence software business, Palmer said. While MicroStrategy's stock has been primarily a play on the long-term prospects of bitcoin, the operating performance of its software business "remains quite meaningful," the analyst said. Palmer's new target is based on a sum-of-the-parts analysis in which he combines the value of the company's holdings of bitcoin and the value of its enterprise analytics software business. Meanwhile, Canaccord analyst Joseph Vafi lowered the firm's price target on MicroStrategy to $780 from $920 and kept a Buy rating on the shares. The analyst said the core business is slowing modestly but the steady business acceleration and Bitcoin prices has recently shown resilience.
BINANCE TO WIND DOWN DERIVATIVES IN EUROPE: Crypto exchange Binance announced Friday it would wind down its futures and derivatives products offerings across Europe, which comes amid increased pressure from global regulators. The company said, “As the crypto ecosystem evolves globally, we are continually evaluating our products and working with our partners to meet our users’ needs. As such, Binance will wind down its futures and derivatives products offerings in Germany, Italy, and the Netherlands. With immediate effect, users from these countries will not be able to open new futures or derivatives products accounts. With effect from a later date to be announced in a further notice, users from these countries will have 90 days to close their open positions.”
COINBASE PRICE TARGET LOWERED: Mizuho analyst Dan Dolev lowered the firm's price target on Coinbase (COIN) on Friday to $210 from $225 and kept a Neutral rating on the shares. The analyst saod that despite the "mini" bitcoin rally to $40,000 earlier this week, his analysis of actual July volumes shows that activity "remains subdued thus far" in Q3. As such, he believes consensus expectations for Coinbase's Q3 may be 20%-25% too high.
RIOT INITIATED WITH BUY: BTIG analyst Gregory Lewis initiated coverage of Riot Blockchain (RIOT) on Thursday with a Buy rating and $45 price target. Riot has established itself as a leader in the bitcoin mining sector currently operating roughly 2.4% of global mining capacity, Lewis said. The recent acquisition of Whinstone US should allow the company to "control its own destiny in the hunt to plug-in additional mining equipment over the next few years," added the analyst. Lewis said Riot Blockchain "quickly positioned itself as a premiere BTC miner."
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain, Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 15.6% this week to $39,020 in U.S. dollars, according to TradeBlock.
