Facebook's Libra to reportedly launch next year as Citron puts $700 target on MicroStrategy
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.
LIBRA TO LAUNCH NEXT YEAR: The digital currency Libra, led by Facebook (FB), is readying to launch as early as January but in a more scaled down version than its already limited plan, the Financial Times' Hannah Murphy reported Friday, citing three people involved in the initiative. In April, The Libra Association said it expected to unveil digital versions of several currencies as well as a digital composite of all its coins, however the group will now just launch a single coin initially backed one-for-one by the dollar. Other currencies and the composite are expected to be unveiled at a later time.
CITRON PUTS $700 TARGET ON MICROSTRATEGY: Andrew Left's Citron Research said MicroStrategy (MSTR) is the best way to own bitcoin in the stock market. The firm, in a Tuesday report posted on its website, put a $700 price target on MicroStrategy shares. "Today, we are long bitcoin as we believe there is no better inflation hedge in the market," Citron wrote. The business intelligence company owns more bitcoin than any other publicly traded company, Citron points out. In Q3, MicroStrategy invested $425M to purchase 38,250 bitcoins, which have a current market value of over $700M. Therefore, MicroStrategy is trading at just 2.5 times sales, according to Citron. If bitcoin trades to $50,000, MicroStrategy could be worth $700 per share, it claims.
COINBASE DENIES DISCRIMINATION: Crypto exchange Coinbase had 15 black employees depart, quit or be fired, representing about three-quarters of black workers at the 600-person company, the New York Times’ Nathaniel Popper reported Friday. Prior to leaving in late 2018 and early 2018, at least 11 employees informed human resources or their managers about alleged racist or discriminatory treatment. One of the staff who worked in recruiting said she notified her manager several times regarding how he and others excluded her from meetings and conversations, while others claimed the use of racist stereotypes and being passed over for promotions in favor of less experienced white employees. Kim Milosevich, a Coinbase spokeswoman, said the company “does not tolerate racial, gender or any other forms of discrimination. All claims of discrimination are treated very seriously, investigated by both internal and third parties, and the appropriate action is taken.” The company’s retail and professional-focused platforms were also hit by technology issues on Thursday, with users reporting struggles with trading bitcoin, Reuters’ Tom Wilson reported. Coinbase said it had identified the problem and implemented a fix.
WAINWRIGHT ON MARATHON, RIOT: H.C. Wainwright analyst Kevin Dede initiated coverage of Marathon Patent Group (MARA) on Monday with a Buy rating and $7.50 price target. As the controversy surrounding bitcoin's "repute as both a medium of investment and a transactional currency gradually fades," Marathon should gain notoriety as an "independently run, uniquely powered, well capitalized" North American miner leading the next wave of hash rate enhancing bitcoin miner deployment, Dede said. Dede also raised the firm's price target on Riot Blockchain (RIOT) on Monday to $7.50 from $3.50 and reiterates a Buy rating on the shares. The rise of the bitcoin price is reigniting attention on cryptocurrency "from both casual onlookers to the sophisticated institutional investing audience," Dede said.
CCB STOPS DIGITAL BOND SALE: China Construction Bank (CICHY) stopped the proposed launch of a blockchain-based bond on Malaysia’s Fusang Exchange, shortly before the security was expected to start trading, the Wall Street Journal’s Serena Ng reported Monday. The bank chose not to move forward with a sale of up to $3B in short-term debt in Labuan after facing scrutiny in China over its role in the deal and the way investors could trade securities. Fusang said it was notified by a division of the bank that the listing plan had been withdrawn.
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 dropped roughly 9.8% this week at $16,840 in U.S. dollars, according to TradeBlock.