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.
CANAAN LOSES CREDIT SUISSE FOR IPO: Canaan Creative, a Chinese bitcoin mining hardware maker, lost Credit Suisse (CS) as lead underwriter for its U.S. initial public offering and has reduced its offering, Bloomberg’s Crystal Tse and Carol Zhong reported Thursday. The company, which previously listed the IPO size as much as $400M, expects to offer 10M American depository shares at $9 to $11 a share to raise up to $110M. According to people with knowledge of the matter, Credit Suisse had concerns over whether the offering could garner sufficient orders.
CRYPTO SETTLEMENTS FALTERING: Three cryptocurrency startups which entered into settlements with the Securities and Exchange Commission missed deadlines to repay investors and offer more transparency, the Wall Street Journal’s Dave Michaels reported Thursday. Airfox, Paragon Coin and Gladius Network collectively raised roughly $40M through illegal sales of virtual tokens in 2017 and pledged to meet the SEC’s fundraising rules in exchange for paying reduced fines. However, Airfox and Paragon missed the deadline to repay investors and Gladius is over five months behind its date to give investors information needed to decide whether to pursue a refund. The companies said the SEC has extended their time to do the work, according to their websites, but the SEC hasn’t disclosed that information.
CHINA CRYPTO NOT SEEKING ‘FULL CONTROL’: Mu Changchun, head of the People’s Bank of China’s digital currency research institute, said China’s proposed domestic cryptocurrency is not an effort to secure full control of information belonging to the general public, Reuter’s Alun John reported Tuesday. “We know the demand from the general public is to keep anonymity by using paper money and coins ... we will give those people who demand it anonymity in their transactions,” Mu said. “But at the same time we will keep the balance between the ‘controllable anonymity’ and anti-money laundering, CTF, and also tax issues, online gambling and any electronic criminal activities. That is a balance we have to keep, and that is our goal.” The timeline for when the currency will be launched is not yet clear, but Mu said in August it was “almost ready”.
OVERSTOCK REPORTS EARNINGS: On Tuesday, Overstock.com (OSTK) reported third quarter loss per share of 89c and revenue of $347.1M, which compared to one analyst estimate of a loss per share of 62c and revenue of $376.2M. “The results of our third quarter were in line with our revised guidance," said CEO Jonathan Johnson. "Our retail business continues its path to sustained profitability, despite a few external headwinds, thanks to the focused leadership of an executive team with a proven track record of success. tZERO continues to reach milestones on its product roadmap, which is no small feat in the highly regulated capital markets environment. Other Medici Ventures companies are bringing their products into production and increasing their leads in their respective verticals.” The company also said in a filing that it received a subpoena from the SEC. The company said, “In February 2018, the Division of Enforcement of the SEC informed tZERO and subsequently informed us that it is conducting an investigation and requested that we and tZERO voluntarily provide certain information and documents related to tZERO and the tZERO security token offering in connection with its investigation…On October 7, 2019, we received a subpoena from the SEC requesting documents related to the Dividend we announced to shareholders in June of 2019 and requesting 10b-5-1 plans of our officers and directors that were in effect during the period of January 1, 2018 through October 7, 2019…We are in regular contact with the SEC and are cooperating fully with the SEC in connection with its investigation and information requests. Following earnings, DA Davidson analyst Tom Forte lowered his price target on Overstock.com to $25 to reflect the "stress test" of his sum-of-parts valuation analysis, but kept his Buy rating on the stock and said he remains "comfortable" in recommending it to investors based on the "value" in the shares. Forte lowered his assumed legacy business value to $6 per share from $23 and also reduced his tZero value to $13 from $23.
NVIDIA BEATS ESTIMATES: On Thursday, Nvidia (NVDA) reported third quarter adjusted earnings per share of $1.78 and revenue of $3.01B, which compared to analyst estimates of $1.57 and $2.91B respectively. CEO Jensen Huang said, "Our gaming business and demand from hyperscale customers powered Q3's results. The realism of computer graphics is taking a giant leap forward with NVIDIA RTX. This quarter, we have laid the foundation for where AI will ultimately make the greatest impact. We extended our reach beyond the cloud, to the edge, where GPU-accelerated 5G, AI and IoT will revolutionize the world's largest industries. We see strong data center growth ahead, driven by the rise of conversational AI and inference." Following earnings, Citi analyst Atif Malik raised his price target for Nvidia to $245 from $200. The company guided January quarter revenue slightly below expectations but with higher gross margins, Malik said. However, more importantly, year-over-year revenue growth resumes in the January quarter led by strong datacenter growth as inference and conversational critical intelligence led training demand grows at hyperscalers, the analyst contended. He said he likes the stock setup on improving year-over-year comps over the next couple of quarters and believes Nvidia offers the best programmable data center computing platform. Malik kept a Buy rating on the shares.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia in select research. Overstock, DPW Holdings (DPW), Kodak (KODK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and Social Reality (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 3.2% this week to $8,466 in U.S. dollars, according to TradeBlock.
Bitcoin
+ (+0.00%)
Bitcoin
+ (+0.00%)
Acquired by UBS
+0.135 (+1.05%)
Nvidia
-6.96 (-3.32%)
OSTK
+
AMD
+0.69 (+1.80%)
Ault Global Holdings
-0.06 (-4.92%)
Eastman Kodak
-0.02 (-0.84%)
Riot Platforms
-0.05 (-3.16%)
Pareteum
-0.006 (-1.50%)
Srax
+ (+0.00%)