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.
Q1 EARNINGS: On Thursday, Bakkt (BKKT) reported first quarter loss per share of 14c on a revenue of $12.5M, which compared to earnings per share of 0c on a revenue of $8.1M for the same period last year. "Momentum is building across our business and we're proud of our strong year-over-year net revenue growth for the quarter," said Gavin Michael, CEO of Bakkt. "We are making considerable progress with our growing list of platform partners, and they serve as an entryway to a vast universe of brands across market segments. As integration work continues, we're looking forward to being live soon and ramping up our partner activations through the course of this year.”
On Tuesday, Riot Blockchain (RIOT) reports Q1 earnings per share of 30c on a revenue of $79.8M, which compared to analyst estimates of 1c and $83.58M, respectively. “We are extremely proud of the progress that Riot continues to make, having achieved record levels of net income, revenue, hash rate and Bitcoin mined in the first quarter," said Jason Les, CEO of Riot. "Our vertically integrated business strategy of owning, operating and manufacturing has accelerated our growth while helping insulate us from continuing global supply chain issues.”
On Thursday, Hut 8 Mining (HUT) reports Q1 earnings per share of C$0.31 on revenue of C$53.3M, which compared to EPS of C$0.15 on revenue of C$31.98M for the same period last year. "We made measurable progress in the first quarter of 2022, significantly advancing our diversification strategy by completing the acquisition of five data centres and cementing our role as the only digital asset mining company that is delivering the high performance computing infrastructure to support companies in the blockchain and Web 3.0 spaces," said Jaime Leverton, CEO of Hut 8. Following the report, Canaccord analyst Joseph Vafi lowered the firm's price target on Hut 8 Mining to $6 from $12 and kept a Buy rating on the shares. The analyst said they have one of the more seasoned track records across the vitcoin mining industry, having been operating in this space since 2018. He thinks the management team is executing well on its plan to opportunistically expand the mining operations while also diversifying the business model.
On Tuesday, Coinbase (COIN) reported Q1 loss per share of $1.98 on revenue of $1.16B, which compared to EPS of $3.05 and revenue of $1.8B for the same period last year. The company said: "We continue to expect that during a prolonged and stressful scenario for our business, we will aim to manage our 2022 potential Adjusted EBITDA losses to approximately $500 million on a full-year basis." s The company sess annual average MTUs 5M-15M, with "strong" subscription and services growth and transaction expenses in the low 20%s. Following the report, Goldman Sachs analyst Will Nance downgraded Coinbase to Neutral from Buy with a price target of $80, down from $240, to reflect lower peer multiples, a weaker profitability profile and updated estimates due to recent crypto trends and company guidance. Following the company's Q1 results he believes Coinbase is unlikely to return to recent levels of profitability in the near-term absent a significant increase in crypto prices or volatility, though Nance still calls it "the blue chip way to gain exposure to the crypto native ecosystem."
LAWMAKERS URGE REGULATION AFTER TERRA MELTDOWN: Lawmakers are pushing for new regulations after stablecoin TerraUSD ($UST) lost its peg to the dollar, Bloomberg’s Allyson Versprille, Laura Davison and Steven Dennis reported Wednesday. TerraUSD sank well below the $1 peg, causing backers to scramble to shore up the token. “If Congress does not act in this space, then the danger is, at some point, a fiat-backed stablecoin might lose its dollar peg. And that could not only be very problematic for consumers who lose money, but it could have repercussions,” Senator Pat Toomey, the top Republican on the Senate Banking Committee, said. Treasury Secretary Janet Yellen also said at a Senate hearing that the meltdown signals the urgent need for guardrails and it would be “highly appropriate” to enact legislation this year.
BLOCK ‘MUST DECOUPLE’ STORY FROM BITCOIN: Mizuho analyst Dan Dolev lowered the firm's price target on Block (SQ) on Thursday to $135 from $215 and kept a Buy rating on the shares. The analyst said the company's "over-association with Bitcoin is a shame." Tagging Block as a "crypto stock" has prevented the stock from benefiting from strengthening fundamentals, Dolev said. He believes that since bitcoin accounts for less 5% of Block's gross profit it should not drive sentiment. To fix this issue, Block "must decouple the story from Bitcoin so that its best-in-class fundamentals can finally shine again," the analyst said.
ANALYST KEEPS OUTPERFORM ON MICROSTRATEGY: William Blair analyst Bhavan Suri kept an Outperform rating on MicroStrategy (MSTR) on Friday following the recent selloff in the shares. With the recent market volatility, investors have expressed concern over risks related to MicroStrategy's bitcoin holdings and the company's recently issued 2025 secured term loan, Suri said. The price of bitcoin has declined from more than $60,000 in November 2021 to less than $30,000 in recent days, but Suri believes MicroStrategy will be able to comfortably support its interest payments and maintain sufficient liquidity to cover debt covenants.
SIGNATURE BANK ‘LOOKS OVERSOLD’: Jefferies analyst Casey Haire said Friday a rough week for the crypto ecosystem has caused "a violent de-rating" of Signature Bank (SBNY) shares, which now appear "oversold." He simulated a "draconian" scenario without the bank's roughly $29B crypto deposit franchise, though "to be clear, we believe this scenario is highly unlikely," and his analysis arrived at the bank being able to hit just under $20 EPS in 2023 when stripping out the entire crypto deposit franchise, Haire said. Though he acknowledges that crypto volatility will dictate trading near-term, Haire kePT a Buy rating and $352 price target on Signature Bank shares.
Meanwhile, Wells Fargo analyst Jared Shaw noted Thursday that Signature Bank has significantly underperformed peers, which he attributes to broader fears surrounding crypto that "have acted as a contagion." The weakness has accelerated over the past three days after Coinbase reported weaker-than-expected earnings, but after speaking with management he views the pullback as an overreaction. Signature has no asset exposure to crypto and has shown historically that volatility in crypto prices doesn't correlate to deposit flows, while in fact volatility drives increasing volumes to the bank's "largest and most important clients," the exchanges, contended Shaw. He maintained an Overweight rating on Signature shares.
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. Ideanomics (IDEX), Riot Blockchain, Overstock (OSTK), 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 about 15% this week at $30,813 in U.S. dollars, according to TradeBlock.
Bitcoin
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Bitcoin
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Bitcoin
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Ethereum
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Dogecoin
+
Litecoin
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Bakkt
-0.03 (-1.07%)
Riot Platforms
+0.81 (+11.10%)
Hut 8 Corp.
+0.43 (+17.70%)
Coinbase
+8.55 (+14.59%)
TerraUSD
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Block
+7.12 (+9.39%)
MicroStrategy
+40.53 (+23.64%)
Signature Bank
+16.82 (+8.89%)
AMD
+4.095 (+4.70%)
Nvidia
+10.57 (+6.53%)
Ideanomics
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Pareteum
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Srax
+0.35 (+11.36%)
OSTK
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