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Where Will Etsy Stock Be In 3 Years?

With people stuck at home and brick-and-mortar shopping an unpopular (or impossible) option, Etsy (ETSY -0.01%) benefited greatly from the coronavirus pandemic. Active buyers, active sellers, and gross merchandise volume (GMV) soared. But the economic reopening, and the current inflationary period we’ve been experiencing, have hurt the business noticeably.

As we try to step back and focus on the longer term, where will Etsy stock be in three years? Let’s take a closer look at the prospects for this top e-commerce marketplace.

Differentiation is key

We can’t really talk about Etsy without focusing primarily on what makes the marketplace so valuable in the first place. According to a recent survey, 87% of buyers on the platform said that it had items they couldn’t find anywhere else. Think about how powerful that situation is. It immediately demonstrates why the business exists in the first place, plus just how wonderful a competitive position it has.

The competition in e-commerce is undoubtedly fierce, but Etsy’s focus on differentiation is critical to its lasting success. This key feature is why investors might want to remain optimistic about its future.

As of March 31, Etsy counted 7.9 million active sellers, up 3.8% year over year. That gain might seem unimpressive at first glance, but consider that the company raised the fee it charges these sellers in April 2022, from 5% to 6.5%. The fact that Etsy didn’t lose a ton of sellers, and instead added some, is an obvious sign of the value it provides.

That bodes well for management’s ability to exercise its pricing power in the future. This is something Warren Buffett would definitely appreciate.

Strong financial position

In 2022, Etsy posted a rare net loss of $694 million. But this was due to a one-time goodwill impairment charge of $1 billion to write down the value of its previous acquisitions of Depop and Elo7, an admission by management that it severely overpaid for these smaller online marketplaces. Typically, though, Etsy has proven that it can be a solidly profitable enterprise.

Excluding last year, between 2016 and 2021, the business was able to expand its operating margin from 4.8% to 20%. That’s a clear indicator that Etsy can scale extremely well as it grows. That’s generally because the tech and data infrastructure is largely developed, so every additional transaction likely carries high margins.

The management team believes that Etsy’s addressable market is gigantic. It’s estimated at $466 billion in the company’s seven core markets (U.S., Canada, Australia, U.K., Germany, France, and India). Should the business be able to penetrate what is seemingly a huge opportunity, GMV and revenue are sure to rise. And thanks to Etsy’s capital-light business model, as exemplified by its expanding margins over time, profits and free cash flow could also be on their way up.

Patience could be rewarded

At a high level, it’s easy to come to the conclusion that Etsy is a solid business. Providing a valuable online marketplace where buyers and sellers can connect over truly differentiated products is clearly in demand. Moreover, this business model has been extremely lucrative.

The stock price, while up 176% over the past five years, is currently 69% off its peak from November 2021. Like many other growth tech stocks, Etsy has face the perfect storm of a post-pandemic normalization of consumer behavior and macroeconomic headwinds, with experts predicting a recession in the near term.

It can be nerve-wracking to put on your contrarian cap and decide to buy a falling stock, especially when the underlying business is also dealing with a dramatic slowdown. But for patient investors who are willing and able to wait for their investments to work out, Etsy might be positioned well to provide solid returns over the next three years.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy. The Motley Fool has a disclosure policy.

The competition in e-commerce is undoubtedly fierce, but Etsy’s focus on differentiation is critical to its lasting success. This key feature is why investors might want to remain optimistic about its future.

Source: https://www.fool.com/investing/2023/06/08/where-will-etsy-stock-be-in-3-years/

US stocks are in the firing line if China’s economy stalls further


A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New York CNN —

Chinese economic activity has hit a soft spot in recent weeks and Hong Kong’s equity markets have flirted with bear territory as a result.

That’s also bad news for US companies with major exposure to China — and a number of S&P 500 companies stand first in the line of fire if the situation worsens.

What’s happening: China’s swift economic reopening in December after three years of severe pandemic restrictions was hailed as a catalyst that would send global growth into overdrive.

Pent-up consumer demand and a resurgence of manufacturing by the world’s second-largest economy is expected to drive about 35% of the world’s growth in 2023, according to recent projections from the International Monetary Fund.

China’s reopening has had positive effects: Factories had their best month in nearly 11 years in February and the country’s economy grew by 4.5% in the first quarter of the year. But recent data shows such positivity may have been short-lived.

Chinese exports fell 7.5% year over year in May as global demand weakened. Recent data shows that China is also contending with worse-than-expected consumer spending, slowing manufacturing and weak home sales. Youth unemployment has hit 20% in urban areas, according to official data, a record high.

Growing geopolitical tensions between Washington and Beijing have spooked investors, driving market volatility. A recent crackdown on American consulting companies like Bain, Capvision, Mintz Group and Micron Technology (MU) has worried multinational businesses, said US Ambassador to China Nicholas Burns on Wednesday.

“Investor views about China remain pessimistic, partly because of skepticism about near-term growth momentum and partly because of worries about the longer-term outlook,” wrote Goldman Sachs analysts in a note on Tuesday.

China, home to more than 1.4 billion people, saw its population drop in 2022 for the first time in more than 60 years. A shrinking population means lower consumption. When Beijing made the announcement in January, global stocks were roiled. The Dow fell by 300 points and the Nasdaq Golden Dragon Index, which follows Chinese firms on American exchanges, fell by 4%.

What it means for markets: US-based companies doing business in China stand to lose if the economy continues on a downward trajectory. Companies like Apple (AAPL), Intel (INTC), Ford (F) and Tesla (TSLA) have large manufacturing ties to the country. Others, like Starbucks (SBUX) and Nike (NKE), rely on Chinese consumers.

Earlier this year, Bank of America (BAC) compiled a list of the S&P 500 companies with the highest exposure to China. Topping the list was Las Vegas Sands (LVS), down nearly 6% this month, with 68% of its sales coming from China.

Qualcomm (QCOM), with a 67% exposure rate to China, issued disappointing forward guidance during earnings last month, citing China’s slow recovery.

Tesla, Intel, Nvidia (NVDA), Wynn Resorts (WYNN) and MGM Resorts (MGM) were also among the 25 S&P 500 companies with the most exposure to China.

Companies that generate more than 50% of sales outside of the United States saw an earnings decline rate of -10.2% in the first quarter of 2023, according to FactSet data. Companies that generated more than 50% of sales inside the United States, however, saw an earnings growth rate of 2.7%.

Meanwhile, Chinese stocks trading in Hong Kong, just barely avoided entering bear territory this month: The Hang Seng index was down 19.6% on May 31 from its January high and the Golden Dragon China Index has fallen 5.6% so far this year.

JD.com (JD), one of the largest Chinese companies trading in the United States, has fallen by nearly 36% this year. Morgan Stanley and Goldman Sachs Group have both lowered their forecasts for Chinese equity indexes.

The bright side: There’s still potential for upside, say economists. Analysts at Nomura and Barclays forecast Chinese economic growth of almost 8% for the second quarter.

Ayaz Ebrahim, JPMorgan Chase’s emerging markets and Asia Pacific equities portfolio manager, recently said on Bloomberg TV that the bank is adding more shares of Chinese stocks to its portfolio in a bet that the Chinese government will back floundering companies and boost valuations.

Wildfires in Canada have smothered large swaths of the United States in a thick plume of toxic smoke, leading to air quality warnings and advisories to stay inside. But fine particles from the smoke can make their way indoors. Air purifiers can be helpful with filtering out the pollution.

Searches on Google have increased 16 fold since Monday, according to Google trends.

Whirlpool (WHR), one of the largest home goods manufacturers in the world, has seen its stock surge 13.2% over the past five days and by 6.4% on Wednesday alone. The company says that its HEPA purifiers can remove up to 99.97% of bad particles from air.

Shares of Carrier Global (CARR), which makes residential and industrial air purifiers and HVAC units, have gained nearly 11% over the past five days.

Johnson Controls (JCI), which has a number of air filters on the market, has also seen its stock price soar. Shares are up by 8.5% over a five-day period.

The air purifier market is poised to grow as climate change increases air pollution and exacerbates breathing difficulties. A Market Insights report forecasts that the industry is expected to grow at an annual compound rate of 10.8% to $2.9 billion by 2025, and $4.8 billion by 2030.

Outdoor air pollution could cause 6 to 9 million premature deaths a year globally by 2060 and cost $2.6 trillion annually because of sick days, increased medical bills and reduced productivity, according to an Organisation for Economic Co-operation and Development report.

Sir Ivan Menezes, who served for a decade as chief executive of the largest spirits maker in the world, has died at age 63 after a short but aggressive illness.

Diageo confirmed Menezes’ death on Wednesday, just two days after the company announced that he was stepping down as CEO following complications from an emergency surgery on an ulcer.

Menezes was born in 1959 in Pune, India. He held UK and US citizenship, as well as overseas citizenship for India. He joined Diageo at its creation in 1997 and became CEO in July 2013. He was knighted in January by King Charles III for services to Business and to Equality. Prior to his illness, he was expected to retire at the end of June. COO Debra Crew, who was set to become CEO on July 1, will take on the role of interim chief executive, effective immediately.

Menezes, who ran the $93 billion company behind Johnnie Walker whiskey, Smirnoff vodka, Guinness and Tanqueray gin, was well known as a champion of diversity in the workplace.

About 40% of Diageo’s senior positions are held by women and 37% of its leaders are ethnically diverse.

“Ivan was undoubtedly one of the finest leaders of his generation,” said Diageo chairman Javier Ferrán in a statement on Wednesday. “Ivan was there at the creation of Diageo and over 25 years, shaped Diageo to become one of the best performing, most trusted and respected consumer companies.”

Under his leadership, Diageo’s market value nearly doubled from $52 billion to $93 billion. Menezes also successfully guided Diageo through the Covid-19 pandemic, delivering a net sales value 36% larger in 2023 than in 2019, Diageo said.

Menezes also served as a non-executive director of Tapestry, chairman of the Council of The Scotch Whisky Association and as a member of the global advisory board of Northwestern University’s Kellogg School of Management.

first quarter of the year

Source: https://www.cnn.com/2023/06/08/investing/premarket-stocks-trading/index.html

Ethereum Layer 2 tokens rally as mainstream cryptocurrencies crumble under SEC’s regulatory crackdown

  • Ethereum Layer 2 tokens Optimism, Arbitrum and ImmutableX started price rallies in response to the SEC’s regulatory crackdown.
  • Optimism completed its Bedrock hard fork earlier today, reducing the Layer 2 solution’s gas fees by 40%.
  • OP, ARB and IMX prices yielded between 3% and 6% gains for holders since Tuesday.

Ethereum struggled to erase losses from the SEC’s enforcement action on two of the largest crypto exchanges in the ecosystem, Binance and Coinbase. The altcoin’s price climbed back above the key $1,800 level; ETH is trading at $1,877 at the time of writing.

While mainstream cryptocurrencies took a hit after the US financial regulator’s actions, Layer 2 tokens, Optimism (OP), Arbitrum (ARB) and Immutable X (IMX) yielded gains for holders. The price rallies in Layer 2 tokens are likely a spillover effect of decentralized exchanges’ popularity after the legal woes faced by Binance and Coinbase.

Also read: US SEC sues Coinbase a day after move against Binance

Ethereum Layer 2 tokens OP, ARB and IMX begin price rallies

Large market capitalization cryptocurrencies crumbled under selling pressure from the SEC’s actions while Layer 2 scaling solutions started to rally instead. OP, ARB and IMX prices rallied 5.5%, 3.8% and 2.0% respectively.

Ethereum Layer 2 tokens

Ethereum Layer 2 tokens

There are two key catalysts driving the prices of Layer 2 tokens. The first is the rising popularity of decentralized exchanges. In the light of centralized exchanges crumbling under regulatory pressure from the SEC, DEXes have gained popularity and relevance since Monday. DEX markets and trading on decentralized platforms is likely fueling a rally in tokens like OP, ARB and IMX.

The second bullish catalyst is the technical updates in OP and ARB ecosystems.

Optimism completes Bedrock hard fork, Arbitrum to open vote for budget proposal

OP mainnet migrated to Bedrock and the move was completed successfully earlier today. The upgrade is known as Bedrock hard fork and it cuts deposit-confirmation time from 10 minutes to 1 minute, and lowers gas fees by 40%.

✅OP Mainnet’s migration to Bedrock has concluded and the Bedrock sequencer has started up.

Key external OP Mainnet infrastructure is starting to come back online. You can track infrastructure status here:https://t.co/XTtaArdI03

— Optimism (✨_✨) (@optimismFND) June 6, 2023

The hard fork marks a key technical milestone for Optimism.

The Arbitrum community is gearing up to hold the Arbitrum Improvement Proposal (AIP) voting on June 9. The ARB network published the proposal draft on June 6 and it has three elements: a lockup, budget, and transparency reporting regarding the 7.5% of the ARB tokens distributed to the Foundation’s “Administrative Budget Wallet.”

Find out more about it here.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

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Source: https://www.fxstreet.com/cryptocurrencies/news/ethereum-layer-2-tokens-rally-as-mainstream-cryptocurrencies-crumble-under-secs-regulatory-crackdown-202306070750

Cryptocurrencies under renewed pressure

Market picture

The cryptocurrency market capitalisation fell 1.8% to $1.1 trillion over the last 24 hours as risky assets lost traction, dragging the Nasdaq lower. Markets were surprised by interest rate hikes in Australia and Canada, raising the chances of a similar move from the Fed next week.

Bitcoin is trading near $26.4K, down 1.5% in 24 hours, a level that has acted as support over the past three months. On Wednesday, the price reversed as it approached its 50-day moving average. This was triggered by a sell-off in the Nasdaq 100, which lost 1.75% on the day. The technical picture remains quite bearish, with Bitcoin remaining within a two-month downtrend channel, setting up an imminent drop towards $25K to test more significant support.

Interestingly, Ethereum feels more confident and continues to find support on dips below 1800, although the 50-day average still acts as resistance.

According to CoinGecko, median trading volume on decentralised cryptocurrency exchanges (DEX) has more than quadrupled in the past two days amid an SEC lawsuit against Binance and Coinbase. The outflow from Binance was nearly $800 million, while Coinbase’s outflow was around $600 million.

News background

The SEC has issued a regulatory order to freeze the accounts of Binance.US. Representatives of the site insist that all user funds are safe.

Bank of America downgraded Coinbase shares to “underperform” following the SEC lawsuit, which could threaten the exchange’s business model.

Timothy Massad, the former CFTC chairman, believes the future of the crypto industry hinges on the outcome of the SEC’s case against exchanges Binance and Coinbase.

The number of cryptocurrency companies on Forbes’ Fintech 50 list fell from nine to five last year. The market value of cryptocurrencies has fallen by $1.4 trillion over the year amid the collapse of FTX, Genesis, BlockFi, Three Arrows Capital and other cryptocurrency companies.

Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts’ opinions are for informational purposes only and should not be considered as a recommendation or trading advice.

The SEC has issued a regulatory order to freeze the accounts of Binance.US. Representatives of the site insist that all user funds are safe.

Source: https://www.fxstreet.com/cryptocurrencies/news/cryptocurrencies-under-renewed-pressure-202306080922

Opinion | Making Manufacturing Great Again

Back when Donald Trump began his political rise, it was common for mainstream pundits to attribute his support to “economic anxiety,” to suggest that MAGA was an understandable, maybe even reasonable response to deindustrialization and the loss of jobs in the American heartland. You don’t hear that very much anymore.

But it’s true that Trump himself was obsessed with trade deficits and that if he indeed had any unorthodox policy ideas — in practice, he was mostly a standard, tax-and-benefit-cutting Republican — they were focused on attempts to revive manufacturing. That, at least, was the main rationale for the trade war he started with China in 2018.

As it turned out, Trump had no visible success in promoting manufacturing. But a funny thing has happened under his successor: Suddenly, investment in manufacturing has surged. What Trump’s trade policies didn’t achieve, President Biden’s industrial policies have.

The numbers are stunning. Here’s an annotated chart of manufacturing construction spending:

The Trump tax cut of 2017, which was sold as a way of promoting U.S. investment, didn’t have any visible effect. Neither did the trade war, which kicked off in earnest in mid-2018. But under Biden, manufacturing construction, as some people put it, has gone parabolic, more than doubling just over the past year.

Raw dollar figures can be misleading, especially when you’re looking at the long run; spending needs to be compared with the size of the economy as a whole. But the Census, which provides these numbers, has annual data going back to 1993; here’s manufacturing construction as a percentage of G.D.P. over the past three decades (the number for 2023 is April spending as a percentage of first-quarter G.D.P.):

Image

Credit…Census, Bureau of Economic Analysis

It’s still really impressive. And there’s no real question about the causes of the surge. It’s being driven by two major pieces of legislation: the misleadingly named Inflation Reduction Act, whose actual core is subsidies for green energy, and the CHIPS Act (“creating helpful incentives to produce semiconductors” — call in the acronym police!), which is supposed to protect national security by promoting domestic production of, um, chips.

The ultimate impact of these policies will almost surely be much bigger than these numbers suggest. For one thing, planning and beginning work on new manufacturing plants takes time, so there’s probably even more spending in the pipeline. For another, these numbers count only construction — basically, factory buildings. Filling those buildings with machinery and investing in R&D to make the most of the new capacity will probably add hundreds of billions to the total business spending.

Why are Biden policies producing a manufacturing revival but Trump policies didn’t? Well, Trump’s trade policy was simply incompetent: Because it raised tariffs on industrial inputs as well as consumer goods, it raised costs and may well have reduced manufacturing employment. And the Trump tax cut was based on the belief that if you let corporations keep more of their profits, they’ll invest the money rather than use it to, say, buy back shares; this belief was proved wrong.

Biden’s industrial policies, by contrast, are largely focused on creating demand for U.S.-manufactured products, for example by subsidizing the purchase of electric vehicles. And business investment, while far less sensitive to tax rates than legend has it, is very responsive to demand.

And so we’re having a huge manufacturing revival.

Now, there’s a risk that what I’m saying may come across as too uncritically upbeat. So let me offer two major caveats about the Biden manufacturing boom.

First, even if we do have a major manufacturing revival, we’re not going back to 1970, when more than a quarter of U.S. workers were in manufacturing. We’re still going to be overwhelmingly a service economy despite these new policies. The new manufacturing boom may help lagging regions in the U.S. heartland and is specifically designed to help workers without college degrees. But nobody should expect it to turn back the clock on our transition to a postindustrial society.

Second, rapid growth in a sector isn’t necessarily a good thing for the economy. Until recently, for example, there was an explosion of resources devoted to Bitcoin mining. As far as I can tell, these resources produced nothing of value — sorry, crypto enthusiasts, Bitcoin has yet to show that it’s useful for anything besides money laundering. And the Bitcoin boom has both inflicted environmental damage and consumed resources that could have been used to produce things that are actually useful.

So why should we consider Biden’s industrial-policy-driven manufacturing boom a good thing? Mainly because it’s part of an urgently needed transition to renewable energy that may be our last chance to avoid climate catastrophe. And the surge in U.S. manufacturing investment in particular partly reflects protectionist aspects of the legislation that are a bad thing in terms of economic efficiency — but were essential to the political deal-making that made it possible to tackle climate change at all.

The point, then, is that the success of Biden’s manufacturing policy can’t be judged purely by the extremely impressive investment numbers. Still, the policy would clearly have been considered a failure if it hadn’t produced a manufacturing boom. So it’s good news that the boom is happening, indeed exceeding even the most optimistic expectations.

Quick Hits

The return of industrial policy.

Neo-mercantilism?

Green trade tensions.

About Trump’s trade war.

Facing the Music

Source photographs by Jim Watson and Ryan McVay/Getty Images

Paul Krugman has been an Opinion columnist since 2000 and is also a distinguished professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman

Source: https://www.nytimes.com/2023/06/06/opinion/biden-trump-ira-chips-manufacturing.html

Cryptocurrencies Price Prediction: Solana, LUNA & XRP – European Wrap 5 June

Why Solana price is primed for 30% rally

Solana price shows quite a few developments on the daily chart, all of which point to a bullish future for SOL holders. Investors can expect a quick run-up, which could develop into a medium-term uptrend if these optimistic conditions remain bullish.

Chart

Terra LUNA Classic price on the rise as Montenegro court approves Do Kwon’s second bail request

Terra LUNA Classic (LUNC) price yielded double-digit gains overnight for holders. LUNC price rallied in response to the recent development in Do Kwon’s bail request. The next hearing in Kwon’s case is June 16.

Pro-XRP attorney says Ripple has 25% chance of winning against SEC, Judge could announce verdict by September

Ripple has a 25% chance of winning its legal battle against the US Securities & Exchange Commission (SEC), according to pro-XRP attorney John Deaton. Over the weekend, Deaton shared his opinion on Ripple’s likelihood of both an outright win and a partial victory.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

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Pro-XRP attorney says Ripple has 25% chance of winning against SEC, Judge could announce verdict by September

Source: https://www.fxstreet.com/cryptocurrencies/news/cryptocurrencies-price-prediction-solana-luna-xrp-european-wrap-5-june-202306051327

Stanley Druckenmiller says Nvidia stock is worth holding for the next few years amid AI bullishness


  • Nvidia is worth holding for two to three years, Stanley Druckenmiller said in a Bloomberg conference.
  • His bullishness comes as other investors have called Nvidia overvalued.
  • Druckenmiller previously revealed investments in Nvidia and Microsoft.

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Billionaire investor Stanley Druckenmiller plans to hold on to Nvidia stock for at least the near future as the chipmaker is exposed to an artificial intelligence trend could be as “transformative as the internet.”

His bullishness comes as other investors have called Nvidia overvalued after it briefly soared to a market cap of $1 trillion last month.

Speaking at the Bloomberg Invest conference on Wednesday, the Duquesne Family Office founder said that he’d hold the firm’s stock for the next few years.

“If [AI is] as big as I think it is, Nvidia is something we’re going to want to own for at least two or three years, not for 10 months,” he said, adding “And maybe longer.”

Nvidia has emerged as a critical enabler of the AI boom. Bank of America has called it the “picks and shovels leader in the AI gold rush” as the company virtually controls the market for graphics-processing chips that power generative AI chatbots like ChatGPT and Bard.

While Nvidia’s valuation is just below $1 trillion, shares have still soared more than 160% in the year to date.

During the Bloomberg interview, Druckenmiller also noted that even if a hard landing for the economy affects some AI development, he expects Nvidia to thrive in the long run.

“History has proven that if you have very good earnings in a recession, and they’re sustainable — if they’re not, the market somehow figures it out — those stocks will do just fine,” he said.

The investor has already placed a bet on Nvidia. In the first quarter, his family office snapped up $220 million worth of the chipmaker’s stock. That’s alongside $210 million in shares of Microsoft, which is an investor in ChatGPT parent OpenAI and has incorporated the technology into its Bing web browser.

But not everyone is convinced about Nvidia. ARK Invest CEO Cathie Wood and finance professor Asmath Damodaran have said shares are overvalued.

Still, AI adoption throughout the economy may propel the S&P 500 by up to 14%, Goldman Sachs wrote in a Monday forecast.

Billionaire investor Stanley Druckenmiller plans to hold on to Nvidia stock for at least the near future as the chipmaker is exposed to an artificial intelligence trend could be as “transformative as the internet.”

Source: https://markets.businessinsider.com/news/stocks/nvidia-stock-nvda-stanley-druckenmiller-artificial-intelligence-ai-bull-market-2023-6?op=1

Today’s Stock Option Quotes and Volatility

The Options Market Overview page provides a snapshot of today’s market activity and recent news affecting the options markets.

Options information is delayed a minimum of 15 minutes, and is updated at least once every 15-minutes through-out the day. The new day’s options data will start populating the page at approximately 8:55a CT.

Unusual Options Activity

Unusual Options Activity identifies options contracts that are trading at a higher volume relative to the contract’s open interest. Unusual Options can prove insight on what “smart money” is doing with large volume orders, signaling new positions and potentially a big move in the underlying Stock or ETF. Options can be considered bullish when a call is purchased at the ask price and Options can be considered bearish when a call is sold at the bid price.

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Shows symbols with the most option activity on the day, with IV Rank and Put/Call ratio.

Covered Calls

A Covered Call or buy-write strategy is used to increase returns on long positions, by selling call options in an underlying security you own. Profit is limited to strike price of the short call option minus the purchase price of the underlying security, plus the premium received. Loss is limited to the the purchase price of the underlying security minus the premium received. The covered call strategy is useful to generate additional income if you do not expect much movement in the price of the underlying security.

Highest Implied Volatility

Highlights heightened IV strikes which may be covered call, cash secured put, or spread candidates to take advantage of inflated option premiums.

Implied volatility is a theoretical value that measures the expected volatility of the underlying stock over the period of the option. It is an important factor to consider when understanding how an option is priced, as it can help traders determine if an option is fairly valued, undervalued, or overvalued. Generally speaking, traders look to buy an option when the implied volatility is low, and look to sell an option (or consider a spread strategy) when implied volatility is high.

Options Put/Call Ratios

Use put / call ratios to time market tops and bottoms.

“Normal” activity is generally 3 calls to 2 puts, or a ratio of 0.60.

Low numbers (less the 0.7) are considered bullish (more calls are being traded), while high numbers (greater than 1.3) are considered bearish (more puts are being traded.)

Index Options

Shows Indices with the most option activity on the day, with IV Rank and Put/Call ratio.

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Real-estate billionaire Jeff Greene warns the US economy is headed for trouble – and house prices may tumble


  • Billionaire investor Jeff Greene expects a painful downturn and a potential slump in house prices.
  • The real-estate tycoon says the Fed’s rate hikes will deal heavy blows to several industries.
  • Greene expects an economic slump, AI, and remote working to weigh on commercial real estate.

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Prepare for the US economy to slump and house prices to slide, Jeff Greene has warned.

The real-estate billionaire, who made a fortune betting against the mid-2000s housing bubble, spoke to Insider about his current outlook on Tuesday. He predicted painful fallout from governments and central banks spending trillions of dollars during and after the pandemic to prop up their economies.

“We’ve just taken the rollercoaster so high,” Greene said, comparing the fiscal and monetary binge to climbing to the top of Space Mountain at Walt Disney World.

Greene blasted the Federal Reserve for pumping money into the economy at times when shortages of workers and raw materials were pushing prices higher. He also slammed the US central bank for hiking interest rates from virtually zero to upwards of 5% since last spring in response to historic inflation.

“You’re firing a gun at the same dead body over and over again,” he said. “You’ve already killed the guy. I think that’s what they’re doing to the economy; it’s just gonna cause catastrophes in a lot of industries.”

Greene noted the unprecedented amounts of monetary and fiscal stimulus have forestalled a recession. However, he cautioned that everything from Wall Street deal flows to construction projects will dry up as liquidity is drained from the system.

He noted that rate hikes tend to hammer certain parts of the economy, but have little effect on sectors such as healthcare, education, and government.

“It’s really hitting some areas hard,” he said, pointing to commercial real estate and investment banks as examples. “They’re gonna get slammed, but a lot of people aren’t going to be affected at all.”

The real-estate tycoon — who met with John Paulson during the mid-2000s housing bubble, and made a fortune emulating the hedge fund manager’s iconic bet against subprime mortgages — flagged the likely impact of higher borrowing costs on house prices.

“People can’t qualify for mortgages anymore,” he said, noting the housing market has shifted from a state of frantic buying and bidding wars to paralysis due to rates rising. Sellers are mulling price cuts after receiving zero offers, while buyers are balking at paying much higher mortgage rates, he added.

Many people will eventually have to sell their homes for less than they’d like, for reasons like divorce or the loss of a family member. Unless rates decline soon, that’s likely to pull down house prices, Greene said.

The property developer, who has campaigned to become a Florida senator and the state’s governor in recent years, cautioned the challenges may only be starting.

“At some point it’s just going to be harder and harder to make money,” Greene said. He noted that many workers pushed for raises during the pandemic, but if the economy slows down, employers might seek to lay them off to slash their bloated overheads. Similarly, if landlords see vacancies rising and rents falling in their properties, they might have to cut costs as well, he said.

Greene predicted that artificial intelligence will “start to rear its ugly head” and “hit the white-collar workforce like a sledgehammer,” wiping out loads of jobs when the economy is already cooling.

Moreover, he pointed to the rise in remote working as a headwind for office buildings and other commercial real estate in towns and cities. “They’re not gonna need more office space, that’s for sure,” he said about companies.

Greene also touched on the stock market’s breathless rally this year, which has been fueled by investors betting an AI boom will supercharge the profits of Tesla, Nvidia, and other companies.

He emphasized that companies like Meta and Google are essential to people’s businesses, and suggested that integrating AI into their software tools would make them even more valuable. However, he cautioned that a wider economic slowdown would likely weigh on the stocks of companies that are vulnerable to a downturn.

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Source: https://markets.businessinsider.com/news/stocks/jeff-greene-house-prices-housing-market-real-estate-fed-economy-2023-6?op=1

Is PayPal Stock a Buy?

Shares of PayPal (PYPL 0.79%) have fallen out of favor with investors, down 79% from their all-time high as of this writing. The business was booming during the worst days of the coronavirus pandemic, but with consumer behavior normalizing and economies reopening, PayPal is seeing growth slow dramatically.

Is it time for investors to ditch the stock? Or is this top fintech company worthy of a place in your portfolio? Let’s take a closer look.

Reasons to sell PayPal

What’s strikingly clear is that the monster growth we saw PayPal post in 2020 and 2021 might never be achieved again. The business increased revenue 8.5% in 2022, while adding just 8.6 million net new active accounts, a far cry from the previous two years. And in the first three months of this year, PayPal’s user base shrank slightly from December of last year. Does that mean the platform has reached its full potential?

That might be the case. While online shopping was booming when everyone was stuck at home, things are returning back to normal. Top e-commerce companies, including Etsy and even Amazon, have reported sales slowdowns in recent quarters, a sign that consumers could be favoring in-person retailing once again. Because PayPal is the most widely accepted digital wallet in North America and Europe, this trend hurts the business.

Moreover, inflationary pressures are a serious headwind for PayPal. Consumers are stretching their budgets and paying more for the essentials, which results in lower amounts of discretionary spending power.

And although the payments industry produces some of the best businesses in the world — think Visa and Mastercard — the competition for a company like PayPal is stiff. When it comes to online checkout, which is PayPal’s core feature, Apple Pay is starting to make inroads. Its usage soared during the key holiday shopping season. This is also a threat when it comes to in-person transactions.

And with Venmo, the PayPal-owned popular peer-to-peer service that counts 60 million monthly active users, the company has to compete with Zelle, operated by a consortium of big banking institutions, as well as with Block’s Cash App.

Reasons to buy PayPal

Because the stock has been crushed over the past few years, it trades at a price-to-earnings (P/E) multiple of 27 right now. That’s well below the trailing five-year average P/E ratio of 55. That tells me investors have gone from being extremely optimistic about this business to striking a pessimistic tone. With Wall Street consensus analyst estimates forecasting annualized net income growth of 28% between 2022 and 2027, the potential for good returns is in the cards, especially keeping the valuation in mind.

The business is doing a great job at getting more engagement from its user base. In the latest quarter, transactions per active account were up 13%. This remains a key strategic focus for CEO Dan Schulman.

PayPal’s two-sided platform, consisting of 35 million merchants and 398 million individuals, has allowed the company to benefit from network effects, probably the strongest economic moat there is. That just means that as PayPal brings on more merchants, consumers find more value in using the service. The opposite, where more individuals increase the usefulness for merchants, is also true. It gives PayPal a powerful competitive position that’s almost impossible for a smaller rival to catch up to.

Network effects can also help to explain why the business is so lucrative. In 2022, PayPal generated $5.1 billion of free cash flow on $27.5 billion of revenue, a superb margin of 19%. The balance sheet is in pristine condition, with a net cash position of $4.4 billion. And with the leadership team finding ways to cut substantial costs across the board, the company is set to become even more efficient in the future.

While PayPal’s growth has slowed considerably, and it faces intense competition, I think the attractive valuation being offered for what is still a competitively advantaged business makes the stock worthy of being a buy today.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel has positions in Amazon.com and Block. The Motley Fool has positions in and recommends Amazon.com, Apple, Block, Etsy, Mastercard, PayPal, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard, short January 2025 $380 calls on Mastercard, and short June 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

Source: https://www.fool.com/investing/2023/06/07/is-paypal-stock-a-buy/