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Daily Market Commentary, PRO COMMENTARY

MicroStrategy Is A Leveraged ETF In Disguise

Per its website, MicroStrategy “provides software solutions and expert services that empower every individual with actionable advice.” While Microstrategy’s mission description may seem like a profitable enterprise, reality has a different opinion. Since 1997, the company has a cumulative net loss of $1.108 billion. Accordingly, the graphs below show its revenue has been flat to slowly deteriorating for over ten years. Its EPS on the right also shows the company’s poor fundamental status. However, as both graphs show, the price of Microstrategy has risen by over 1,300% over the last five years.

Microstrategy has a market cap of $42 Billion. The reason for such a high market cap and stock performance is clearly not their underlying business. Exciting shareholders are its holdings of approximately 250k bitcoin. At current prices, its Bitcoin holdings are worth nearly $17 billion. Furthermore, Microstrategy is using approximately 2.5x leverage. If you multiply the leverage by their holdings, you get $42.5 billion, a value almost perfectly aligned with its market cap. So, what is MicroStrategy? It’s a leveraged Bitcoin fund disguised as a non-profit technology company.

microstrategy bitcoin

ASML Takes Some Steam Out Of The Chip Bubble

The SimpleVisor graph below shows that ASML Holdings fell by over 10% yesterday on a weak earnings report. ASML makes chip-making machines widely used by the semiconductor industry. ASML’s bookings were only 2.6bn euros, about half the expected number. The company also cut sales and margin guidance. Thus, the question is, if the chip industry is facing insatiable demand, why such a stunning decline in the need for chip-making equipment? Per the CEO:

While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected

ASML’s earnings caused the chip sector to weaken. However, it’s important to note that the weakness appears not to be coming from AI-related machinery. Consequently, this earnings report made earnings season for chip developers, manufacturers, and related companies much more interesting.

asml stock price

Greed And How To Lose 100% Of Your Money

Few stories are as staggering or cautionary as this one. An investor turned an $88,000 investment into a mind-boggling $415 million through Tesla stock, only to lose it all. It’s a story that captures extremes of financial success and failure. It is a story of greed and the false confidence that comes with exponential returns. However, a deeper examination of the circumstances that led to this loss clarifies that there were warning signs. Common-sense strategies and risk management tools to prevent financial catastrophes were abandoned.

READ MORE…

greed tesla

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