Coinbase & The Chamber of SECrets, Oh No Nio & Typical Tesla Tirades
If You Wanna Be My Lender
You gotta get with the SEC’s lawyers … apparently.
The market has had its share of soap opera theatrics over the years — remember when Great Stuff brought you Big Tech’s classic Antitrust Issues? And real OG Great Ones remember the long-running Tesla-driven plot of EV Days. (No? Just me?)
Today’s crypto calamity, courtesy of Coinbase Global (Nasdaq: COIN), shows off Wall Street dramatics at their best.
Enter Coinbase, one of the most popular crypto trading platforms in the brave new digital world. For much of its short, short life as a public company, Coinbase stock has traded in line with the bitcoin you can trade on its platform. Up with the crypto flow, down with the crypto undertow.
Now, Coinbase is finding out what it’s like to trade — well, fall — on its own merit. The company’s been gung-ho about getting its new Coinbase Lend product off the ground. With it, you can park cash in a stablecoin (USD Coin) for a 4% yield while Coinbase lends that money to “verified borrowers.”
I think you can see where this blossoming, naïve romance is headed: Enter the SEC, which I’m sure many of you are intimately familiar with already.
Bold of you to assume such a thing, good sir…
Sure, but you know how uppity — how controlling the SEC wants to be over crypto. Maybe they’re just too demanding. Maybe they’re not understanding … it’s too bold.
But now, the SEC just left Coinbase standing … alone in a world that’s so cold (so cold).
The crypto platform and prospective lender got hit with a Well’s notice today, essentially a warning knock before the SEC sues your guts out. It’s nice of them to give you a heads-up, at least.
But why? A lawsuit? Things were going so well for Coinbase … it just went public! Lend wasn’t trying to hurt anyone. Coinbase just wanted to offer investors that sweet, sweet yield … that reliability that’s so hard to find in someone today.
Are … are you projecting anything, Mr. Great Stuff? Everything OK at home?
Sorry, I just get so caught up in these things. I mean, the SEC didn’t even specify what Coinbase Lend did that ticked it off! Was it the combination of the words “crypto,” “stablecoin” and “yield?” Something about lowly peons making more money off crypto under the establishment’s nose?
Chief Legal Officer Paul Grewal is just as flabbergasted as I am. By golly — he’s been trying to reach the SEC about this product for six months!
Even Coinbase CEO Brian Armstrong (no relation to Billie Joe, presumably) says the SEC completely high-hatted him on his trip to D.C., refusing to meet about Coinbase. Heck, Armstrong stuck his neck out to say that, you know … just maybe … you should be clearer about your demands, Mr. SEC:
Armstrong went on to say that, initially, the SEC issued a blanket decision that Lend will count as a security, along with some security-related demands that Coinbase complied with. But Coinbase still had questions … a few quid pro quos to make sure its new operation was all good with the legal beagles.
If Twitter is correct — and when is it not? — the SEC ghosted Coinbase and then had the absolute gall to start a lawsuit after not addressing Coinbase’s questions. Can you believe that?
It gets better: Now the SEC wants to get catty back, not even directly replying to Coinbase’s tweets. The SEC just slides a Well’s notice under the door and calls it a day. And for the moment … Wall Street is playing he-said-she-said until further details of the SEC’s lawsuit are available, striking COIN shares down 3% today.
You’re gonna need a bigger bitcoin rally than today’s uptick to get investors’ attention off this telenovela in the making. Thank you for tuning in to the pilot episode … of Keeping SECrets.
What do you think will become of the SEC vs. Coinbase? Have you heard about Coinbase’s Lend program before? Share what you’re up to these days: GreatStuffToday@BanyanHill.com.
We’re In A Race Against Time
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Going: Pay Me, Pal
It looks like the “buy now, pay later” (BNPL) race just got even hotter. This morning, digital payment giant PayPal (Nasdaq: PYPL) announced it plans to buy Japanese firm Paidy in a $2.7 billion acquisition deal.
If you haven’t heard of Paidy, it basically acts as a middleman between consumers and Japanese merchants. With Paidy, you can buy items online and pay for them in monthly installments … granted the company’s machine-learning tech deems you “creditworthy” enough to make those payments in the first place.
PayPal hopes the deal will help it penetrate Japan’s largely untapped digital payment market, where roughly two-thirds of the country’s purchases are still paid with cash. Considering I can’t even remember the last time I paid for something with dollar, dollar bills, y’all … this figure blew my mind.
Remember, the BNPL business model took off during the COVID-19 pandemic thanks to all those government stimmy checks and low interest rates. But now that people got a taste of all these delicious credit card alternatives, this genie’s not going back in its bottle.
Consumers will continue to buy things they can’t technically afford up-front … and credit lenders like Paidy will happily front the bill for a later cost. This should benefit PayPal and other fintech companies in the long run … though I shudder to think what it’ll do to all those guys and gals already ridin’ that long debt train to nowhere.
Ah well. Out of sight, out of mind, as I like to say!
Going: Down With The IPO Sickness
In true “hold my beer” fashion, the number of IPOs in 2021 has already far outpaced 2020. To date, 279 companies have gone public in the U.S. versus 2020’s grand total of 218. That’s a lot of cheddar entering the marketplace … but in the words of the Randy Bachman: You ain’t seen nothing yet.
It seems the IPO hoopla is just starting, with several companies looking to hit the public market in the second half of the year. Notable names include Warby Parker, Fresh Market, iFit, Toast, Sportradar, Allbirds, Sweetgreen and Authentic Brands Group.
But are any of these names … like … worth investing in?
Well, maybe… Of the companies I just mentioned, I like Sportsradar the best. The company sells sports data that coaches can use to gauge player performance and monitor training progress — much like the statistics Billy Beane and Peter Brand used to assemble a killer baseball team in the movie Moneyball.
Sports fanatics pay big bucks for anything that can improve their totally legal bets. So, if Sportsradar offers a service that pairs well with, say … DraftKings … I could see it taking off.
But as for the other IPOs, I’m less enthused.
Warby Park needs to improve its growth story before it piques my interest. Fresh Market is on par with Whole Foods but with worse management. iFit practically screams “Peloton 2.0.”
And Sweetgreen? Don’t even get me started on this healthy fast-food wannabe. I’ll continue to eat my sad-looking McDonald’s cheeseburger in my car and I. Will. Like. It.
Gone: Dilution Do’s & Don’ts
Hold your electric horses — we’re not done with the share offering goodness just yet.
No, there’s one more exciting entrant dumping new shares on the market, and … oh, it’s just Nio (NYSE: NIO).
You expected another hot IPO, but it was me … Nio!
Nio announced a $2 billion stock offering today, and as is tradition, a sell-off from share dilution fears soon followed. Nio dropped as much as 7% today because heaven forbid a growing company raises money … on the stock market … that was created for raising money.
Sure, no NIO investor wants their shares to be devalued even ever so slightly, but in reality, Nio’s business model hasn’t changed. The company hasn’t changed. (The chip shortage hasn’t changed either, for that matter.)
If you did your research before investing in NIO, this share offering doesn’t change any of that. The company needs that capital infusion like every other electric vehicle (EV) company has done before … even Tesla (Nasdaq: TSLA).
Today’s plunge is just Wall Street adjusting for the influx of new shares. And if anything, it could be a buying opportunity if you’re bullish on NIO taking on Tesla in China.
Editor’s Note: Ian King’s No. 1 Electric Vehicle-Related Stock
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Alright, Great Ones, it’s poll time, see? I’m the one asking questions ‘round here, see? Pay no attention to Muggsie in the corner there. He’ll stay right there as long as you play along and answer, see?
I’d make an absolutely horrible 1920s gangster. I’d make an even worse 1920s cop. But while I don’t know much about policing the streets and busting criminals, I do know about cybersecurity.
Anywho, last week we asked you if you’ve ever invested in cybersecurity stocks. I’m sure I don’t have to tell you that cybersecurity is the numero uno digital threat to your investing returns … and that investing in solid cybersecurity stocks is an excellent way to boost your returns.
Or … maybe I do need to tell you? Some of you, at least. In last week’s poll, 47.7% of Great Ones said they’ve bought cybersecurity stocks before … just not Great Stuff Picks holding CrowdStrike (Nasdaq: CRWD). Kudos to you!
Though, I am curious as to which cybersecurity stocks y’all find more compelling than CrowdStrike. If you’ve got the time and don’t mind telling me, drop me a line at GreatStuffToday@BanyanHill.com.
(And please tell me you’re not among the 2.3% who invested in McAfee or Norton. They aren’t real cybersecurity companies, and you can’t convince me otherwise.)
Next up, we have the crème of the crop: the 25% of you who bought CRWD … presumably because I recommended it in Great Stuff Picks back in January 2020. You crazy Great Ones are up nearly 400%!
Finally, there’s that 25% who answered last week’s poll with: “No, why should I?” To you … I’m not sure what to say. If the rising threat of cyberattacks, ransomware, phishing, email scams and all the rest isn’t enough to convince you that this market is exploding … I’m not sure anyone can convince you.
Now, it being Wednesday, I’ve got another question for you.
Oompa Loompa doopity do!
Stop that. Bad things happen when they start singing!
This week, we’re asking about one of our favorite love/hate companies: Tesla.
Today, TSLA stock fell, then rallied … then fell again. Investors couldn’t decide which new Tesla story was more influential: the bad review for the new Model S Plaid edition or the new Chinese deliveries figures.
For reference, automotive data specialist Edmunds issued a scathing review of the Model S Plaid that was nowhere near as funny as Spaceballs. Meanwhile, Tesla also shipped a record 44,264 vehicles out of its Shanghai manufacturing plant last month. Most of those went to Europe, meaning Shanghai got Shanghaied?
Investors were more focused on the record deliveries during the great semiconductor shortage. I’ll say I’m impressed as well, though: Tesla is building cars literally where the chips are made, so…
Anywho … I do have a question here: Are you sick of hearing about Tesla yet?
Be honest. I’m not asking if you like the company as an investment. I’m asking if you’re tired of hearing about every little minute detail surrounding Tesla and CEO Elon Musk. Personally, I take great delight in following this EV soap opera. It reminds me of the time when Mikkos Cassadine tried to freeze the world in General Hospital.
What? Like you didn’t watch soap operas in college while lazing around.
Enough banter. Vote now:
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And if you don’t see an answer you like, make up one of your own and email us at GreatStuffToday@BanyanHill.com. I mean, Great Stuff is your one-stop shop for ranting, raving and a whole lotta rambling too. We love it all, so write to us now!
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Until next time, stay Great!
Editor, Great Stuff