Doge To The Moon?
Great Ones, I’ve talked a lot recently about how most investments only have value because we believe they have value. This conversation has centered around cryptocurrencies like Bitcoin, Ethereum and the like.
Today, we’re continuing this conversation with a closer look at Dogecoin (DOGE).
Now, I swore to myself at some point that I’d never talk about Dogecoin — the most ludicrous cryptocurrency on the market. I mean, it started out as a joke … Dogecoin is literally a cryptocurrency based on a 2013 Shiba Inu meme.
So, why are we talking about Dogecoin? Why do I talk about any crypto lately? Because some celebrity or Wall Street talking head caused the market to react. Last week, it was Berkshire Hathaway (NYSE: BRK.A) VP Charlie Munger.
This week, it’s Tesla (Nasdaq: TSLA) CEO Elon Musk.
Musk has been by far the most notorious cryptocurrency influencer to date. He prompted a bitcoin surge after repeatedly tweeting about the crypto coin. Furthermore, Tesla has a multibillion-dollar stake in the cryptocurrency and has started accepting bitcoin as payment.
This time around, Musk’s addled brain has focused on Dogecoin … assumedly for funsies. In this weekend’s Saturday Night Live, Musk called Dogecoin a “hustle,” prompting a 30% plunge in the crypto’s price.
However, this morning, Musk’s SpaceX and its partner Geometric Energy announced that their new project “DOGE-1 Mission to the Moon,” would be funded entirely with Dogecoin. This mission will send a 40-kg satellite to the moon on a SpaceX Falcon 9 rocket early next year.
On the news, Dogecoin regained about 4% of its post-SNL plunge. But there are serious concerns you should consider before joining Musk in his latest crypto crusade. Specifically, Dogecoin breaks one of the two major rules of cryptocurrency valuation. Let’s recap those two rules:
- Utility: Cryptocurrencies like bitcoin are traceable, exchangeable and not tied to any government. They have a built-in ledger via blockchain that allows you to see where and how they’ve traded before. These factors allow cryptos to have a level of security never before seen in currencies.
- Scarcity: Gold, diamonds, etc. have long held value tied to their scarcity. There is supposedly a finite supply. In the case of cryptocurrencies, this is doubly true. There are only 21 million bitcoins in existence. And there will only ever be 21 million bitcoins. Period.
Dogecoin certainly has utility, even though no one currently accepts it as payment. It is traceable, exchangeable and not tied to any government.
However, Dogecoin is not scarce by any means. While the number of bitcoins is capped at 21 million, there is no cap on Dogecoin. In other words, there’s no limit on how many Dogecoins can be in “circulation.”
If bitcoin’s scarcity makes it similar to gold, I guess Dogecoin’s lack of scarcity makes it similar to the U.S. dollar. Technically, there’s an unlimited supply of U.S. dollars … if the Fed is brave (or stupid) enough to keep printing. Similarly, there’s also an unlimited supply of Dogecoins.
That said, Elon Musk’s SpaceX is not the U.S. government or the U.S. economy. In other words, Dogecoin is severely lacking in the “utility” department right now. Couple that with its nonexistent scarcity, and you have … well, you have a boatload of volatility and risk.
So, Great Ones, if you too would like to jump into Dogecoin for funsies, I’m not going to tell you no. However, if you thought, even for a moment, that Dogecoin was a serious investment … smack that thought right out of your head. It has no place at all in any serious investment portfolio. None.
For once, Elon Musk is right. Dogecoin is most certainly a hustle.
Editor’s Note: Ian King, Here!
Thanks, Mr. Great Stuff, for letting me hijack today’s issue for a minute…
I just wanted to let your readers know that my cryptocurrency picks are on fire: This past March, I told my readers to close out half their position in one little-known cryptocurrency. How much did they make? 4,000%. How long did it take? Just three months. And I wasn’t done there.
In April, I recommended closing half a position in another cryptocurrency … for a nearly 2,000% gain. That happened in just four months. And get this: The remaining halves of those trades are still climbing.
Now, 4,000% and 2,000% are exceptional gains — something you don’t see every day. But when you know the cryptocurrency market the way I do … that’s exactly the kind of thing that can happen.
The Good: Vax-Happened
OK, just a little pinprick. There’ll be no more AAAAAH! But you may feel a little sick…
Especially if you missed out on BioNTech (Nasdaq: BNTX) a year ago. The cutting-edge vaccine maker’s shares have quadrupled in the past year alone as demand for its COVID-19 vaccine surged. That exploding demand led to an equally large rise in revenue.
This morning, BioNTech announced that it swung from a loss last year to a profit of $5.33 per share. Revenue quadrupled to $2.5 billion. Both figures trounced Wall Street’s expectations.
And, if you had any doubt as to where this revenue boom came from … BioNTech said that $2.1 billion in sales stemmed directly from shared profits on its Pfizer (NYSE: PFE) vaccine.
For the full year, BioNTech sees $15.1 billion in vaccine revenue, noting that its vaccine doesn’t need to be adjusted for any of the COVID-19 variants. Still, it stands ready to adjust the vaccine if the need arises.
The bottom line is that BNTX’s prognosis is solid for the foreseeable future. BioNTech investors are certainly comfortably numb with today’s results, sending the stock more than 8% higher.
The Bad: Chicken Pressure
So, I’m sitting in my office looking at Shiba Inu dogecoin memes — a typical Monday morn — when I hear what sounds like … wings?
Next came the screeching, then a pungent burning odor assaulting me … and more screeching — lovely sounds when you’re home alone.
As my cats quickly alerted me, not one, not two but a whole nest of birds thought they’d mosey up my drier exhaust and into the hose. As their torment finished, mine just began…
My point is that there are a thousand ways to roast a bird. Dryer exhaust is a new one for me, and as Tyson Foods (NYSE: TSN) is finding out, “chickflation” is a much similar hassle to clean up.
The many-meat processor saw earnings shoot up 67.5% year over year to $1.34 per share, which beat estimates for $1.12 per share with room to spare. Revenue ticked up to $11.3 billion, which also beat expectations for $10.9 billion.
Tyson even expects demand for its foods will increase throughout 2021, but that’s about where Tyson’s confidence runs out. With reports of inflation at every level of its supply chain, Tyson warned that rising costs would threaten its margins later in the year. Sound familiar?
Virtually everyone is blaming either short-term inflation or the chip shortage for their misery and woes this earnings season. From the frozen chicken purveyors to the robot Roomba makers. But how’s this affect you?
Well, if you buy Tyson foods, it’ll probably get a bit more expensive. If you don’t buy Tyson’s foods … what you do buy will probably get more expensive. And so it goes. Supply chain issues aren’t an “oh, I’ll just go to Aldi!” kinda fix — not at this scale.
On the bright side, while Tyson’s earnings will be clipped with higher chicken prices, analysts are already predicting “another food deflation cycle post this inflation” next year or in 2023. So, we have that going for us … which is nice if you’re keeping track of food deflationary cycles.
The Ugly: Caught In The Stable
I hate to break it to you, but this week’s electric vehicle (EV) earnings are not off to a great start — and we have Workhorse (Nasdaq: WKHS) to thank for that.
Honestly, 2021 hasn’t been Workhorse’s year to begin with. WKHS is down about 80% from its February highs, after it was glossed over for a multibillion-dollar contract to bring the U.S. Postal Service electric.
Let’s start with the good news: Workhorse doubled the number of vehicles it produced in the quarter! The bad news is that brings Workhorse up to a whopping 38 vehicles rolling off the lot. That’s … 38. Three. Eight.
Not even 40 cars. And nowhere close to its 8,000-vehicle backlog. It’s still better than Nikola (Nasdaq: NKLA) … but just barely.
Revenue came in less than a quarter of what analysts expected. Sales only totaled $521,060 and paled against estimates for $2.3 million. Per-share earnings? Don’t even ask…
Oh, and Workhorse’s “strategic stake” in fellow EV maker Lordstown Motors (Nasdaq: RIDE) is nearly pointless given the fallout from Lordstown’s short-a-thon with Hindenburg. Pretty much everything that WKHS could do wrong … it did. What gives?
The company’s downplaying production problems big-time. Workhorse’s inability to crank out the cars it’s taking orders for should be a real concern for anyone investing in the stock. Presuming the company’s backlog isn’t canceled out from under it, Workhorse is in dire straits unless it ramps up production virtually overnight.
And considering Workhorse is still a fresh-out-the-gate newcomer to the public EV race … the company probably should’ve spent money on that production issue ages ago. That means more spending with money that the company doesn’t have … you know, since it’s hardly selling any cars?
Please, someone, get this horse some performance-enhancing drugs. WKHS dropped another 15% after its abomination of a report. If you’re looking to buy anything to do with EVs … steer clear of WKHS.
Anyway, nobody’s talking about the real EV profit story: It’s under the hood — in the technology making it possible. I’m not talking about the lithium battery — this technology means a $51 trillion boom in ALL power needs.
I hope last week’s earnings bonanza whet your appetite for even more rambunctious reports coming off the Street today!
Let’s take a closer look at this week’s small fry smörgåsbord, courtesy of Earnings Whispers on Twitter:
Hmm, can you guess what I’m looking at this week? Wendy’s, obviously…
Tucked over there on Thursday is the streaming market’s heir apparent, Walt Disney (NYSE: DIS). Literally everyone on and off the Street will be looking at Disney’s streaming figures and estimates. Does Disney expect to lose or gain subscriber traction as more places open up? Curious minds want to know.
Either way, Disney’s subsisted just fine on its digital presence and slim park offerings amid the pandemic, but any financial updates from its gradual park reopening will be ace for you DIS investors out there.
Also, by the time you’re reading this, Roblox’s (NYSE: RBLX) first report as a public company will be in the books. I don’t know what to expect here, but neither does most of Wall Street. Will I be watching either way? You bet. Roblox memes are … well, let’s just call ‘em imaginative.
Aurora (NYSE: ACB) is another report I want to check out just for funsies. Old-school Great Ones know that Aurora used to be a familiar face ‘round the Great Stuff Picks circle, but the company’s consistently inconsistent earnings reports just left a bitter tar-like taste in my mouth.
Hopefully, Aurora was able to capitalize on its couch-locked-down consumers throughout these recent pandemic months … and not let its perfect market opportunity roll away like a hacky sac down a storm drain.
Over in the EV streets, we have a few different parts of the sector sounding off.
Xpeng (NYSE: XPEV) will round out the reporting round-robin for China’s EV makers this week, and just like Nio last week, any good news for Xpeng’s foothold on the Chinese market is more bad news for Tesla (Nasdaq: TSLA).
Now, Blink Charging (Nasdaq: BLNK) is another one that I’m looking at. The company’s setting up a network of charging stations — i.e., a solution for the one major griping point everyone has with EVs and the lack of available charging.
And finally, I want to see what the heck QuantumScape (NYSE: QS) has been up to. I, for one, am eager to learn how its groundbreaking battery designs are set back, or how the company still has zero chance of profitability or a myriad of other QS B.S.
But that’s enough from me … what stocks are you watching this week? Are any of your own personal picks entering the earnings limelight? Let me know!
Drop us a line and let us know at GreatStuffToday@BanyanHill.com.
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Until next time, stay Great!
Editor, Great Stuff