Traders have bid up MARA stock as cryptos soar again. However, Marathon’s crypto-mining business is nowhere near profitability yet. Workday (WDAY) is higher after posting an earnings and revenue beat THUNDER BAY — The health and well-being of Canadians are the top priorities of the Governments of Canada and Ontario. But the COVID-19 pandemic has affected more than our personal health. It is having a profound effect on our economy. That is why our respective governments have been taking decisive action to support families, businesses and … Nvidia has been on fire, causing many to wonder how far it can go. NVDA stock could extend to $535, but that doesn’t mean it will stop there. Kitco News’ contributed commentary features articles and opinions from some of the top experts in the gold industry.
Marathon Patent Group (NASDAQ:MARA) has had an interesting run. A few years ago, the company tried to commercialize intellectual property, as you might guess from its name. However, when that didn’t pan out, Marathon made an abrupt pivot to cryptocurrency mining in 2017. MARA stock briefly soared.
That excitement soon fizzled though. As Bitcoin crashed from $20,000 to as low as $4,000, interest in Marathon and other crypto and blockchain stocks disappeared. Marathon’s shares collapsed from a peak of $23 to less than a dollar.
However, cryptocurrencies are back. Bitcoin has surged above the $10,000 mark again, and many altcoins such as Ethereum and Ripple are also on the move.
Not surprisingly, traders are bidding up some of the crypto stocks in sympathy. For example, Overstock.com (NASDAQ:OSTK) shares are up more than tenfold so far this year.
Many folks are hoping that MARA stock will be the next big crypto winner. However, these wishes will likely be dashed.
For all the excitement around the renewed rise in cryptocurrencies, there’s still little evidence that mining it is good business. Well, in North America anyway. Clearly, some mining collectives are doing well, but they’ve generally set up shop in places with cheaper electricity and overhead such as China.
For Marathon, it’s far from certain that there’s a workable business model here.
In Q2 of 2020, the company generated a mere $286,000 of revenues. This was actually a decline from $356,000 of revenues for the same period last year. Not only this is microscopically-small business, it’s also a shrinking one.
What’s worse, its profit margins are imploding. In this quarter of 2019, the company spent $499,000 to produce that $356,000 of cryptocurrency. Pretty bad. However, it got far worse.
This past quarter, Mara spent $740,000 in direct operating costs to produce just $286,000 of revenues. Needless to say, spending three bucks to get back one dollar of cryptocurrency is not a winning strategy.
And this is just the direct costs associated with producing their crypto. It doesn’t include all the other costs associated with being a public company. Once you include employee salaries, consulting fees, administrative costs and so on, Mara managed to lose more than $2.1 million last quarter. Again, it did so while bringing in just $0.3 million of revenues. This isn’t just a bad business, this is a horrendously unprofitable one.
Recently, Marathon announced that it will be buying 10,500 additional mining rigs. This is a bold move, given that Marathon’s current mining operations are massively in the red as is. When you’re losing money, adding more capacity is an odd decision. Generally when you are in a hole, you’re supposed to stop digging.
Regardless, it may still be the right decision. The thing is Marathon is mining such a trivially small amount of crypto now that it would struggle to ever reach profitability. Even if the price of crypto had quadrupled in Q2, Marathon would still have only earned $1 million of revenue and would have had an operating loss of $1 million.
By contrast, any gold mining operation that couldn’t make money if the price of gold went up 300% would be viewed as a terrible investment prospect.
By buying way more mining rigs, at least Marathon will hopefully be able to generate a meaningful sum of revenues that at least cover the company’s employee costs and overhead. And then, if crypto prices go exponential, maybe the company can generate an operating profit.
Marathon is not a good investment even if you’re bullish on the future of cryptocurrencies. Since the 2017 peak, for example, the price of Bitcoin has lost roughly 40% of its value. Bitcoin topped out around $20,000 then, and it goes for $12,000 or so now.
Over the same time span, however, MARA stock imploded. Marathon peaked at $23 in 2017 and fell to less than 50 cents per share earlier this year before its recent rebound. Even now, however, with prices around $3, the stock is down nearly 90% while Bitcoin fell just 40%.
With it getting easier and easier to buy Bitcoin either on digital exchanges or via exchange-traded products, there’s no need to own MARA stock. Right now, the company’s mining operation is so tiny that it would require a truly miraculous run in crypto prices merely for the company to break even.
Again, just reflect for a second on the fact that the entire company generated just $286,000 of revenue over the past three month span. That’s far short of what a public company needs to be a reasonable investment.
As such, steer clear of this name. Matt McCall put it nicely: Marathon is a blockchain trap. While the company may look like a key cryptocurrency player, it just hasn’t reached a meaningful scale of operations yet.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. At the time of this writing, he held no positions in any of the aforementioned securities.
Ian Bezek, InvestorPlace Contributor
Bull Notes, Earnings Beat Pushes Workday Stock to Record High – Schaeffer’s Investment Research
The shares of Workday Inc (NASDAQ:WDAY) are up 12.7% at $244.05 at last check, earlier hitting a record high $247.89, after reporting second-quarter earnings and revenue that bested analyst forecasts. Additionally, the company increased its revenue forecast, and named co-president Chano Fernandez as a new co-CEO, alongside current CEO Aneel Bhursi.
All of this news led no fewer than 15 analysts to raise their price targets, including Cowen and Company and RBC, who raised their targets to $250 and $280, respectively. Still, analysts covering the maker of cloud-based human resources and finance software are divided, with 16 sporting a “buy” or better and 17 at a “hold” or worse.
WDAY has notched new annual highs each session after an August 26 bull gap pushed the equity above the resistant $200 level. Over the last two sessions, Workday stock hadbeen bumped even closer to its July 12 all-time high of $226.83, making today’s topple of the milestone no surprise. What’s more, the stock has solid support in place from its 10-day moving average, and is up 26.5% in the last six months.
In the past 10 days, calls have nearly doubled puts at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, in the last two weeks, 13,027 calls have crossed the tape, versus 7,207 puts. In other words, there’s a lot of options-related optimism circling in the options pits.
Author: by Jake Scott
NetNewsLedger – Investment in Thunder Bay Transit Will See Upgraded Hubs and Heated Shelters
That is why our respective governments have been taking decisive action to support families, businesses and communities, and we continue to look ahead to see what more can be done.
Ontarians need help getting safely to work and home, getting to appointments, to shop and to conduct business. Strategic investments in sustainable public transit and active transportation infrastructure play a key role.
Marcus Powlowski, Member of Parliament for Thunder Bay−Rainy River, and the Honourable Patty Hajdu, Minister of Health and Member of Parliament for Thunder Bay−Superior North, on behalf of the Honourable Catherine McKenna, Minister of Infrastructure and Communities; along with the Honourable Laurie Scott, Ontario’s Minister of Infrastructure; and His Worship Bill Mauro, Mayor of the City of Thunder Bay, today announced funding for 13 public transit projects in Thunder Bay.
Four transit hubs will be upgraded, and a new one built, with widened sidewalks, automatic doors and heated shelters. The hubs will improve accessibility and make it easier for riders to catch their bus. The purchase of four conventional buses will help make the transit system more reliable, while 14 new specialized paratransit buses will provide accessible, door-to-door service for passengers who need more assistance. In addition, 40 new bus shelters and several hundred new mobility pads will also improve accessibility. A new electronic fare management system will make payment simpler through reloadable smart cards.
Together, these projects will improve the quality, safety and convenience of the transit system. The upgrades will also help pedestrians and cyclists more easily connect to their bus and community.
The Government of Canada is investing over $10.4 million in these projects through the Public Transit Infrastructure Stream (PTIS). The Government of Ontario is contributing more than $8.5 million, while the City of Thunder Bay is contributing over $6.6 million.
Why Nvidia Stock Still Has More Upside Left
The run in Nvidia (NASDAQ:NVDA) has been stunning, and deservedly so. With NVDA stock up 183% from the March lows, many investors are beginning to wonder just how high this name can go.
That’s a fair question at this point, even from those that have been long. However, investors also need to realize the underlying mechanics of the market.
Hindsight is obviously 20/20 right? It’s easy to sit here now at the end of August and pound our chest about being long stocks. Well in April — when the action looked like a bear-market rally — it wasn’t easy staying long. In May, when the market was flirting with another breakdown, it wasn’t easy to champion a bullish stance.
Now that everything has resolved to the upside, it’s easy to be the bull. But understanding the underlying mechanics is necessary to learn for the future.
NVDA stock was a steal below $200 per share. At that time, it was a value play. In the months since though, it was a momentum play. That’s as large cap tech was clearly in demand. That’s shown by how much faster the Nasdaq hit new highs before the S&P 500. Simply put, there was more demand for tech than other sectors.
That was a plus for Nvidia.
But the other big positive? Nvidia has growth — and not only growth, but accelerating growth. It’s the kind of thing I like to see with the stocks I pick for my 5G Highway Super Portfolio.
Put simply, the pandemic has been good for business. That has made Nvidia among a smaller cohort of stocks that are now growing even faster, while a larger group of stocks have little or negative year-over-year growth.
That creates even more demand for a stock like Nvidia. I have been talking about this concept — that growth stocks accelerating their growth deserve a higher premium — for months now.
So next time, analyze what part of the market is in demand, then what stocks in that group are in even higher demand.
When the company reported earnings in May, upside guidance really blew Wall Street away. However, despite elevated expectations coming into the most recent earnings result, Nvidia again delivered.
Earnings and revenue topped expectations, with the latter growing 50% year-over-year. Gross margins also came in ahead of estimates. But on top of all that, management said it expects fiscal third-quarter revenue of $4.4 billion, well ahead of consensus estimates at the time for $3.97 billion in sales.
Friends, there’s no other way to say this: Nvidia’s products are in robust demand. Its data center business just had its best quarter. Gaming — as we know from our prior coverage — has been robust as well. Demand for A.I. and cloud applications is through the roof. Those two catalysts are also what makes it a promising 5G stock to consider.
Nvidia isn’t just a 5G “road builder” like some companies investors like to hype up. It’s going to be a driver on what I call the “5G Highway.” It’s going to lead some of the greatest innovations as we step into a future that brings our biggest sci-fi dreams into reality.
While the Mellanox deal took longer than expected to close, it has immediately added to Nvidia’s business. This is no surprise, as management told us it would be accretive to cash flow, margins and earnings from day one.
Admittedly, some areas of its business are struggling as the sectors that it caters too — for instance, automotive — are in a tough spot due to the novel coronavirus. But as a whole, Nvidia’s businesses are booming and thus, NVDA stock has been on fire.
This rally is deserved, even if the stock is getting stretched.
Some investors are becoming concerned about the move, asking “just how far can Nvidia go?”
While the valuation is becoming stretched — now at 46 times next year’s earnings estimates — realize that price-to-earnings ratios are not the all-encompassing deciding factor in the stock market. Otherwise, this latest rally in the market would have never occurred. Valuation isn’t irrelevant, but there are more factors in play than just that.
There was clear hesitation by investors after earnings. Despite a strong quarter, the stock stalled, ending flat on the day after it reported. That said, it only took a day for buyers to come back to NVDA stock. Shares soon cleared $500 and continue to hold above that mark now.
On the upside, look for a rotation over the current high at $516.50. Above that puts the 261.8% extension in play up near $535. Above that mark and shares can again start to push higher. While the run seems extreme, investors have to realize that Nvidia is a backbone in the tech sector. It’s not just a component that can be swapped with others; in many cases it’s a critical pillar that makes it possible.
For this reason, not only does Nvidia stock deserve a premium, but it will also continue to fuel growth. Regardless of what the share price does, NVDA stock has great fundamentals and that will continue to drive this stock higher for the long term.
But if you’re looking for the most profitable stocks to buy on 5G prospects, Nvidia is just the tip of the tip of the iceberg. Investors can discover new companies developing revolutionary technologies to make the most of our hyper-connected future.
As the chief technology analyst at InvestorPlace, I’ve curated The 5G Highway Super Portfolio … a tactical approach to investing in 5G that maximizes short-term and long-term gains. In this special report, I uncover the 5G equivalents of the hottest tech behemoths and more.
With a proven track record in making calls on tech titans far before they dominated the field, my research team and I have demonstrated the know-how needed to sift through the 5G duds to find the real gems. I’ve found companies at the forefront of key 5G revolutions: movements in driver-less cars, virtual reality and remote surgery … just to name a few.
On the date of publication, Matt McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article had a long position in NVDA. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.
Matt McCall and the InvestorPlace Research Staff, Editor, MoneyWire
U.S. Dollar trends to guide gold markets
When the COVID-19 pandemic first began to make its negative influences felt throughout the financial markets, global investment trends in the U.S. currency quickly emerged as a primary safe haven beneficiary. As a result of these risk-off trends in market sentiment, the U.S. Dollar Index (DXY) was propelled to its highest levels in more than three years and prior resistance levels (above 99.80) were overcome in a clear and decisive fashion. However, deep reversals became present in the market after the U.S. Dollar Index approached highs above 102.90 and its valuation experienced declines of as much as -10.5% in less than four months. Not surprisingly, this quick reversal of fortune has led to a surge in the number of financial pundits in currency markets that are calling for the greenback’s demise and the end of its role as the world’s reserve currency.
Of course, these types of grandiose statements are almost always premature (and probably designed to attract attention to the author’s commentary). But it should also be understood that there are legitimate factors involved here that could lead to further weakness in the market’s valuation of the U.S. currency. Ultimately, I believe that this type of bearish event could turn out to have a positive effect on the market prices of both gold and silver as we head into next year.
As the U.S. Federal Reserve remains committed to holding interest rates near historic lows for an extended period of time, the current market environment looks to be well-suited for additional moves higher in precious metals assets. Gold and silver prices tend to perform best in low-yield interest rate environments, so the economic disruptions created by the COVID-19 pandemic have almost ensured that this risk-off investment context will continue to characterize the financial markets for the next several quarters.
For these reasons, it will be critical for precious metals investors to continue monitoring market trend activity in the U.S. Dollar Index as a way of gauging where gold and silver prices are likely to travel next. From a technical perspective, buying activity in DXY is likely to encounter resistance near the 94.70 region (which is the market low established on March 9th, 2020). In this case, I expect to see “support-turned-resistance” scenarios contain market prices in DXY on the first upward approach of this important price zone.
Of course, this sort of price analysis strategy can also be implemented by those looking to capitalize on recent trends in foreign exchange markets and I would expect these investment influences to be felt primarily by currency pairs like the EUR/USD or USD/JPY. However, these types of active day trading strategies will often lead to increased transactional costs and this is why it is so important to compare broker reviews before establishing active positions in the open market.
If we do see market trends in DXY break above this key resistance level, it would not be surprising to see prior rallies in both gold and silver markets to experience corrective selling pressure. As dollar-denominated assets, gold and silver prices tend to be heavily influenced by the generalized price trajectory that is presented by the U.S. currency. However, I will continue to maintain my bullish view on the precious metals space as long as gold prices manage to hold above critical support levels in the $1,760 region.
In silver markets, the market’s price momentum has been quite strong during the last two months. However, readings in the Relative Strength Index (RSI) are now reaching into overbought territory and pullbacks have occurred near the next critical resistance levels near $26 per ounce. We will need to see a monthly close above this level to maintain a bullish view on the metal near-term.
Finally, platinum prices have maintained a healthy trajectory and the metal appears to have formed a strong base above the $875.30 level. As long as markets are able to maintain support in this area, the outlook remains bullish and we have set the next price target at $1,018.10 (which is the price high that was established on February 19th, 2020).