Stock Market Commentary for 5/24/2021:
|The Big Picture:|
- Stock Talk:
|The Winner of the Day: Upstart Holdings|
|The options market and Vulcan Value Partners both bet big on Upstart Holdings ($UPST) heading into this week. Vulcan said the stock continues to trade below its intrinsic value.|
|What’s Moving Pre-Market: Element Solutions ($ESI) ↑ | Leslie’s ($LESL) ↓|
|The Loser of the Day: V.F. Corp.|
|V.F. Corp. ($VFC) reported murky results in its latest earnings call. While the firm’s performance surpassed interior expectations, analysts expected more despite Covid headwinds.|
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Top Investment Story #1: Bitcoin’s Plunge
What is Happening?:
Bitcoin has fallen to its lowest levels since late January, as the “this is the last time BTC will ever cross 30K” crowd becomes silent.
Why Does This Matter:
By midday Sunday, Bitcoin’s price hovered just above $31,000, far below its high of nearly $65,000 in mid-April. The news impacts more than just crypto investors, as many financial firms and publicly traded companies have recently joined the cryptocurrency movement.
The most glaring, of course, is Coinbase. The recently debuted firm fell 3.88% on Friday, as Bitcoin and secondary cryptocurrencies continued a week-long downtrend. Over the weekend prices worsened, signaling a poor start to the week for $COIN. Square ($SQ), Tesla ($TSLA), PayPal ($PYPL), and others have also taken large Bitcoin positions in recent months. While some firms have enjoyed the artificial boost to earnings the stake has given them last quarter, Bitcoin’s volatility could crater future results.
JPMorgan released an interesting report, stating that some investors were dumping Bitcoin and other crypto exposure for gold. This demonstrated that many investors aren’t sold on cryptocurrencies being able to effectively hedge against inflation. Adding that news to recent reports, the U.S. Treasury is looking to reign in crypto-traders and tax their gains; the alternative payments market suddenly has multiple threatening headwinds.
Public awareness surrounding the environmental toll taken in order to produce cryptocurrencies, has also contributed to the selloff. Elon Musk, considered to be one of Bitcoin’s greatest influencers, highlighted this concern in recent tweets. He stated that Tesla would no longer be buying cryptocurrencies due to the increasing amount of fossil fuels being used to generate them.
While Bitcoin is still up 286% since this time last year, and Ethereum has posted an impressive 840% gain in the same time frame, recent volatility is a concern for various firms. Specifically for Coinbase, Square, PayPal, and others who have taken larger positions, the catalysts of this selloff carries serious weight in the long run.
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Top Investment Story #2: Travel Fares On The Rise
What is Happening?
The number of people beginning to travel again is rising, but so are the prices.
Why Does This Matter?
It seems as if every aspect of travel is approaching pre-pandemic prices.
Airfares and hotel rates are climbing, as travelers return in the highest numbers since the pandemic began. Beach trips, mountain vacations, and visiting friends and family after a year of being cooped up, has more people on the road or in the air once again.
Domestic U.S. airfares are up 9% since April 1st, while international fares are up 17%, according to last week’s research from Bernstein.
The price of a hotels in some popular destinations are even higher than before Covid hit. Room rates in Cancun, Mexico were about $205 per night in early May, according to hotel data from STR. That’s up from just $45 per night one year ago, and $160 per night in 2019. In Hawaii, the average was about $269 per night, up from $122 last year and $263 the year before.
If the expectation that prices will continue to rise doesn’t discourage you from travel, the crowds just might. Most airports plan to hire a significant number of TSA agents in anticipation for a busy summer, and a massive increase foot traffic. Not into flying? Gas prices for travel have been steadily increasing as well.
It may be frustrating to see fares so high, but the light at the end of the tunnel could mean COVID-19 is nearly behind us. If the emerging crowds are what is your deterrent, you still might be able to find off-the-grid spots for booking, but expect your cost to still be higher as you factor in gasoline and other expenses.