🗞️The Wrap: On The Books
Bitcoin on the books, splitting up the monopolies and own a piece of Nintendo.
On The Books
MicroStrategy (MSTR) has recently completed what could be the most revolutionary corporate action of the century. The US$1.5b company has added US$250m of bitcoin to its balance sheet. That’s 21,454 bitcoin to be exact (or 0.1% of the world’s bitcoin supply).
The move announced alongside share buyback has been called an inflation hedge by management. With a heap of cash on the books, a weakening dollar and the omnipresent threat of inflation could massively devalue the company’s balance sheet.
The stock has risen 21% since the move was announced 3 weeks ago and provides one of few ways to access crypto through equities.
We often joke about there being an ETF for everything. The finance version of “there’s an app for that”. But we keep waiting for a crypto ETF.
Remember the Harvard graduate, Olympic athlete Winklevoss twins from The Social Network? The twins own over 1% of the world’s bitcoin supply and have pushed for a bitcoin ETF for some time.
The SEC has rejected their proposal on numerous occasions. Their main concern revolves around crypto’s openness to manipulation. Interestingly one line in their rejection letter noted that “more institutional participation would ameliorate many of the Commission’s concerns”. $MSTR is a small step towards seeing more institutions have crypto on their books. One day Apple or Goldman Sachs could hold various coins.
Would it be surprising if the banks already do? JP Morgan has already created their own coin as a means of exchange.
And for the bitcoin homers, I apologise in advance for butchering any of the facts above.
On the topic of ETFs, here’s further proof that there really is a fund for everything. Joining $GAMR, $HERO is another gaming ETF made available on Stake.
While the biggest US names like Activision and EA are included, the beauty of such a product is in the access it grants investors to foreign markets. 6.3% of assets lie in Nintendo, one of the few ways western investors can get access to the Japanese giant.
On top of a number of other Japanese gaming companies, $HERO offers exposure to Chinese, Korean and even Swedish gaming companies.
This little piece of analysis has been floating around the internet for a couple of weeks now. If Airpods were a standalone company, they would be the 32nd biggest in the US.
In a now-deleted tweet, the analyst projected that 100million units sold in 2021 would lead to US$20billion in revenues. With a 35% profit margin (probably lower) and at a 25x P/E ratio, it would be a $175b company.
Of course, this is a simple analysis and most of AirPods value comes from the Apple brand but it’s amazing to consider the size of a monopoly’s components.
It raises the question, how much would Amazon Web Services be worth alone? We’ve spoken in the past about the Amazon Tax, how Amazon essentially takes a % of almost all online transactions given the internet’s reliance on AWS for storage and services.
While AWS only accounted for 13% of Amazon’s revenue in 2019, it was responsible for 71% of operating profits. At today’s valuations, I wouldn’t be surprised to see it well past $500b, as an analyst in 2018 valued AWS worth half a trillion (before the continued exponential rise of $AMZN).
A hypothetical dictator declares that there are too few females in the population. A law is passed that every couple has children until they have a girl and then they stop. What’s the expected ratio of boys to girls after 30 years?
Best Buy | ZM
The buy and hold working wonders here as Zoom gained 40% in a session after raising their guidance. What a move.
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