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Morning Coffee: Banks pass stress test, BTC sluggish

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Stocks on the radar overview

The market took a significant dive yesterday and we saw a sell off of most stocks. VKTX [stock_quote symbol=”VKTX”] took the biggest hit on our watchlist. VKTX dropped 13.5{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} closing at $10.64. Readers should note that our thesis has not changed regarding VKTX. The stock is due for a pull-back, having had risen in 6 of the last 10 days. VKTX will remain a buyout target at some point in the future. It is imperative to keep the long-term goal in mind.

Subscribe to our research to get access to our outstanding research reports that cover stocks and securities which have resulted in returns of over 100{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} (Sientra Inc.) and blockchain and cryptocurrencies which have resulted in returns over 1200{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} (Ripple).


Stocks and Securities

U.S. stock futures rose early Friday, suggesting the Dow could put an end to its eight-session losing streak. For the week, the Dow is down 2.5{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} as of Thursday’s close, while the S&P and Nasdaq have lost 1.1{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} and 0.4{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15}, respectively. The blue-chip gauge is 1{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} lower for the year, but the S&P and Nasdaq have gained 2.9{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} and 12{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15}.

Oil prices will be in focus as Organization of the Petroleum Exporting Countries members and other key crude producers gather in Austria to discuss the future of an output-cut pact that has been in place since January 2017. Crude futures are trading higher Friday as Iran appears to oppose a deal to increase crude production. Oil prices have spiked by as much as 20{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} this year, in part because OPEC has produced even less than was foreseen under a 2016 agreement that was supposed to reduce supply by 1.8 million barrels per day.

Bank stocks should see some action as The US Federal Reserve said Thursday that 35 major financial institutions, including Bank of America [stock_quote symbol=”BAC”], JPMorgan Chase [stock_quote symbol=”JPM”]  and Citigroup [stock_quote symbol=”C”], would be able to lend under even the grimmest of economic conditions.

In Europe, the end of the Greek debt crisis is around the corner. Eurozone finance ministers have agreed to extend the maturities and defer interest on some loans provided to Greece, paving the way for the country to exit its third bailout program in August.


Blockchain and cryptocurrency

Yesterday we mentioned that Bitcoin may be showing some signs of life, however, the market still looks sluggish. The Bithump hack may be part to blame. While Goldman Sacks CEO Lloyd Blankfein still holds reservations regarding the value of bitcoin and cryptocurrencies, record bitcoin buying continues in Venezuela admits economic turmoil and hyperinflation.

The San Francisco Blockchain Economic Forum was held this week, featuring investors with billion dollar portfolios, top-level politicians, scientists, media influencers & leaders in technology from around the world. The PlayChip ICO was awarded the Draper Hero’s Choice Award. We are very bullish on this project as we had the opportunity to see them during the World Blockchain Forum. This is certainly a project for crypto-investors to keep an eye on.With the recent legalization of sports betting, the market is ripe for sport betting applications and PlayChip seems to have it figure out. 


Stocks on the Radar

Spotify Technology SA

Spotify (SPOT) [stock_quote symbol=”SPOT”] – Our speculative stock on the Radar today is SPOT. Spotify is a pioneer of the premium streaming music industry that has breathed new life into the music business. Today, Spotify is the industry leader that currently boasts 170 million monthly active users, which are broken down into two categories: premium and ad-supported.

Spotify has 99 million ad-supported users along with 75 million paying customers, with premium customers making up over 90{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} of its $1.37 billion Q1 revenues. The company’s premium users climbed 45{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} from the year-ago period, outpacing the free version’s growth of 21{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15}. Expected 2018 revenues of $5.2 billion are expected to turn into 2019 revenue of more than $6.6B billion. Expected 2018 loss of $-2.21 a share is expected to turn into a 2019 loss of $0.08. We believe in a decent equity market the shares can move towards the $220 mark.

Shares rose 1.8{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} during yesterday’s trading session closing at $179.53, a new record high for the music-streaming company. This has occurred in light of Macquarie analyst Amy Yong initiating an outperform rating and a $225 price target. Amy Yong stated that, “We believe Spotify can hit its 30-35{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} long-term gross margin goal by ’22 as a result of its content relationships and as operating leverage kicks in…We estimate MAUs will grow at a 23{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} 3-year CAGR through ’20, hitting 200 million by year-end from 170 million currently.” She believes the company will be able to achieve this by picking up shares in the U.S., U.K., and Brazil. This indicates a 25{d745bfe1f0a8cfaf7934723e820c1a1fdf298af2e9634a8abb073c3029806a15} price increase from the current trading price.

[finviz ticker=SPOT]


Disclaimer: The above references an opinion and is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice. The Author does not hold any of the securities discussed above.
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Dr. Tiam Feridooni

Written by: Dr. Tiam Feridooni MD, PhD, BSc Dr. Feridooni, graduated from Dalhousie Medical School in May, 2018. Prior to enrolling in medical school, he completed his Bachelor of Science with Honours in 2010 in Biochemistry. He then obtained his PhD at Dalhousie University in Pharmacology in 2014, with a focus around regenerative medicine and stem cell transplantation. Dr. Feridooni has been published numerous high impact journals and has also co-authored a few books.

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