Nvidia stock (NASDAQ: NVDA)
After the Nvidia announcement of a 4-for-1 stock split, things are about to get interesting.
NVIDIA’s pre-split share price would make it almost impossible for the company to enter the Dow Jones, since it would have a massive influence on the index. But at $150 dollars after the split, the scenario is drastically different. The index weighting places it in the center of the pack.
So, what could it possibly replace? There are options. It would presumably replace another tech stock. The Dow weighting of IBM is roughly the same as that of Nvidia. That could be an ideal candidate, especially given IBM’s plans to spin off its Global Technology Services division at the end of the year.
The S&P Dow Jones index committee could also opt for a chip swap, swapping Nvidia for Intel, which is only $56 per share. The last possible option would be to remove Cisco, the index’s least influential stock, which is currently trading at $52. Removing Intel or Cisco and replacing them with Nvidia would also increase the Dow’s weighting of technology.
We have no idea what those on the committee are thinking. Investors are playing a guessing game. Nvdia, on the other hand, has grown into a technological behemoth. It is a household name in the technology industry and a major player in the chip industry. Furthermore, the stock has grown far larger than the three aforementioned stocks. It also has a much larger market cap than Salesforce, which was included in the index’s most recent change in August 2020.
Nvidia’s market capitalization is $375 billion.
Intel is worth $228 billion.
Cisco is worth $222 billion.
Salesforce is worth $207 billion.
IBM is worth $129 billion.
If Salesforce’s timing is any indication, expect some interesting developments this summer.
Coinbase (NASDAQ: COIN)
Investment company Mizuho has highlighted concerns about a “crypto winter” because of the steep decrease in the values of bitcoin and other cryptocurrencies in recent weeks.
“The harsh winter of 2018 resulted in dwindling volumes, which harmed COIN’s transacting users and retail revenues (80 percent of total). Although all outcomes are still possible in 2021, a crypto winter could mean a 15% to 20% drop in current consensus sales expectations, according to the note.
Mizuho’s warning differs from that of some other Wall Street analysts, who have stated that the drop in cryptocurrency prices is not a big deal or even a positive, given the potential for increased trading activity.
According to Wedbush, prices had a direct impact on only about 2% of the company’s revenue. Goldman Sachs said investors should instead focus on volatility which would be the “bigger driver in the near term.”
In a way, that view makes Coinbase look more like an investment bank, in which increased trading during a downturn can shore up the financial results even if other areas of the business take a short-term hit.
Mizuho’s note, on the other hand, argued that the price drop risks driving users and interest away from Coinbase and depressing the overall business for the foreseeable future.
The company conducted a regression analysis and discovered that the price of bitcoin was the most important factor in projecting Coinbase users and volumes. According to Mizuho, the exchange platform’s activity has been reduced as a result of the dramatic drop in the price of bitcoin in late 2017 and early 2018.
“The winter was difficult for COIN. Monthly transacting users fell from 2.7 million in 1Q18 to 0.8 million in 1Q19, weighing on retail transaction revenue, according to the note.
To be sure, the crypto market has grown significantly in the last year, attracting more institutional users, which may make prior trading data less reliable for future projection.
Coinbase went public in April through a direct listing, with shares trading at $381 per share at the start. After briefly exceeding $400, the stock has steadily declined, closing just above $225 on Monday.
Facebook (NASDAQ: FB)
Here’s why hedge fund manager Dan Niles likes Facebook as a reopening play
After Facebook’s second-quarter earnings were released, hedge fund manager Dan Niles noted that he saw Facebook shares as a reopening play, and he also added a streaming service like Netflix to his portfolio.
Niles also told to press that he has added ViacomCBS to his portfolio as a competitor to Netflix.
“People enjoy streaming. “If you look at Viacom, that’s an incredibly cheap way to participate in streaming,” Niles explained.
Netflix shares have fallen by more than 7% this year, while ViacomCBS shares have risen by about 15%.
Magna International, a manufacturer of mobility technology for automakers, is also in the hedge fund manager’s portfolio as a cheaper alternative to Tesla in the electric vehicle sector.
“Rather than EV with Tesla, we prefer Magna,” Niles explained. “It also helps to protect the portfolio.”
Niles believes Tesla shares, which were trading at $618 on Thursday afternoon, are worth “quite a bit less.” Magna’s stock was trading around $100 on Thursday afternoon.