| From: Julius Wong | 3/31/2021 7:49:53 AM | | | | | | Rising Popularity Makes Bitcoin An Interesting Marketing Tool
Mar. 31, 2021 12:33 AM ET Bitcoin USD (BTC-USD)AMC, AMZN, BCA-USD... 3 Comments10 Likes
Summary
Bitcoin has seen a surge in popularity, in part due to the crypto being seen as having potential 'mainstream' use in the corporate world.
While TSLA made headlines with its Bitcoin purchase and acceptance of it as a direct payment, many retailers have been indirectly accepting crypto for years.
Following CMG, more companies could hop on the bandwagon and use crypto as a promotional and marketing vessel to drive engagement higher.
Bitcoin-led promotions could provide high levels of engagement in short periods of time at a low cost.
 Photo by AlexSava/iStock via Getty ImagesBitcoin ( BTC-USD) has been finding more mainstream uses during the year so far, with more companies aside from traditional payment processors and facilitators starting to 'accept' Bitcoin. Elon Musk and Tesla ( TSLA) have been the headliner for corporate acceptance and usage of bitcoin, with the electric car maker buying $1.5 billion of the volatile crypto asset. However, more companies do indeed offer the ability to pay with Bitcoin and other cryptocurrencies, typically through crypto wallets. With the recent surge in popularity with Bitcoin and other cryptos like Ethereum and NFTs, more companies could hop on the bandwagon and use crypto as a promotional and marketing vessel to drive engagement higher.
Tesla's Love for the Digital GoldTesla revealed that it had bought ~$1.5 billion of Bitcoin in early February in a filing with the SEC, following in the footsteps of MicroStrategy ( MSTR) in a huge purchase of the crypto asset. Tesla noted that the reason behind the purchase was "more flexibility to further diversify and maximize returns on our cash," as rising inflation fears have been a large factor in the market this quarter. Tesla used about 8% of its $19 billion cash and equivalents balance.
Tweets from Musk's Twitter
In addition, Tesla has decided to allow Bitcoin as a payment for vehicles, which is a questionable practice to say the least. While the company certainly has the liquidity to do so after the purchase (aside from potential future purchases to switch from cash to crypto), the extreme volatility around the price of Bitcoin makes it less suitable for such a transaction. Bitcoin's price surged with the announcement of Tesla's purchase, now sitting just below $60k per BTC.
From a prospective customer standpoint, buying a long-range Model 3 on March 1 would cost ~1.03 BTC, while the current price on March 30 would be just ~0.78 BTC; due to the extreme volatility, the value in BTC of the car could vary dramatically based on the purchase date. The same stands for refunds - Tesla noted that it "can choose to pay them back in U.S. dollars or bitcoin [and] reserves the right to refund the customer in U.S. dollars at the exact price bitcoin was worth at the time of purchase," therefore a customer could receive less while Tesla can benefit. Take the above as an example: the customer pays 1.03 BTC but wants a refund at the end of the month, receiving 0.78 BTC while Tesla can keep the remaining 0.25 BTC.
Adding Bitcoin to the balance sheet to replace cash in an inflationary environment, for liquidity for purchases and refunds, and to drive higher adoption across the corporate world are some of the reasons behind Tesla's jump into the billion-dollar BTC buy. For other companies, such a large purchase of Bitcoin might not be necessary, but using the crypto to enhance engagement could be a smart move.
Crypto Payments Are Already Quite MainstreamAside from Tesla's jolting announcement, C2B cryptocurrency payments are already possible among many prominent retailers and platforms, made possible through crypto wallets/networks like Flexa, Bakkt, and BitPay.
E-commerce platforms like Overstock ( OSTK), which has its own crypto, and Shopify ( SHOP) allow customers to pay with cryptocurrencies (and merchants to accept them). Stores/merchants including Whole Foods ( AMZN), Home Depot ( HD), GameStop ( GME), Starbucks ( SBUX), Microsoft's ( MSFT) Xbox Store, AMC ( AMC), Nordstrom ( JWN), and Expedia ( EXPE) also accept crypto through apps like Flexa, Bakkt and Coinbase ( COIN). Companies like Uber ( UBER) and Spotify ( SPOT) are exploring methods of accepting crypto payments, while BitPay's Bitcoin-prepaid Mastercard ( MA) is accepted at any retail location that accepts [prepaid] Mastercard, or for online bill paying such as with AT&T ( T).
Crypto payments have been in mainstream business for much longer than most know, but the main difference between these merchants accepting crypto and Tesla is the nature of the payment. These merchants have utilized third party wallets and processors to provide payment solutions (indirect), while Tesla will be handling payments itself (direct). This is where Tesla could start to usher in a 'new age' for crypto payments, and while wallets and processors will still carry a bulk of payments to brick-and-mortar and other merchants, larger merchants like Amazon ( AMZN) and Walmart ( WMT), among others, could easily float handling direct payments of crypto/Bitcoin in the future.
Rising Popularity Makes BTC An Interesting Marketing ToolSince accepting crypto directly could require a large outlay to secure sufficient liquidity, other merchants wishing to hop on the crypto train and benefit from the rise in popularity of the asset class could follow in the footsteps of Chipotle Mexican Grill ( CMG) and use Bitcoin for promotions.
Burritos or Bitcoin?For National Burrito Day, which happens to coincide with April Fool's Day on the first of the month, Chipotle is launching its ' Burritos or Bitcoin' game promotion from 9am to 6pm PST. Teaming up with Stefan Thomas, who notably lost ~7,000 BTC by forgetting his passkey, the game gives users 10 attempts to guess a six-number sequence. The odds of winning are shown below.
 Graphic from Chipotle's Burritos or Bitcoin
Given Chipotle's expected odds of winning, the projected traffic over the 9-hour window is approximately 175 million people; the prizes are simply $100,000 in Bitcoin to 53 winners, and $100,000 ($10.00 coupon code) to 10,000 for a free burrito. Chipotle already offers deals and freebies for the day, but this promotion has a total giveaway of $200,000 and a projected immense amount of traffic to the site to play, with 10,000 coupon redemptions afterwards driving traffic to stores for pickup/delivery.
BTC in Promotions and MarketingBitcoin could find itself in a much more mainstream role within the corporate world as a marketing tool, able to drive millions of people to a site of promotion in a short span of time. For Chipotle, the $200,000 total giveaway amount is practically invisible, as the company has nearly $1 billion in other operating expenses, which includes marketing and promotion expenses.
For retailers like Nike ( NKE), which spent over $3 billion in ' demand creation' expenses, paired Bitcoin and product promotions to the tune of $100,000 to $500,000 (maybe even up to $1 million to $2.5 million for the holiday season) could drive tens to hundreds of millions of people to the site, and likely spur some spillover of engagement after the promotion and boost customer spend. The overall giveaway amount/cost to drive such engagement is very minimal in proportion to the overall annual marketing spend: assuming 100 million people for a $1 million total giveaway, it's just $100 per person engaged.
With brick-and-mortar retailers, namely in apparel and accessories, the pandemic-induced shuttering of malls significantly impacted revenue streams, and forced many companies into cost-saving initiatives, of which, in most cases, impacted marketing and advertising spends to aid the bottom line. Canada Goose ( GOOS) reduced marketing spend as part of its cost-saving plan, although marketing spend has increased in FQ3. With a budget much smaller (total SG&A for FY20 was just $350 million, of which marketing is a proportion), a promotion similar in size to Chipotle's could drive much more traffic to the site while still having a relative small capital outlay.
Other restaurants like McDonald's ( MCD), known for extensive promotions and games like Monopoly, could see a large boost in sales and traffic for a game of a similar style with Bitcoin prizes. While the game-play of the Monopoly game incentives purchases of different menu items to collect pieces, Bitcoin could serve as an alternative prize or a replacement prize for the traditional cash prizes. With more popularity in Bitcoin, a game/promotion of this style could generate a significant amount of sales and engagement.
While it definitely could be an interesting synergy, and one that could get old quick - the odds of winning are extremely small, relative to a large lottery jackpot, which could dissuade people from attempting to win - it could be a viable strategy for companies reliant on traffic and customer engagement (retail/apparel/restaurants). Bitcoin awareness would also likely have to be a key feature of the target market or majority customer base of the brand (a company like Chico's ( CHS) might not fare as well as Lululemon ( LULU) in a promotion or giveaway of this sort).
OverallBitcoin is steadily finding more acceptance in the mainstream world, although the cryptocurrency is far from replacing fiat money. While there have been many instances of retailers accepting indirect payments of the coin, Tesla is pioneering direct payments of Bitcoin for its product. Although direct payments may not be feasible for most companies due to volatility/risks and capital outlay to acquire enough for liquidity reasons, Bitcoin could still find a way into corporate transactions from a marketing standpoint.
With a surge in popularity over the past six months to a year, and a very high likelihood of continued popularity, turning to Bitcoin-led promotions, like Chipotle Mexican Grill has done, could provide extremely high levels of engagement and traffic per total cost of the promotion. From small to large companies alike, Bitcoin could find significant potential as a tool in marketing. |
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| From: Julius Wong | 3/31/2021 10:29:29 AM | | | | | | Electric vehicle stocks rally after Biden proposes massive investment in EV market
Mar. 31, 2021 10:10 AM ET Tesla, Inc. (TSLA) By: Clark Schultz, SA News Editor 15 Comments
The electric vehicle sector is rallying ahead of a speech today by President Biden.
Biden's American Jobs Plan covers electric vehicles in detail.
White House Fact Sheet on Biden-EVs: "U.S. market share of plug-in electric vehicle sales is only one-third the size of the Chinese EV market. The President believes that must change. He is proposing a $174 billion investment to win the EV market. His plan will enable automakers to spur domestic supply chains from raw materials to parts, retool factories to compete globally, and support American workers to make batteries and EVs. It will give consumers point of sale rebates and tax incentives to buy American-made EVs, while ensuring that these vehicles are affordable for all families and manufactured by workers with good jobs. It will establish grant and incentive programs for state and local governments and the private sector to build a national network of 500,000 EV chargers by 2030, while promoting strong labor, training, and installation standards."
"His plan also will replace 50,000 diesel transit vehicles and electrify at least 20 percent of our yellow school bus fleet through a new Clean Buses for Kids Program at the Environmental Protection Agency, with support from the Department of Energy. These investments will set us on a path to 100 percent clean buses, while ensuring that the American workforce is trained to operate and maintain this 21st century infrastructure. Finally, it will utilize the vast tools of federal procurement to electrify the federal fleet, including the United States Postal Service."
Select EV stocks of interest: Fisker ( FSR +3.3%), Hyliion Holdings ( HYLN +3.4%), Li Auto ( LI +4.5%), GreenPower Motor ( GP +6.8%), Workhorse Group ( WKHS +3.3%), XPeng ( XPEV +4.0%), Canoo ( GOEV +2.2%), Lordstown Motors ( RIDE +3.5%), XPEL ( XPEL +3.1%), Westport Fuel Systems ( WPRT +5.5%), Niu Technologies ( NIU +3.3%), Nio ( NIO +0.9%), Blink Charging ( BLNK +4.7%), Electrameccanica Vehicles ( SOLO +0.3%), Churchill Capital Corp IV ( CCIV +2.0%) and Ayro ( AYRO +2.8%).
Tesla ( TSLA +3.1%) is also higher off the EV buzz and with the company's Q1 deliveries report due out in the next few days. |
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| From: Julius Wong | 4/1/2021 9:11:36 AM | | | | | | Can the stock market crash during an economic boom?
It's hard to believe it was only a year ago that the economy was essentially put on ice. There were quarantines. Shutdowns. Closures of businesses, schools, supply chains, and our everyday way of life. This led to the worst quarterly economic contraction on record in the second quarter of 2020, clocking in at an annualized –34%.
Yet somehow we are now on track for an economic boom.
Goldman Sachs analysts said in a recent outlook piece they now expect 8% economic growth in 2021 and an unemployment rate of 4% by year-end. They think the unemployment rate could reach as low as 3.2% by 2023. Treasury Secretary Janet Yellen thinks we could be back at full employment as early as next year.
Of course, there is a reason for this lightning-quick turnaround. The government has helped keep things afloat by spending and sending out gobs of money. Trillions of dollars have been sent to businesses, municipalities, and individuals, including the most recent $1.9 trillion stimulus bill.
So that enormous contraction was likely the fastest recession in U.S. history as well. And the sheer amount of government spending means we could see one of the biggest economic booms ever coming out of a downturn.
Investors have now gone from worrying about the potential for another Great Depression last March to the biggest risk being an inflationary spike from a combination of government spending, supply constraints, and pent-up demand as people get vaccinated.
Inflation can be harmful to the stock market, but it's hard to imagine investors selling their stocks in the midst of an economic boom.
Has the stock market ever crashed as the economy soared?
It's rare, but it has happened before.
Going back to the 1930s, which is essentially when GDP as a metric was invented, real economic growth in the United States has averaged roughly 3% per year. The stock market is not the economy, but there is a relationship between GDP growth and the market over time, especially when growth is high.
This is not a perfect relationship, but you can see the higher real GDP growth goes, the higher average annual stock market returns tend to go.
Averages can often hide outliers, and the one outlier here was 1937. Real GDP growth came in at over 5%, but the S&P 500 finished the year down 35%. However, one of the reasons stocks fell so hard that year is the economy began to slow by the end of the year, which led to a recession that lasted until 1938.
The highest growth with a down stock market came in 1941 when GDP was up double digits year over year while the S&P 500 finished the year down almost 11%. This was an instance in which investors were spooked from World War II.
Otherwise, stocks have generally seen strong returns when economic growth is so high. In seven out of the 11 years when real GDP growth was 8% or higher, the stock market was up double digits.
So it's relatively rare for the stock market to fall concurrently with a booming economy.
There is one caveat that may apply with today's environment though. While it's rare for the stock market to fall during a booming economy, it's also rare for the stock market to boom in the midst of a nasty recession like it did in 2020.
There is the possibility of a “sell the news” reaction by investors now that the market is already up around 80% from the bottom in late March 2020. That is a risk worth considering.
However, betting against the stock market against the backdrop of what could be the strongest economic environment since the 1990s seems like an even riskier proposition.
fortune.com |
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| To: Julius Wong who wrote (6249) | 4/1/2021 10:03:32 AM | | From: The Ox | | | | | The key will be the Fed punch bowl. If they take it away, then yes, the markets can go down during an economic boom/expansion. It doesn't look like that will be the case for several quarters but it's certainly something to keep an eye on. More likely, the markets will temper their angle of ascent and grow but more slowly than the past 11 months. |
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| From: Cogito Ergo Sum | 4/2/2021 11:32:53 AM | | | | | | From Message 33265687
As an aside but related.. bought CP Rail last week..
Message 33260423
And excerpt from a PM to SI buddy
Snip
So I looked at the network map for KC southern that CP is taking (hopefully).. Mexico is nice I guess.. but they run right along the Gulf coast through Houston .. So thinking that Keystone XL is dead.. long enough to be of value.. rail might work..
Creel the current guy liked this when still Hunter's protégé.. but Hunter was adverse because of course the tank car investment is poof if a pipe goes through .. Now I see no pipe... and I see the the oil companies will need to go longer term commitment so CP order book will be stable.. (Hunter's fear of pipe going in gone.)
thoughts
Snip
Looking ok so far |
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| From: Julius Wong | 4/3/2021 7:29:38 AM | | | | | | Uranium, lithium names rally on clean energy optimism
Apr. 01, 2021 2:44 PM ET Uranium Energy Corp. (UEC) By: Carl Surran, SA News Editor 63 Comments
Investors hunting for a way to capitalize on President Biden's big plans for clean energy infrastructure are latching on to uranium names, which are moving broadly higher in today's trading.
While nuclear energy is not specifically mentioned in the $2T infrastructure proposal, its federally mandated "energy efficiency and clean electricity standard" would seem difficult to achieve without it.
Presidential climate advisor Gina McCarthy says nuclear energy should be one of the power sources eligible for a national Clean Energy Standard mentioned in the Biden plan.
After posting gains yesterday, shares are accelerating higher: UEC +9.9%, DNN +7.3%, URG +7.3%, UUUU +5.1%, OTCQX:FCUUF +5%, NXE +4.7%, CCJ +3.9%, OTCQX:WSTRF +3.8%.
Two new research reports from BMO Capital and Morgan Stanley say today's uranium prices mark a floor and predict a rally in prices over the next few years to ~$50/lb. by 2024.
Most lithium names are stronger too: LTHM +8.9%, ALB +3.6%, SQM +2.5%.
ETFs: URA, URNM, LIT |
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| From: Julius Wong | 4/3/2021 7:35:15 AM | | | | | | Semiconductor stocks gain after Micron earnings beat, TSMC's $100B capacity plan
Apr. 01, 2021 12:05 PM ET Brooks Automation, Inc. (BRKS) By: Brandy Betz, SA News Editor 9 Comments
The Philadelphia Semiconductor Index is up 2.3% compared to the 1.5% gain for the broader tech sector (NYSEARCA: XLK) after a positive earnings report from Micron, rumors of a Kioxia deal, and TSMC's $100B capacity expansion investment.
Micron reported upside fiscal Q2 results driven by particularly strong demand in mobile, industrials, and automotive. The company forecast a strong FQ3 as DRAM demand continues to outpace supply and NAND stabilizes.
Despite the current "severe" DRAM shortage, Micron plans to stick with its "conservative" capex strategy for the year.
Micron and memory peer Western Digital were at the center of one support saying the companies were considering separate bids for NAND giant Kioxia. But another report said Kioxia would prefer to pursue an IPO.
Foundry giant TSMC plans to spend $100B over the next three years to expand its fab capacity. TSMC had already forecast 2021 capex of $25-28B.
Top semiconductor movers today include semi equipment and adjacent names Brooks Automation ( BRKS +6.9%), Entegris ( ENTG +5.6%), Teradyne ( TER +3.6%), Lam Research ( LRCX +5.2%), Applied Materials ( AMAT +4.7%), KLA ( KLAC +3.4%), and ASML ( ASML +1.4%).
Related: Yesterday, semi stocks got a boost after President Biden unveiled a $2T infrastructure plan that requested a $50B investment in domestic semiconductor manufacturing. |
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