Tuesday's Headlines: Coinbase Stock Gains on Rising Cryptocurrency Prices

Tuesday's Headlines: Coinbase Stock Gains on Rising Cryptocurrency Prices

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Stitch Fix (SFIX) 5.9%

iRobot (IRBT) 5.8%

Nordstrom (JWN) 5.1%

Cloudflare (NET) 4.8%

Tripadvisor (TRIP) 4.4%

Moving Down ⬇️

BlackLine (BL) -10.4%

Lemonade (LMND) -4.7%

Bumble (BMBL) -4.1%

Duolingo (DUOL) -4.0%

RH (RH) -3.7%

 

Here are the stories that you need to know ahead of market-open today, Tuesday, the 19th of July.

 

Coinbase Stock Gains on Rising Cryptocurrency Prices ⬆️

Shares of crypto-trading platform, Coinbase, rose 9% yesterday to close trading at $58.6, valuing the company at $15.4 billion by market cap. The key catalyst was an uptick in cryptocurrency prices such as Bitcoin and Ethereum. In the last seven trading sessions, the price of Bitcoin surged by 10%, while Ethereum is up 41%.

Data from CoinMarketCap suggests the two largest cryptocurrencies account for over 50% of total trading volume on Coinbase. Therefore, the stock price of Coinbase is closely linked to the price movements of the digital assets available to trade on its platform.

Despite the recent surge, Coinbase stock is trading 83% below all-time highs due to bearish market sentiment and falling crypto prices.

Coinbase reduced its workforce by 18% in June due to challenging macroeconomic conditions. Generally, trading volumes of exchanges plummet in a bear market resulting in lower revenue and profit margins. However, when crypto prices rose between March 2020 and November 2021, Coinbase increased sales from $533.7 million in 2019 to $ 47.83 billion in 2021.

Comparatively, the company ended 2021 with an operating profit of $3.07 billion, compared to an operating loss of $35.64 million in 2019.

 

Starbucks Considers Its Own Brexit ☕️

In the face of increasing competition, Starbucks (SBUX) is apparently considering the sale of its operations in the UK.

According to a report from The Times newspaper over the weekend, the international coffee chain has started the process of canvassing for interested parties to buy-out its operations in the region. The company has roughly 1,000 stores in the UK and employs about 4,000 people — its largest market in the EMEA region.

The company has since denied that it has entered into a “formal sale process” for its UK operations, but that it continues to “evaluate strategic options” for its international businesses.

Like many other retailers, Starbucks was hit hard during the pandemic — perhaps even more so considering the restricted e-commerce offering that it could provide. Now, as the world reopens into a hybrid-working environment, foot traffic at key locations in town and city centers has not returned to the same volume, according to the company.

Add to this the pressure of rising food and labor costs, not to mention increasing competition from “takeaway food chains and restaurants focusing on coffee as a secondary discounted offer”, and we see the pressure that Starbucks faces.

If a sale of operations were to transpire, it wouldn’t be the first time Starbucks has left a major market. Last year, the company exited a joint venture worth $2bn in South Korea, its fifth-largest market, selling its stake to its local partner.

 

IBM Sounds the Currency Alarm 💸

IT hardware and services company IBM beat earnings expectations Monday evening but warned of gathering storm clouds due to the strengthening dollar. This sank the stock more than 5% in pre-market trading, despite revenue exceeding expectations by more than 2%.

While this is a once-in-generation opportunity for American tourists to get more bang for their buck abroad, the rising dollar will also weigh on businesses with significant international operations — think of all the biggest names: Microsoft, Apple, and Meta.

The dollar has been steadily increasing in value since last summer due to a hawkish Federal Reserve and mounting geopolitical tensions. This week the dollar-euro exchange rate reached parity, a phenomenon that hasn’t happened since 2002. For IBM, this took a nice bite out of revenue. The quarter saw a 6% foreign exchange hit, while management had previously forecast a 3% - 4% hit.

However, this doom and gloom won’t last forever. While IBM seems wary of short-term headwinds, its long-term outlook remains positive. The company reiterated its full-year forecast, expecting revenue growth to hit mid-single-digit growth.

IBM is no stranger to long-term success. The 110-year-old business has constantly evolved to stay on the cutting edge of tech. Moving forward, it remains focused on its software and consulting business, with a particular interest in the so-called “hybrid cloud”. Cloud revenue rose 18% in the most recent quarter, reaching $5.9 million.

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