Tuesday's Headlines: Coinbase Keeps Sliding as Bitcoin Continues to Slump

Tuesday's Headlines: Coinbase Keeps Sliding as Bitcoin Continues to Slump

Here were the biggest movers in the MyWallSt shortlist on Friday:

Moving Up ⬆️

StoneCo (STNE) +16.8%

Evolent Health (EVH) +14.7%

Palo Alto Networks (PANW) +7.0%

MercadoLibre (MELI) +3.8%

Core & Main (CNM) +3.7%

Moving Down ⬇️

Farfetch (FTCH) -11.3%

Trupanion (TRUP) -8.4%

Baozun (BZUN) -8.3%

Zillow (Z) -5.5%

Peloton Interactive (PTON) -5.3%

 

Coinbase Keeps Sliding as Bitcoin Continues to Slump 🪙

Shares in American cryptocurrency exchange Coinbase slumped by almost 9% yesterday as investors continue to be fearful of investing in any crypto-adjacent companies. The recent fallout from the collapse of FTX combined with Bitcoin’s ongoing slide has left Coinbase licking its wounds as it now sits at its lowest valuation since its public debut in April 2021.

Coinbase has been the subject of a worrying dip where it has lost over 25% of its value since market close last Tuesday. The controversy surrounding FTX’s collapse and subsequent filing for Chapter 11 bankruptcy has made crypto an even more difficult proposition for potential investors, with the beleaguered firm reportedly owing its 50 largest creditors close to $3.1 billion.

New FTX CEO, John J. Ray III of Enron restructuring fame, stated that he’d never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” In a veritable domino effect, the price of Bitcoin has dropped by over 25% since the FTX scandal came to light, further adding to Coinbase and other crypto-exposed firms’ respective falloffs.

Coinbase CEO Brian Armstrong has reiterated that his firm doesn’t have “any material exposure to FTX” in an attempt to distance itself from the issue, but realistically any issue rocking the crypto world that hard will undoubtedly have negative consequences. Coinbase is currently down over 83% year-to-date.

 

Zoom Slides on Weak Guidance 🖥️

Shares of Zoom (ZM) fell as much as 9% in pre-market trading this morning after last night’s earnings call. The video conferencing specialist’s weak guidance for the upcoming quarter was enough to send investors running.

For the third quarter of its fiscal year, Zoom delivered revenue of $1.1 billion, matching analysts’ expectations, and earnings per share of $1.07 which exceeded forecasts of $0.84. However, this wasn’t enough to appease Wall Street, especially when management revised its full-year revenue guidance to $4.37 - $4.38 billion from $4.4 billion.

With concerns around corporate spending rife, as well as a much more competitive environment than it faced in the pandemic, the company is seeing an elongated sales cycle. CEO Eric Yuan said on the call that it is coming to terms with "heightened deal scrutiny for new business". While this doesn’t mean it is losing out to rivals, customers are taking longer to close, perhaps highlighting the imminent economic downturn.

Management did not give guidance for its fiscal 2024, however, it did say it is planning on slowing hiring and “being very, very thoughtful about prioritization of investments." Shares of Zoom are down 56% year-to-date and a whopping 86% from all-time highs seen in late 2020 before today’s drop.

 

Estée Lauder Struggles to Prove Itself 💅🏾

Estée Lauder Companies fell more than 6% on Monday as it deals with continued lockdowns in China.

Last week, the cosmetics company delivered a disappointing quarter that it blamed on COVID-19 restrictions which have taken a toll on its Travel Retail segment and brick-and-mortar stores in China. However, investors received a reprieve a few days later when the Chinese government announced an easing of travel restrictions which sent Estée Lauder’s stock up.

It didn’t take long though for these hopes to be dashed. Yesterday, Beijing announced its first COVID-19 death in 6 months, prompting the city to close parks, museums, and transportation hubs.

In better news, over the weekend, Estée Lauder announced it would be acquiring longtime partner Tom Ford for $2.8 billion. The deal, which is composed of cash, debt, and deferred payments that will be due in 2025, is expected to close in the beginning of the new year.

Bank of America anticipates Tom Ford Beauty alone will generate between $800M and $1B of revenue for EL, with an additional $100M coming from eyewear and apparel. The deal also has the benefit of eliminating Estée’s annual royalty payments to Tom Ford.

The brands have been working together for decades. EL was instrumental in launching Tom Ford’s high-end scents, including Black Orchid and Tuscan Leather, which routinely retail for more than $100 a bottle. According to Fabrizio Freda, the chief executive officer of Estée Lauder, the deal will further the company’s growth in “luxury beauty for the long-term.”

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