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  • Bitcoin’s incredible 300% increase in 2020 may lead to an even stronger showing in 2021, according to Fundstrat’s Tom Lee.

  • In a CNBC interview, Lee claimed bitcoin might quadruple in 2021 as the crypto has a parabolic setup like the one that occurred in 2017.

  • “2021 will be very similar to 2017 which means bitcoin might do even better in 2021, maybe somewhere above 300%,” Lee said to CNBC.

Following a huge 2020 that had bitcoin going to all time highs for an increase of over 300%, 2021 might be even better.

That’s coming from Fundstrat’s Tom Lee, who predicted in a CNBC interview that he sees bitcoin sky-rocketing another 300% in the next 12 months.

With its current value at $29,000, a quadrupling in price would put the asset at $116,000.

Pushing bitcoin higher would be reminiscent of 2017, when a parabolic rally occurred. Lee tweeted that 2020’s halvening makes it similar to 2016, when bitcoin also had a halvening. A halvening is when the reward for miners finishing problems on the blockchain is cut by 50%.

2021 will be like 2017 in that bitcoin will have a “parabolic rise,” Lee tweeted.

David Grider, the digital asset strategist from Fundstrat’s also increased his prediction for bitcoin, expecting the asset to reach at least $40,000 in 2021.

“We believe conditions are creating a continued rally in bitcoin over the next 1 year. Institutional and larger investors buying in, regulatory de-risking and stimulus demand are leading to a surge in momentum, which we think can continue,” Grider stated. 

But if the market corrects in 2021, the positive future for bitcoin may evaporate, according to Lee.

“Bitcoin behaves like a risk on asset, so in the years where the S&P performs well, bitcoin also performs well. So I believe if stocks see a correction, then bitcoin will also fall,” Lee said. 

Even better, AMD has a super-competitive product line-up that could command a larger market share. Advanced Micro Devices has turned into a big winner, even during COVID. That’s a commendable accomplishment.

Should you be interested in this stock? Well, the sales and revenue data says it could be a miracle 2021 for the company. 

AMD Stock and Ground-breaking Products

The first thing to know about AMD is the company has a good line of performance-enhanced products. Let’s take a look at their 2021 and 2022 product range.

First, their Ryzen CPU is wildly popular and continues to drive revenue. It’s even been called the “fastest mainstream-platform gaming CPU” ever. AMD reported high Q3 revenue in part because of Ryzen’s increase in sales. The product has made AMD a leader in desktop CPUs and gives it a significant advantage in the market. 

Even better, the Ryzen 5000 line has hit huge performance gains, with a 19% increase in instructions per cycle. This has led AMD to show big performance improvements in video editing, gaming and computer-aided design with these new CPUs. And what’s more, they have made significant achievement with their “ultrathin” 4000 series and their Radeon RX 6000 series GPUs.

As AMD leads, Intel (NASDAQ:INTC) is losing its grasp on the market thanks to being out-performed and its inability to meet consumer demand. Even Apple (NASDAQ:AAPL) is abandoning Intel. All the while, in the PC market, AMD has a healthy share of around 20% and that share is increasing. Plus, Microsoft (NASDAQ:MSFT) has requested AMD increase their production to meet demand for its newest Xbox consoles. Due to this, it is expected that revenue will be even better for AMD in Q4.

Finally, the company just made a deal to buy Xilinx (NASDAQ: XLNX), a top provider in the enterprise computing industry. This acquisition has increased AMD stock and will let them move into industries like aerospace and defense.

Strong Numbers Drive Their Stock Price

With their products performing at industry-leading levels, the company’s numbers have unsurprisingly been great. With Q3, revenues hitting $2.8 billion, which is a 56% year-over-year (YOY) increase. 

Also, operating income hit $449 million (up an amazing 141% from $186 million) and net income hit $390 million (up 225% from $120 million). Finally, diluted EPS increased from 11 cents to 32 cents. And cash equivalents hit $1.77 billion for the quarter. 

So AMD is doing very well. But there’s more to come. For this past quarter, the company anticipates a 41% increase on revenues and a 41% increase for the year overall. And that will mean to a quick increase in EPS. Plus, AMD has a large free cash flow margin which leads to significant investment in capital and higher rewards for shareholders.

So, the stock is absolutely a good long-term investment. With an amazing line of products coming soon and high performance continuing into 2021 and 2022. Based on these facts, shares could easily go past $100 in 2021.

2020 was absolutely one of the most volatile in history. Investors pushed their way through the S&P 500 dropping over a third of its value in only 30 days. But they also had a rally for the history books, with the market hitting new records only five months after hitting the bottom in March.

But there’s no denying that certain investments got ahead of themselves over the next nine months since this March bottom. However, one investment is more dangerous than the rest. And I believe it should be avoided in 2021. That investment is bitcoin.

It is nothing but a problem

The largest digital cryptocurrency in the world has hit a high of $34,000. For context, bitcoin is up 200% since November. And since October, it is up 363%. 

Why is bitcoin exploding? Search the internet and you’ll get plenty of explanations. Bitcoin fans often say that its potential to transform the payment industry made this rally inevitable.

But for me, I don’t see bitcoin as unique at all. In fact, below is my growing list of reasons why bitcoin is the most dangerous thing you could invest in.

Image source: Getty Images.

Its scarcity is a lie

Bitcoin fans will say it has a hard limit of 21 million coins and that is proof of its scarcity. And economics says if demand exceeds supply, the price will increase.

Well, not always. We’re not referring to a physical thing in limited supply. Bitcoin’s cap is just an arbitrary number created out of thin air. Gold is considered scarce because we can’t make more of it. Bitcoin is not the same because “community consensus” could increase the token limit. The chance of this happening is small, but it’s still there.

Because of this, Bitcoin gives its users the belief of scarcity, and this makes the price increase as a result.

Image source: Getty Images.

It’s not as usable as you think

People say bitcoin will be the future of trans-national payments. But again this is flawed.

Sure, the number of companies accepting bitcoin is increasing, but the actual percentage willing to accept it is very very small. According to Fundera, only about 2,300 U.S. companies accept bitcoin. But the Census Bureau lists 32.5 million businesses in the U.S.

And more than that, about 40% of tokens are kept by investors and not circulated. That gives us 11.2 million coins for transactions. These tokens are worth around $380 billion. But 2019’s global GDP came to a total of $142 trillion. Bitcoin has no “game-changing utility.”

Image source: Getty Images.

Store of value? You have to be kidding!

Bitcoin bulls always compared bitcoin to gold. But it will never be a store of value.

Assets which are a store of value usually have a connection to gov-backed currencies, and they tend to be stable. For instance, gold has an inverse connection to the U.S. dollar, and it’s buoyed by real scarcity.

Bitcoin doesn’t have this. Enthusiasts claim an inflated dollar is good news for bitcoin, but that would only be the case if it had government backing and real scarcity — but it has neither.

Bitcoin has also lost 80% of its value on multiple occasions over the past 10 years, including more than once losing half of its value in 24-hours. That’s not a store-of-value asset.

Image source: Getty Images.

You don’t own the underlying technology

Bitcoin fans also point its blockchain technology as revolutionizing payments and settlements. While it’s true that blockchain technology is innovative, buying bitcoin doesn’t give you ownership of that technology.

But even more so, bitcoin’s blockchain is not the only one out there. It has first-mover advantage, but blockchain projects now number into the hundreds if not more.

No barrier to entry

Another important point is that cryptocurrency has no barrier to entry. Anyone can develop blockchain with or without a linked digital currency. There are NO guarantees that blockchain will be used on a broad scale, or that bitcoin will even be needed for using that technology.

Plus, there are many blockchain projects being developed that may work with fiat currencies, or without any tokens whatsoever.

Image source: Getty Images.

It’s more than bitcoin

Buying bitcoin is not the only danger here. Another way you could get yourself into danger is investing in the Grayscale Bitcoin Trust (OTC:GBTC). This group owns 607,038 bitcoin and operates like a fund that investors can buy. And of course, they will charge you an obscene 2% fee to buy their cutting-edge fund.

And further, business intel company MicroStrategy (NASDAQ:MSTR) has put more than $1.1 billion into bitcoin. This stock issued debt just to buy more bitcoin. And MicroStrategy’s sales through Q1 of 2020 were down 1%, while its operating losses exploded.

Put bluntly, bitcoin is super dangerous. It’s driven by short-term trends and emotions and misinformation about its utility, scarcity, and long-term potential. It’s my #1 investment to avoid in 2021.

JPMorgan published a huge long-term prediction for bitcoin on Monday. They are claiming that the super-hot asset could rise as high as $146,000 as it takes on gold as an “alternative” to the dollar. But, there’s one small catch.

Bitcoin’s market cap — which you get by multiplying the price by the total number of coins — is currently more than $575 billion. And JPMorgan says it will have to increase by 4.6 times to go toe-to-toe with gold’s $2.7 trillion market.

They also say for bitcoin’s value to reach that incredible level, its volatility needs to drop by a huge amount to give big investors the confidence to make large investments. Bitcoin’s significant volatility showed up again on Monday when it dipped below $30,000 just days after hitting that level. But it was up 1% in the past 24 hours on Tuesday, trading around $31,720.

“This long term upside prediction assumes the volatility of bitcoin levels out to that of gold,” JPMorgan’s strategists announced.

“For the majority of very large investors, the volatility of each investment matters in terms of risk management. The greater the volatility of an asset, the greater the capital taken up by that asset.”

Meanwhile, Crypto fans say bitcoin’s current rally is completely different than 2017’s bubble, when bitcoin zoomed close to $20,000, only to catapult down to $3,122 the next year. That’s because larger investors are starting to get on board, and this is a vital confidence booster.

Skeptics see bitcoin’s 2020 increase — where it advanced over 300% — as similar to the sketchy 2017 market. They view it as a speculative investment with no underlying value and see a bubble likely to explode at any point.

But JPMorgan claims there’s “very little doubt that the flow of larger investors into bitcoin is the one thing that separates 2020 from 2017.”

“A leveling out of volatilities between gold and bitcoin is probably going to be a long-term process. This means the $146k  price target should be seen as a long-term target.”

Numerous trans-national investors are utilizing vehicles like the “Bitcoin Trust” from Grayscale to invest in bitcoin. And JPMorgan claims that over $3 billion has flowed into this specific fund since October, while gold ETFs have lost $7 billion.

But skeptics are still abound. JPMorgan’s own CEO, Jamie Dimon, once said the cryptocurrency was a “fraud” and labeled bitcoin mania reminiscent of the 17th century tulip bulb craze.

Dimon, on the other hand, has supported bitcoin’s underlying blockchain technology. With JPMorgan even investing it’s own money into the space, creating its own digital currency known as the JPM Coin and creating a new division devoted to blockchain.

One of the most insane years for stocks is now past us. After losing 34% of its value during Q1, the S&P 500 managed to finish 2020 higher by 16%. It was the quickest bear market in history, followed by the most aggressive rebound in history.

It was also a huge year for growing stocks. Around 10% of companies with a value of $300 million or more finished the year higher by at least 100%. That’s a huge number which probably isn’t doable in 2021.

So as we go into the new year, it’s entirely plausible that some of these rock-starts will return to Earth. Below are five popular stocks that could lose 50% as investors re-analyze their investments.

NIO

Few industries were more explosive than electric-vehicle makers this year. China’s NIO (NYSE:NIO) was one of the market’s top gainers, with more than a 1,100% increase. NIO has benefited from capacity raises and margins going from negative to positive double-digits. And the company gained billions of dollars in investment last year, which does away with any worries about financing.

But there are two concerns we have. First, NIO is a $76 billion company that’s creating about 50,000 EVs per year. Its market cap is bigger than some non-ev auto stocks, which have multiple lines, can make millions of vehicles per year, and are investing billions into EV technology. So a $76 billion market cap seems overboard.

Another issue is that NIO faces increasing competition from wealthier companies in China. NIO might have the advantage of being based in China, but it’s not completely destroying the competition on the production front. It wouldn’t shock us to see the EV bubble burst this year.

Moderna

Drug developer Moderna (NASDAQ:MRNA) had a great 2020, thanks mostly to its coronavirus vaccine research. Its COVID-19 vaccine, mRNA-1273, was given emergency authorization by the U.S. FDA. This should mean multiple billions in sales in 2021.

Investors are excited, but there are a couple of issues for Moderna in 2021. The biggest being the other developing vaccines could have an edge over their vaccine. For example, Johnson & Johnson‘s coronavirus vaccine is given in one dose, but Moderna’s is given in two doses. If J&J’s vaccine gives similar efficacy to mRNA-1273, it could turn Moderna’s vaccine into something less desirable.

But even more so, Moderna’s valuation is also a worry. Biotech stocks are usually valued at a multiple of 3 to 6 times peak sales. Moderna has been well over this price point for a good time. Even if their numbers are outstanding in 2021, the outlook isn’t so bright. As other treatments are approved, Moderna’s COVID-19 income is likely to dwindle.

Chipotle Mexican Grill

This year restaurants around the country struggled due to Covid, but the chain Chipotle Mexican Grill (NYSE:CMG) sky-rocketed higher by 66%. With their goal of providing fresh, natural foods, along with their willingness to incorporate digital drive-thru and delivery options, helped them navigate the worst year in decades.

But we are skeptical of a restaurant stock trading at an earnings multiple of 65. And while the addition of virtual drive throughs (Chipotlanes) can be seen as innovation, a multiple of 40 to 65 times forward EPS for a restaurant is very high. There are far too many other factors, such as inflation and labor costs, which can ruin this over-the-top valuation.

Plus, over the past 14 years, Chipotle’s routine has been to go higher for around four years, then lose about half its value. This might happen this year if investors decide to pivot to more fundamentally attractive stocks.

MicroStrategy

Another very stock that could be hit hard this year is analytics company MicroStrategy (NASDAQ:MSTR). It might not be as well-known as the others on this list, but MicroStrategy has made news by putting over $1.1 billion of its money into bitcoin. As of December, they owned 70,470 bitcoin, bought at a price of $15,964 per coin. This position is now worth over $2 billion. 

However, bitcoin has a routine of overextending. The largest cryptocurrency catapulted down more than 80% on multiple occasions over the last 10 years.

It’s easier for me to predict a huge pullback in MicroStrategy because I don’t like bitcoin. I strongly think bitcoin is without game-changing use and real scarcity, which would both be required to call for a $29,000 value per token. Investing in bitcoin gives investors no control over the underlying blockchain technology, which is the only thing that may have real value.

But, if you need more reason to avoid MicroStrategy, their sales were down 1% through most of 2020, with them losing from operational costs increasing 32% to $14 million. Their stock should not be up by 229%. 

Tesla

Lastly, Tesla (NASDAQ:TSLA) is a hugely popular stock that may go in reverse this year. Tesla’s stock skyrocketed a whopping 700% in 2020 after increasing their capacity, raising additional capital, performing a stock split, and joining the S&P 500.

Although electric vehicles are the future of the industry, Tesla went into the fast lane way too soon. Tesla may have made over 500,000 EVs in 2020, but that does not clear a $669 billion valuation.

Tesla has not yet proven it can generate a regular profit from selling EVs. In most of the past quarters, selling their emission credits allowed Tesla to report a small adjusted profit. The margins on EVs aren’t great, which makes their earnings ratio of 184 completely insane.

Tesla’s ability to keep its advantages while other auto makers are investing tens of billions into EVs technology is also in question. It might be my top stock to avoid in 2021.


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