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The chipmaker Nvidia last week issued a revenue guide for the current quarter of $ 2.7 billion, dropping well below analysts' consensus estimates of $ 3.4 billion. The one guilty? The bitcoin deflagrating bubble!
Some explanations on earnings and notices on revenue that you can not recover.
The craze of global cryptocurrency – not just for bitcoins
BTCUSD, -2.78%
but similar absurdities have led to a strong demand for graphics processing units (GPUs), of which Nvidia is a leader, since they are used to perform the necessary calculations to "extract" cryptocurrencies. While the air quickly left the global crypt, the extraction of those useless lines of code became less profitable and, as a result, the demand for GPUs rapidly declined.
To read: Which markets are closed on Thanksgiving?
Granted, Nvidia & # 39; s
NVDA, + 4.78%
the chips are not just about bitcoin mining, but are vital for a number of other applications focused on the global phenomenon of artificial intelligence (AI). As a producer of some of the most advanced chips on the market, Nvidia will survive the disappearance of bitcoins and other similar absurdities (see chart). For a real-time observation of how cryptocurrency craze is imploding, you can visit coinmarketcap.com. (For more information, see "Why bitcoin is now the biggest bubble in history, in a graph.")
As I explained several times before, the term "capitalization" when used to describe a cryptocurrency is absurd. Market capitalization is the abbreviation of "market capitalization" or the total value of all publicly traded shares of an operating company. It is assumed that all earnings (or cash flows) are discounted with respect to all investors in the company's shares (dubbed "the market") and, therefore, evaluate the company in this way.
The way we know bitcoin, and all the other criptos, is a bubble making a glaring observation that it is not able to produce any cash flow, making the term "capitalization" absurd. This does not mean blockchain since a technology can not be useful without the useless step of buying a digital token called bitcoin, which is calculated to limit the amount of bitcoins to 21 million and then increase the price as more poor people insinuate themselves in this line of code in search of wealth. (For more information, see "Bitcoin is perfectly monitoring the main phases of the bubble.")
As history has shown on several occasions, most bubbles end with most investors losing huge amounts of money while holding and hoping the bubble is reflected. Unfortunately, after the bursting of bubbles, it may take decades to recover and "take out" the price of the bubble, or, in the worst case, disappear. I think bitcoin will be a situation of worst case scenario.
A case in point is Amazon.com
AMZN, -0.41%
which made its founder Jeff Bezos the richest man in the world. It was a bubble (a fast-growing price with no earnings), but this is no longer the case, as it now has an increase in sales and profits and is expanding into new businesses. Amazon sales were up in 1997-2000, but so were its losses. The more sales he had, the more money he lost, so the title was overvalued in the dot-com bubble of 1999. That's why it went from $ 113 to $ 5.51 after the dot-com bubble erupted in 2000-02 ( see chart).
Then, when Bezos turned it around, Amazon became the company that had institutional and on-board support for the longest of any big business without making money, bringing all cash flows into business growth. The stock has become parabolic without becoming a bubble. In the 2018 fiscal year, Amazon has revenues of $ 233 billion, while in 2019 it is estimated that increases of 21% to $ 293 billion, based on consensus analysts' estimates. Then Amazon will be more than half the size of Walmart
WMT, -3.03%
the largest retailer in the world, but grows much faster than Walmart.
That's why Jeff Bezos is the richest man in the world and probably will become richer, if he is not decomposed by the Trump administration or by any subsequent administration for that matter, which is not the way I act cheer for a satisfied customer. After all, they did it for Standard Oil and AT & T
T -1.64%
My technical version of the bitcoin
My job requires me to speak with many clients about the broader picture when it comes to their investments. Therefore, I am much more oriented towards the macro and I try to see through short-term market rotations. But if one is poised for a couple of decades in the trenches of the fascinating world of finance, sooner or later one comes to know something about the use of graphs.
To be absolutely clear, I will never make an investment by looking at a chart alone. I have to understand what makes the "tick" chart and what makes an investment increase or decrease, as in the case of specific actions. Since there will never be profits, or cash flow for this, generated by bitcoins, never, it is conceivable that it will go to zero, nada or zero. It does not take a genius to understand it.
That said, let me put on the hat of my amateur technician. It seems that the bitcoin has fallen below a support level of more than $ 6,000 (see chart). The chart shows decreasing peaks and even lows that were eliminated last week at that key level. If you read the chart as $ 6,000 as the minimum that was hit after the high was set on December 18, 2017, and $ 12,000 is the first major rebound below the minimum, then the bitcoin chart has formed a " bearish wedge ". or a "descending triangle" that ranges from $ 12,000 to $ 6,000. The measured move of that breakdown is $ 6,000 (or the width of the triangle) below the support level of $ 6,000.
In other words, the Bitcoin chart suggests that it will go to zero. What about apples?
Ivan Martchev is an investment strategist with the institutional fund manager Navellier and Associates. The opinions expressed are his. Navellier & Associates holds NVDA, AMZN but not WMT in managed accounts. Ivan Martchev and his family do not own NVDA, AMZN or WMT.
