2 brutal liquidation actions to avoid this fall
The 8.2% increase year over year in the consumer price index (CPI) for September and job hotter than expected the data has increased the odds that the Fed will respond with a fourth consecutive rate hike of 75 basis points at its November meeting. The economy is expected to slide into a recession soon as the central bank continues to stick to its inflation-fighting measures.
“The the probability of a recession is 99.9%said Earl Davis, head of fixed income in Bank of Montreal’s fund management division, citing that interest rates will need to rise much more to curb inflation.
The selloff has rocked the stock market recently as investors brace for more pain. As a result, major equity indices suffered huge losses, with the S&P 500 and Nasdaq Composite dropping more than 22% and 30% respectively.
Given these uncertain market conditions, investors are advised to exit fundamentally weak and battered Coinbase Global, Inc. (PIECE OF MONEY) and DraftKings Inc. (DKNG).
Coinbase Global, Inc. (PIECE OF MONEY)
COIN is a fintech company that provides end-to-end financial infrastructure and technology for the global crypto economy. The company offers financial accounts for retail crypto users, a liquid marketplace for institutions for crypto transactions, and technologies and services for ecosystem partners.
On October 17, it was revealed that COIN plans to sue 1,000 users in the republic of Georgia for taking advantage of a pricing glitch when the lari, the local currency, was priced at $290 instead of $2.90 for about six hours on COIN. The incident illustrates a long-standing concern of financial regulators about the risks posed to institutions by external partnerships.
On September 12, information emerged that the brother of a former COIN product manager pleaded guilty to a wire fraud conspiracy charge when prosecutors called the first insider trading case involving cryptocurrency.
In June, COIN announced a 18% reduction in its workforce by laying off approximately 1,100 employees. This came as volatile crypto markets have lost over $2 trillion in valuation since 2021, and COIN CEO Brian Armstrong has warned of a recession and crypto winter on the horizon.
During the second quarter of fiscal 2022 ended June 30, total COIN revenue decreased 63.7% year-over-year to $808.33 million. During the same period, the company recorded an operating loss of $1.04 billion, compared to revenue of $874.73 the previous year.
Additionally, COIN’s net loss attributable to common shareholders was $1.1 billion and $4.98 per share, compared to net income of $1.59 billion and $6.42 per share at quarter of the previous year, respectively.
Analysts expect COIN revenue for the fiscal year ending December 2022 to decline 57.3% year-over-year to $3.35 billion. Additionally, the company’s current-year loss per share is expected to be $6.61, compared to EPS of $17.10 a year earlier.
The stock has plunged 12.4% in the past month and 74.8% since the start of the year to close the last trading session at $63.19.
It’s no surprise that COIN has an overall rating of F, which translates to strong selling in our POWR Rankings system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
COIN also has an F rating for growth, value, stability, and sentiment and a D for momentum and quality.
It is ranked last among 147 stocks in the F-rated Software app industry.
DraftKings Inc. (DKNG)
DKNG is a digital sports games and entertainment company. The company offers multi-channel sports betting and gaming technology, powering sports and gaming entertainment for operators in 17 countries.
For the second quarter of fiscal 2022 ended June 30, the Adjusted EBITDA deteriorated 24% year over year to negative $118.13 million. The company reported an operating loss of $308.92 million during the same period. Its net loss attributable to common shareholders was $217.10 million, or a loss of $0.50 per share.
Analysts expect DKNG to post a loss of $0.50 per share in the fourth quarter of the current fiscal year, ending December 2022. The company is expected to continue reporting losses for at least two fiscal years. .
The stock has fallen 29.7% over the past month and 52.7% over the past year to close the last trading session at $13.14.
DKNG has an overall rating of F, which equates to a strong sell in our POWR rating system. It also has an F rating for stability and quality and a D for value and sentiment.
DKNG is ranked second to last among 27 stocks in the D rating Entertainment – Casinos/Gambling industry.
Click here to see additional POWR ratings for DKNG (growth and dynamics).
COIN shares were trading at $66.24 per share on Thursday morning, up $3.05 (+4.83%). Year-to-date, COIN is down -73.75%, compared to a -20.91% rise in the benchmark S&P 500 over the same period.
About the Author: Santanu Roy
Fascinated by the traditional and evolving factors that influence investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to moving into investment research, he was a process associate at Cognizant. With a master’s degree in business administration and a fundamental approach to business analysis, he aims to help retail investors identify the best long-term investment opportunities. After…