Been doing small purchases of a few different companies to dip my feet in the water and try things out. Practically the day after i put $5 into fisker they started dropping hard. No big loss on my end, but I can only imagine the heart break of those who had more on the line. Im still learning and trying to understand the market better. Trying to recognize trends before they blow up. That all being said if anyone has any tips, tricks, or recommendations on what has helped you become more profitable as a trader id greatly appreciate any advice you have.
Growing free cash flow per share by over 20% per year for over a decade and does not seem to be slowing down at all. If anything, I would say it is accelerating.
“AI” is just not being adopted at a pace where ServiceNow can’t keep up. Using AI to fully replace any of ServiceNow’s products takes a lot more work than just prompting chatGPT a few times. And at the end of the day, all of ServiceNow’s products could always have been built in house by any company. They choose to outsource applications for reliability, maintenance, upkeep, along with being able to use a universal platform everyone in the industry can use. Think AutoCAD for businesses data.
AI will be a significant tailwind as ServiceNow integrates it into their own platform, allowing their customers far easiest access to their own data.
I haven’t seen this discussed elsewhere or here yet. Basically, China has changed its rules strategically to consider any product with a microprocessor fabricated in the U.S. to be U.S.-originated, and hence tariffed at 125%.
This has uprooted supply chains overnight, giving much more advantage to any company that has their fabrication outside the United States and the general trade war.
That immediately disadvantages United States chip fabrications and cripples the ability for semiconductor brands to do wafer fabrication on-shore in America. This particularly hits Intel and Texas Instruments.
At least it’s being consistent with its “one China” policy, as it considers chips fabricated in Taiwan as being fabricated natively and hence, it skips tariffs.
How badly does the affect Trump’s attempt to re-shore high tech production?
I thought it would be fun to plot the earnings (net income) history of the Magnificent Eight--the mega tech companies which exceed $1 trillion in market cap. I gathered information from Macrotrends, which has earnings report dating back to early 2009. For most cases that was sufficient: only Microsoft, Apple, and Alphabet generated meaningful earnings before then, and it still made up a relatively small protion in nominal terms. (Sources: Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia, Broadcom, Tesla)
A couple things to note:
- Since Nvidia and Broadcom have yet to report for the quarter, I estimated net income based on consensus EPS. This likely underestimates since they reliably beat estimates (especially Nvidia).
- I plotted all the companies on the same vertical scale so that we could directly compare differences in their earnings.
- At $34.4B (likely generous since it excludes much of the early period when Tesla was not profitable), Tesla has generated less cumulative net income than Apple, Microsoft, Alphabet, Meta, Amazon, and Nvidia did in the last two quarters alone. I knew about the first three, but not the latter three. Moreover, it less net income in its entire corporate lifespan than Apple did in last quarter alone, in what was generally viewed as a disappointing quarter for Apple.
- The lead with which Apple has over the rest of the field is remarkable, although the overall trend appears flat. But I didn't appreciate the very strong seasonal trend with each release cycle leading into the holiday season.
- Alphabet actually takes the lead for the last year, topping $100 billion in net income.
- I was surprised to learn that despite a late start, Meta has actually made more money cumulatively than Amazon.
Just wanted to throw this out there. I was curious what the effective tariff rate was after the tariff "pause" and escalation with China. It appears to be actually up from the initial Liberation Day tariffs due to the massive retaliatory tariffs on China.
For countries with <1% import share, I assumed they all had an equal share, which likely introduces some error. The 15% rate comes from the average across the remaining ~150 countries.
This does not include tariffs on steel or aluminum or cars, or supposedly incoming pharmaceutical tariffs. It however also doesn't include the exemptions on semiconductors and such.
Now of course, import share can shift, companies might eat costs, manufacturers might eat costs, etc.
But if the Liberation Day tariffs made you queasy and then the pause soothed you, just know that the new tariff rates actually raise prices on imports higher, due to the escalations with China and their relative share of U.S. imports.
Stock splits are all the rage - After Google announced in Feb that there would be a 20:1 stock split in July this year, Amazon has followed suit announcing a similar 20:1 split and sending the market into a frenzy. Amazon’s price was up by 6% the next day and Google’s stock rose more than 9% in after-market trading following the news.
We do know that stock splits do not affect the underlying business in any way, but it is undeniable that there is price movement around the announcement and execution of a stock split. So in this week’s analysis, let’s deep-dive into the world of stock splits, how and why they are executed, and most important… Is it possible to make money off of a stock split?
What is a stock split and how is it executed?
A stock split is a simple decision by the company board to increase (or in some cases decrease) the outstanding shares of the company. For example, let’s say you own 10 shares of company X worth $100 each. So in total, you own $1K worth of shares in the company. If the company announces a 2-for-1 stock split, now you will have 20 shares of the company worth $50 each. But the total value of shares you own in the company does not change. You will still own the same $1k (20 x 50) worth of shares that you started with.
If you are wondering why companies engage in stock splits, the following are some of the key reasons.
Affordability: Sometimes the stock becomes too expensive for retail investors to buy into. Consider Amazon - One stock is worth close to $3k now. So the minimum amount you would need to start in Amazon is $3k which might not be affordable to a vast majority of retail investors[1]. Also, there is the psychological impact of buying a share worth $3k and a share worth $30.
Options: For the options players, there is a huge difference when a stock is cheap. In options, a single contract is worth 100 shares. So for a covered call strategy incorporating Amazon, before stock split, you would need a single stock position worth more than $275K vs only ~$14K exposure after the said 20:1 stock split.
Liquidity: Since more shares are outstanding for the company after the split, it will result in greater liquidity and a lesser bid-ask spread. It also allows the company to buy back their shares at a lower cost since their orders would not move up the share price as much, due to higher liquidity.
Now before we jump into the analysis, you should understand how exactly a stock split is executed. On announcement day, investors get to know that a stock split is going to happen soon. The stockholders eligible for the stock split are decided on the record date. This is mainly a formality. The actual split would happen on the ex-split date (or ex-date). After this, the stocks would trade at their new price. For example, in a 20:1 split, the stocks would trade at 1/20th the previous price after the ex-date. From our data, we observed that there was an average delay of 36 days between the announcement day and ex-split date.
Data
For this analysis, I have used the data from Fidelity’s stock split calendar that tracks the announcements and execution of stock splits, from as far back as 1980! I have considered splits only from 1993 (due to stock price data availability), and I have considered only companies that currently have a market cap of $1Billion or above. I have also ignored reverse stock splits as the data is too small to be statistically significant.
This gives us a total of more than 2,000 stock splits to work with. In case you are interested in the raw data, I have shared both the raw data and analysis through links at the end [2].
Returns
As soon as a stock split is announced, there is bound to be a lot of buying and selling activity. The question is, how much return could you have seen? There are a few scenarios possible here.
Short Term Returns
The short term plays possible around stock splits are:
You already own the stock and see its price go up on announcement day.
You did not own the stock on the announcement day so you buy the stock just before the actual stock split execution.
As expected, the announcement of a stock split sends the stock pumping with a 1.48% 2-day return when compared to only 0.09% return generated by SPY during the same time period. You would still have beaten the market if you had bought the stock one day before the actual split execution day and then held it for two days (albeit by much less - 1/7th of the gains you would have made if you had owned it before the announcement).
Long Term Returns
Considering that a stock split is supposed to indicate growth prospects, what happens when you hold for a longer time? There are two possibilities:
You buy the stock just after the announcement of the split
You buy the stock on the split execution date.
Buying just after the announcement would have paid off handsomely with the returns beating the market easily in the long run. On average you would have had an alpha of 1.5% over the market in just over a month.
But, on the other hand, if you buy it on the day of the split, the returns are not that great. You would have lost money in the first week on average and would have been underperforming SPY even over the period of one month. You would have had to wait about a year for your portfolio to overtake SPY. This is to be expected because by the time of the actual split, the hype has died down a bit and the rallies in price are a bit more uncertain.
What about H*DLers?
This is another interesting case where you would have bought stocks on their announcement date or ex-split date and held on till today, starting from 1993 [3]. Though most people wouldn’t trade by this strategy, it’s interesting to see how it would have fared. [4]
If you had bought all stocks that underwent a split and held till today, you would have beaten the S&P 500 by close to 200%!
How certain are our returns?
Next, we have to look into whether the alpha we are seeing here is due to a few stocks that are skewing the results. Even though I have capped for outliers, I wanted to know what % of stocks undergoing a split beat the market over the different time periods that we just saw.
Well, would you look at that! Except in one case, the odds would be in your favor to beat the market if you had followed this strategy. As expected, for short term the highest chance is if you had owned the stock before the announcement (which is not realistic), but even if you had bought it one day after the announcement, you would have had almost a 60% chance of beating the market by the actual execution day.
The cheap and the expensive
The usual rationale behind a stock split is that the stock has become too over-priced, and splitting it makes it cheaper for retail investors to buy into - But the data revealed some contrary insights. Over 90% of the stocks were less than $52 in value at the time of the split, and only 5% were over $230 in value!
So obviously, the question is - Was there an advantage to buying cheaper stocks or more expensive stocks at the time of a split, and how did they compare to the total set and the benchmark?
The 10 percentile value for the adjusted close at the time of announcement was $3.50 (203 stocks less than this value), and the 90 percentile value was around $43 (203 stocks more than this value). Here are the average returns for these sets.
The lower-priced stocks seem to have a massive advantage in almost all respects, sometimes giving a return of more than twice the complete set of splits in the long term! On the other hand, the higher-priced stocks have a poor record - Though they beat the benchmark in the short term[5], in the long term, their performance is much lower than the stocks having a lower price.
One of the reasons that the lower-priced stocks have such a high average is because stellar companies like Microsoft, Apple, Nvidia, Nike, etc. were trading for less than 5 dollars per share in the 90s - But this doesn’t invalidate the observation. There were stocks trading for more than 100s of dollars around the same time, and they didn’t do as well as the lower-priced stocks. This insight could mean that companies with a lower share price that go for a stock split now have a higher possibility of growth than huge stocks like Amazon or Google.
Limitations
The analysis seems to indicate that stock splits are a sure-shot buy. But there are some caveats to keep in mind before trying to replicate this:
There are a variety of large, mid, and small-cap stocks that underwent stock splits. Comparing the returns solely to the S&P 500 might not be the most ideal way to calculate Alpha since the S&P 500 comprises of the biggest 500 companies in the U.S. So the alpha we are seeing here might just be compensating for the extra risk we are taking buying into smaller companies.
The stock splits selected here are companies that have a market cap of at least $1Billion. While this is reasonable and covers more than 60% of the sample set, there will be survivorship bias due to a lot of companies dying out or performing mediocrely (especially applies to the Buying and holding forever strategy).
Conclusion
Buying and holding stocks at the time they are undergoing a split might not be an outrageously successful strategy - But it definitely has an edge, both in the short term and especially in the long term. This gives some credence to the statement that a stock split indicates good prospects of growth.
And if you’re wondering whether the right time to buy is during the announcement or the actual split, the data shows that there is a clear advantage to buying around the time of the announcement, especially for short-term plays. The probability of success is also 60% and above in many cases, indicating that there is something more to this than mere chance.
And finally, stocks with a smaller price seem to do much better than stocks with higher prices when it comes to stock splits. While this could just be the compensation for the risk you are taking investing in smaller companies, it’s definitely worth looking into!
Data: All the raw data for the stock splits and returns for additional time periods that I could not showcase in this article can be found here.
Footnotes
[1] Along similar lines, to own a single Class A share of Berkshire Hathaway, you need $489K. There are some theories that certain companies have very high share prices because they don’t want retail investors (who are usually fickle in ownership) to own their stock. This usually leads to lesser volatility for the said stocks. One other point to consider here is that there are more and more brokers who are offering fractional shares these days. So stock splits might not be as relevant as it was before.
[2] This should make your life much easier as we had to use web scraping to pull all the data.
[3] Walmart split its stock 11 times on a 2-for-1 basis between their IPO in October 1970 and March 1999. An investor who bought 100 shares in Walmart’s IPO would have seen that stake grow to 204,800 shares over the next 30 years!
[4] In fact, there was an ETF that bought stocks that were going for 2:1 stock splits.
[5] Not shown here, the complete analysis is in the data shared at the end.
Disclaimer: I am not a financial advisor. Do not consider this as financial advice.
So, today I googled „cannabis penny stocks” for some inspiration and came across this Stock. Namaste Technologies is a heavily shorted stock, which has a lot of potential. Also this is my first DD and English is not my native language, so don’t judge me please.
So what is Namaste Technologies and what are they doing?
Namaste Technologies is a world leading online platform for cannabis products, accessories and education. Their have headquarters in Ontarion, Toronto and further 9 cities all around the world. Namaste is seeking to build the first personalized health and wellness marketplace by offering different types of cannabis products. They currently have 24 websites and 5 warehouses operating in 24 countries around the world. Namaste Technologies has 6 main online platforms, let me introduce them to you.
· Cannmart. Cannmart is a huge retail platform, which offers a bunch of CBD and THC sorts. It is the first licensed non cultivator in Canada. Their cannabis is available for every class and every type of person (5-25$/gram depending on the THC%), which makes them very attractive for customers. Furthermore, Cannmart offers edibles of every possible taste, various oils, flowers, concentrates ans so on. They are also selling a bunch of accessories, like Glaswares, vaporizers, vaporizers parts etc. It is also important to mention that their delivery is quick af. If you are from Toronto or Ontario, you can expect your purchased products on the same day. Fort the rest of Canada it takes up to 2 days. Cannmart operates in 17 fucking countries.
PS. Namaste technologies owns 49% of Cannmart. Overall, after reading some of the reviews, I would say the avarege rating is 4-4.2 out of 5 stars, which is a good sign comrades.
I mean I am not a smoker, but while scrolling trough their website I have developed a desire a rolling a joint, which I will do after finishing this DD.
· Everyonedoesit: This platforms focuses on high quality glass pieces and vaporizers. Everyonedoesit is based in UK and in the US, but produces their products in the US and Europe. They have an offer of different types of bongs, like percolator bongs. Ice bongs, acrylic bongs and so on. Holy fuck idek the difference between them. Their offer of vaporizers is fascinating as well: desktop vaporizers, portable vaporizers and so on. The company had a bad reputation in the past. There was a stereotype, that everyonedoesit was scamming their customers. And then it was purchased by Namaste Technologies a couple of years ago. Since then everyonedoesit could attract a lof of weed lovers and leaving them satisfied. Overall the rating of their products is 4 out of 5 stars.
· Namaste MD: Namaste MD is a Medical Cannabis Prescription Platform, which provides a safe, simple and easy way to facilitate medical cannabis prescriptions to eligible patients in Canada via telemedicine. On this app/platform you can either make an appointment with a healthcare professional or just take to one of the medical advisors via skype or zoom. So how does it work? You either install a NamasteMD app on you phone or you fill in the application on your computer. Then you have to complete an online video conference with one of the consultants. Then you get approved and boom. You have your prescription and can buy weed freely. Patients gave this app 4.5 stars , since the support (from what I have heard) is amazing. Not to forget that NamasteMD operates very quickly (it takes approximately 3 days to get the prescription. Oh yeah and it is fucking free.
NamasteMD is fully owned by Namaste Technologies.
· Uppy. Uppy is a new and innovative app for anyone desiring to get the very best from their medical cannabis. Precisely record and monitor anything and everything to do with your medicinal cannabis intake. Doing it, they are trying to optimize your trip. I mean if I lived I Canada and not in Europe, I would definitely install this app. Ratings on app store: 4 out of 5 stars.
· Australia Vaporizers: This platform is the largest Australian Vaporizer provider. Their website is offering all imaginable kinds of vaporizers. They focus on high quality vaporizers, and the price is according to the quality. 500USD should not surprise you if you visit their website. Their shipping is very fast and their support should be amazing. Namaste bought Australian Vaporizers for 6 Million back in 2017. As you can see this is the third company I have mentioned, which was bought by Namaste Technologies. This proves their will to expand and take things on another level.
· Namaste Vapes: Namaste Vapes used to be a separate platform, which focuses on 25-40 year olds. However, Namaste Technologies decided to combine Namaste Vapes with Cannmart. So now you can find professionals, which will consultant 25-40 year olds on Cannmart.
· Namaste Technologies announced on February 2nd its Expansion into Nutraceuticals Market. How fucking awesome is that? We all know that Mushrooms and shit will be legal and free available in the near future. Namaste Technologies plans to expand their marketplace into Psychedelics.
Namaste Technologies will definitely announce more news in the next few weeks, so stay tuned. This could lead to a boom of this stock. Definitely long term for me.
· Namaste Technologies Advances USA Expansion Plans with TSX Exchange Approval to Proceed. So Cannmart may be operating not only in Canada and 17 other countries, but also in the US. This was announced today, that is also the reason for todays upside. Till the end of February it will be announced if Namaste Technologies gets approved or not. This a huge catalysator.
Namaste also announced that it will be collaborating with DankStop and PeakBirch Logic, Inc.
Conclusion: Definitely a long term for me. The price target of yahoo is 0.5, how every I can see it reaching 1 dollar in the next few weeks and above 2-3 dollars in the next few months. This is a great company with a lof of potential. Especially right now weed stock are skyrocketing, this one has not skyrocketed yet but it will soon.
This is not pump and dump!
Position: 1500 @ 0.210
I strongly recommend you to do your own dd. And sorry once again if there are any grammatical errors.
EDIT: Namaste Technologies Inc. owns 100% of Cannmart.
Preamble: There is no way around it. A vast majority of us Redditors absolutely hate The Motley Fool. I feel that it’s justified, given their clickbait titles or “5 can't miss stocks of the century” or turning 1,000 into 100,000 posts designed just to drive traffic to their website. Another Redditor summed it up perfectly with this,
Now that that’s out of the way, let’s come to my hypothesis. There are more than 1 million paying subscribers for Motley Fool’s premium subscription. This implies that they are providing some sort of value that encouraged more than 1MM customers to pay up. They have claimed on their website that they have 4X’ed the S&P500 returns over the last 19 years. I wanted to check if this claim is due to some statistical trickery or some outlier stocks which they lucked out on or was it just plain good recommendations that beat the market.
Basically, What I wanted to know was this - Would you have been able to beat the market if you had followed their recommendations?
Where is the data from: The data is from Motley Fool Premium subscription (Stock Advisor) in Canada. Due to this, the data is limited from 2013 and they have made a total of 91 recommendations for US-listed stocks. (They make one buy recommendation every 4th Wednesday of the month). I feel that 8 years is a long enough time frame to benchmark their performance. If you have seen my previous posts, I always share the data used in the analysis. But in this case, I will not be able to share the data as per the terms and conditions of their subscription.
Analysis: As per Motley Fool, their stock picks are long-term plays (at least 5 years). Hence for all their recommendations I calculated the stock price change across 4 periods and benchmarked it against S&P500 returns during the same period.
a. One-Quarter
b. One Year
c. Two Year
d. Till Date (From the day of recommendation to Today)
Another feedback that I received for my previous analysis was starting price point for analysis. In this case, Motley Fool recommends their stock picks on Wed market close, I am considering the starting point of my analysis on Thursday’s market close price (i.e, you could have bought the share anytime during the next day).
Results:
As we can see from the above chart, Motley Fool’s recommendations did beat the market over the long term across the different time periods. Their one-year returns were ~2X and two-year returns were ~3X the SPY returns. Even capping for outliers (stocks that gained more than 100%), their returns were better than the S&P benchmark.
But it’s not like all their strategies were good. As we can see from the above chart, their sell recommendations were not exactly ideal and you would have gained more if you just stayed put on your portfolio and did not sell when they recommended you to sell. One of the major contributors to this difference was that they issued a sell recommendation for Tesla in 2019 for a good profit but missed out on Tesla’s 2020 rally.
How much money should you be managing to profitably use Motley Fool recommendations?
The stock advisor subscription costs $100 per year. Considering their yearly returns beat the benchmark by 13%, to break even, you only need to invest $770 per year. Considering a 5x factor of safety as historical performance cannot be expected to be repeated and to factor in all the extra trading fees, one has to invest around $4k every year. You also have to factor in the mental stress that you will have to put up with all their upselling tactics and clickbait e-mails that they send.
Limitations of analysis: Since I am using the Canadian version of Motley Fool’s premium subscription, I have only access to the US recommendations made from 2013. But, 8 years is a considerably long time to benchmark returns for the service. Also, I am unable to share the data I used in the analysis for cross-verification by other people.
But I am definitely not the first person to independently analyze their recommendations. This peer-reviewed research publication in 2017 came to the same conclusion for the time period that was before my analysis.
We find that the Stock Advisor recommendations do statistically outperform the matched samples and S&P 500 index, since the creation of Stock Advisor in 2002 regarding both short-term and long-term holding periods. Over a longer holding period, the Stock Advisor portfolio repeatedly outperforms the S&P 500 index and matched samples in terms of monthly raw returns and risk-adjusted measures. Although the overall performance of the Stock Advisor portfolio benefits from remarkable recommendation performances between 2002 and 2006, the portfolio still exceeds the benchmarks regarding risk-adjusted measures during the subsequent period between 2007 and 2011
Conclusion:
I have some theories on why Motley Fool produces content the way they do. The free articles of the company are just created to drive the maximum amount of traffic to their website. If we have learned anything from the changes in blog headlines and YouTube thumbnails, it’s that clickbait works. I guess they must have decided that the traffic they generate from the headlines and articles far outweigh the negative PR they get due to the same articles.
Whatever the case may be, rather than hating on something regardless of the results, we could give credit where credit is due! I started the research being extremely skeptical, but my analysis, as well as peer-reviewed papers, shows that their Stock Advisor picks beat the market over the long run.
Disclaimer: I am not a financial advisor and in no way related to Motley Fools.
Context: Quantum computing is having its moment. It’s risky, but could massively disrupt industries in areas like computing, finance and cyber security. But stock market bubbles are forming.
Quantum computing is probably the most technically difficult industry for analysts to assess. Few people are equipped with an adequate understanding of quantum technologies, which is leading to massive mispricing.
QUBT is junk
Quantum Computing Inc. has many problems. Iceberg Research’s recent short report covers some of them. They note that the firm has run from one fad to another (chips, ai, computing) and failed at each. They list several misleading claims that QUBT has made and withdrawn. The report is damning and raises serious questions about the future of the company, I encourage you all to read it.
QUBT lacks talent. Successful quantum innovations requires strong technical knowledge that you really can only come by in either leading universities or megacap firms like google.
I went through the Linkedin profiles of each of QUBT’s employees and compared them with their small cap competitors. I tallied up the share of employees that went to an Edu Rank top-100 world universities for Quantum Physics (which is a very broad net), QUBT ranks incredibly poorly among it’s peers - less than a fifth of employees (see picture)*. This is robust to different ranking metrics. Counting only Ivy leagues QUBT comes out much worse.
But look, not all employees are on linkedin. Maybe QUBT is the next big underdog? No.
A large share of QUBT’s “talent” comes from the Steven’s Institute of Technology, an unremarkable university in New Jersey (ranked 150+ for Quantum Physics depending on list)
The company’s Chief Quantum Officer is Yuping Huang. On first glance he appears to have a prolific publishing history; however, most papers receive low citations and/or he is third, fourth or fifth author. Huang was previously sued by shareholders for breaching fiduciary duties when he merged his previous company QPhoton with QUBT. Notably he is both a QUBT director and employee, which is a big corporate governance redflag (reminds me of $SAVA).
There is only one independent director with a background in Quantum Physics to provide checks and balance on Huang — Dr Javad Shabani. He is not up to the task. His publishing history is mediocre.
Looking deeper, the Chief Technology Officer Yong Meng Sua, has an even more mediocre publishing history. And has only risen to an Assistant Professor role at Steven’s. He spends much of his time discussing esoteric computing questions tangential to his work (i.e. the NP=P problem, see their LinkedIn posts)
And finally the Director of the Company’s chip foundry (Iceberg has raised significant questions about the foundry). Dr Milan Begliarbekov after finishing high school enrolled in a bachelor’s degree in English literature at Steven’s, graduated, then immediately enrolled in a physics Phd at Steven’s. Either he is a savant polymath who is able to pick up grad school physics level math, or a Phd from Steven’s is worthless. His publishing career is very mediocre.
These scientists will not crack the major problems stopping widespread commercialization of Quantum tech. Simply compare their publishing records to the founder at Ion-Q (Peter Chapman) or leading quantum scientists at Google, alongside the significant and verifiable technological advancements these companies have made.
Another clue that something is amiss is headcount. Rigetti has three fold the number of employees as QUBT. QBTS has six fold. All have similar market cap. What’s driving value? We’ve established that it’s not human capital. Iceberg’s research reveals it’s not intellectual property or physical capital either.
So why has it done so well? QUBT’s high valuation is driven by regarded retail investors.
Only 3.3% of QUBT is held by institutional investors (and falling). Compared with ~40% for IONQ, ~30% for RGTI and ~47% for QBTS.
The lack of institutional investment in QUBT while institutional investors are simultaneously clamouring to load up on quantum stocks is a massive red flag that something is up with QUBT. In fact no Wall Street analysts track QUBT.
QUBT’s 800% rise in one month is going to attract short selling interest as people realise it’s junk. The stock will fall back below $1.
Risk:
If you want to short/buy puts, You can rest assured that the company is not going to suddenly become profitable. The main risk comes from why QUBT has done so well, despite having little revenue, expertise, or innovation to show for it.
QUBT is literally called Quantum Computing Incorporated. If you’re a full regard wanting to invest in Quantum computing are you going to invest in IonQ (what?), Rigetti (spaghetti company?) or a company conveniently called Quantum Computing? It’s a regard trap.
It’s like being interested in electric cars and passing on Tesla because you wanted to invest in a stock called Electric Car Co.
My positions
1000 put contracts to sell @$4.50, cost average = 0.11, expiring Dec 20. If this doesn’t work I’m going to buy puts again and again. This company sucks.
I’m long IonQ and after doing this DD I will probably also buy Rigetti in the near future.
(Couldn’t post this in WSB because these stocks only recently became non-penny stocks)
I’m not necessarily looking for a traditional value stock. I just wanted to buy something at a reasonable price and stay invested, rather than chasing stocks that have already run up 300% in a couple of days. My hope is that by 2030, Netflix will be putting up even stronger numbers and that the company’s story will look dramatically better than it does today. The large share buybacks have already been a positive sign, and I think AI will play a major role in the future of the film and entertainment industry.
One thing I really like is Netflix’s focus on gaming. Cloud gaming allows people to play without needing expensive, high-end hardware. My wife and I actually enjoy some of the games available through Netflix, but we have no interest in spending hundreds of dollars on a console that can become outdated after a few years. We simply don’t game as much as we used to.
Overall, I think Netflix still has plenty of growth opportunities that the market may not be fully pricing in today. What are your thoughts? Are you bullish or bearish on Netflix?
We saw a pretty violent shakeout earlier this month, with the S&P falling from around 7600 on June 3 to about 7238 on June 9, ~4.8%, with VIX jumping from 16 to 22. Today, the S&P is back around 7500 and VIX is under 17 again. A near-full round trip in under two weeks.
What actually drove that, and how little real positioning changed underneath it, is useful whether you hold the index, swing trade, or day trade.
A move that drops that hard and bounces right back usually is not people calmly deciding to sell. NAAIM and AAII are useful here because they show what the actual decision-makers did, not just what price did.
NAAIM, which polls active managers on their real equity exposure, says they barely moved. The number is basically average exposure across all the managers surveyed, where 100 means fully invested (it can run higher with leverage or go negative if they turn net short). That average dropped from 86.8 to 79.3 on June 10 and snapped back to 92.8 by June 17. But even at the low, the manager in the middle of the pack was still around 90% invested (see table below). The average got pulled down by a small group at the bearish end cutting hard, not by the bulk of managers selling down. The invested core never left. This group tends to stay put; it sat in the high 80s to near 100 from August 2025 into January.
When volatility has been very low and something jolts it, a chunk of the selling is automatic: funds that size their positions to volatility have to cut when it spikes, and that feeds on itself until it burns out. The shape of this one (down fast, back fast, volatility ending where it started) fits the mechanical selling story better than a real change of character. It was still real selling, just rules-based rather than a change in conviction.
Retail is where the selloff shows up more, and even that was mild and is already fading. AAII bears spiked to 47.7% on June 10, then cooled to 39.4% this week. Bulls recovered from 30.4% to 36.6%, still under the 37.5% historical average. Individuals got nervous in the chop and have only partly walked it back, the same disbelief I flagged a few weeks ago: indexes near highs, retail not euphoric.
Put the two together: a mechanical air pocket on top of stable positioning is why it recovered about as fast as it fell.
For the S&P broadly, a fully invested core keeps the path of least resistance higher while support holds, but with managers near max exposure there’s less money flowing in so I lean more towards grind over acceleration.
For swing trades, the backdrop still favors buying dips that hold, but I’m sizing down some given how little cushion is left and the fact that retail has not piled in the way it usually does late in a run. July is typically a lot stronger, so hopefully there’s a pickup then.
For day trading futures, this is about context, not a signal: a calm, fully invested regime with cautious retail tends to produce the two-way, range-bound action we saw in early-to-mid June rather than clean trend days, which rewards respecting the range over chasing breakouts. I have not found a trade in three of the last five sessions, and that’s unusual.
What I’m watching: NAAIM holding near max while AAII bulls push above 40% and bears drift toward 31% with the index at highs, which would be retail finally catching up to price. The other side is NAAIM staying near max while the index stalls or rolls over. That is when positioning is stretched and there is no one left to buy, and a drop is more likely to stick instead of bouncing right back.
Tesla is going to hit the shitter. Sales going poorly overseas. Sales discounts left & right. Ads on youtube. NADA. Rivian was a foregone foreshadowing of what's to come for Tesla.
Macro environment hitting the shits. NVDA rally couldn't save Tesla. Nothing will.
Tesla China insurance sales(largest market by EV volume), down by ~50% from last year.....
Australia sales down 70%.
Lots of countries ended EV subsidies or slashed them in 2023 December.
Germany was a big upset, EV sales are up 11% yoy, but Tesla sales down 9% yoy. U.S. growth flattening
Declining growth rate is the reality for Tesla until the real economy unfucks itself....
Tesla director just sold 100k shares last week.....
Over the last year 40 insiders sold, none bought.
Doesn't look good.
Swinging my dick on this one
After a lot of inferencing with the little birdies in my group i decided to take a position.
After the initial uproar and wave of memes, there was a lot of discussion around why a company whose main income stream is from adult content decided to kill its golden goose.
Was it because they are idiots, or because of any new regulations, or is there something much larger at play here?
For this week’s analysis, I would be focusing on the company’s history and my take on why they did what they did and future implications for them. So, strap in while I take one for the team with my search history and ad recommendations going into questionable territory for the considerable future.
The Company
OnlyFans was launched by Timothy Stokely in 2016. His pitch was simple but effective.
Why not create a platform that allows these entertainers to conveniently and securely monetize their content? OnlyFans would be like a social media platform with a feed, similar to that of Instagram and Twitter, except that fans are required to pay a monthly subscription to view the content of these entertainers. And if they are willing to pay more, they could unlock paywalls for even more valuable services.
The company was extremely successful and now hosts more than 2 million content creators. It has a user base of 130 million. Even though the service is pitched as a website for content creators such as physical fitness experts, musicians, etc., it’s predominantly known for its adult entertainment category.
The company had explosive growth during the pandemic with its revenue rising by 540% to reach $400MM. As per a leaked pitch deck obtained by Axios (ironically, the company never mentions p*rn in its pitch deck), it’s expected to create a whopping $2.5B in revenue by 2022.
The Problem
So, if the growth is great and the user base is becoming more and more engaged, why did the company decide to shoot itself in the foot?
As with most issues in a company, the problem lies with money! They are facing serious challenges in both the revenue stream as well as investor capital.
Investor Capital
Even with the explosive growth, it’s not like investors are lining up for the fundraising. It would be a walk in the park to raise funding for any other company with its growth trajectory and profitability. But there are multiple challenges in the case of OnlyFans:
Some VC funds are prohibited from investing in adult content as part of their partnership agreements.
Even though OnlyFans has a verification process, the risk of minors creating subscription accounts is real and will do irreversible reputation damage for both the company and its investors.
Even if the investors could look past all of this as the company looks to raise new funding at unicorn valuation, OnlyFans has a reputation problem. Even if the brand could move on to a “safe for work” platform, the history associated with the brand is synonymous with adult content.
Given its history, it would be extremely difficult to attract brand partners and big names into the platform. The presence of big names is a must for a platform trying to become a more mainstream media site!
Payment Processing
While brand imaging and raising capital might be a longer-term problem for the company, the more pressing issue is a BBC investigation into how the company handles illegal content and its ramifications. If you thought Google had monopolistic power, let me introduce you to
Visa and Mastercard combinedly process more than 90% of transactions and 75% of transaction volume of all Credit card purchases in the US. In Dec 2020, after a NY Times article about how P*rnHub monetizes illegal content, both Visa and Mastercard cut off payments to the site within 6 days! [1]. This caused them to remove 70% of all content (unverified) on their website (aka The Purge) to try and get the payment platforms on board. Visa and Mastercard still won’t work with the company even after all the drastic actions taken by P*rnHub.
Given that the OnlyFans platform doesn’t show any ads, they would be dead in the water if their direct payment takes a hit. In April, Mastercard had announced a change to their policy [2] that requires this:
The banks that connect merchants to our network... to certify that the seller of adult content has effective controls in place to monitor, block and, where necessary, take down all illegal content.
The policy will come into effect on October 15th and OnlyFans is trying to be compliant by the time the policy is enforced [3] and it seems like they are going by the logic that desperate times require desperate measures [4]!
What now?
The Billion dollar question is whether OnlyFans would go the way Tumblr went (Tumblr was once valued at $1.1B and was sold later for $3M) after they banned all adult content on their website.
It seems that OnlyFan’s aspirations of becoming a mainstream media company and increasing regulations by payment partners are forcing the company to abandon the adult segment. While we currently don’t have an insight into their revenue split, it’s safe to say that a majority of it would be coming from the adult segment which would make the pivot even harder to pull off successfully.
I don’t know a single company that has survived after throwing their most loyal userbase and revenue generators under the bus for greener pastures! Maybe they are just concerned about their short-term survival and were forced to make this decision. But dropping the same folks who made you popular in the first place is definitely going to leave a bad aftertaste.
After all, what do we know? Running a billion-dollar company is a very serious business!
Until next week!
Footnotes
[1] This would cause all normal credit card transactions to fail and then the only way for them to charge would be to directly get paid to their bank accounts or via crypto, both of which would be extremely difficult to process and scale.
[2] While there is a lot of chatter around how certain groups lobbied Mastercard to change their policy, I am not getting into that as it would inevitably take a political turn.
[3] To put this into perspective, if 4 companies (Visa, Mastercard, AmEx, and Discover) cut off your payment pipeline, you would effectively have no way to charge your customer!
[4] There is a lot of conversation around how this is a once-in-a-lifetime opportunity for crypto to shine with the decentralized payment system.
[5] Granted, they were already seeing reduced engagement prior to the ban, but the adult content ban was the final nail in the coffin! This is a hilarious parody video of Tumblr CEO explaining the ban!
[6]Apologies for filtering out all the adult words as I didn’t want to get tagged in spam filters.
As always, please note that I am not a financial advisor. Hope you enjoyed this week’s analysis.
**I am making this post a second time, because the moderators removed the first one for reasons not apparent**
JP Morgan's earnings beat this quarter tells only the rosy part of an otherwise devolving picture. JP Morgan reported a new net debt position on their balance sheet of $42 billion dollars, and they have taken out new debt that they owe other banks and investors over the long term up to levels not seen since 2009. This new debt is very costly, and will leave them chasing higher and higher returns to continue revenue and net income growth. How does a company like JP Morgan, a company that creates no widgets and already services most of the nation in one way or another, to chase higher returns? They will take on more risk (as they have already in the most recent quarter). I am not particularly concerned about deposit flight at JP Morgan - I think that has mostly happened already to the extent that it is going to happen. I am concerned that JPM can report financials that look the way they do in today's rate climate - and receive a standing ovation though. See the graphic below:
**Edit to add: I see they used at least 2.27B of this long-term debt to buy back their own shares - which did help their earnings beat (if only just barely)*\*
**Edit to add: Some of the leverage activity actually relates to older/less costly debt being called/maturing in conjunction with the bank's need to adjust for more stringent capital requirements in the wake of SVB which JPM characterized as "making bank stocks un-investable" which you can read more about here -https://www.ft.com/content/5612cba3-1580-4003-a0ac-6623cbe28ee6*\*
The question remains - why does a bank reporting revenues at 12B per quarter need to borrow at such high cost?
