ACCUMULATION BOOST
Over the past month, there has been a notable surge in the acquisition of assets by long-term holders of Bitcoin, totaling close to $23 billion – a significant uptick indicating a trend of accumulation. Over 400,000 BTC have been transferred to these addresses. This increase in investment activity reflects a growing interest in the cryptocurrency, and some experts are predicting that major institutions or governments may publicly disclose their ownership of Bitcoin by 2024. They advise the general public to stay informed about economic developments and consider including Bitcoin in their investment portfolio. Additionally, the number of individuals actively engaging in the process of “mining” Bitcoin has remained relatively stable, indicating a potential positive trend in the market. Moreover, it is worth remarking that as long-term holders of Bitcoin hold onto their investments instead of selling them off quickly, it could change how new investors view the stability and growth potential of the cryptocurrency market. This shift in perception may lead to increased interest and confidence in Bitcoin as a long-term investment option, potentially attracting more investors to the market and contributing to its overall growth and stability.
RISKY STOCK SPLIT
MicroStrategy has made headlines as it has announced a historic 10-for-1 stock split, set to take effect following the close of trading on August 7. The decision to enact this stock split was motivated by the company’s aim to increase accessibility of its shares to both investors and employees. This forward split is the third split in MicroStrategy’s history since its initial public offering in 1998, and it is believed that the share price will be lowered to around $145. Nonetheless, despite this, it is important to note that MicroStrategy’s appeal to investors is largely due to its status as the largest corporate holder of Bitcoin, with 226,500 Bitcoins valued at around $13.8 billion. This has led investors to pay a hefty premium of nearly 90% to own shares of the company, which may not be sustainable in the long run. Moreover, in a risky move, the company even borrowed money to purchase more Bitcoin, which could pose financial risks in the future. As a result, experts caution against investing in MicroStrategy stock without thorough research and consideration of the potential risks involved.
RECORD LOW RATES
Last week, mortgage interest rates decreased significantly and reached the lowest levels seen since May 2023. This drop in rates led to a notable increase in demand for mortgages from both potential homebuyers and existing homeowners looking to refinance. The Mortgage Bankers Association reported a 6.9% rise in total mortgage application volume, with the average interest rate for 30-year fixed-rate mortgages falling to 6.55%. Refinance applications saw a particularly sharp increase of 16%, likely as borrowers sought to take advantage of the lower rates. However, the increase in applications for purchasing homes was more modest, at just 1%. Moreover, it is worth noting that although the current rates are favorable, some buyers may be hesitating to enter the market due to uncertainties in the economy.
DIPS DESPITE EARNINGS
Following the release of Amazon’s second-quarter earnings report, the company’s stock experienced a decline despite surpassing earnings expectations of $1.26 per share. The revenue of $147.98 billion missed the expected $148.68 billion, suggesting that people might be spending less on Amazon. In addition, although their cloud computing division, AWS, grew by 19%, their North America and International segments did not grow as quickly. Consequently, analysts have lowered their price targets for Amazon’s stock as they are worried about these mixed results and what might happen in the future. Furthermore, with increased competition in the cloud computing industry, Amazon faces challenges in meeting market expectations. Nevertheless, as of 8:00 AM CST, Amazon has managed to recover some of its recent losses.
STREAMING SUCCESS
Disney has reported positive earnings for its third ffiscal quarter, with its streaming division finally turning a profit. The direct-to-consumer streaming business, which includes Disney+, Hulu, and ESPN+, showed a significant improvement, posting an operating income of $47 million compared to previous losses. However, weak performance in the parks division affected the overall report, attributed to a decline in consumer demand towards the end of the quarter. Despite this setback, Disney exceeded analysts’ expectations for adjusted earnings per share and revenue, resulting in an initial stock rise followed by a decline. The company also raised its guidance for full-year adjusted earnings growth and announced upcoming price increases for its streaming services. Although there was a slight increase in core Disney+ subscribers, the average revenue per user for domestic Disney+ customers decreased, indicating challenges in maximizing monetization. Nevertheless, despite these hurdles, Disney remains positive about its future direction and profitability in the streaming sector.