Alpha-Centric ESG Research

Kyle Rudden

This is a follow-up to <a href="https://www.smartkarma.com/insights/esg-and-bitcoin-the-truth-lies-somewhere-between-benign-and-boiling-off-oceans" target="_blank" data-smartkarma-citation="insights:52134" rel="noopener">ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans</a>, in which I discussed the ongoing cryptocurrency/ESG debate, and explained the reasoning behind my slightly positive long-term opinion of the issue (near-term negative, however).Essentially, it boiled down to the balance of Environmental, Social, and Governance issues. Proof-of-Work cryptocurrencies (especially Bitcoin) are an Environmental nightmare. However, there is reason for optimism (e.g., Ethereum 2.0), and some long-term Social issues are major positives.Nevertheless, the raging firestorm over cryptocurrency's Environmental footprint will be foremost on the minds of many ESG-minded investors. They will want avoid crypto at all costs. That is easy regarding direct exposure – just don't buy Bitcoin, Coinbase, or any other crypto pure-plays.Indirect cryptocurrency exposure is a different story altogether. As cryptocurrencies become more mainstream, the potential for indirect exposure increases – in probability, degree, and number of possible vectors. Some are hard to miss (e.g., Tesla), but others are much harder to identify.Ergo, this Insight. It covers the first of several emerging areas of potential indirect crypto exposure, specifically the growing cadre of listed companies putting crypto on the books; holding Bitcoins in treasuries for a variety of reasons, but primarily as a supposed super-hedge against inflation.It is written for the never-Bitcoin environmentalist investor, but with a little imagination any pro-Bitcoin investor can just flip its messages upside down. After all, whether indirect cryptocurrency exposure is an ESG risk or an ESG opportunity is entirely up to you to decide, for yourself.

This is a follow-up to ESG and Bitcoin: The Truth Lies Somewhere Between Benign and Boiling Off Oceans, in which I discussed the ongoing cryptocurrency/ESG debate, and explained the reasoning behind my slightly positive long-term opinion of the issue (near-term negative, however).Essentially, it boiled down to the balance of Environmental, Social, and Governance issues. Proof-of-Work cryptocurrencies (especially Bitcoin) are an Environmental nightmare. However, there is reason for optimism (e.g., Ethereum 2.0), and some long-term Social issues are major positives.Nevertheless, the raging firestorm over cryptocurrency's Environmental footprint will be foremost on the minds of many ESG-minded investors. They will want avoid crypto at all costs. That is easy regarding direct exposure – just don't buy Bitcoin, Coinbase, or any other crypto pure-plays.Indirect cryptocurrency exposure is a different story altogether. As cryptocurrencies become more mainstream, the potential for indirect exposure increases – in probability, degree, and number of possible vectors. Some are hard to miss (e.g., Tesla), but others are much harder to identify.Ergo, this Insight. It covers the first of several emerging areas of potential indirect crypto exposure, specifically the growing cadre of listed companies putting crypto on the books; holding Bitcoins in treasuries for a variety of reasons, but primarily as a supposed super-hedge against inflation.It is written for the never-Bitcoin environmentalist investor, but with a little imagination any pro-Bitcoin investor can just flip its messages upside down. After all, whether indirect cryptocurrency exposure is an ESG risk or an ESG opportunity is entirely up to you to decide, for yourself.

Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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Our base case valuation of Wish is an implied EV of $12.3 billion, implied market cap of $14.4 billion, and implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO price range of $24 per share. Given such a low upside, we would pass on this IPO.
One of the long-term concerns we have about Wish is the fact that the number one priority of the company is price. This is a double-edged sword. By focusing on price as the number one priority, the company has been able to gain a tremendous number of customers that put price as their number one importance. Nonetheless, it may be difficult for the company to generate relatively high profit margins in the long run since Wish may have difficulties in gaining customers that value quality over price when purchasing products through mobile or online platforms.
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Our base case valuation of Wish is an implied EV of $12.3 billion, implied market cap of $14.4 billion, and implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO price range of $24 per share. Given such a low upside, we would pass on this IPO.
One of the long-term concerns we have about Wish is the fact that the number one priority of the company is price. This is a double-edged sword. By focusing on price as the number one priority, the company has been able to gain a tremendous number of customers that put price as their number one importance. Nonetheless, it may be difficult for the company to generate relatively high profit margins in the long run since Wish may have difficulties in gaining customers that value quality over price when purchasing products through mobile or online platforms.


Wish IPO Valuation Analysis: Focus on Price Is a Double-Edged Sword

BigCommerce Holdings / Equity Capital Markets

<a href="https://www.nasdaq.com/articles/e-commerce-platform-bigcommerce-sets-terms-for-%24130-million-ipo-2020-07-28" target="_blank" data-smartkarma-citation="entities:29196:1" rel="noopener">BigCommerce Holdings Inc (BIGC US)</a> plans to complete its IPO next week. The IPO price range has been determined at $18 to $20. The company plans to offer 6.9 million shares. At the high end of the IPO price (excluding greenshoe option), the company would raise nearly $138 million.Our valuation analysis of BigCommerce suggests an implied market cap of $2.3 billion and a target price per share of $30.9, which suggests a 62% upside to the mid-point of the IPO price range of $19. We are also including BigCommerce in our model stock portfolio. Our valuation is based on P/S, using our estimated sales of $189.4 million in 2021 and P/S multiple of 12x. We used fully diluted shares of 74 million shares to derive our target price valuation. Our P/S valuation multiple of 12x represents a 20% discount to the average P/S valuation of the comps in 2021. It also represents a 67% discount to the P/S multiple of 36.7x for Shopify.

BigCommerce Holdings Inc (BIGC US) plans to complete its IPO next week. The IPO price range has been determined at $18 to $20. The company plans to offer 6.9 million shares. At the high end of the IPO price (excluding greenshoe option), the company would raise nearly $138 million.Our valuation analysis of BigCommerce suggests an implied market cap of $2.3 billion and a target price per share of $30.9, which suggests a 62% upside to the mid-point of the IPO price range of $19. We are also including BigCommerce in our model stock portfolio. Our valuation is based on P/S, using our estimated sales of $189.4 million in 2021 and P/S multiple of 12x. We used fully diluted shares of 74 million shares to derive our target price valuation. Our P/S valuation multiple of 12x represents a 20% discount to the average P/S valuation of the comps in 2021. It also represents a 67% discount to the P/S multiple of 36.7x for Shopify.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn &amp; Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn &amp; Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Equity Bottom-Up

Following his bizarre revelations about his involvement in ongoing FBI investigations on August 12'th last, <a href="https://www.smartkarma.com/entities/overstock-com-inc" target="_blank" data-smartkarma-citation="entities:20930:1" rel="noopener">Overstock</a> CEO Patrick Byrne resigned his position on August 22'nd, severing all ties with the company, through still remaining its largest shareholder.Byrne's antics triggered a collapse in Overstock's share price, causing it to lose some 40% of its value over a three week period. Now, with a new (interim) CEO, and a new board member, the company is going on the defensive.In separate briefings last week, interim CEO Jonathan Johnson and blockchain subsidiary tZero CEO Saum Noursalehi addressed the events of the past month and outlined their plans for the future of the company. Their words seem to be having the desired impact. Over the course of the past three trading days, Overstock is now up some 33%. The saga, and the volatility, goes on.

Following his bizarre revelations about his involvement in ongoing FBI investigations on August 12'th last, Overstock CEO Patrick Byrne resigned his position on August 22'nd, severing all ties with the company, through still remaining its largest shareholder.Byrne's antics triggered a collapse in Overstock's share price, causing it to lose some 40% of its value over a three week period. Now, with a new (interim) CEO, and a new board member, the company is going on the defensive.In separate briefings last week, interim CEO Jonathan Johnson and blockchain subsidiary tZero CEO Saum Noursalehi addressed the events of the past month and outlined their plans for the future of the company. Their words seem to be having the desired impact. Over the course of the past three trading days, Overstock is now up some 33%. The saga, and the volatility, goes on. 

Blockchain Delusion. Overstock Volatile As Ever Despite Byrne's Resignation

United States

Overstock.com, Inc. offers discounted brand-name merchandise for sale over the Internet. Products include bed-and-bath goods, kitchenware, jewelry, sporting goods, electronics, and designer accessories.

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Overstock.Com Inc (OSTK US)

Bitcoin on Balance Sheets: Indirect Crypto Exposure Considerations for Crypto-Leery ESG Investors

Companies are increasingly embracing cryptocurrencies as a corporate treasury management strategy. This looks at some representative companies with...

Kyle Rudden

Wish IPO Valuation Analysis: Focus on Price Is a Double-Edged Sword

Our base case valuation of Wish is an implied price per share of $24.50 per share. This represents just a 2% upside to the high end of the IPO...

Douglas Kim

BigCommerce IPO Valuation Analysis

BigCommerce Holdings Inc (BIGC US) plans to complete its IPO next week. The IPO price range has been determined at $18 to $20. The company plans to...

Douglas Kim

U.S. Equity Strategy: Buy The Dips

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the...

Vermilion Research

Blockchain Delusion. Overstock Volatile As Ever Despite Byrne's Resignation

Following his bizarre revelations about his involvement in ongoing FBI investigations on August 12'th last, Overstock CEO Patrick Byrne resigned...

William Keating

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