The biggest tap-to-earn games have faced a rude awakening as their tokens continued their strong downward trend.

Catizen, one of the biggest Telegram games, has crashed from a high of $1.1500 to $0.4565, bringing its market cap to over $139 million and its fully diluted valuation (FDV) to over $400 million.

Similarly, Notcoin (NOT), the first Telegram tap-to-earn game has dropped by 74%, lowering its valuation from over $2.5 billion to $770 million. 

Most recently, Hamster Kombat, the biggest player in the industry, has dropped for each day since its airdrop last week. In this, its market cap has fallen from over $600 million to $300 million, while its FDV has dropped to $465 million.

Other popular tap-to-earn tokens like DOGS and Pixelverse have all crashed hard since their listings.

What is Telegram’s tap-to-earn industry?

Tap-to-earn games like Notcoin, Hamster Kombat, DOGS, and Catizen have become some of the fastest games in the crypto industry.

These games solve the key challenge with traditional play-to-earn players like Axie Infinity, Decentraland, Sandbox, and Gala Games. 

The traditional games were relatively unavailable to many people because one needed a computer and an online wallet to get them. Their gameplay was also relatively difficult for most people. 

Telegram games, on the other hand, are simpler mini-applications that are housed in the application, making them available to most people, even those with low-end smartphones.

Their gameplay is also simple since one just needs to press a button to accumulate tokens. People also gain more tokens by doing simple activities like watching their videos, following their social media accounts, and answering some tasks. 

The goal is to accumulate as many tokens as possible and then convert them into fiat currencies when their airdrop happens.

These games have become highly popular this year, with Hamster Kombat gaining over 300 million users in less than six months. Its YouTube channel has over 37.5 million subscribers, while its X page has over 14 million followers.

PixelTap has over 75 million players, while TapSwap, Blum, DOGS, and Notcoin have over 45 million users. Other popular names in the Telegram ecosystem like Gamee, Goats, Lost Dogs, and Cat Gold Miner have added more than 7.7 million users.

These games have become highly popular for several reasons. First, Telegram is a highly popular social media network with over 950 million users, making these games easy to use.

Second, they are all easy-to-play games, meaning that users can accumulate tokens within just a few steps. Third, their is the potential for making a killing when the networks launch their airdrops.

Why Hamster Kombat, Notcoin, DOGS, and Catizen have slumped

There are several reasons why these tap-to-earn games have not translated their success in the gaming industry into the crypto industry.

First, and to be fair, most of the recently launched airdrops have not been successful. For example, Wormhole, ZkSync, Bitcoin Dogs, and EigenLayer have all dropped sharply this year.

Second, these tokens have crashed as many people who accumulated them before their airdrops sold them. Recent data shows that most of Hamster Kombat’s players have sold the HMSTR tokens to take advantage of the current liquidity. The same has happened across other tokens. 

Third, there are concerns about future dilutions since only a handful of tokens were released. Hamster’s maximum supply has been capped at 100 billion, and only 64.3 billion have been released. This means existing holders will experience substantial dilution in the future.

Catizen has a maximum supply of 1 billion CATI, while only 305 million of them are in circulation. Similarly, DOGS has a maximum of 550 billion tokens and a circulating supply of 516 million.

Notcoin is the only one that has unlocked all tokens, meaning that holders will not be diluted.

Lessons from play-to-earn

Tap-to-earn tokens have plunged as investors take a lesson from the play-to-earn tokens that became highly popular in 2021. 

Most of them have all plunged in the past few years. Decentraland and Axie Infinity have had their market capitalisation crash from over $8 billion in 2021 to below $800 million today.

This decline happened because of the weak activity in their games, with some of them having less than 2,000 monthly active users. These users are usually paid in their respective tokens, which have crashed, reducing the incentive for people to play. 

Similarly, there are concerns about what will happen now that Hamster Kombat, Catizen, DOGS, and Notcoin tokens have been launched. 

Analysts expect that these networks will continue seeing weak growth in the future as gamers explore the next big ones. The collapse of tap-to-earn tokens raises questions about what to expect when the Pi Network launches its airdrop in 2025. Most experts believe that Pi will also drop as people convert their coins into cash.

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The RTX (RTX) stock price continued its robust surge as geopolitical tensions rose this week. It jumped to a fresh all-time high of $124.40 on Tuesday, bringing the year-to-date gains 50%, making it its best year ever. 

Other companies in the military industrial complex continued rising. Lockheed Martin soared to a record high of $611, bringing the year-to-date gains to over 36%. Similarly, companies like General Dynamics and Northrop Grumman continued their surge.

Geopolitical challenges rise

RTX is a leading player in the defense industry, where it has become a top merchant of military equipment. 

It operates its business in three key divisions: Collins Aerospace, Pratt & Whitney, and Raytheon. 

Collins manufactures many items in the aerospace and defense industry and provides aftermarket service. Its products are found in planes like the Boeing 777X and the 737 MAX.

Pratt & Wihitney is a big competitor to Rolls-Royce and GE Aviation in the jet engine industry. It makes engines that are used in civilian and defense aircraft like the F-35, Airbus A320. 

Raytheon, manufactures various items used by the three arms of the military. Its products include Advanced Medium Range Air-to-Air Missiles (AMRAAM), StormBreaker, and Long Range Stand Off Weapon (LRSO). 

Altogether, RTX generates about 46% of all its sales from the US government and the rest to its international clients.

Therefore, the company has benefited substantially as the military spending has continued rising in the past decade. Data shows that the US government spent $693 billion in defence spending in 2010, a figure that has jumped to over $841 billion. Analysts expect that this spending will hit $1 trillion in the coming years. 

Iran and Israel crisis

The most recent catalyst for the RTX stock price was the decision by Iran to launch hundreds of ballistic missiles to Israel on Tuesday. It also coincided with Israel’s decision to launch a ground attack in Lebanon, a highly embattled country.

It did that to revenge the killing of Hezbollah’s leader last weekend. In a statement, Benjamin Netanyahu said that Israel will revenge for these missile attacks. 

Therefore, there is a risk that the region will see a prolonged conflict. Many analysts believe that Netanyahu’s goal is to ultimately have the US government launch attacks or even a ground operation in Iran.

At the same time, the war in Ukraine is continuing while tensions between the US and China have increased. Russia has warned that it may use its nuclear arsenal if Ukraine attacks it using Western-provided weapons.

There are also rising odds that China will attack Taiwan in the next few years, a move that will lead to more retaliation by the American government.

Therefore, RTX and other weapons manufacturers are expected to see robust demand in the coming years.

The companies will also benefit from the potential improved relations between Israel and Saudi Arabia. As part of the deal being negotiated, Saudi will have better relations in exchange of Western weapons. This is notable because it is one of the biggest spenders. It spent over $75 billion in 2023.

RTX earnings download

The most recent results showed that the RTX business continued growing in the second quarter. Reported sales rose by 8% to over $19.7 billion, while its adjusted sales were $19.8 billion.

Most importantly, RTX ended the quarter with a record backlog of over $206 billion. It added $24 billion in contracts in the quarter.

Pratt & Whitney’s organic sales rose by 19% to $6.8 billion, while Collins Aerospace’s sales rose to $7 billion. Raytheon’s sales retreated by 4% to $6.5 billon.

RTX expects its business to continue doing well this year. Its adjusted sales are expected to be between $78.75 billion and $79.5 billion, up from the previous guidance of between $78 billion and $79 billion. 

However, its free cash flow is expected to be $4.7 billion, lower than the previous guidance of $5.7 billion. This decline is likely because of the challenges in its Pratt & Whitney business, where its engines found some costly challenges.

RTX stock price analysis

The ongoing RTX stock surge has made it a highly expensive company that trades at a forward P/E ratio of 33. This premium is understandable because of the rising demand across all its businesses. It is also in line with that of other companies in the military industrial complex.

On the daily chart, we see that the RTX share price has surged from last year’s low of $66.8 to $124.40. It recently crossed the important resistance point at $124, its previous all-time high. By moving above that level, the stock invalidated the double-top pattern that was forming. 

It has remained above all moving averages and the Ichimoku cloud indicator. Therefore, the path of the least resistance for the stock is upwards, with the next point to watch being at $150.

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The Xiaomi stock price continued soaring, reaching a high of $24, its highest point since 2022 bringing its market cap to over HKD 605 billion or $72.4 billion. This growth makes it one of the biggest Chinese technology companies.

Xiaomi’s growth is continuing

Xiaomi, popularly seen as China’s Apple, sells millions of smartphones globally each year. 

It has also expanded its business to other industries like accessories, wearables, gaming, and home accessories. Most recently, the company has expanded its business in other industries, including electric vehicles. 

Its growth over the years has been because of the quality of its products and the prices. In most cases, Xiaomi sells top-of-the-range products for minimal costs, which has endeared it in countries like China and India. 

Data from SeekingAlpha shows that Xiaomi’s business has been volatile in the past few years. Its annual revenue rose from over $29.5 billion in 2019 to a peak of $51.6 billion in 2021. 

The revenue then dropped to $40.6 billion in 2022, followed by $38.7 billion last year. Its revenues in the trailing twelve months rose to $42.5 billion.

Xiaomi is also highly profitable, with its total net income coming in at $2.5 billion in the last four quarters.

The biggest challenge, however, is that Xiaomi makes most of its money in the smartphone industry, which has been slowing for a while. People are staying with phones for longer, helped by the quality of the shipped devices. 

The most recent data by IDC showed that worldwide smartphone sales grew by 6.5% in the second quarter as momentum continued to build. Shipments rose to 285.4 million, the fourth consecutive quarter of growth. 

Xiaomi has a large market share in the industry as it shipped 42.3 million devices, making it third only to Samsung and Apple. The other top brands are Vivo and OPPO. This recovery explains why the Xiaomi stock price has bounced back in the past few months.

Xiaomi’s smartphones are the number 2 in Latin America, 3 in Africa, and 3 in Europe. Also, it is the number 1 brand in India and number 2 in the Southeast Asian region.

Xiaomi’s sales are rebounding

The most recent results show that Xiaomi’s revenues bounced back in the second quarter, reaching RMB 88.8 billion, a big increase from the RMB 67 billion it made in the same period last year. 

Its gross profit jumped by almost 30% to RMB 18.3 billion, while its profit for the period was over RMB 5 billion.

Most of its revenue came from the smartphone and Internet of Things (IoT) busines, whose revenue rose by 22% to RMB 82.5 billion. 

The company’s new EV business continued firing on all cylinders, selling over 27,307 vehicles. Its goal is to sell 120k vehicles this year, a remarkable performance for a company that has just gotten into the business. It was also the best-selling pure-electric sedan in July.

Most importantly, its electric vehicle brand is seeing healthier margins. In the most recent quarter, it had a gross margin of 15.4%, higher than other Chinese EV brands. Nio has a gross margin of 7.8%, while XPeng has 7.29%. 

Therefore, while the car business will drag its profitability for a while, there are rising odds that it will break even in the coming years. The challenge, however, is that EV growth is expected to slow in the next few years, which could affect its growth and profitability.

Additionally, Xiaomi has one of the top balance sheets in China, with over RMB 141 billion in cash and short-term investments. It also returned billions of dollars to shareholders through share repurchases.

Xiaomi will also benefit from the recently announced Chinese stimulus and falling interest rates globally. These catalysts will likely lead to more demand for discretionary products. 

Xiaomi stock price analysis

Xiaomi stock by TradingView

The daily chart shows that the MI share price has been in a strong bull run in the past few weeks. The current phase of the rebound started on August 4, when it bottomed at H$15.38. 

It has jumped above the key resistance level at $20.35, its highest swing on May 14, and the previous all-time high. By moving above that level, the stock made the double-top pattern that was forming invalid. 

The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA), signalling that bulls are still in control.

At the same time, oscillators like the Relative Strength Index (RSI) and the stochastic oscillator have all pointed upwards, meaning that it has more momentum.

Therefore, the Xiaomi share price will likely continue soaring as bulls target the next key resistance point at H$30.45, its highest level in June 2021. If this happens, the stock will rise by over 27% from the current level.

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The Zimbabwe ZiG, a currency launched in April, has imploded, raising fears of sticky inflation and more US dollar demand. The official USD to ZIG exchange rate was listed at 25.13 on October 2, much higher than the initial price of 13.5.

It is doing worse in the black market, where the exchange rate has surged to 40, meaning that the currency has fallen by over 207%. 

Why is the ZiG imploding?

The current phase of the Zimbabwe ZiG sell-off happened after the central bank devalued it by 43% last week.

This happened as the bank worked to bridge the gap between the official and the black market rate. It argued that the devaluation would work as a shock absorber and that it would stabilise the currency in the long term.

The central bank also decided to hike interest rates from 20% to 35% to make the currency attractive for savers. It also introduced new currency caps that reduced the amount of money that one can take out of the country to $2,000 from $10,000 before. 

Recent intentional currency devaluations have not worked out well. For example, the Nigerian naira and the Egyptian pound have all crashed to their record lows after the central banks devalued their currencies. 

The odds of the Zimbabwe ZiG’s success were always stacked against it, as I have written several times before. 

First, the Zimbabwean economy is not doing well because of a recent prolonged drought that has led to more food imports. Higher imports lead to more demand for US dollars since many users abroad do not accept the Zimbabwean currency. Some of Zimbabwe’s top exports like tobacco have also been affected. In a note, an analyst at Capital Economics said:

“While this is a positive step, it is unlikely to be a one-time adjustment. The country’s wide current-account and fiscal deficits, along with limited access to external capital markets, will continue to place significant pressure on the currency.”

Second, the Zimbabwe ZiG has plunged because of the elevated US dollar demand in the currency. While many businesses accept the currency, data shows that most convert their profits into US dollars. 

Third, the ZiG is competing with the more established US dollar, which is used to handle most transactions in the country. Data by the central bank shows that the greenback is used in over 70% of all transactions.

A crisis of confidence

The most important reason why the Zimbabwe ZiG has crashed is that many people in the country don’t have confidence in the currency and the central bank. 

Besides, the bank has launched six currencies, which have all imploded, leading to substantial losses, especially to savers.

Before the ZiG, the central bank launched the RTGS dollar, which dropped by more than 80% in the first three months of the year as its demand collapsed. Savers who allocated their savings in the currency when it was launched in 2019 saw their funds almost disappear.

History shows that many people have a hard time trusting troubled currencies. This explains why the Turkish lira has dropped to a record low even after the central bank delivered several interest rate hikes, pushing the benchmark to 50%.

It also explains why the Argentine peso has crashed by over 20% this year and by 180% in the last twelve months. 

Other highly troubled currencies like the Nigerian naira and the Egyptian pound have also crashed because of low confidence among businesses and individuals. 

For starters, Zimbabwe ZiG is a unique currency in that it is backed by dollars and gold. When it was launched, the currency was backed by $100 million in cash and 2,500 kilograms of gold. The central bank has added more money and gold to back it up.

It is an experiment that has not been tried before. The closest approach that has been fairly successful has been to peg local currencies to others. For example, Namibia has pegged its currency to the South African rand.

Similarly, the Hong Kong dollar has been pegged to the US dollar. As we have seen before, countries that peg their currencies often need to intervene in terms of pressure. For example, the Hong Kong Monetary Authority (HKMA) intervened in the market three times in 2023.

HKMA is able to do that because it sits on some of the highest dollar reserves in the region. Recent data shows that the city has over $425 billion in reserves, which are higher than its GDP of $359 billion. Zimbabwe, which has also intervened recently, does not have these buffers.

As I have written before, I believe that odds of the Zimbabwe dollar success are limited and that the country will most likely continue using dollars for a long time.

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Warner Bros. Discovery (NASDAQ: WBD) stock has been one of the worst performers in the media industry this year. It has dropped by over 28% this year, while the S&P 500 and Nasdaq 100 indices have soared by over 20%. 

WBD’s performance is a continuation of what has been happening since WarnerMedia and Discovery merged in April 2022. It has dropped by over 60% since then, meaning that a $10,000 investment in the company would now be worth less than $4,000. 

WBD’s market cap has dropped from over $50 billion to about $20 billion. Netflix, on the other hand, has continued firing on all cylinders, rising by over 85% in the last 12 months, bringing its valuation to $304 billion. 

Why Warner Bros. Discovery is struggling

Warner Bros. Discovery’s performance has mirrored that of other media companies. For example, Paramount Global, the parent company of CBS, Nickelodeon, Comedy Central, and MTV, has crashed by over 70% in the past few years, giving it a market cap of $7.5 billion. 

Walt Disney, which owns ABC and ESPN, has dropped by over 53% from its highest level in 2020. 

These stocks have dropped because the media industry has changed, possibly for good. As a result, brands that used to be hot a decade ago have become toxic. For example, in the past, people used to watch MTV and BET to get the latest music. 

Today, that has changed, thanks to a free service like YouTube and streaming solutions like Apple Music, TikTok, and Spotify. 

Similarly, Nickelodeon and Cartoon Network were the best channels for children. That has changed, with YouTube having the biggest market share. 

This trend has seen many Americans embrace cord cutting since most of them rarely watch TV. Data by Statista show that the share of TV households without a traditional TV has grown from 18.8% in 2014 to 60% in 2023. This trend will continue to grow to 75% by the end of 2026. 

Cord cutting has a major impact on Warner Bros. Discovery. In the first place, it reduces its advertisement revenue now that most companies are opting for other forms of marketing. 

Additionally, it reduces the amount of money the company receives from cable companies like Charter Communications, Comcast, and Dish Networks. 

WBD’s earnings have been disappointing

The Warner Bros. Discovery’s stock has dropped because of the company’s slow revenue growth. Its second-quarter revenue dropped by 5% in the second quarter to $9.7 billion.

This revenue decline was spread across the studios and networks segments. Studios, which created popular theatrical releases like Godzilla x Kong and Dune dropped by 4% to $2.45 billion. TV revenue also retreated by 27% because of low licensing fees. 

The studio segment’s weakness is notable because it is one of its crown jewels. It also has a big market share in an industry whose other large players are Disney and Paramount. 

Meanwhile, revenue in the network business continued to fall, reaching $5.2 billion in the last quarter. This decline was mostly because of weak advertising and distribution divisions. Most importantly, the company made a big write-down of its networks division, which explains why it reported a big loss of $10.1 billion during the quarter. 

Most importantly, Warner’s direct-to-consumer business is not growing as expected. Total direct-to-consumer subscribers were 103.3 million, a 3.6 million increase from last quarter. Despite the increase, the division’s revenue dropped by 5% to $2.56 billion because of weak licensing fees.

Warner Bros. Discovery’s business, therefore, needs a good turnaround strategy, especially that the company lost rights to NBA. This turnaround, in my view, should include selling some of its assets and using the funds to pay its high debt. 

The best time to sell some or all of its TV networks is now because they still have some value. In the next decade, however, their valuation will continue falling, as we have seen with Paramount. In fact, there is a risk that cable companies like Charter will drop some of its networks.

Its other challenge is that it faces substantial maturities in the coming years. It has over $3 billion worth of maturities through 2026, which will affect its content investments.

Warner Bros. Discovery stock analysis

The daily chart shows that the WBD share price has moved sideways in the past few months as investors wait for the next catalyst. It has formed a rectangle pattern whose lower and upper levels are at $6.92 and $8.90. 

The stock is also consolidating between the 50-day and 200-day Exponential Moving Averages (EMA). 

There are signs that it has formed a small bullish flag pattern. Therefore, the outlook for the stock is neutral, with the key points to watch being $8.90 and $6.92. A break below the support will point to more downside, while a move above $8.90 will lead to more gains.

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