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BlackRock’s head of crypto doesn’t see Bitcoin as a ‘risk on’ asset

​​Bitcoin has been wrongly categorized as a “risk-on” asset, says Robbie Mitchnick, BlackRock’s head of digital assets.

In a recent Bloomberg interview, Mitchnick argued that the crypto industry has misinterpreted Bitcoin’s risk profile, comparing it to stocks in a way that oversimplifies its behavior.

He explained:

Some crypto publications have taken Bitcoin’s inherent riskiness and stretched it to mean it’s a ‘risk-on’ asset like equities.

But, he argues, Bitcoin’s long-term drivers differ from stocks and traditional risk assets—sometimes moving in the opposite direction.

Bitcoin’s market drivers differ from equities

BlackRock’s new white paper describes Bitcoin as a “unique diversifier,” offering protection against monetary and geopolitical risks.

Mitchnick highlighted that Bitcoin is a decentralized, non-sovereign asset with no country-specific or counterparty risks.

He said:

It’s confusing to call it risk-on when its fundamentals suggest it’s more like a risk-off asset.

Risk-on assets typically thrive in favorable economic conditions, like tech stocks and certain commodities. In contrast, risk-off assets, such as gold and government bonds, perform better in uncertain times.

Bitcoin, he stressed, does not align with these definitions.

BlackRock calls Bitcoin a hedge, not a risk-on asset

Mitchnick also addressed concerns over a recent change to BlackRock’s iShares Bitcoin Trust (IBIT) ETF, requiring 12-hour withdrawals from Coinbase, its custodian. He downplayed the update, calling it routine optimization.

“Nothing significant has changed,” he said, adding that such tweaks are standard as the ETF evolves.

Bold prediction: Bitcoin to hit $1 million by 2025?

Meanwhile, the crypto community buzzes with a daring prediction from analyst PlanB.

He suggests Bitcoin could hit $1 million by the end of 2025, outlining a scenario where Trump wins the US election, ends the “war on crypto,” and drives Bitcoin to $100,000.

By 2025, he predicts, Bitcoin could climb to $400,000 before a surge in investor FOMO pushes it to $1 million.

While many find this forecast overly optimistic, it has certainly sparked discussion.

According to Coin Telegraph, one crypto trader said, “If this happens, I’ll run naked in the streets.”

Amid all the hype, Mitchnick remains focused on the fundamentals, reiterating that Bitcoin’s true value lies in its potential as a hedge rather than a speculative risk-on play.

The post BlackRock’s head of crypto doesn’t see Bitcoin as a ‘risk on’ asset appeared first on Invezz

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Ibovespa gains 1.4% after Chinese stimulus announcement: Vale, Petrobras lead the charge

On Tuesday, the Brazilian stock market experienced a notable turnaround, with the Ibovespa index rising by 1.4% and surpassing the crucial threshold of 132,000 points.

This resurgence followed five consecutive days of declines and reflects a strong positive reaction from investors to China’s recent economic stimulus measures aimed at bolstering growth amid ongoing challenges.

As one of Brazil’s key trading partners, favorable news from China significantly influences Brazilian stocks, particularly in the commodities sector, which has direct ties to Chinese demand for minerals and agricultural products.

The recent stimulus measures have instilled optimism among investors, hinting at a potential increase in demand that could benefit Brazilian exporters. Vale S.A., the country’s leading iron ore mining company, emerged as a standout performer, with its shares rising over 4.5%.

This surge aligns with an uptick in mineral prices, closely linked to the anticipated demand boost from China following the stimulus announcement.

Vale’s dominant position in the global iron ore market underscores its vulnerability to shifts in Asian demand, making its performance crucial not only to Brazil’s economy but also indicative of broader geopolitical influences on local stock market dynamics.

Analysts remain optimistic about Vale’s continued strong performance as market conditions evolve.

Petrobras benefits from rising oil prices

Meanwhile, Petrobras, Brazil’s state-owned oil company, also saw its shares increase by 1%, largely driven by a recovery in global oil prices that had been in decline.

As Petrobras navigates operational challenges and seeks improved profitability, this rebound in oil prices brings a measure of hope.

Investors are cautiously optimistic about the company’s ability to capitalize on this upswing to enhance its financial standing.

Notable gains across sectors

The positive momentum was not confined to Vale and Petrobras; several other major companies reported substantial gains.

WEG, a leading electric motor and equipment manufacturer, saw a 1.7% rise in its stock price.

Similarly, Banco do Brasil, recognized for its robust banking services, increased by about 2%.

Other firms, including Eletrobras, JBS, and Suzano Papel e Celulose, also experienced share price increases ranging from 1.5% to 2.2%.

This diverse array of gainers suggests a broad market recovery and reflects widespread investor optimism across various sectors.

Despite the stock market’s positive performance, economic anxieties linger.

The Central Bank of Brazil has adopted a cautious stance regarding inflation, raising concerns about the reliability of government fiscal data.

Following a recent increase in the Selic rate to 10.75%—the first hike in two years—investors are apprehensive that the Central Bank’s warnings could signal potential economic instability.

The minutes from the latest Copom meeting revealed no initiatives to curb inflation, further underscoring a deteriorating inflationary landscape.

Forecasts indicate medium-term inflation could rise, presenting an increased risk of price pressures that may threaten economic stability.

The post Ibovespa gains 1.4% after Chinese stimulus announcement: Vale, Petrobras lead the charge appeared first on Invezz

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Volkswagen union negotiations begin amid looming factory shutdowns in Germany

Volkswagen has embarked on crucial discussions with its trade unions, initiating a pivotal negotiation phase that will shape the future of the company’s workforce and operational structure in Germany.

These talks, set to begin on Wednesday, come at a time when Europe’s largest car manufacturer is weighing significant layoffs and the possible closure of several plants in the country.

The outcome of these negotiations will largely determine the company’s course in navigating high costs and intensifying competition.

The threat of plant closures, which surfaced earlier this month, has placed Volkswagen on a direct collision course with IG Metall, the influential union representing workers at the automaker.

IG Metall has pledged strong resistance to any factory shutdowns, positioning itself as a defender of the company’s workforce.

Adding complexity to the situation, IG Metall must also secure a new labor agreement for the 130,000 workers employed under Volkswagen’s core brand.

This task follows Volkswagen’s recent termination of employment guarantees, which had shielded jobs at six major production plants in western Germany since the mid-1990s.

Volkswagen’s cost struggles amplified by global competition

Volkswagen has voiced concerns that Germany’s rising energy and labor costs put it at a disadvantage compared to other European competitors and aggressive Chinese automakers who are looking to capture a larger share of Europe’s electric vehicle (EV) market.

This pressure, according to the company, forces it to consider drastic measures, including layoffs and facility closures, despite the longstanding agreements with its workforce.

Germany’s industrial sector, including titans like BASF and Thyssenkrupp, has been grappling with similar challenges.

Soaring costs, coupled with labor shortages, have pushed several major companies to downsize or even contemplate partial exits from the country.

This strain is echoed across the German automotive industry, as evidenced by recent profit warnings from fellow automakers Mercedes-Benz and BMW, both of which have suffered from waning demand in China.

Cavallo to defend Volkswagen workers as talks begin

At the heart of these negotiations stands Daniela Cavallo, head of Volkswagen’s works council.

The 49-year-old, who has long been a staunch advocate for workers’ rights, is set to face off against Volkswagen executives in what could be the most contentious labor discussions in recent memory.

Cavallo, who ascended to her leadership role as the first female head of the company’s works council, is determined to shield the “Volkswagen family” from the looming threats.

The high-stakes talks come on the heels of Volkswagen’s announcement that it may close plants in Germany for the first time, ending a fragile two-year period of calm between the unions and management.

Although tensions had temporarily eased under Cavallo’s leadership alongside CEO Oliver Blume, the automaker’s ongoing struggles—fueled by high operational costs and shifting market demands—have forced these difficult decisions to the forefront.

Cavallo expressed her dismay earlier this month, shortly after Volkswagen informed employees of the potential plant closures, saying:

Unfortunately, I’ve got to admit that this is the darkest day so far.

The breaking of employment guarantees and talk of shuttering factories mark a cultural shift at the company, a development that Cavallo and her fellow union members view as a serious blow to worker security.

Volkswagen maintains that such moves are unavoidable given the challenging market conditions and the high cost of doing business in Germany.

However, the unions remain unwavering in their opposition, preparing for a hard-fought battle to protect jobs and prevent the closure of vital production plants.

As the talks progress, all eyes will be on how Volkswagen and IG Metall navigate this volatile situation, with broader implications for Germany’s automotive industry hanging in the balance.

The post Volkswagen union negotiations begin amid looming factory shutdowns in Germany appeared first on Invezz

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Altcoin market wrap: ADA reenters top 10, AAVE flips crucial resistance, RENDER consolidates

The altcoin market exhibited mixed signals as Bitcoin struggled to reclaim the $64,000 mark, trading at $63,782 at the time of this publication.

Cardano has rejoined the top ten cryptocurrencies by market capitalization, AAVE is targeting $200 after overcoming a crucial hurdle, and Render is signaling consolidation following last week’s impressive rallies.

Cardano reenters the top 10

Cardano (ADA) has experienced a 13% uptick over the past seven days, enabling it to reclaim its position among the top ten digital assets and surpass TRON (TRX), which saw a modest increase of 0.73% during the same period.

Cardano currently boasts a market cap of $13.72 billion, while TRON’s market cap stands at $13.11 billion.

Source – Coinmarketcap

ADA’s jump from $0.328 to press time levels within eight days came after somewhat prolonged consolidations.

Optimism in the broad crypto marketplace after the US Fed declared the much-awaited rate cut last week contributed to Cardano’s rise.

Cardano gained 7% over the past day to trade at $0.3817 at press time, and the 31% jump in daily trading volume suggests a bullish stance.

Thus, ADA could extend its current gains, with broad market tendencies playing a crucial role.

AAVE eyes a 22% surge

Aave joined the recent broad market rally, climbing from the weekly low of $135 to $178 before retracing to press time levels of $165.

Meanwhile, the impressive recovery saw the altcoin surpassing the vital resistance at $154 – March 2024 highest swing point.

Moreover, AAVE trades well above the 200 Exponential Moving Average, confirming an upside trend.

The altcoin remains poised for continued recovery, with bulls targeting the $200 psychological mark. That would translate to a 21.21% jump from Aave’s current price.

AAVE trades at $165.57 after losing 5.2% in the past 24 hours, with the 30% dip in daily trading volume highlighting near-term bearishness.

However, the decline could indicate a bullish pause after last week’s 16% increase.

Source – Coinmarketcap

Nansen’s data supports impending rallies for the token.

Stats show AAVE’s centralized exchange (CEX) outflows soared past $6.35M – a nearly 5x uptick from the latest average.

Skyrocketed CEX outflows often mean optimism as they show players moving their assets to self-custody for longer-term hodling.

Nevertheless, the Relative Strength Index approaching overbought conditions signals possible declines for AAVE before upward resumption.

RENDER consolidates

The artificial intelligence crypto remained relatively unmoved over the past day, losing 0.94% of its value to trade at $6.14.

The prevailing performance comes after Render gained 30% in the past week.

Source – Coinmarketcap

Meanwhile, the altcoin remains poised for short-term consolidations amid balanced RENDER sellers and buyers.

However, developments in the AI sector and broad market sentiments will shape the asset’s trajectory in the coming sessions.

The post Altcoin market wrap: ADA reenters top 10, AAVE flips crucial resistance, RENDER consolidates appeared first on Invezz

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Australia’s inflation eases to 3-year low in August as core inflation continues to decline

Inflation in Australia slowed significantly in August, hitting its lowest level in three years.

This welcome development was largely attributed to government rebates on electricity bills, which played a crucial role in easing consumer price pressures.

According to data released by the Australian Bureau of Statistics (ABS), the annual pace of consumer price inflation (CPI) dropped to 2.7%, down from 3.5% in July, aligning with market expectations.

The ABS reported that federal and state government subsidies reduced electricity prices by nearly 15% in August, counterbalancing an otherwise slight increase of 0.1%.

Petrol prices also saw a decline of 3.1%, adding to the favorable inflationary conditions.

However, despite these positive signs, the Reserve Bank of Australia (RBA) remains cautious about interpreting the decline as a signal for an imminent rate cut.

Core inflation trends lower, but rate cuts still a waiting game

While the headline inflation rate provided optimism, the central bank continues to focus on underlying inflation, which is a more stable measure excluding volatile items such as holiday travel and fuel.

Encouragingly, the core CPI—which strips out these fluctuating categories—fell to 3%, positioning it at the upper end of the RBA’s target band of 2-3%. This marked a decrease from July’s 3.7%.

Moreover, the trimmed mean, a critical gauge of core inflation, slowed to an annual rate of 3.4%, compared to 3.8% in the previous month.

The RBA projects this figure will settle at around 3.5% by year-end.

Despite this progress, the RBA has signaled that it is not yet prepared to initiate rate cuts, citing the need for sustained movement in the right direction.

“What really matters—and as the RBA keeps reminding us—is the sustainable return of underlying inflation to target. That’s still a little way off, but August’s print shows momentum is moving in the right direction,” Harry Murphy Cruise, an economist at Moody’s Analytics, told Reuters..

He added that while rate cuts may not happen until February, the likelihood of further delays is decreasing.

Market reactions and economic outlook

Despite the positive inflation data, market reactions were relatively muted.

The Australian dollar remained steady, last trading at $0.6891, and three-year bond futures showed little movement, standing at 96.63.

Financial markets are currently pricing in a 75% chance that the RBA will begin cutting rates by December, following its decision earlier this week to hold rates steady without discussing further hikes.

The RBA has maintained a cash rate of 4.35% since November, a considerable increase from the pandemic-era low of 0.1%.

The central bank believes that this level is sufficiently restrictive to bring inflation down to its target range without jeopardizing employment gains.

However, core inflation, which was running at 3.9% in the last quarter, has been slow to fall, adding to the RBA’s cautious approach.

Treasurer Jim Chalmers expressed cautious optimism about the latest inflation numbers.

“These figures are heartening, encouraging, and welcome,” he said, referencing both headline and core inflation declines.

However, Chalmers emphasized the need to remain vigilant, noting that inflation trends can be volatile.

Chalmers stated during a press conference in Brisbane:

We’re not getting carried away because we know that monthly numbers can fluctuate. Inflation doesn’t always move in a straight line.

The ABS report also provided the first insight into services inflation for the quarter, which remained relatively high at 4.2% year-on-year in August, only slightly down from 4.4% in July.

Rate cuts on the horizon?

With the next quarterly inflation numbers expected soon, analysts are already predicting that continued easing of inflationary pressures could lead to a change in the RBA’s stance.

“If the reductions in underlying inflation are replicated in the Q3 data, we could see the RBA adopt a more dovish tone at its November meeting, possibly paving the way for a 25 basis point rate cut in December,” Tony Sycamore, an analyst at IG, told Reuters.

Although inflation is trending in the right direction, the RBA is expected to maintain a careful and measured approach before making any decisions about rate reductions.

Until then, the Australian economy continues to grapple with the challenges of balancing inflation control and preserving employment gains, with markets watching closely for the next move.

The post Australia’s inflation eases to 3-year low in August as core inflation continues to decline appeared first on Invezz

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Thailand embarks on $14 billion digital wallet scheme to boost economy

Thailand has officially launched the first stage of its ambitious $14 billion stimulus plan aimed at revitalizing the country’s economy.

Dubbed the “digital wallet” scheme, the initiative is designed to provide financial relief to millions of citizens, eventually covering 45 million people who will each receive 10,000 baht.

The government believes this direct infusion of cash will drive consumer spending and generate economic momentum.

In the first phase, 14.5 million welfare cardholders and individuals with disabilities will receive the cash payout by the end of the month.

Prime Minister Paetongtarn Shinawatra, speaking at the program’s launch, expressed optimism about its impact:

Cash will be put into the hands of Thais and create a tornado of spending.

Government eyes economic recovery through spending

The digital wallet initiative was originally intended to operate via a smartphone app, allowing recipients to spend the funds within their local communities over six months.

Despite initial technical plans, the program begins with direct cash handouts as the government seeks to accelerate economic activity.

“There will be more stimulus measures, and we will move forward with the digital wallet policy,” the prime minister emphasized during her speech.

While the scheme is intended to jumpstart Southeast Asia’s second-largest economy, which is projected to grow by 2.6% this year following a modest 1.9% increase last year, the program has faced significant opposition.

Economists question fiscal responsibility

Despite the Thai government’s firm stance on the stimulus plan, concerns have been raised by economists, including two former governors of the central bank, who argue that the initiative is fiscally unsustainable.

Critics worry about the impact on national finances, especially as the government struggles to secure adequate funding to support the large-scale handouts.

However, the administration has stood by its decision, viewing the program as a necessary step to boost the country’s economic growth, which has lagged behind other nations in the region.

Thailand reconsiders tourism amid revenue concerns

In a separate move aimed at increasing government revenue, newly appointed Tourism Minister Sorawong Thienthong has announced plans to reintroduce a tourism tax that had been previously shelved by Prime Minister Srettha Thavisin.

The tax, which requires foreign visitors arriving by air to pay 300 baht, and those entering by sea or land to pay 150 baht, is expected to contribute to the government’s goal of increasing tourism revenue to at least 3 trillion baht this year.

Thienthong stated:

I believe the collection of the tourism fee benefits the tourism industry since the revenue can be used for the development of infrastructure and attractions, along with ensuring tourist safety.

However, the minister also indicated that the system’s readiness to collect these fees still needs to be assessed before finalizing a start date.

With these dual strategies—the digital wallet stimulus and the reintroduction of the tourism tax—Thailand’s government is aiming to both stimulate domestic spending and bolster its tourism sector, hoping to set the country on a path toward economic recovery in the face of both internal and external challenges.

The post Thailand embarks on $14 billion digital wallet scheme to boost economy appeared first on Invezz

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Boohoo and THG Group shares have imploded: buy the dip?

Boohoo (LON: BOO) and THG Group (LON: THG) shares have imploded in the past few years, costing investors billions of pounds. THG, formerly known as The Hut Group, tumbled to 50.75p, its lowest point since January 2023. It has dropped by over 93% from its all-time high.

Boohoo, on the other hand, crashed from a high of 433.6p in 2020 to the current 29p, bringing its market cap to over £363 million.

Why THG Group shares slipped

THG Group is a top e-commerce company founded by Matt Moulding. It owns brands in the beauty and nutrition industry. Its beauty brand comprises popular companies like LookFantastic, Cult Beauty, and Dermstore. It sells thousands of products to customers in the UK, Europe, and the US. 

THG also owns a nutrition business whose leading brand is MyProtein, which manufactures and sells protein powders, supplements, minerals, and vitamins. 

Additionally, THG Group owns Ingenuity, a brand that builds and manages websites for companies in the beauty and retail businesses. 

THG Group’s recent performance is a sad situation because the company rejected a buyout deal from Apollo Global in 2023, noting that the offer undervalued the brand. It also rejected approaches by a Belerion Capital and King Street Capital consortium. Nick Candy’s investment company also approached the company.

THG Group’s performance brings memories of other companies that rejected buyout offers and then tumbled. The most notable is Entain, which rejected a $11 billion offer from MGM. Today, the company is valued at over £4.7 billion. 

THG Group’s stock has retreated because of its ongoing challenges across its top segments. The most recent financial results showed that its revenue for the year’s first half rose by just 2.2% to £911 million while its gross margin slipped by 20 basis points to 42.4%. 

The firm attributed the slow growth to major headwinds in the nutrition segment, especially its MyProtein brand, whose revenue dropped to £299 million. This slowdown was partially offset by its beauty and Ingenuity brand. 

THG Group’s adjusted EBITDA improved slightly to £52.3 million, helped by its decision to exit loss-making brands and reduce its workers. Its free cash flow was a £128.5 million loss. 

Therefore, while THG Group’s share price is cheap, fundamentally, the company is facing substantial challenges that will affect its business. 

THG Group share price analysis

The daily chart shows that the THG stock price has been in a strong downward trend. It crossed the important support at 56.15p, its lowest swing in April this year. It has also dropped to the key support at 50.75p, its lowest level in April last year. 

THG remains below all moving averages and has formed a head and shoulders pattern. Therefore, the path of the least resistance for the stock is bearish, with the next point to watch being at 45p. This view will be confirmed if it drops below the support at 50.75p.

Boohoo chart by TradingView

Boohoo Group has tumbled

Like THG Group, Boohoo has been another highly troubled British retail and technology company. A winner during the pandemic, the stock has dropped by over 93%, costing investors billions of dollars.

Boohoo’s troubles started when media outlets reported about its poor working conditions in Leicester. 

After that, the firm started dealing with substantial competition from Chinese brands like Shein and Temu, which benefitted from low production costs. Shein, which was started a few years ago, is now valued at over $70 billion.

Boohoo has seen its revenue growth continue slowing down while returns increased. Its most recent financial results showed that its Gross Merchandise Value (GMV) dropped by 13% in 2024 to over £1.8 billion. 

Its revenue did worse, falling by 17% to £1.46 billion. As a result, Boohoo, a profitable company, started making losses. Its annual loss rose from over £90 million in FY’23 to £159 million in the last financial year. 

Unfortunately, there are signs that its business is still not doing well this year. Data by SimilarWeb shows that Boohoo’s website traffic has fallen in the past few months. It had 9.7 million visitors in August, down by 7.47% from the previous month.

It has also changed its US strategy by saying that it would start shipping its orders from the UK. That is a sign that its US business was not doing well to support its warehouses.

Boohoo share price analysis

BOO chart by TradingView

On the weekly chart, we see that the BOO stock price has barely moved in the past few years. Its past attempts to bounce back have found substantial resistance slightly below 50p. The stock has remained below the 50-week moving average while its volatility has stalled.

Therefore, the stock will likely remain in this range in the coming weeks. A drop below the key support at 26.24p will point to more downside, with the next point to watch at 20p.

The post Boohoo and THG Group shares have imploded: buy the dip? appeared first on Invezz

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Miniso stock outlook: is this Chinese retailer a bargain now?

Miniso (MNSO) stock price has been in a strong downward trend since going public in 2021. It tumbled to a low of $12.56 on Tuesday, its lowest swing since January 9, and 54% below its highest level this year. It has also fallen by over 58% from the record high of $32.54. 

Miniso Group to acquire Yonghui Superstores

The Miniso stock price crashed hard this week after the company announced its intention to acquire a majority stake in Yonghui Superstores, a leading retailer in China.

Miniso will pay $889 million for the deal, which it hopes will boost its market share in China, the world’s second-biggest economy.

The market did not love the deal for two main reasons. First, Yonghui is a struggling retailer that has faced substantial challenges in the past few years. One of the challenges is that it is facing competition from the likes of JD.com and Alibaba.

Second, the deal came at a time when Chinese consumers were not doing well. Recent data by the government showed that retail sales in the country have been relatively soft in the past few months. 

The weak retail sales explain why the Chinese government has been keen to boost its economic stimulus. On Tuesday, the central bank lowered the reserve ratio by banks, a move that will unlock over $125 billion in funds.

Investors also disliked the acquisition because the funds would have been used better to grow its core business. In a note, analysts at Bank of America downgraded the company, saying:

“While we continue to believe MNSO’s core business enjoys a solid outlook, we now thing the Yonghui transaction raises more questions than answers, increasing its risk profile and adversely impacting investors’ perceptions of the company.”

Miniso has been a growing company

Miniso is not a company that most people in the United States know. However, it is on of the fastest-growing retail groups in many emerging markets. 

It is a retail outlet that deals with a reasonably-priced assortment of products like perfumes, wallets, jewelry, and kitchen items. 

It was started by Ye Guofu, a Chinese billionaire, and has grown rapidly in the past few years, helped by its franchising approach. 

Miniso’s annual revenue dipped from $1.36 billion in 2019 to over $1.27 billion in 2020 because of the pandemic. Unlike most retailers, Miniso does not do a lot of business online, which explains why the decline happened. 

Its revenue has been growing since then, reaching a high of $1.58 billion in the last financial year. Miniso also moved from making a $219 million loss in 2020 into a profit of over $243 million. 

The most recent financial results showed that Miniso’s business was doing well as total revenue rose by 24% to $553 million. This was a notable development since it crossed the RMB 4 billion level for the first time ever. 

Miniso’s margins also continued rising, with the gross figure jumping to 43.9% while its operating profit jumped to over $103 million. 

For the year’s first half, Miniso’s revenue rose by 25% to $1.067 billion while its gross margin rose to 43.7% from the previous 39.6%. 

This growth happened as the company continued opening stores. It ended the quarter with 6,868 stores after having a net opening of 455. Most of these openings were in the international markets, where the management sees more opportunities.

Miniso, like other popular brands like McDonalds, uses a franchise model, where it only holds a handful of stores. In China, its directly-operated stores are 29 against 4,086 third-party stores. Globally, it directly operates 343 stores against 2,410 third-party ones. Miniso also owns the TOP TOY brand, which has 195 stores. 

Miniso stock outlook

Miniso stock chart by TradingView

Miniso seemed like a classic value company before the latest acquisition. It was seeing robust revenue and margin growth. Most importantly, the company was returning funds to shareholders, especially through the HKD 2 billion share repurchase program. Share repurchases help to boost a company’s returns by increasing the earnings per share. 

Miniso also has room to more than double its stores in the next decade. Unlike other retailers, its store opening costs are limited since they are done by third parties. This acquisition, however, has clouded Miniso’s outlook.

Turning to the weekly chart, the stock formed a slanted double-top chart pattern, a popular bearish sign. This week, it dropped below this pattern’s neckline at $15.23, its lowest point on February 5. 

The stock has also moved below the 25-week Exponential Moving Average (EMA) while top oscillators like the MACD and the Relative Strength Index (RSI) have drifted downwards. 

Therefore, the stock will likely drop further in the coming weeks, and then it will bounce back either this year or in 2025.

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Here’s why DocuSign stock could benefit from Smartsheet acquisition

DocuSign (DOCU) stock price has underperformed the market in the past few years. It was trading at $60 on Tuesday, where it has been stuck for a while. Since August 2022, it has remained inside $40 and $70 while top American indices like the Nasdaq 100 and S&P 500 have jumped to a record high.

Smartsheet acquired

A potential catalyst for DocuSign emerged this week when Blackstone and Vista Equity Partners teamed up to acquire Smartsheet in a $8.4 billion deal.

This is a notable deal because Smartsheet is a single-product company that used by thousands of customers globally. 

It is a sign that private equity companies, with trillions of dollars in dry powder, are about to start buying cheap companies at a time when their growth are slowing.

Smartsheet, started 19 years ago, had strong growth during the pandemic. Its annual revenue has risen from over $270 million in 2019 to over $1 billion in the trailing twelve months (TTM).

However, there are signs that its growth is starting to slow, with analysts expecting the figure to rise to $1.12 billion in 2024 and $1.29 billion in 2025. 

This growth is slowing as companies become more concerns about costs. Many firms have also started to move to large companies like Salesforce and Microsoft that offer numerous solutions. 

Analysts expect that M&A deals will accelerate for two main reasons: interest rates are now falling while the US could have a President Trump, who has vowed to deregulate the economy. 

DocuSign could benefit

DocuSign is another company that could benefit from the Smartsheet acquisition because the two companies are almost similar.

They are both single-product companies whose growth has slowed after surging during the Covid-19 pandemic.

For starters, DocuSign is a company that offers an eSignature solution to companies and individuals worldwide. Its product includes tools like website forms, electronic notarisation, document generation, and identity management. 

DocuSign is used by thousands of companies like United Airlines, Santander, Unilever, Ducati, and Flowserve. 

Its annual revenue soared from over $974 million in 2019 to over $2.7 billion in the last financial year.

Like Smartsheet, its business is growing at a slower rate than before. Analysts expect that its revenue will come in at $745 million in the third quarter from $700 million in the same period in 2023. 

Analysts also expect that its annual revenue will jump to over $2.95 billion and $3.12 billion in 2025, representing 6.70% and 5.90% growth, respectively. In the past, the company was used to have high double-digit growth rates.

The most recent results revealed that its total revenue grew by just 7% in the second quarter to $736 million. It expects that its revenue will be between $743 million and $747 million in the current quarter.

And like Smartsheet, DocuSign’s insiders don’t have a big stake in the company, which can complicate the buyout process. Insiders own just 1% of the total shares, according to Yahoo Finance. In contrast, acquiring a company like Asana would be difficult because insiders, especially Distin Moskovitz own 42% of the float.

Competition is a big issue

One reason why DocuSign’s growth has slowed is that, like Smartsheet, the industry has become highly competitive. 

DocuSign is now competing with many eSignature brands. For example, Google has started offering eSignature solutions on Google Docs and its other solutions. This means that people and organisations using Docs and Sheets can easily sign documents without using an external provider.

Other companies like Adobe, HelloSign, SignNow, and RightSignature have also launched their solutions. HelloSign was acquired by Dropbox in 2019.

Therefore, a private equity company can buy Dropbox, hoping to improve its operations as a private company. 

Besides, there are signs that Dropbox is highly undervalued. One way for valuing a SaaS company like DocuSign is to use the so-called rule-of-40, which is calculated by adding a company’s growth and margins. In Dropbox’s case, it has a net income margin of 34% and a growth rate of 7%, giving it a figure of 40. 

Most importantly, there have been rumours of the company’s acquisition for a long time. In December, WSJ reported that the firm was exploring a sale.

DocuSign stock price analysis

DOCU chart by TradingView

The weekly chart shows that the DOCU share price has moved sideways in the past few years as its growth slows. It has remained inside the key support level at $39.85 and the resistance level at $70. 

DocuSign stock has continued to oscillate at the 50-week and 25-week moving averages while the Average True Range (ATR) has dropped, signaling that it has little volatility.

Therefore, the stock will likely remain in this range for a while. In the long-term, however, it will likely bounce back as odds of an acquisition rise. If this happens, it will likely retest the key resistance point at $70. 

The post Here’s why DocuSign stock could benefit from Smartsheet acquisition appeared first on Invezz

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Carlyle Group stock is a bargain with potential catalysts

Private equity companies have done well in the past 12 months, helped by the robust inflows into alternative assets. The closely-watched Invesco Global Listed Private Equity ETF (PSP) has jumped by over 30% in this period and is hovering at its highest point since 2022.

David Rubenstein’s Carlyle has trailed peers

Carlyle Group (CG) stock has trailed other popular PE companies in the last few years. It has barely moved in the last three years while companies like Apollo Global Management and KKR have more than doubled. 

This underperformance has continued this year, as shown below. In this period, Carlyle’s stock has risen by 9.16% while TPG and KKR have risen by 40% and 60%, respectively. Other companies like Apollo, Blackstone, and Brookfield Asset Management have all jumped by over 205. 

Carlyle Group’s underperformance is mostly because of the management issues it went through in 2022 when Kewsong Lee abruptly resigned before the end of his five-year contract. His resignation was mostly because of his pay and the substantial disagreements about how to run the company since David Rubenstein and William Conway were still around.

Carlyle Group then appointed Harvey Schwartz, a former president and Chief Operating Officer at Goldman Sachs. 

Schwarz’s tenure has benefited from the general outperformance of the private equity industry and the increased inflows by institutions. It has also benefited from high interest rates, which have boosted its net interest income from $82.6 million in 2019 to over $239 million last year.

Carlyle Group’s annual revenue retreated to $2.42 billion last year from $4.1 billion a year earlier.

Carlyle Group earnings

The most recent financial results showed that Carlyle Group’s total assets under management (AUM) rose to over $435 billion, a 13% increase from the same period last year. Its fee earning assets jumped to $307 billion while its perpetual capital was $90 billion. 

Carlyle Group raised $12.4 billion in the last quarter and $40.9 billion in the last twelve months (LTM). 

Its quarterly revenue came in at $1.06 billion, higher than the $462 million in the same period last year. This revenue soared was mostly because of an increase in management fees and investment income. 

Carlyle Group did several important transactions this year. The most important one was the acquisition of a landmark deal to acquire Discover Financial Services in a $10 billion deal. It has also remained highly active in the Collateralized Loan Obligations (CLO) industry, where it deployed $9 billion after raising $12 billion in the last twelve months.

Carlyle has also become a major player in the private credit industry. It raised $5 billion last quarter and is aiming to approach its credit target of $40 billion. 

Analysts expect that Carlyle Group’s business will continue doing well as demand for private credit continued growing.

Interest rates and US election

A likely catalyst for the Carlyle Group stock is the recent interest rate cuts by the Federal Reserve and the upcoming US election.

The Fed decided to slash interest rates by 0.50% last week and hinted that more of these cuts will continue this year. 

At the same time, the US will go to an election in November, and there are chances that Trump will win. Analysts believe that a Trump victory will be a positive thing for private equity companies for two main reasons. First, Trump will not introduce a bill to end the carry trade loophole.

Second, he will likely appoint a Federal Trade Commission (FTC) chair who will be willing to approve M&A deals. Therefore, companies like Carlyle Group and Blackstone will likely increase their realizations.

Carlyle Group stock is cheaper

There are a few reasons why Carlyle seems like a good investment for now. First, it has a higher dividend yield, which stands at 3.25%, higher than other firms like KKR, Apollo, and Blackstone. Of course, this yield is higher because the stock has underperformed the peers.

Carlyle has a forward one-year price-to-earnings ratio of 11.5, which is much lower than other companies. Brookfield has a multiple of 33 while TPG, Blackstone, Apollo, and KKR have multiples of 29, 34.5, 17, and 28, respectively. Its forward 3-year P/E multiple is 9, much lower than the other companies. 

Additionally, while Carlyle is behind most of these firms in private credit, it is working on that, with its goal of reaching its $40 billion target. Consider what the CEO said in the last earnings call:

“Management fees in Global Credit and Solutions experienced double-digit growth year-over-year and hit record levels. We expect total management fees to accelerate across the second half of the year, driven by the nearly $20 billion of pending fee-earning AUM, the highest level since 2021.”

In my last article on Carlyle Group in January, I noted that the firm was a good acquisition target as companies race to the $1 trillion mark. For example, by acquiring Carlyle, Apollo, with its $695 billion in assets, would become a $1.1 trillion PE firm, making it bigger than Blackstone.

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