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The stock market ends the day in the green despite plummeting Chinese stocks.
The three major indices all closed today in the green, even if just barely.
This day in the green comes despite billions in losses from U.S.-listed Chinese companies in danger of regulatory crackdowns by the government. Shareholders are getting cold feet as the Chinese officials target education stocks and companies they deem concerning over data sharing.
Nevertheless, investors across the rest of the market stayed optimistic and kept the indices moving forward thanks to better-than-expected earnings reports, which we discussed last week.
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Microstrategy Inc (MSTR) stock is up 26% today as Bitcoin begins to climb.
Microstrategy Inc (MSTR) is up 26% today, and it comes as no surprise because Bitcoin appears to be on the rise again. Crypto-minded investors have targeted the business intelligence company since it acquired over 2 billion dollars worth of Bitcoin as its treasury reserve asset. Management is betting on the cryptocurrency to be a safe investment vehicle for the company’s cash in the coming years.
Despite its move in tandem with Bitcoin, Microstrategy is not part of the cryptocurrency industry. It provides business intelligence services to enterprises, specifically with a web-based platform for company-wide analytics and reporting. It has many large corporations as clients, including Fortune 500 companies. The sentiment cycle around Bitcoin leaves little space to discuss the company's core business. That's where Stock Card comes in.
Microstrategy’s Stock Card reminds us that software systems will see great growth in coming years, but the picture isn't all rosy. For example, Earnings Per Share, which you can find under the Profitability, is declining. It does generate free cash flow but carries some debt. Revenue growth is negative to flat too. So, I'm not sure about the core business. If I want to invest in crypto-related stocks, there are better ones to pick.
For example, type in Cryptocurrency in the search bar to get the cryptocurrency-related collection on Stock Card! Some noteworthy mentions are PayPal (PYPL) and Coinbase (COIN), direct beneficiaries of digital currencies. I prefer them over Microstrategy for my investment in crypto-related stocks.
Chinese regulators deal a major blow to Tencent (TCEHY) and its monopoly over music rights.
If you go into the search function on Stock Card and enter “China,” you’ll see the China collection suggested to you. Click here, and turn off the OTC and Penny stocks filters. Then, order the list by losses, and you’ll get what seems to be a nearly bottomless page of stocks in the red! If you’ve been following the news, the Chinese government is investigating data security concerns, the private tutoring industry, and antitrust violations. Investors are selling as they fear their stocks may be next on the chopping block.
Tencent (TCEHY) is no different, having fallen about 10% by closing time today. This massive corporation deals with social networking, online games, internet utilities like email, cloud networks, and entertainment content, including news and music. Unfortunately, the music industry is the latest to be scrutinized by Chinese regulators. In Tencent’s case, the government is taking direct action. Yesterday, the company was ordered to dissolve its exclusive music licensing deals around the world. According to officials, the corporation is violating policies meant to prevent monopolies, and it’s pretty evident that Tencent owns more than 80% of Chinese music rights.
This company is not the first nor the last to be impacted by the government’s crackdowns. It makes sense that investors are jumping ship across all the U.S.-listed stocks from China. However, it's very unlikely for the Chinese government to sacrifice these companies over regulations. It is most likely a period with widespread negative news, followed by regulatory corrections. This may mean an interesting investment opportunity for those who bet on China and are ready to take the risk and find good deals. I'm monitoring the situation for some bargain shopping if the sell-off continues.
Get to Know Freedom Portfolio
Let's wrap up with an exciting update from Stock Card's partner community. This week, we celebrate Paul Essen, one of the latest portfolio publishers on Stock Card. Paul's portfolio is called Freedom on the Stock Picks page, and it is one of my favorite portfolios. He is such a true long-term investor that keeps adding to his winners and can hold through the price drops without getting cold feet. I highly encourage you to follow Paul's Freedom portfolio to get new investment ideas.
To help you get to know Paul, I've just published my latest conversation with him about how he picks stocks. I enjoyed it quite a lot, and I’m sure you’ll find it valuable as well.
Make sure to watch this video!
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