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In today’s edition
- Nvidia’s business performance
- Coinbase profits amidst the launch of spot bitcoin ETFs
- Bezos cashes out
- Reddit’s IPO: Tapping into AI’s potential
- Intuitive Machines’ Moon landing triumph
Market Snapshot
The stock market ended the week on a positive note, with the S&P 500 and Dow Jones Industrial Average both reaching new highs, driven by enthusiasm for artificial intelligence and a standout earnings report from Nvidia (NVDA). The S&P 500 marked gains for the sixth time in seven weeks, highlighting a strong bullish trend. Nvidia’s shares contributed significantly to the week’s gain, rising nearly 9% after reporting a 265% increase in year-over-year revenue, briefly pushing its market value above $2 trillion and fueling a broad market rally.
Stock market closing data for the week from February 19th to 23rd, 2024
News Summaries
Nvidia’s recent financial performance exceeded forecasts significantly, with fourth-quarter revenues reaching $22.1 billion, marking a 265% increase from the previous year. As a result, Nvidia’s market capitalization increased by $277 billion in a single day, surpassing the entire market value of giants like Coca-Cola or Reliance Industries Limited (RIL), each valued at around $260 billion. Now, Nvidia ranks as the third-most valuable company in the US stock market, only behind Microsoft and Apple and ahead of Amazon and Alphabet. Nvidia’s success is largely attributed to its pivotal role in the artificial intelligence (AI) sector, with its H100 chips being essential for advancements in AI across various sectors. Despite facing competition and regulatory challenges, Nvidia’s market valuation reflects strong investor confidence in its AI-focused strategy and its significant impact on the technology sector, contributing notably to the S&P 500’s gains this year.
Coinbase recently reported its first quarterly profit in two years, buoyed by a late-year rally in Bitcoin and regulatory approval for spot bitcoin exchange-traded funds (ETFs). Despite the SEC’s approval of bitcoin ETFs, the long-term impact on Coinbase remains ambiguous. While Coinbase may gain from custodial fees for the bitcoins held by these ETFs, contributing to a modest 2.2% of its total revenue in 2023, the low margins from these fees and the potential decrease in bitcoin trading volumes pose significant challenges. However, Coinbase has not yet observed a reduction in trading volume and anticipates growth in subscription and services revenue. Yet, with its valuation at 15 times revenue—significantly higher than its peers—the company’s financial health in the evolving crypto landscape warrants cautious optimism from investors.
Jeff Bezos has resumed selling Amazon shares for the first time since 2021, offloading approximately $8.5 billion worth of stock this month amidst a broader trend of tech executives like Tim Cook, Mark Zuckerberg, and Sundar Pichai liquidating significant portions of their holdings following recent share price recoveries. However, these sales do not necessarily indicate a lack of confidence in their companies’ futures. Instead, they are part of pre-scheduled selling plans, contrasting sharply with the reduced insider sales during the 2022 tech stock downturn. The sales come at a time when tech companies’ valuations, like Amazon’s, have significantly increased, driven by cost-cutting measures, halted interest rate hikes, and enthusiasm over artificial intelligence. Despite these sales, figures like Bezos and Nvidia’s Jensen Huang remain among their companies’ largest individual investors, suggesting that such transactions are more about personal financial management than pessimism about the tech sector’s prospects.
As Reddit prepares for its IPO, the platform has struck a balance between rewarding its user-driven ecosystem with shares while maintaining voting control among its core insiders, detailed in its S1 filing. Financial scrutiny reveals a 21% sales increase to $804 million and a significant reduction in losses by over 40% to $91 million. Despite these strides, Reddit only captures a minuscule slice — below 0.1% — of the $1 trillion digital advertising pie. Pivoting towards e-commerce and data licensing, Reddit’s API adjustments enable them to tap into the lucrative AI market, as evidenced by a licensing agreement with Google. This shift, albeit late in recognition, demonstrates Reddit’s potential to monetize its extensive data pool in a market that’s rapidly gravitating towards AI-driven models.
The successful lunar landing of US-based Intuitive Machines’ unmanned Odysseus lander near the Moon’s south pole heralds a new chapter in private lunar exploration and signifies the United States’ return to the moon after over five decades. This achievement, achieved after an eight-day journey and momentary suspense due to lost contact upon landing, underscores the pivotal role of commercial entities in space exploration. The mission, which carried both NASA scientific payloads and commercial packages, including mini-sculptures and a lunar archive, demonstrates the feasibility and cost-effectiveness of leveraging private companies for space exploration. This landmark event not only paves the way for NASA’s planned human missions to the lunar south pole by 2026 but also boosts investor confidence in space companies, as evidenced by the sharp increase in Intuitive Machines’ share price following the mission’s success.
