Ark Files For Bitcoin ETF, Nvidia Supports Arm Acquisition

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Brian Sozzi and Myles Udland on Tuesday break down top market players including: Nvidia shares rally after securing backing from three key chipmakers for proposed Arm and Cathie Woods Ark Invest filing with SEC from the United States to launch a Bitcoin exchange-traded fund.

Video transcript

MYLES UDLAND: Sozzi, I always feel like I’m saying 2020 in my head, but this year almost half is over as we move forward in time. Let’s take a look at the futures here – set for a mixed open – a reversal, really, of what we saw in yesterday’s session. NASDAQ is coming back here a bit as we get closer to the opening bell.

The NASDAQ closed at a record high yesterday. We’ve seen the S&P and the Dow under a little bit of pressure – part of that spin to growth, away from those value names [INAUDIBLE] See our live images from the floor of the New York Stock Exchange [INAUDIBLE] opening bell.

And the CEO of the company will join us in the next hour to discuss their beginnings and, of course, the prospects of their core business. But let’s talk about a few names here that have recently hit the market. We see the three majors in the green, at the opening indication here, Sozz.

You reported it to us yesterday – Nvidia shares just went down. And we know the semiconductor shortage and then the likely investment super-cycle that results in this space that is anticipated by so many investors. But this stock continues to tear higher in the market.

BRIAN SOZZI: Myles, I’m still trying to digest what David Kostin told us about the markets. But if I have to talk to Nvidia, I actually will. And I think what you’re seeing here – the stock has gone up about 23% over the past month, according to data from Yahoo Finance +, really for two reasons.

First, the stock rally started after the company announced an absolute blowout quarter a few weeks ago, and they suggested the momentum probably continued into the second quarter. I mean, their sales for the July quarter were 15% above consensus. And we’ll talk a bit about your newsletter, Myles, a bit later in the show, you talk about earnings estimates.

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But I’m really wondering if Street modeled Nvidia’s profit estimates correctly based only on the momentum they have in the gaming segment, in the data segment, and yes, even still in the crypto segment despite the broader crypto pullback. And finally, over the past two or three sessions, the rally has been fueled by positive developments on the ARM front.

I mean, they came out in September of last year and said they were going to try to acquire ARM for $ 40 billion – a lot of regulatory concerns about this deal around the world. But now many companies such as Marvell, Broadcom have recently backed this deal saying it will not hurt competition. And as a result, you see Nvidia shares on the rise.

MYLES UDLAND: Sozzi, I have one for you here. So if you look at companies that have market caps in the middle of nine digits – you know, Nvidia right now around $ 600 billion – which is first a trillion dollar company, Tesla or Nvidia – – basically, saying market capitalization this morning.

BRIAN SOZZI: I’ll go – well, first of all, we don’t pick stocks here on Yahoo Finance. I’ll just write it down.

MYLES UDLAND: Of course. Of course.

BRIAN SOZZI: Because it’s a way to go back in selecting an action – I’m just saying, Myles. I say it like that. But Nvidia – I think Nvidia has a much bigger divide around its business compared to what we see from Tesla. We’ll also talk a bit later about what UBS wrote today on Tesla, discussing the competitive forces in the auto industry right now.

Ford hits Tesla. GM hits Tesla. Toyota hits Tesla. And then you also have all these electric vehicle companies in China hitting Tesla as well. I don’t see anyone necessarily hitting Nvidia, especially if they do this ARM deal. It’s going to be huge.

MYLES UDLAND: Now when you hear Tesla and Nvidia, someone not far behind is Cathie Wood – an interesting development from Wood’s Ark Invest yesterday. The company has filed an application with the SEC to have a Bitcoin ETF. Now, there will be no review of pending Bitcoin ETFs until the fall.

It also marks the 12th company that has at least submitted a product application in this direction. But, Sozzi, you know, we talk so much about the price of Bitcoin and what drives cryptocurrencies in general, and I think that’s maybe a side part of the conversation at this point. But there has been, for some time now, a conversation about how a Bitcoin ETF is positive – a more easily tradable product for investors who don’t want to do the job of determining their storage, their wallets, maybe. their cold storage, perhaps it’s easier for institutions to get some sort of Bitcoin exposure if there is an exchange-traded fund that tracks the price.

But I guess you could say, you know, maybe a name like MicroStrategy, or Coinbase, or others – via blockchain – they’re proxies of sorts for the cryptocurrency space in general, but there is no such thing as pure play. I mean, there is the GBTC Trust, but there is no ETF that is Bitcoin. And there are a lot of pending requests.

We will see if they are indeed approved. But on the one hand, not a huge surprise to see Ark getting involved there, but on the other hand, in what could be a very competitive space, Sozzi, I imagine the way Ark has positioned himself , especially with retail traders, they would appear to be a potential big winner if their application is approved.

BRIAN SOZZI: Okay, Myles. And Cathie Wood has been involved in Bitcoin or cryptocurrency since 2017, so she knows the space very well. It really is something in his alley. But I know you’re an avid case reader, Myles, look at this dossier they posted on this potential deal.

One of the risk factors – it is simply indicated in bold type, Bitcoin in general. It is a key risk factor. And they note in the filing that Bitcoin’s market value is not tied to any specific company, government, or asset.

And you scroll down a bit more – another risk factor, dynamic pricing – that’s it, just in bold italics. Another – a decline in Bitcoin adoption could negatively impact confidence. So it’s interesting to read language like this, which is so different in many ways from when a company goes public and the language it puts in its prospectus.

MYLES UDLAND: Yeah, I mean, look, the SEC filings are a real gold mine of interesting nuggets on how companies think about themselves, how companies think about themselves. they have to cover their description of their business, or the associated risk, et cetera, et cetera, et cetera.

But I think, you know, get to that exact point, Sozzi – and it reminds me of a conversation we had with Jamie Cox yesterday, but I think we’d have with any, let’s call it, a senior trustee, n isn’t it – someone who operates in very traditional financial markets – people aren’t comfortable recommending Bitcoin, because they all, in essence, recognize what was on Ark’s file, namely that there is nothing you can definitively say behind the price of Bitcoin.

There are some very good arguments that can be made as to why price has done this, that, or the other, and will do something in the future. But you can’t go into traditional modeling, discounted cash flow type analysis for Bitcoin, and that’s really what keeps so many institutions on the sidelines in terms of being able to credibly recommend to their clients that you must have an allowance for this asset. .

And I think in some ways, if you’re a real fan of crypto, you almost want it to stay that way, because then you have the edge, right? You arbitrate the financial industry’s need to justify investments in a specific way, which means there are fewer people who can expose themselves to something they wish to expose themselves to, and sort of keep your leverage, if you will, on space, on harvesting in space, and so on, you know, in a way that I find unique.

BRIAN SOZZI: Myles, I have one for you here: Nvidia doubling or Bitcoin 100,000 first. I put it on you.

MYLES UDLAND: Well, Bitcoin is expected to triple to 100,000, so I’m going to grab a leaflet on doubling from Nvidia before Bitcoin hits 100,000. So there you go. So I guess we’re both Nvidia bulls today. Is this the takeaway here?

BRIAN SOZZI: That’s the bottom line. Hot grip. Hashtag hot plug.

MYLES UDLAND: Never store recommendations on this program. Nothing is investment advice. And of course, you definitely shouldn’t be listening to us.

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