ð¥Weekly Portfolio Update 26.04.21ð¥
Weekly Performance, Key Events in The Portfolio, What to Read This Week and More!
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ð®Portfolio Weekly Performance ReportÂ
â Key Events in The Portfolio
First Investment in Bitcoin
Those of you who have followed me for a while would know that cryptocurrencies have never been a thing that I would talk about or invest in, mainly due to the fact that they are too volatile to be invested in the long term, and also due to the preconceptions that their value is based on nothing but thin air.
However, a lot has changed in recent years, giving me different perspectives about cryptocurrency, bitcoin in particular, as a digital asset class for portfolio diversification purposes.
Nowadays, many companies have adopted bitcoin as a form of payment. Tesla, for example, had announced early this year its plan to accept bitcoin for its cars after purchasing $1.5 billions dollars worth of bitcoin. Other than that, the dawn of bitcoinâs yield curve and the rise of the collateral use case for bitcoin had made bitcoin less and less likely to ever go back to zero in the future.
That being said, I still remain sceptical about its current value, which is why I have only invested a minute proportion (0.84%) of my portfolio into bitcoin during its recent dip. This much bitcoin will hardly affect the volatility of the portfolio. I truly believe bitcoin makes a great digital asset class to diversify our portfolio, especially in todayâs low-interest environment.
Verizon Reported Q1 2021 Earnings
Verizon ($VZ) had reported great earnings last Wednesday that topped estimates. Verizon announced earnings per share (EPS) of $1.31, up compared to adjusted EPS of $1.00 during Q1 2020, and revenue of $32.87B, up 4 per cent from $31.61B in Q1 2020. Analysts anticipated EPS of $1.29 on revenue of $32.44B.
The company had reported growth for the very first time in its business services sector, which rose by 1.3 per cent, with revenues climbing to $7.78B, compared to $7.68B during Q1 2020. Verizon had also expanded its 5G network services to several additional cities and, at the same time, kickstarted the deployment of its 5G Ultra-Wideband and fixed wireless broadband service on C-band spectrum, which the carrier bid and successfully bought earlier this year in what the CEO referred to as a âonce-in-a-lifetime opportunity.â.
However, the carrier also reported losing postpaid subscribers during the quarter. Despite the losses, its consumer wireless service revenue came in at $13.7 billion, up 1.5 per cent from last year, âdriven by the continued adoption of wireless unlimited and premium unlimited plans.â
Verizon remains as a long term 5G play in our portfolio which will see a great return in the future once all its current investments in the 5G space are paid off as the world moves towards wider scale adoption of 5G technology.
Big Tech Earnings Week
Companies from our portfolio reporting this week:
Monday: Tesla
Tuesday: Alphabet, Microsoft, AMD
Wednesday: Apple, Facebook
Thursday: Amazon
We will soon see one of the busiest weeks of earnings season as Big Tech revved up to report this week. As usual, regardless of the market response, we would have no plan to sell any of the stocks; if we are lucky to see some decent pullback in the tech sector, it might even be a great buying opportunity for us. That being said, I expect great earnings from the companies, especially Alphabet and Microsoft, both of which have had great growth in the cloud sectors. It will be great to see AMD report some great numbers after taking greater market share from Intel in recent years.
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ð Recap of the week
US Stock Tumbled on Bidenâs Tax Plan
President Joe Bidenâs expected proposal to increase the top marginal income tax rate to 39.6% from 37%, and nearly doubling taxes on capital gains to 39.6% from 20% for people earning more than $1 million had sent the US stocks falling sharply lower last Thursday, with the three main indexes on Wall Street down about 1% at the close of Thursdayâs trading session.
JPMorgan had estimated that Bidenâs proposed tax plan would shave 4% off earnings per share for the S&P500. The plan will most certainly weigh on the high-growth tech stocks the most as more investors seek to take profit ahead of the Big Tech earnings season.
However, that being said, many believe that Congress will most likely pass a scaled-back version of this tax increase with a more modest increase in tax, possibly 28% as noted by Goldman Sachs economists, and sure enough, we saw a slight recovery in the stock market on last Friday.
Netflixâs Earnings Missed Expectations
Netflix ($NFLX) has tumbled as much as 11% in after-hours trading after reporting a cooling growth in subscriber numbers in its Q1 2021 earnings report last Tuesday. The company reported global paid net subscriber additions of 3.98 million vs 6.2 million expected by Wall St, a huge miss which the company attributed to delays in its big-name shows and films due to the ongoing coronavirus pandemic.
As competitions ramped up from Disney, Amazon and other giants, Netflix will face a great headwind to maintain its growth in subscriber numbers in the future. That being said, the company is confident that ânew seasons of some of its biggest hits and exciting film lineupâ will drive a strong second half of the year.
Another news that surprised investors the most is the companyâs big $5 billion buyback plan that doesnât make any sense. As a growing company, many see better use of the $5 billion in the company to better compete with its competitors, especially when its current valuations are relatively high by most measures. Since the $5 billion only represents about 2% of Netflix's enterprise value (EV), that means its retail investor would not benefit too much from the buyback plan anyway.
ðŠÂ Tweets to start the week
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Best, HaoNing