Ticker Reports for November 15th
Top-Performing Non-Leveraged ETFs This Year
In the world of exchange-traded funds (ETFs), the most outsized returns typically go to products employing leverage. However, while ETFs like the GraniteShares 2X Long NVDA Daily ETF (NASDAQ: NVDL)—a highly specialized vehicle aiming to provide two times the daily returns of NVIDIA Corp. (NASDAQ: NVDA), the semiconductor giant and largest company in the world by market value—may appear to have made tremendous growth of nearly 600% this year, they in fact employ investment strategies that strongly disfavor long-term buy-and-hold approaches.
Many such leveraged funds are designed to be traded on a daily basis, making them most suitable for active investors with a high risk tolerance.
Looking to ETFs that do not use leverage, the total return figures this year drop significantly, though they still manage to outpace the growth of the S&P 500 far. Notably, many of the leading non-leveraged ETFs for 2024 have themes centering around Bitcoin and cryptocurrencies more broadly.
This list of winning funds for the year includes Grayscale Bitcoin Trust (NYSEARCA: GBTC), Hashdex Bitcoin Futures ETF (NYSEARCA: DEFI), and First Trust SkyBridge Crypto Industry and Digital Economy ETF (NYSEARCA: CRPT), among several others.
Though these funds all focus on the same industry, and they each provide investors the peace of mind of accessing the volatile crypto space through an ETF, they offer different strategies and risk/reward profiles.
CRPT: Broad Access to the Crypto and Digital Finance Spaces
CRPT focuses on both the cryptocurrency industry as well as the wider digital economy, meaning that it holds shares of companies involved in cryptocurrency mining and technology, ETFs and similar products that target cryptocurrencies via spot price or futures methodologies, and a larger array of fintech firms. This strategy allows CRPT access to a more diverse pool of names than either of the other funds on this list.
As of mid-November 2024, this diversification is reflected in CRPT's top holdings, including shares of crypto exchange platform Coinbase Global Inc. (NASDAQ: COIN), crypto miner Mara Holdings Inc. (NASDAQ: MARA), and the iShares Bitcoin Trust ETF (NASDAQ: IBIT), among others. CRPT's expense ratio of 0.85% is within the expected range for a fund of this kind, though with assets under management (AUM) of just $78 million and a 1-month average trading volume of under 64,000, liquidity may be an issue for investors. On the other hand, as the fund has returned more than 211% in the last year, many investors may be happy to hold CRPT for a long time.
GBTC: Strong Performance From First Spot Bitcoin Fund
The Grayscale Bitcoin Trust holds passive investments in Bitcoin. It was the first spot Bitcoin ETF available in the U.S. and remains one of the largest even as the field has grown more competitive. With nearly $17 billion in AUM and a 1-month average trading volume of just under 3.5 million shares, GBTC offers investors an attractive liquidity proposition. This is partially offset by the fund's high expense ratio of 1.5%, which is substantially above several alternative Bitcoin funds.
In the last year, GBTC has returned about 110%, even as the fund underwent a spinoff in July that created the new Grayscale Bitcoin Mini Trust (NYSEARCA: BTC). This performance is shy of the gains to Bitcoin tokens, which are up almost 149% in the same period. However, investors in GBTC do not have to worry about storing, safeguarding, and transferring tokens or any of the other considerations particular to crypto investments.
DEFI: Hybrid Spot and Futures Strategy
DEFI uses an unusual approach that combines Bitcoin holdings with Bitcoin futures, cash and equivalents to attempt to replicate the price performance of the token itself. Given its focus on futures contracts, DEFI is structured as a commodity pool in order to combined investor assets.
DEFI has a lower expense ratio that GBTC, at 0.90%, though with only $11 million in AUM and very low trading volume, liquidity is a larger problem for this fund and may be enough to prompt investors to look elsewhere. Still, for those willing to take the chance, the fund has provided nearly 94% returns in the last year.
All three of the funds above have benefited from the rise in cryptocurrency prices throughout the last year. Much of this took place early in 2024, but crypto tokens have gotten a major boost in November following the U.S. presidential election. If this upward trend continues, these funds could continue to outperform into the new year.
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Rivian's Wild Ride: Is the Dip a Buying Opportunity?
Rivian Automotive (NASDAQ: RIVN) has been on a rollercoaster ride in recent weeks, with its stock price experiencing dramatic swings that reflect the turbulent nature of the electric vehicle (EV) sector. Despite the company's recent partnership with Volkswagen offering a glimmer of hope, investors remain skeptical. After experiencing the rollercoaster of ups and downs, followed by yet another steep decline, investors question whether the current low represents a genuine opportunity to invest.
A Market in Flux
Rivian's stock price has been on a wild ride, fueled by a combination of investor excitement and market uncertainties. The broader EV market is experiencing volatility, driven by factors like rising interest rates, geopolitical tensions, and uncertainty surrounding the future of EV incentives. The recent resurgence of former President Donald Trump's political influence has added further complexity to the equation, as his administration's policies could potentially impact government support for EVs. This volatility, coupled with Rivian's challenges, has created a turbulent environment for investors.
Volkswagen: A Catalyst for Growth?
The recent expansion of Rivian's partnership with Volkswagen (OTCMKTS: VWAGY) has sent waves through the market, initially triggering a surge in Rivian's stock price. The deal involves VW injecting a significant $5.8 billion into Rivian over the next few years, a move seen by many as a powerful vote of confidence.
The deal consists of various forms of investment, including convertible notes, equity, and a potential loan. The initial $1 billion was received in June 2024, followed by an additional $1.32 billion upon closing in November 2024. VW is poised to provide another $1 billion in equity upon Rivian, achieving two consecutive quarters of gross profit. An additional $1 billion is expected in 2026 upon successful testing of the joint venture's technology in a VW vehicle, and a final $460 million will be provided when the first saleable VW vehicle using the joint venture's technology is produced or by January 2028, whichever comes first. This substantial investment will undoubtedly help solidify Rivian's financial position, easing concerns about its ability to fund operations and future growth.
However, the deal is not without its intricacies. The investment is structured around specific milestones, creating a degree of uncertainty for investors. The full impact of the joint venture on Rivian's operations and profitability remains to be seen. While the deal signifies a major step forward, its long-term ramifications for Rivian's financial independence and strategic autonomy require careful consideration.
Weighing the Risks and Rewards
Rivian, despite its impressive growth trajectory, has yet to achieve sustainable profitability. The company continues to operate at a loss, a situation exacerbated by the ongoing component shortages that have impacted production and delivery targets. The potential impact of a Trump presidency on EV incentives adds another layer of uncertainty. While the Volkswagen deal will undoubtedly help ease financial pressures, Rivian's path to profitability remains a key concern for investors.
However, a compelling case can be made for Rivian's long-term potential. The Volkswagen deal, while presenting some challenges, is a major endorsement of Rivian's technology and market position. The partnership signifies a belief in the viability of Rivian's "zonal" architecture, a flexible platform that can be adapted for various vehicle types and price points. This partnership will enable Rivian to leverage VW's global manufacturing capabilities and distribution network, potentially accelerating its expansion.
The upcoming launch of the R2 model, designed to be a more affordable and mass-market vehicle, holds the potential to expand Rivian's customer base and drive sales growth significantly. The R2 model, with its anticipated range of 260-320 miles, will target a wider audience seeking a more accessible entry point into Rivian's electric adventure experience. The joint venture with Volkswagen could lead to substantial cost savings through shared sourcing and development, enhancing Rivian's financial performance.
It's also important to consider Rivian's core fundamentals. The company boasts a solid balance sheet, a growing market share, and a compelling vision for the future of electric mobility. Rivian's dedication to innovation, its strong brand reputation, and its commitment to sustainability make it a compelling investment proposition for investors seeking long-term growth.
A Contrarian Perspective: Is This the Time to Buy?
The recent dip in Rivian's stock price presents a contrarian opportunity for investors. Many argue that the market is overreacting to short-term challenges, neglecting Rivian's long-term potential. The Volkswagen deal, the impending R2 launch, and the company's strong fundamentals suggest that the current downturn might be a temporary blip. Investors may be overlooking the strategic significance of the VW deal and its potential to accelerate Rivian's growth. The R2 model, designed to reach a wider audience, could drive significant sales growth and contribute to improved profitability.
Investing in Rivian, as with any stock, carries inherent risks. The EV market is still relatively young and faces significant challenges. Rivian's path to profitability requires continued innovation, efficient execution, and navigating a complex regulatory landscape.
However, for those seeking exposure to the rapidly growing EV market and willing to embrace the risks associated with a growth-oriented company, the current dip could present a valuable opportunity to acquire shares of a company with a bright future.
Looking Ahead: Rivian's Roadmap to Success
Rivian's roadmap to success hinges on achieving sustainable profitability, a goal that requires a steadfast commitment to cost reduction, efficiency improvements, and expanding its product portfolio. The upcoming launch of the R2 model is a critical milestone for the company, potentially marking a turning point in its growth trajectory. The company is also looking to expand its offerings beyond adventure vehicles, exploring opportunities in the commercial van segment.
The future of the EV market is filled with potential. The global shift towards sustainable transportation is driving rapid growth in this sector, offering immense opportunities for innovation and disruption. Rivian, with its focus on adventure vehicles, its dedication to innovation, and its commitment to a sustainable future, has the potential to become a leading player in this evolving market.
Rivian's stock performance is a reflection of the complex dynamics within the EV market and the challenges inherent in a growth-oriented company. While the recent dip may seem daunting, investors should carefully consider the long-term potential of Rivian's technology, its strong fundamentals, and the strategic advantages offered by its partnership with Volkswagen. This may be a moment to embrace a contrarian perspective and view the current downturn as a potential buying opportunity. Remember to invest wisely, manage your risks, and be prepared for the inevitable bumps along the way.
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Freshworks Stock Soars 50% – Is This the Perfect Entry Point?
This recovery rally is sparking excitement among investors and making the stock one to watch closely as we head into the final few weeks of the year. Let's jump in and take a closer look.
Bullish Fundamentals
To start, let's take a look at Freshworks' recent fundamental performance, which, based on last week's earnings report, is nothing short of impressive. The company smashed expectations last week, easily beating analyst forecasts on both revenue and earnings.
Not only did Freshworks deliver a surprise profit for its non-GAAP EPS, but it also landed a record revenue print, which was driven by 20% year-over-year growth. This is especially noteworthy given Freshworks' stock was trading at all-time lows just a couple of weeks ago, and helps explain the stock's reaction in the days since the earnings release.
Beyond the headline numbers, management raised its forward guidance, which is one of the strongest signals they can send to the market. Coupled with the record revenue print, investors should be seeing further gains heading into the rest of the year as the stock begins to recover from its downtrend.
Bullish Analyst Updates
Given the strength of the report, it's no surprise that there have been several bullish updates from analysts. The teams over at JPMorgan & Chase, as well as JMP Securities, Canaccord Genuity, and Piper Sandler, all rated the stock either Buy or Overweight in the aftermath of the report.
The price targets from these firms reached as high as $24, suggesting there's another 50% upside to be had from where the stock closed on Tuesday—not bad considering the stock has already logged a 50% rally in the past fortnight.
Potential Concerns
It is worth noting that not all analysts are buying into the huge upside, for now at least. The likes of Wells Fargo and Robert Baird have both given Freshworks stock a Neutral or Equal Weight rating in the past week, and the stock is already trading above their respective price targets of $14 and $15.
This suggests they think the stock is fairly valued right now in light of the big update, and they're waiting to see additional signs of recovery before leaning into further upside.
Another factor to consider is the stock's technicals, specifically its Relative Strength Index (RSI), which currently sits at a frothy 84. The RSI is a measure of momentum that indicates if a stock is overbought or oversold, with readings above 70 suggesting it's extremely overbought and due for a pullback.
However, given how the exceedingly bullish outlook painted by both Freshworks' revenue growth and management's guidance, we're inclined to say any short-term profit-taking will also create a golden entry opportunity for investors on the sidelines.
Getting Involved
Looking ahead into 2025, investors should see the stock continue its upward trend, especially if Freshworks can maintain the strong growth trajectory shown in its recent earnings report. The broader market environment also provides a supportive backdrop, with the S&P 500 reaching fresh highs and the Fed's rate cuts encouraging a solid risk-on sentiment that is favorable for growth stocks like Freshworks.
While there may be some caution required due to the size of recent gains, the recently uncovered longer-term upside potential is just too good to ignore.
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