EDITORIAL

Editor’s Morning Note: Spines And Rallies

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Welcome to the first Mattermark Editor’s Note, a mostly-regular morning brief highlighting trends and notes that do not quite fit into a tweet, but also don’t require a full post of their own to discuss.

It’s currently hip to launch newsletters1, but you need additional email like I need to endure more reports of non-GAAP revenue. As such, we’ll have short chats here in the first hours of the work day. This new scribbling doesn’t mean that Mattermark’s editorial output won’t continue its regular publishing schedule — instead this is something small, and in addition.

Before we start, a personal digression. If you noticed that posting was light on Mattermark over the past few weeks, it’s because I was out for a bit. Happily, I’m back and we can get to work. Let’s begin!

Bitcoin Rallies Despite Flat Transaction Volume: If you forgot about bitcoin, I can’t fault you. But while the rest of the world lost itself in election coverage and corporate earnings, the price of bitcoin spiked. It’s back to the $575 range, its highest since late 2014. Interestingly, the rally comes in the face of transaction volume that is mostly flat for the year.

What could be driving the price pop? A coming halving of the number of coins that miners will receive when new bitcoin is issued, most likely.

A price increase when new supply is constrained, holding demand — volume, in this case — flat, is a reasonable result. However, this might be a bit much:

Screen Shot 2016-06-07 at 8.30.22 AM

There are currently around 15.6 million bitcoin in circulation.

5,000, 3,000, $40, $30 And $14: It’s always fun to watch indices and stocks sit around large, or round figures. Here are a few numbers that I spend too much time checking up on:

  • Nasdaq and the 5,000 barrier. This is an interesting psychological ceiling as it was initially reached at the apex of the first tech bubble. Now, the Nasdaq can’t seem to either get past the 5,000 mark, or deviate too far below it2; all but no tech IPOs and a nearly all-time high Nasdaq? 2016, indeed.
  • The Shanghai index and the 3,000 mark. After massive highs and massive declines, the most-watched Chinese stock index has settled around 3,000. Any deviation from that range will be a proxy for investor optimism, or the opposite. That or massive state intervention. Chinese stocks remain expensive by some global comparisons.
  • Microsoft’s former $40 floor. For some time, Microsoft employees would note a $40 share price for the company’s equity as a key floor. I presume it had something to do with their compensation’s structure. We can all but retire this figure as Microsoft has traded north of $40 for several years now. However, given the long Ballmer Interregnum, I still use $40 as a stick to measure the company’s correlative value in historical context.
  • $TWTR. You might remember when Twitter traded for nearly $70 per share. Those were the days. In August of 2015, shares in the social media company fell below the $30 mark, a level that some thought might put Twitter into M&A play. The company managed to climb back over $30 in October of that same year. It now trades for $15, or half. And it’s still an independent company. Make of that what you will.
  • And finally, Box’s IPO price: $14. Box recently took a whacking from investors after it beat on both adjusted profit, and revenue, but posted a light billings tab. Box also modestly raised its full-year guidance. So, the trend continues: Box largely beats expectations, raises forward expectations, and investors reprice it downward. This adds another ratchet of compression to the current value of recurring revenue (ARR). More on that soon, I promise.

Tech Finds Spine: According to PCWorld, tech does in fact have a backbone. Here’s the headline: “Google, Facebook, Yahoo, rights groups oppose FBI expansion of surveillance powers.” I share your sneaking suspicion that we’re still in the early innings of the battle between the government and the larger side of tech. And of course, there is a Dilbert for everything.

Now, go have more coffee and get something productive done.

  1. There are some worth reading: Mattermark’s Daily, Primack’s Term Sheet, Amy’s Morning Missive, and whatever it is that Jason Rowley is up to.
  2. Buy the dip, etc.
Top Image Via Giphy.

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© Mattermark 2017. Sources: Mattermark Research, Crunchbase, AngelList.
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