🤑 Coinbase is killin' it
Smallcap, midcap investors panic over new BSE circular, Coinbase posts an impressive Q2 results, and some more updates.
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First up,
Market Recap 📈
Indian benchmark indices closed at record highs, led by strong gains in IT, PSU Banks, and media stocks. Meanwhile, US stock markets also closed at fresh highs on data indicating that inflation growth may have peaked.
Sensex: 54,843.98 (+0.58%) ↑
Nifty 50: 16,364.40 (+0.50%) ↑
Dow Jones: 35,484.97 (+0.62%) ↑
Nasdaq 100: 15,027.76 (-0.17%) ↓
Bitcoin: $44,895.95
Top Stories 📰
1. Coinbase beats analyst expectations 🚀
While the crypto markets continue to experience significant volatility, crypto exchange platform Coinbase published impressive second-quarter results, posting a more than 1000% year-on-year revenue growth.
Some key insights:
Revenue reached $2.03 billion, a 27% increase from the previous quarter.
Net income rose to $1.6 billion from $32 million in the same period last year.
Monthly Transacting Users (MTUs) advanced 44% year-on-year to 8.8 million.
Added 1,000 institutional investors this quarter.
Ethereum surpassed Bitcoin in trading volumes for the first time, mainly driven by NFTs and DeFi ecosystems.
It also benefitted from a one-time line item worth $737.5 million, which Coinbase received after becoming the first major US crypto exchange platform to go public in April.
Despite reporting an excellent quarter, the company warned that its trading volumes and MTUs have fallen in July due to "volatility declined significantly relative to Q2 levels.”
Coinbase plans to list more digital assets in the future and is currently exploring ways to support DeFi. Following the news, its shares rose 2% in after-hours trading to $274.59.
Why it matters? While it has been a fantastic quarter for Coinbase, in terms of revenue, a huge part of it comes from trading in Bitcoin, which makes it a riskier investment than its competitors. Additionally, the latest $1 Trillion Infrastructure Bill has mounted pressure on crypto firms due to the stringent crypto tax reporting requirements.
2. Smallcap, midcap investors in panic mode 😨
A new BSE notice has caused investors to act in a panic-selling mode, leading to a major sell-off in smallcap and midcap stocks. The exchange said it's introducing a new surveillance mechanism called ‘Add-on Price Band Framework' to curb excess volatility for certain shares.
Under the new rule, set to be effective from August 23, price caps would be imposed on stocks whose value grew six times in six months, or 12 times in one year, 20 times in two years, or 30 times in three years. What's more, the exchange said that these securities would also be subjected to weekly, monthly and quarterly price limits.
The move, which received SEBI's nod, led to a panic sell-off in the smallcap and midcap indices, which dropped 2.05% and 0.85%, respectively. Nearly 521 stocks were locked in lower circuits, while 2,500 stocks closed in red.
Witnessing such a dramatic price drop, SEBI later clarified that the new price bands would apply to stocks priced at Rs 10 or more, with market capitalisation of less than Rs 1,000 crore. It also said that the “framework is applicable to BSE Exclusive securities in groups viz. X, XT, Z, ZP, ZY, Y."
Why it matters? While BSE said that it's introducing the measure to maintain market integrity and control excessive price volatility, some brokers criticized the new draconian regulation, saying that any restriction on the free movement of stock prices is a suppression of free markets.
Deal Street 🤑
SpaceX to acquire Swarm Technologies
Elon Musk's SpaceX to acquire satellite connectivity startup Swarm Technologies, making it the first acquisition deal in 19 years. Swarm, which raised $25 million in August 2018, has a small modem called Tile that can be inserted into several connectivity devices and linked to satellite networks to facilitate a low-cost method to power IoT devices. The startup also operates a network of 120 sandwich-sized satellites and ground station network. The acquisition will transfer the control of Swarm’s ground and space licenses to SpaceX, while Swarm will benefit from SpaceX's better capitalization and resources, along with "the synergies associated with acquisition by a provider of satellite design, manufacture, and launch services," the companies said in a filing.
CoinDCX becomes India's first crypto unicorn
Crypto exchange CoinDCX raised a $90 million Series C round at a $1.1 billion valuation, becoming India's first crypto startup to achieve unicorn status. The round was led by Facebook co-founder Eduardo Saverin’s B Capital, with existing investors such as Polychain Capital, Block.one, Coinbase Ventures participating in the fundraising. The announcement comes amid growing regulatory uncertainty as the RBI still remains on the fence over private cryptocurrencies. The Mumbai-based startup, which has raised around $110 million so far, plans to use the fresh capital towards hiring new talent and launching new products for targeting wealthy individuals.
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