Page 257 – Channelchek

SoftBank Bounces Back: $7.6B T-Mobile Win Boosts Assets After String of Investment Flops

Posted on December 28, 2023December 28, 2023 by slightbourne@noblecapitalmarkets.com

Japanese conglomerate SoftBank Group saw its shares soar 5% this week after announcing it will receive a windfall stake in T-Mobile US worth $7.59 billion. The deal highlights a reversal of fortunes for SoftBank and its founder Masayoshi Son, who has weathered missteps like the WeWork debacle but is now reaping rewards from past telecom investments.

The share acquisition comes through an agreement made during the merger of SoftBank’s US telecom unit Sprint and T-Mobile. With the merger complete and certain conditions met, SoftBank will receive 48.75 million T-Mobile shares, doubling its stake in the mobile carrier from 3.75% to 7.64%.

This is a big win for SoftBank as it substantially increases its portfolio of listed assets. SoftBank has worked to shift towards more conservative investments after facing heavy criticism for pouring money into overvalued late-stage startups like WeWork. The Japanese firm was forced to bail out WeWork after its failed IPO in 2019, leading to billions in losses.

However, the T-Mobile windfall, along with the recent blockbuster IPO of SoftBank-owned chip designer Arm, helps balance the books. It also bumps SoftBank’s internal rate of return on its original Sprint investment to 25.5%, a solid result.

SoftBank Trading at Steep Discount Despite Strong Assets

Even with missteps like WeWork, SoftBank still holds an impressive array of assets from its years of prolific venture investing. Yet the Japanese firm trades at a 45% discount to the value of its holdings, presenting an opportunity for investors.

The influx of liquid T-Mobile shares adds more tangible value compared to some of SoftBank’s private startup investments. Having more listed stocks helps improve SoftBank’s loan-to-value ratio, giving it more marginable equity relative to debt obligations.

This could help narrow the gap between SoftBank’s market capitalization and net asset value. The T-Mobile windfall and Arm IPO shore up SoftBank’s balance sheet with listed assets at a time when the gap between its market cap and value of holdings remains substantial.

Son’s Missteps Bring Scrutiny But Vision Still Intact

While the WeWork bet soured investor perception of SoftBank’s investment strategy, Son has shown he still has an eye for disruption. His early investments in Alibaba and Yahoo! set the stage for his later dominance in late-stage startup funding.

However, the WeWork debacle led Son to pledge increased financial discipline and a shift towards AI-focused companies. Recent wins like the Coupang IPO and rising value of holdings like DoorDash reassure investors that Son still knows how to pick winners early.

SoftBank also stands to benefit from Son’s long-term vision on the potential of AI, having acquired chipmakers like Arm to position itself as a leader in the so-called Information Revolution. As AI comes to dominate technology over the next decade, SoftBank’s early moves could pay off handsomely if Son’s predictions come true.

T-Mobile Deal Highlights Importance of Sprint Merger

While US regulators initially balked at the T-Mobile/Sprint merger over competition concerns, the deal is now paying off for SoftBank. The Japanese firm’s persistence in pursuing the merger exemplifies its long-term approach, as the benefits are now apparent.

The combined T-Mobile/Sprint is now a much stronger competitor versus Verizon and AT&T, going from the 4th largest US wireless carrier to 2nd largest. T-Mobile has aggressively expanded its 5G network and subscriber base since completion of the merger in 2020.

SoftBank also benefited by negotiating the share acquisition as part of the original merger agreement, allowing it to substantially increase its T-Mobile stake down the road at minimal additional cost.

Final Thoughts

The T-Mobile share acquisition highlights a reversal of fortunes for SoftBank after missteps like WeWork resulted in negative headlines and billions in losses. While the firm still trades at a discount to the value of its holdings, the T-Mobile windfall and Arm IPO help increase its listed assets versus debt.

Son’s long-term vision and willingness to make bold bets still drive SoftBank, even if investments like WeWork went sour. With the US telco mission accomplished by enabling the Sprint/T-Mobile merger, SoftBank now has both its legacy telecom investment and new T-Mobile shares paying off. Looking ahead, SoftBank is well-positioned in AI and next-gen chips to ride disruption waves far into the future if Son’s predictions on technology evolution prove prescient.

Release – Salem Media Group Announces New Revolving Credit Facility with Siena Lending Group

Posted on December 27, 2023December 27, 2023 by aweinsoff@channelchek.com

Research News and Market Data on SALM

December 27, 2023 12:01pm EST

IRVING, Texas–(BUSINESS WIRE)– Salem Media Group, Inc. (NASDAQ: SALM) announced today that it has closed a new $26.0 million 3-year asset-based revolving credit facility with Siena Lending Group (the “New Revolving Facility”), which refinanced its prior revolving facility with Wells Fargo Bank.

Obligations under the New Revolving Facility are secured by a first-priority lien on the Company’s and its subsidiaries’ accounts receivable, inventory, deposit and securities accounts, certain real estate and related assets, and a second-priority lien on substantially all other assets of the Company and its subsidiaries.

FORWARD LOOKING STATEMENTS:

Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to our ability to close and integrate announced transactions, market acceptance of our radio station formats, competition from new technologies, inflation and other adverse economic conditions, and other risks and uncertainties detailed from time to time in our reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

ABOUT SALEM MEDIA GROUP:

Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape. Learn more about Salem Media Group, Inc. at www.salemmedia.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231226399648/en/

Company Contact:
Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com

Source: Salem Media Group, Inc.

Released December 27, 2023

Nvidia Stock Still Has Room to Run in 2024 Despite Massive 200%+ Surge

Posted on December 27, 2023December 27, 2023 by slightbourne@noblecapitalmarkets.com

Nvidia’s share price has skyrocketed over 200% in 2023 alone, but some analysts believe the AI chip maker still has more gas in the tank for 2024. The meteoric rise has pushed Nvidia near trillion-dollar status, leading some to question how much higher the stock can climb. However, bullish analysts argue shares still look attractively priced given massive growth opportunities in AI computing.

Nvidia has emerged as the dominant player in AI chips, which are seeing surging demand from companies developing new generative AI applications. The company’s deals this year with ServiceNow and Snowflake for its H100 chip underscore how major tech firms are racing to leverage Nvidia’s graphics processing units (GPUs) to power natural language systems like ChatGPT.

This voracious appetite for Nvidia’s AI offerings has triggered a wave of earnings upgrades by analysts. Where three months ago Wall Street saw Nvidia earning $10.76 per share this fiscal year, the consensus forecast now stands at $12.29 according to Yahoo Finance data.

Next fiscal year, profits are expected to surge over 67% to $20.50 per share as Nvidia benefits from its pole position in the white-hot AI space. The upgraded outlooks have eased valuation concerns even as Nvidia’s stock price has steadily climbed to nosebleed levels.

Surge Driven by AI Dominance But Valuation Not Overstretched

Nvidia’s trailing P/E ratio now exceeds 65, but analysts note other metrics suggest the stock isn’t overly inflated. For example, Nvidia trades at a PEG ratio of just 0.5 times, indicating potential undervaluation for a hyper-growth company.

Its forward P/E of 24.5 also seems reasonable relative to expected 70%+ earnings growth next year. While far above the market average, analysts argue Nvidia deserves a premium multiple given its AI leadership and firm grasp on the emerging market.

Evercore ISI analyst Matthew Prisco sees a clear path for Nvidia to become the world’s most valuable company, surpassing Apple and Microsoft. But even if that lofty goal isn’t achieved, Prisco notes Nvidia still has ample room for expansion both in revenue and profits for 2024.

Other Catalysts to Drive Growth Despite Stellar Run

Prisco points to Nvidia expanding its customer base beyond AI startups to bigger enterprise players as one growth driver. Increasing production capacity for key AI chips like the H100 is another, which will allow Nvidia to capitalize on the AI boom.

Patrick Moorhead of Moor Insights & Strategy expects the untapped potential in inference AI applications to fuel Nvidia’s next leg higher. This is reminiscent of the machine learning surge that propelled Nvidia’s last massive rally around 2018.

While risks remain like potential profit-taking and Nvidia’s inability to sell advanced AI chips to China, analysts contend the long-term growth story remains solid. Nvidia is firing on all cylinders in perhaps the most disruptive tech space today in AI computing.

With its gaming roots and GPU headstart, Nvidia enjoys a competitive advantage over rivals in the AI chip race. And its platform approach working with developers and marquee customers helps feed an innovation flywheel difficult for challengers to replicate.

Final Thoughts on Nvidia’s Outlook

Nvidia has already achieved meteoric stock gains rarely seen for a mega-cap company. Yet analysts argue its leading position in the AI revolution merits an extended valuation premium despite the triple-digit surge.

Earnings estimates continue marching higher as customers clamor for Nvidia’s AI offerings. While the current P/E is lofty on an absolute basis, growth-adjusted valuations suggest upside remains as Nvidia cements it dominance across AI use cases.

If Nvidia can broaden its customer base, boost production capacity, and capitalize on emerging opportunities like inference AI, shares could continue to charge ahead despite their blistering 2023 rally. With tech titans racing to deploy the next generation of AI, Nvidia looks poised to provide the supercharged semiconductors powering this computing transformation.

Release – Defense Metals Completes Geotechnical Field Data Collection for Wicheeda Rare Earth Element Project Preliminary Feasibility Study

Posted on December 27, 2023December 27, 2023 by aweinsoff@channelchek.com

Research News and Market Data on DFMTF

27 Dec, 2023, 05:00 ETVANCOUVER, BC, Dec. 27, 2023 /PRNewswire/ – Defense Metals Corp. (“Defense Metals” or the “Company“; (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) announces that it has completed all infrastructure geotechnical field data collection in support of the preliminary feasibility study (“PFS“) for its 100% owned Wicheeda Rare Earth Element (“REE“) Project located near Prince George, B.C., Canada.

Craig Taylor, CEO of Defense Metals, commented:

Image 1: Heli-Sonic Overburden Drilling in PFS Tailings Option Study Area (CNW Group/Defense Metals Corp.)

Image 2: Temporary Bridge Installation to Access Tailings Study Area (CNW Group/Defense Metals Corp.)

Image 3: Excavated Overburden Test Pits Underway in Tailings Study Area (CNW Group/Defense Metals Corp.)

“We are very excited to have completed our 2023 Phase 3 geotechnical program. I would like to congratulate the APEX and SRK teams for their safe and professional execution of this work. These multi-phase programs started in early summer and we now have all field geotechnical data in hand necessary for the completion of our PFS study which we expect to be finished in Q2 2024.”

Highlights of the 2023 Wicheeda REE Project infrastructure geotechnical programs include:

16 helicopter and track sonic overburden geotechnical drill holes totalling 225.5 metres (Image 1and Image 2);
20 excavated overburden geotechnical test pits totalling 76.8 metres (Image 3);
6 diamond drill holes totalling 1,182 metres within the Wicheeda REE deposit pit shell; inclusive of 4 open pit geochemical drill holes totalling 920 metres, and in pit exploration holes totalling 262 metres;
Shipment of a 2,700 kg metallurgical sample, collected from drill core, to SGS Lakefield, Ontario for continued flotation and hydrometallurgical optimization test-work;
Initiation of humidity cell testwork on 17 samples, and 250 kg sample selection for on-site kinetic leach (barrel) testing of samples representative of anticipated mine waste rock to assess metal leaching and acid rock drainage potential in support of environmental assessment.

The geotechnical work was completed by SRK Consulting (Canada) Inc. (“SRK“) with the support of APEX Geoscience Ltd. (“APEX“).

Image 1: Heli-Sonic Overburden Drilling in PFS Tailings Option Study Area

Image 2: Temporary Bridge Installation to Access Tailings Study Area

Image 3: Excavated Overburden Test Pits Underway in Tailings Study Area

Qualified Person

The scientific and technical information contained in this news release as it relates to the Wicheeda REE Project has been reviewed and approved by Kristopher J. Raffle, P.Geo. (B.C.), Principal and Consultant of APEX Geoscience Ltd. of Edmonton, Alberta, who is a “Qualified Person” as defined in NI 43-101.

About the Wicheeda Rare Earth Element Project

Defense Metals’ 100% owned, 8,301-hectare (~20,534-acre) Wicheeda REE Project is located approximately 80 km northeast of the city of Prince George, British Columbia; population 77,000. Wicheeda is readily accessible by all-weather gravel roads and is near infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia.

About Defense Metals Corp.

Defense Metals Corp. is a mineral exploration and development company focused on the development of its 100% owned Wicheeda Rare Earth Element Deposit located near Prince George, British Columbia, Canada. Defense Metals Corp. trades on the TSX Venture Exchange under the symbol “DEFN”, in the United States, trading symbol “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.

Defense Metals is a proud member of Discovery Group. For more information please visit: http://www.discoverygroup.ca/

For further information, please visit www.defensemetals.com or contact:

Todd Hanas, Bluesky Corporate Communications Ltd.
Vice President, Investor Relations
Tel: (778) 994 8072
Email: todd@blueskycorp.ca

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Cautionary Statement Regarding “Forward-Looking” Information

This news release contains “forward‐looking information or statements” within the meaning of applicable securities laws, which may include, without limitation, statements relating to advancing the Wicheeda REE Project, the expected completion of the PFS and the expected timeline, the receipt of assays from drilling, continued optimization test-work, the technical, financial and business prospects of the Company, its project and other matters. All statements in this news release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, accuracy of assay results, performance of available laboratory and other related services, future operating costs, interpretation of geological, engineering and metallurgical data, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration, engineering and metallurgical results, risks related to the inherent uncertainty of exploration, metallurgy and development and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company’s profile on SEDAR at www.sedarplus.ca. While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain community acceptance (including First Nations), risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological, metallurgical and engineering assumptions, decrease in the price of rare earth elements, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, an inability to predict and counteract the effects of COVID-19 and other viruses and diseases on the business of the Company, the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, loss of key employees, consultants, or directors, increase in costs, delayed results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward‐looking statements or forward‐looking information, except as required by law.

SOURCE Defense Metals Corp.

Release – Salem Media Group Announces the Sale of Regnery Publishing

Posted on December 26, 2023December 26, 2023 by aweinsoff@channelchek.com

Research New and Market Data on SALM

December 26, 2023 12:56pm EST

IRVING, Texas–(BUSINESS WIRE)– Salem Media Group, Inc. (NASDAQ: SALM) announced today that it has reached an agreement with Skyhorse Publishing to sell Regnery Publishing. The company expects to close the transaction by the end of the year.

David Evans, Chief Operating Officer of Salem Media, said, “We are thrilled to pass the torch of the oldest and most respected conservative publishing company in America to Free Speech advocate Tony Lyons and his incredibly successful Skyhorse Publishing. Salem is committed to the dissemination of conservative ideas and is excited that Skyhorse will both be a powerful steward of this important brand and an engine for its future growth.”

Tony Lyons, President and Publisher of Skyhorse Publishing, added, “We are so pleased to acquire this legendary publishing company, founded over 75 years ago, and are committed to building on the strong foundation that the Regnery staff has developed. We see a lot of synergies and opportunities for growth and will work hard to promote, market, and sell the books we have acquired and those that are pending, as well as to develop and pursue exciting new projects. Regnery will be an imprint of Skyhorse Publishing and will maintain its own identity.”

The more than 1,500 Regnery titles will be absorbed into the Skyhorse Publishing catalogue. The former Washington D.C. based publishing house was founded in 1947 by Henry Regnery and acquired an impressive list of authors over its 75 years, including former President Donald Trump, Senator Rand Paul, Senator Ted Cruz, Senator Mitt Romney, Tulsi Gabbard, Eric Metaxas, former President Ronald Regan, and Ann Coulter.

ABOUT SKYHORSE PUBLISHING:

Skyhorse Publishing, one of the largest independent book publishers in the United States, was launched in September 2006 by Tony Lyons, former president and publisher of the Lyons Press. The company has had fifty-seven New York Times bestsellers and currently has over 10,000 titles in print.

Skyhorse maintains a firm stance against censorship and aims to provide a full spectrum of political, theological, cultural, and philosophical viewpoints to counter the increasingly biased environment in mainstream media.

Through its twenty imprints, Skyhorse publishes an eclectic and maverick list of titles. Its imprints — Allworth Press, Arcade Crime Wise, Arcade Publishing, Carrel Books, Children’s Health Defense, Clydesdale Press, Front Page Detectives, Good Books, Helios Press, Hot Books, Night Shade Books, Not For Tourists, Racehorse For Young Readers, Racehorse Publishing, Sky Pony Press, Sports Publishing, Talos Press, Yucca Publishing, Skyhorse Publishing, and World Almanac — cover everything from nature, sports, country living, history, reference, travel, humor, health, art, business, philosophy, religion, current events, politics, investigative and conspiracy, to fiction, literary nonfiction, science fiction, fantasy, and young adult and children’s literature. Its backlist includes more than ten thousand titles. Skyhorse is distributed by Simon & Schuster in the U.S. and abroad.

ABOUT SALEM MEDIA GROUP:

View source version on businesswire.com: https://www.businesswire.com/news/home/20231222615634/en/

Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com

Source: Salem Media Group, Inc.

Released December 26, 2023

MicroStrategy Stock Skyrockets 337% in 2023 on Bitcoin Play

Posted on December 26, 2023December 27, 2023 by slightbourne@noblecapitalmarkets.com

Business intelligence software company MicroStrategy has seen its stock price explode in 2023, gaining a massive 337% so far this year. This meteoric rise is almost entirely fueled by the company’s big bet on bitcoin starting in 2020.

Unlike other major tech stocks like Nvidia and Meta which rely on growing revenue and market share, MicroStrategy’s appeal to investors stems from its holdings of the popular cryptocurrency bitcoin. The company has accumulated around 174,530 bitcoins worth approximately $7.65 billion as of late December 2022. MicroStrategy began buying bitcoin in July 2020 as a way to invest its excess corporate cash.

At the time, MicroStrategy was a relatively small software company with minimal profits. But its co-founder and then-CEO Michael Saylor saw an opportunity to boost returns on idle cash by purchasing bitcoin, which he viewed as “digital gold.” This allowed stock investors to gain exposure to bitcoin prices without directly buying the cryptocurrency.

Remarkably, MicroStrategy’s market valuation is now over $8 billion, meaning 90% of its value comes directly from its bitcoin holdings rather than its core software business. When bitcoin rises or falls, so does MicroStrategy stock. For example, 2022’s bitcoin plunge of 64% dragged MicroStrategy shares down 74%.

Saylor’s Bitcoin Bet Pays Off Big for MicroStrategy

Michael Saylor first announced MicroStrategy’s new bitcoin buying strategy in July 2020. At the time, the company had over $500 million in cash and short-term investments, but was earning little return due to rock-bottom interest rates.

Saylor decided that bitcoin offered a better store of value than either cash or gold. By Q4 2020, MicroStrategy held over 40,000 bitcoins and its stock had doubled for the year. Fast forward to 2023, and Saylor’s bitcoin bet has multiplied MicroStrategy’s stock price over 5-fold from its pre-bitcoin days.

Despite stepping down as CEO in 2022, Saylor remains executive chairman and a bitcoin bull. He expects mainstream adoption of bitcoin as an asset class to grow from 0.1% of global capital to 0.2% and higher. While bitcoin ETFs may provide some competition when approved, MicroStrategy retains an advantage in actively managing its bitcoin trove.

MicroStrategy Now Viewed as a Bitcoin Holding Company

MicroStrategy was founded in 1989 and operated for most of its history as an under-the-radar provider of business intelligence software. But bitcoin has thrust the company into the spotlight, to the point where it is now valued essentially as a bitcoin holding company.

This represents a novel use of corporate cash. Some other companies like Tesla and Block (Square) have also put portions of their balance sheet into bitcoin. However, MicroStrategy is unique in that bitcoin comprises 90% of its market valuation.

In 2023, investors have rewarded MicroStrategy’s first-mover status with a “scarcity premium” as one of the only publicly traded ways to gain pure-play exposure to bitcoin prices. However, this premium could erode as new spot bitcoin ETFs enter the market. But for now, MicroStrategy remains a one-of-a-kind bitcoin play for stock investors.

MicroStrategy Keeps Buying More Bitcoin

Despite its already enormous bitcoin position, MicroStrategy shows no signs of letting up in its accumulation of the cryptocurrency. In November 2022, the company purchased another 16,130 bitcoins for over $593 million.

MicroStrategy has adopted an aggressive “buy the dip” strategy, utilizing its steady software cash flows to continue building its bitcoin treasury. So far this strategy has paid off tremendously for shareholders.

However, detractors point to the huge risks inherent in MicroStrategy’s ultra-high concentration in such a volatile asset. Bitcoin prices can see massive swings, as in 2022 when it fell from nearly $69,000 to under $17,000 by year-end. But Michael Saylor firmly believes bitcoin will continue appreciating over the long term.

MicroStrategy Stock Surges as Bitcoin Short Sellers Get Burned

With such an enormous bet on bitcoin, it’s not surprising that MicroStrategy has been a prime target for short sellers betting against further bitcoin-fueled stock gains. About 23% of available MicroStrategy shares are currently shorted, the second highest percentage among crypto-related stocks.

But so far, the short sellers have been the ones getting burned. In just the first three quarters of 2022, over $2 billion worth of short positions were covered at a loss. Data shows short sellers lost approximately $1.4 billion specifically on bearish MicroStrategy bets this year.

If bitcoin rebounds strongly in 2023 as many analysts expect, it could force even more short covering and propel MicroStrategy shares even higher. This dynamic explains why MicroStrategy has so dramatically outpaced bitcoin itself in 2023, more than doubling the cryptocurrency’s own gains.

Conclusion: One-of-a-Kind Bitcoin Play

In conclusion, MicroStrategy has morphed from an obscure software maker into a one-of-a-kind publicly traded bitcoin holding company. It offers stock investors unparalleled exposure to bitcoin’s price movements, both good and bad.

Led by a crypto-bullish CEO, the company has accumulated a $7.65 billion bitcoin hoard and adopted a “buy the dip” strategy. So far, this move has massively rewarded shareholders in 2023, though not without major risks. With bitcoin poised to potentially become a growing asset class, investors are keeping a close eye on this unique bitcoin proxy play in MicroStrategy stock.

Take a moment to look at Bitcoin Depot and Bit Digital, emerging digital asset companies.

Bristol Myers Squibb $4.1B RayzeBio Buyout

Posted on December 26, 2023December 26, 2023 by slightbourne@noblecapitalmarkets.com

Pharma giant Bristol Myers Squibb (BMY) announced Tuesday that it will acquire clinical-stage biotech RayzeBio for $4.1 billion, continuing Bristol’s strategy of deals to refresh its drug pipeline amid upcoming patent expirations.

RayzeBio is developing a novel targeted radiotherapy called RYZ101 to treat multiple types of cancer. The company’s technology combines tumor-targeting antibodies with radioactive isotope payloads that selectively damage cancer cells’ DNA when delivered.

RYZ101 is currently in Phase 3 testing for treating metastatic castration-resistant prostate cancer. Early clinical data showed promising results with the drug demonstrating tumor response rates of 44-55%.

Bristol gains full rights to RYZ101 and RayzeBio’s broader platform for linking radioisotopes to cancer-fighting proteins. The deal gives Bristol a potential new blockbuster cancer treatment as competition intensifies in the immuno-oncology space.

Shoring Up the Cancer Business

Bristol already markets leading cancer immunotherapies Opdivo and Yervoy. However, Opdivo faces patent expiration in 2028/2031, forcing Bristol to find new long-term growth drivers.

The RayzeBio deal comes right after Bristol announced the $13.1 billion acquisition of schizophrenia drug developer Karuna Therapeutics last Friday. Karuna’s lead drug KarXT could generate peak annual sales of over $3 billion, analysts project.

These acquisitions help future-proof Bristol’s business as its top-selling drugs face new competition. Blood thinner Eliquis, which makes up over 30% of Bristol’s revenue, will see biosimilar rivals by 2026. Cancer drug Revlimid, acquired in Bristol’s 2019 buyout of Celgene, faces generics soon too.

“We are focused on strengthening our portfolio through a combination of internal programs and targeted business development,” said Bristol Myers CEO Giovanni Caforio. The RayzeBio and Karuna deals “complement our existing pillars of growth,” he added.

Betting Big on Radio-Pharmaceuticals

In addition to RYZ101’s potential, Bristol gains RayzeBio’s expertise with radio-pharmaceuticals. Attaching radioactive particles to antibodies allows them to precisely pinpoint tumor cells and kill them via DNA damage.

RayzeBio’s technology overcomes past challenges with radio-drugs such as lack of tumor specificity and rapid decay of radioisotopes. Linking radioisotopes to robust antibodies circumvents these issues and improves the drugs’ efficacy.

Analysts see radio-pharmaceuticals as an emerging trend in oncology. Radio-immunotherapies like RayzeBio’s could complement immuno-oncology drugs that activate the immune system against cancer.

By acquiring RayzeBio’s platform, Bristol can expand development of new radio-drug conjugates across its oncology pipeline. Bristol may also look to license out the technology to other companies given the heightened industry interest.

An Expensive Acquisition

Bristol is paying a huge premium to acquire RayzeBio before the biotech can prove RYZ101’s efficacy in late-stage testing. The $4.1 billion price tag works out to $62.50 per share, more than double RayzeBio’s prior closing price.

But Bristol likely wanted to preempt competition for the promising biotech asset. Amgen and Novartis are also developing radio-pharmaceutical drugs for cancer. And RayzeBio would have commanded an even higher valuation had RYZ101 succeeded in Phase 3.

Bristol expects the acquisition will reduce its adjusted earnings by about 13 cents per share in 2024. But Bristol maintained its existing profit guidance for 2022 and 2023, implying confidence the long-term benefits outweigh the near-term costs.

The company plans to finance the purchase using new debt. Bristol’s strong cash flows should allow it to service the additional debt load as it waits for RYZ101 to potentially reach the market around 2025.

Conclusion: Bolstering Its Firepower

The back-to-back deals for Karuna Therapeutics and RayzeBio showcase Bristol Myers Squibb’s strategy to acquire new therapies and drug platforms that can drive growth over the next decade. While expensive, these acquisitions reduce Bristol’s reliance on aging blockbuster drugs facing patent cliffs.

Gaining Karuna’s potential multi-billion dollar schizophrenia medicine and RayzeBio’s cutting-edge radio-pharmaceutical technology gives Bristol valuable new firepower to deploy in the fiercely competitive pharma market. If successful, the deals will ensure Bristol Myers remains an industry leader as it confronts upcoming challenges from biosimilar and generic competition.

Take a moment to take a look at emerging growth biotechnology companies by looking at Noble Capital Markets Senior Research Analyst Robert LeBoyer’s coverage universe.

New Inflation Data Supports Case for Fed Rate Cuts in 2024

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

The latest inflation report released on Friday provides further evidence that price pressures are cooling, opening the door for the Federal Reserve to pivot to rate cuts next year.

The core personal consumption expenditures (PCE) index, which excludes food and energy costs, rose 3.2% in November from a year earlier. That was slightly below economists’ expectations for a 3.3% increase, and down from 3.7% inflation in October.

On a 6-month annualized basis, core inflation slowed to 1.9%, dipping below the Fed’s 2% target for the first time in three years. The moderating price increases back up Fed Chair Jerome Powell’s comments last week that inflation has likely peaked after months of relentless gains.

Following Powell’s remarks, financial markets boosted bets that the Fed would begin slashing interest rates in early 2024 to boost economic growth. Futures prices now show traders see a more than 70% likelihood of a rate cut by March.

The Fed kicked off its tightening cycle in March, taking its benchmark rate up to a 15-year high of 4.25% – 4.50% from near zero. But Powell signaled last week the central bank could hold rates steady at its next couple meetings as it assesses the impacts of its aggressive hikes.

Still, some Fed officials have pumped the brakes on expectations for imminent policy easing. They noted it is premature to pencil in rate cuts for March when recent inflation data has been mixed.

Cleveland Fed President Loretta Mester said markets have “gotten a little bit ahead” of the central bank. And Richmond Fed President Tom Barkin noted he wants to see services inflation, which remains elevated at 4.1%, also moderate before officials can decide on cuts.

More Evidence Needed

The Fed wants to see a consistent downward trajectory in inflation before it can justify loosening policy. While the latest core PCE print shows prices heading the right direction, policymakers need more proof the disinflationary trend will persist.

Still, the report marked a step forward after inflation surged to its highest levels in 40 years earlier this year on the back of massive government stimulus, supply chain snarls and a red-hot labor market.

The Commerce Department’s downward revision to third quarter core PCE to 2%, right at the Fed’s goal, provided another greenshoot. Personal incomes also grew a healthy 0.4% in November, signaling economic resilience even in the face of tighter monetary policy.

Fed officials will closely monitor upcoming inflation reports, especially core services excluding housing. Categories like healthcare, education and recreation make up 65% of the core PCE index.

Moderation in services inflation is key to convincing the Fed that broader price pressures are easing. Goods disinflation has been apparent for months, helped by improving supply chains.

Path to Rate Cuts

To justify rate cuts, policymakers want to see months of consistently low inflation paired with signs of slowing economic growth. The Fed’s forecasts point to GDP growth braking from 1.7% this year to just 0.5% in 2023.

Unemployment is also projected to rise, taking pressure off wage growth. Leading indicators like housing permits and manufacturing orders suggest the economy is heading for a slowdown.

Once the Fed can be confident inflation will stay around 2% in the medium term, it can then switch to stimulating growth and bringing down unemployment.

Markets are currently betting on the Fed starting to cut rates in March and taking them back down by 1.25 percentage points total next year. But analysts warn against getting too aggressive in rate cut expectations.

“There is mounting evidence that the post-pandemic inflation scare is over and we expect interest rates to be cut significantly next year,” said Capital Economics’ Andrew Hunter.

The potential for financial conditions to tighten again, supply chain problems or an inflation rebound all pose risks to the dovish outlook. And inflation at 3.2% remains too high for the Fed’s comfort.

Fed Chair Powell has warned it could take until 2024 to get inflation back down near officials’ 2% goal. Monetary policy also acts with long lags, meaning rate cuts now may not boost growth until late 2023 or 2024.

With risks still skewed, the Fed will likely take a cautious approach to policy easing. But the latest data gives central bankers confidence their inflation fight is headed in the right direction.

Comstock Inc. (LODE) – Comstock Metals Achieves a Major Milestone

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

Friday, December 22, 2023

Comstock (NYSE: LODE) innovates technologies that contribute to global decarbonization and circularity by efficiently converting under-utilized natural resources into renewable fuels and electrification products that contribute to balancing global uses and emissions of carbon. The Company intends to achieve exponential growth and extraordinary financial, natural, and social gains by building, owning, and operating a fleet of advanced carbon neutral extraction and refining facilities, by selling an array of complimentary process solutions and related services, and by licensing selected technologies to qualified strategic partners. To learn more, please visit www.comstock.inc.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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Supply contracts secured. Comstock Metals has secured enough end-of-life solar panel supplier commitments to begin commissioning its first demonstration photovoltaic (PV) recycling facility upon receipt of required permits. Comstock Metals is negotiating agreements with major customers for industry-scale supply agreements. Comstock’s technology and renewable solutions provide a better alternative to land fill disposition of these materials. Comstock’s solution ensures safe deconstruction, decontamination, separation, and productive reuse of metals contained in end-of-life photovoltaic materials.

Demonstration PV recycling system. Comstock Metals is readying a demonstration facility that commercializes technologies for efficiently crushing, conditioning, extracting, and recycling metal and mineral concentrates from photovoltaics and other electronic devices. Comstock Metals previously received a storage permit and expects to receive the remaining air quality and solid waste permits shortly and expects to begin receiving, commissioning, and then processing the end-of-life panels in early 2024. Because Comstock Metals will likely receive a tipping fee for handling the end-of-life solar panels, Comstock Metals could begin generating cash flow with revenue recognized once the waste is processed and recycled.

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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.

Energy Fuels (UUUU) – Uranium production timeline accelerates with uranium price spike

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

Friday, December 22, 2023

Energy Fuels is a leading U.S.-based uranium mining company, supplying U3O8 to major nuclear utilities. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is ramping up commercial-scale production of REE carbonate. Its corporate offices are in Lakewood, Colorado, near Denver, and all its assets and employees are in the United States. Energy Fuels holds three of America’s key uranium production centers: the White Mesa Mill in Utah, the Nichols Ranch in-situ recovery (“ISR”) Project in Wyoming, and the Alta Mesa ISR Project in Texas. The White Mesa Mill is the only conventional uranium mill operating in the U.S. today, has a licensed capacity of over 8 million pounds of U3O8 per year, has the ability to produce vanadium when market conditions warrant, as well as REE carbonate from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U3O8 per year. The Alta Mesa ISR Project is also on standby and has a licensed capacity of 1.5 million pounds of U3O8 per year. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the U.S. and several uranium and uranium/vanadium mining projects on standby and in various stages of permitting and development. The primary trading market for Energy Fuels’ common shares is the NYSE American under the trading symbol “UUUU,” and the Company’s common shares are also listed on the Toronto Stock Exchange under the trading symbol “EFR.” Energy Fuels’ website is www.energyfuels.com.

Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Energy Fuels announces that is has commenced production at three mines. During the third-quarter earnings’ discussion six weeks ago, management indicated that it was hiring personnel and upgrading facilities at four mines with plans to restart production at one or two of the mines in 2024. Today’s announcement would appear to be an acceleration of previous plans. Management also indicated previously that it plans to produce 1,000,000 lbs of uranium in 2024 and stockpile the uranium until a mill campaign is completed in late 2024 or early 2025. It is unclear whether these plans have changed in light of today’s announcement.

Uranium prices are surging. Uranium prices were below $40/lb. most of the last ten years causing domestic producers to idle production. Prices started to rise in 2022 reaching a price in the mid seventies just six weeks ago. Since then, uranium prices have soared to a level near $90/lb. It has been our investment premise that cheap uranium from Kazakhstan sold on spot would eventually dry up, and that when that happened, uranium prices would rise quickly. With utilities (and the government) now rushing to shore up supply, the log jam appears to have been broken.

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

The ODP Corporation (ODP) – A Shareholder Letter

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

Friday, December 22, 2023

Office Depot, Inc., together with its subsidiaries, supplies a range of office products and services. It offers merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture through its chain of office supply stores under the Office Depot, Foray, Ativa, Break Escapes, Worklife, and Christopher Lowell brand names. The company also provides graphic design, printing, reproduction, mailing, shipping, and other services through design, print, and ship centers. It has operations throughout North America, Europe, Asia, and Central America. The company also sells its products and services through direct mail catalogs, contract sales force, Internet sites, and retail stores, through a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 31, 2008, Office Depot operated 1,267 North American retail division office supply stores and 162 international division retail stores, as well as participated under licensing and merchandise arrangements in 98 stores. The company was founded in 1986 and is based in Boca Raton, Florida.

Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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Letter. This week, self described long-term ODP shareholder, AREX Capital Management issued an open letter to the Company’s Board of Directors seeking a relaunch of the Office Deport separation process and the sale of Varis to unlock significant shareholder value.

Value. In AREX’s belief, the market will have a dramatically more favorable view of the remaining ODP business (Business Solutions and Veyer) once the Company no longer operates a primarily brick-and-mortar retailer. In this scenario, using 2024 EBITDA AREX estimates ODP shares could be valued in the $75 range, or nearly 50% above current levels.

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

Bristol Myers Drops $14 Billion to Acquire Karuna Therapeutics, Gaining Schizophrenia Drug

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

Pharmaceutical giant Bristol Myers Squibb made a bold move into neuroscience today, announcing the $14 billion acquisition of clinical-stage biotech Karuna Therapeutics. The massive deal provides Bristol Myers with Karuna’s lead drug candidate, KarXT, a potential new treatment for schizophrenia and other psychiatric disorders.

KarXT could be the first drug in its class approved for schizophrenia in decades. The market for schizophrenia drugs is estimated at over $7 billion globally. If approved, KarXT is projected to achieve multi-billion dollar peak sales. Bristol Myers is betting the experimental medicine could transform treatment for millions struggling with serious mental illness.

This acquisition is the latest in a wave of big pharma interest in the emerging neuroscience space. Companies are eager to find new approaches to historically hard-to-treat psychiatric conditions like schizophrenia, depression and Alzheimer’s disease.

Smaller biotechs like Karuna have led the charge, developing novel therapies targeting neurological mechanisms of psychiatric disorders. But larger players like Bristol Myers have taken notice of the promise of these new technologies.

Karuna’s KarXT combines xanomeline, a novel muscarinic receptor agonist, with trospium chloride, an FDA-approved muscarinic receptor antagonist. Early clinical results show this approach reduces side effects and improves efficacy compared to current schizophrenia drugs.

Take a look at other emerging growth biotechnology companies by taking a look at Noble Capital Markets’ Senior Research Analyst Robert Leboyer’s coverage list.

In late-stage clinical trials, KarXT demonstrated statistically significant and clinically meaningful improvements in schizophrenia symptoms. Patients experienced rapid reductions in hallucinations and delusions with far fewer problematic side effects like sedation.

Based on positive Phase 3 data, Karuna submitted a New Drug Application for KarXT in schizophrenia in mid-2022. The FDA accepted the application and set a PDUFA goal date of September 2023 for a potential approval.

Clearly Bristol Myers feels confident about KarXT’s chances, agreeing to pay $28.5 billion upfront in cash to finalize the acquisition. Karuna shareholders will also be eligible for up to $3.5 billion in milestone payments if KarXT reaches certain commercial goals.

For Bristol Myers, the move signals a push into neuroscience and psychiatric disease, an area it has not traditionally emphasized. But the company likely sees major growth potential, given the prevalence of mental illness and the need for better treatments.

Almost 3% of the U.S. population suffers from schizophrenia. Another 17% experience some other mental illness like depression, bipolar disorder or PTSD. Existing drugs fail to adequately manage symptoms for many patients and carry tolerability issues that lead to poor compliance.

Doctors and patients are eagerly awaiting novel therapies like KarXT that balance safety and efficacy. Karuna is also exploring KarXT’s potential in dementia-related psychosis and other indications beyond schizophrenia.

The lucrative deal builds on other recent big-ticket acquisitions for Bristol Myers as the company looks to expand its portfolio. Earlier this year, Bristol Myers acquired cancer biotech Turning Point Therapeutics for $3.2 billion and the oncology company MyoKardia for $13 billion.

But the Karuna purchase represents Bristol Myers’ biggest bet yet on the emerging neuroscience space. It’s the second largest biopharma acquisition announced in 2022 after Pfizer’s $43 billion buyout of cancer drugmaker Seagen.

Other large pharmaceutical companies have also signed deals to access neuropsychiatric drug candidates. AbbVie recently acquired an option to purchase Alector’s experimental Alzheimer’s therapy for up to $2.2 billion. And Eli Lilly collaborated with NextCure on novel immuno-oncology approaches for treating mental illness.

As more novel mechanisms like KarXT arrive, expect growing competition among pharma giants to capture market share. Bristol Myers struck first with today’s monumental acquisition, but likely won’t be the last looking to neuroscience for future growth.

Consumer Confidence Jumps to Five-Month High, Signaling Economic Optimism

Posted on December 22, 2023December 22, 2023 by slightbourne@noblecapitalmarkets.com

U.S. consumer confidence increased substantially in December to reach its highest level in five months, according to new data from the Conference Board. The confidence index now stands at 110.7, up sharply from 101.0 in November. This surge in optimism indicates consumers have a brighter economic outlook heading into 2024.

The gains in confidence were broad-based, occurring across all age groups and household income levels. In particular, confidence rose sharply among 35-54 year olds as well as those earning $125,000 per year or more. Consumers grew more upbeat about both current conditions and their short-term expectations for business, jobs, and income growth.

The large improvement in consumer spirits is likely the result of several positive economic developments in recent months. Stock markets have rebounded, mortgage rates have retreated from their peaks, and gas prices have declined significantly. Many shoppers also appear to be returning to more normal holiday spending after two years of pandemic-distorted patterns.

Labor Market Resilience Boosts Spending Power

Driving much of this economic optimism is the continued resilience in the labor market. The survey’s measure of jobs plentiful versus hard to get widened substantially in December. This correlates with the 3.7% unemployment rate, which remains near a 50-year low. Robust hiring conditions and rising wages are supporting the consumer spending that makes up 70% of GDP.

With inflationary pressures also showing signs of cooling from 40-year highs, households have more spending power heading into 2023. Consumers indicated plans to increase purchases of vehicles, major appliances, and vacations over the next six months. This points to solid ongoing support for economic growth.

Fed Rate Hikes Could Be Nearing an End

Another factor buoying consumer sentiment is growing expectations that the Fed may pause its rapid interest rate hikes soon. After a cumulative 4.25 percentage points of tightening already delivered, markets are betting on a peak rate below 5% in early 2024.

This prospect of nearing an end to historically-aggressive Fed policy has sparked a powerful rally in rate-sensitive assets like bonds and stocks while boosting housing affordability. With inflation expectations among consumers also falling to the lowest since October 2020, pressure on the central bank to maintain its torrid tightening pace is declining.

Housing Market Poised for Rebound

One key area that could see a revival from lower rates is the housing sector. Existing home sales managed to eke out a small 0.8% gain in November following five straight months of declines. While higher mortgage rates earlier this year crushed housing affordability, the recent rate relief triggered a jump in homebuyer demand.

More consumers reported plans to purchase a home over the next six months than any time since August. However, extremely tight inventory continues hampering sales. There were just 1.13 million homes for sale last month, 60% below pre-pandemic levels. This lack of supply will likely drive further home price appreciation into 2024.

The median existing-home price rose 4% from last year to $387,600 in November. But lower mortgage rates could bring more sellers and buyers to the market. Citigroup economists project stronger price growth next spring and summer as rates have room to decrease further. This would provide a boost to household wealth and consumer spending power.

Economic Growth Appears Solid Entering 2024

Overall, with consumers opening their wallets and the job market thriving, most economists expect the US to avoid a downturn next year. The sharp rise in confidence, spending intentions, and housing market activity all point to continued economic growth in early 2024.

Inflation and Fed policy remain wildcards. But the latest data indicates the price surge has passed its peak. If this trend continues alongside avoiding a spike in unemployment, consumers look primed to keep leading GDP forward. Their renewed optimism signals economic momentum instead of approaching recession as 2024 gets underway.