Latest news with #BernsteinResearch
Yahoo
3 days ago
- Business
- Yahoo
Why more and more companies are buying bitcoin
More corporations are adding bitcoin to their balance sheets, boosting demand. Low-growth firms would be good candidates to follow Strategy's lead, Bernstein said. Here's why bitcoin has turned into a must-have asset for some companies. The bitcoin boom is drawing the attention of more companies, who are following Strategy's lead and piling up the token in their corporate treasuries. A growing list of firms have turned themselves into bitcoin holding companies recently, incorporating the top crypto in their balance sheets along with more traditional assets like cash and bonds. To date, 80 companies have embraced the "bitcoin standard," and they own about 3.4% of the total bitcoin supply, according to a report from Bernstein Research. Many are trying to replicate the success of Strategy, which pioneered the bitcoin treasury strategy and has amassed a trove of around 554,000 bitcoins. The company's stock has outperformed the Magnificent Seven, S&P 500, and its underlying bitcoin holdings in the last 12 months. Following suit, last month, GameStop added $500 million of bitcoin to its balance sheet in its first-ever crypto purchase, and Trump Media & Technology Group announced plans to raise $2.5 billion for a bitcoin treasury. In April, the SPAC Cantor Equity Partners merged crypto firm Twenty One Capital with the goal of becoming a pure-play bitcoin holding company and saw its shares spike nearly 500% in the first week of trading. Bernstein predicts that company demand could drive $330 billion of inflows into bitcoin by 2029, with up to $124 billion of that from Strategy alone. That influx of corporate money would be bullish for bitcoin's price. However, buying bitcoin isn't a one-size-fits-all maneuver, and Strategy's success may be hard to replicate, Bernstein said. Bernstein estimates that around 2,000 global companies with market caps under $100 billion could be prime candidates for bitcoin adoption. These firms share characteristics like low growth (defined as sub-5% yearly revenue growth rate), low leverage, and high cash piles of $100 million or more. Bitcoin could be a lifeline for these types of companies. Firms with poor growth prospects might decide that their cash is better spent on investing in bitcoin than letting it sit on their balance sheet earning minimal returns. A prime example is Japanese hotel-management company turned bitcoin treasury, MetaPlanet. After years of weak profitability and stock-price stagnation, MetaPlanet began purchasing bitcoin in 2024 via cash raised from bond and equity sales. The move paid off, and the stock is up over 500% in the last year. Some larger companies, such as Tesla, have also purchased bitcoin in the past. However, other mega-cap companies have rejected proposals to buy bitcoin. Meta is the latest example, with over 99% of shareholders voting against a bitcoin treasury plan earlier this week. Proposals have also failed at Amazon and Microsoft. Not all businesses will find the same success as Strategy. The business software company has been piling up bitcoin for five years, enticing investors with equity, convertible debt, and preferred stock offerings to fund even more purchases. The stock provides investors with price appreciation, convertible debt offers more capped upside, and preferred stock provides dividend payouts. The company also has the benefit of experience after weathering multiple bitcoin price crashes. MetaPlanet and other treasury companies have issued convertible debt and equity, but Bernstein points out these companies don't have the same scale and ability to raise funds as Strategy. However, as bitcoin popularity skyrockets, it's clear that lack of experience won't stop these companies from taking a page from the Strategy playbook. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
3 days ago
- Business
- Business Insider
Why more and more companies are buying bitcoin
The bitcoin boom is drawing the attention of more companies, who are following Strategy's lead and piling up the token in their corporate treasuries. A growing list of firms have turned themselves into bitcoin holding companies recently, incorporating the top crypto in their balance sheets along with more traditional assets like cash and bonds. To date, 80 companies have embraced the "bitcoin standard," and they own about 3.4% of the total bitcoin supply, according to a report from Bernstein Research. Many are trying to replicate the success of Strategy, which pioneered the bitcoin treasury strategy and has amassed a trove of around 554,000 bitcoins. The company's stock has outperformed the Magnificent Seven, S&P 500, and its underlying bitcoin holdings in the last 12 months. Following suit, last month, GameStop added $500 million of bitcoin to its balance sheet in its first-ever crypto purchase, and Trump Media & Technology Group announced plans to raise $2.5 billion for a bitcoin treasury. In April, the SPAC Cantor Equity Partners merged crypto firm Twenty One Capital with the goal of becoming a pure-play bitcoin holding company and saw its shares spike nearly 500% in the first week of trading. Bernstein predicts that company demand could drive $330 billion of inflows into bitcoin by 2029, with up to $124 billion of that from Strategy alone. That influx of corporate money would be bullish for bitcoin's price. However, buying bitcoin isn't a one-size-fits-all maneuver, and Strategy's success may be hard to replicate, Bernstein said. Small, low-growth companies are good candidates Bernstein estimates that around 2,000 global companies with market caps under $100 billion could be prime candidates for bitcoin adoption. These firms share characteristics like low growth (defined as sub-5% yearly revenue growth rate), low leverage, and high cash piles of $100 million or more. Bitcoin could be a lifeline for these types of companies. Firms with poor growth prospects might decide that their cash is better spent on investing in bitcoin than letting it sit on their balance sheet earning minimal returns. A prime example is Japanese hotel-management company turned bitcoin treasury, MetaPlanet. After years of weak profitability and stock-price stagnation, MetaPlanet began purchasing bitcoin in 2024 via cash raised from bond and equity sales. The move paid off, and the stock is up over 500% in the last year. Some larger companies, such as Tesla, have also purchased bitcoin in the past. However, other mega-cap companies have rejected proposals to buy bitcoin. Meta is the latest example, with over 99% of shareholders voting against a bitcoin treasury plan earlier this week. Proposals have also failed at Amazon and Microsoft. Can Strategy's strategy be replicated? Not all businesses will find the same success as Strategy. The business software company has been piling up bitcoin for five years, enticing investors with equity, convertible debt, and preferred stock offerings to fund even more purchases. The stock provides investors with price appreciation, convertible debt offers more capped upside, and preferred stock provides dividend payouts. The company also has the benefit of experience after weathering multiple bitcoin price crashes. MetaPlanet and other treasury companies have issued convertible debt and equity, but Bernstein points out these companies don't have the same scale and ability to raise funds as Strategy. However, as bitcoin popularity skyrockets, it's clear that lack of experience won't stop these companies from taking a page from the Strategy playbook.
Yahoo
04-04-2025
- Automotive
- Yahoo
Here's What Trump's Tariffs Could Do to the U.S. Auto Industry
Announcing a barrage of new tariffs on the White House lawn yesterday, Donald Trump promised that jobs and factories 'will come roaring back into our country.' He paid special attention to the 20 or so autoworkers in the audience. 'The autoworkers were fantastic,' he said. 'You're going to be very happy soon.' At one point during the speech, Trump pulled one of his trademark red Make America Great Again hats from the dais. 'Come here. Thank you, fellas. Get it. That's it. That's it,' he said, offering them the cap. What else they'll get from the administration besides that isn't clear. As markets reel from Wednesday's tariff announcements, the U.S. auto industry is continuing to figure out its next steps. Roughly 46 percent of vehicles sold here last year were made in other countries. Investment analysts at Bernstein Research estimate that 57 percent of the parts that make up vehicles assembled in the United States are sourced abroad; those items are due to face tariffs by May 3. GM—which imports 48 percent of the vehicles it sells in the U.S., and sources less than 40 percent of its parts domestically—could face a 79 percent drop in earnings before interest and taxes, Bernstein estimates. Automakers had lobbied to exempt vehicles made in Mexico and Canada that comply with the terms of the U.S.-Mexico-Canada Agreement, or USMCA. The Trump administration is subjecting them to the 25 percent tariff anyway. The value of U.S.-made parts included in those cars will be deducted from the total amount that gets assessed, however. For example: A car made in Mexico that costs $40,000 would be subject to a $10,000 levy if it's shipped to the U.S. If that car contains $5,000 worth of U.S.-made parts, it'd be charged $8,750—i.e., 25 percent of $35,000. Trump has argued that auto tariffs will compel companies to bring production back into the U.S. The United Auto Workers—while critical of Trump's action on other fronts—has enthusiastically endorsed his auto import tariffs on those grounds. 'With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants,' the union wrote in a statement responding to the auto tariff announcement last week. The reality may be more complicated, especially given the extent to which U.S. automakers have structured production around the expectation of free trade with Mexico and Canada. 'There is some wiggle room for certain products, but that still costs a lot of money and time,' says Stephanie Brinley, associate director of AutoIntelligence at S&P Global Mobility. The easiest places to shift production will be for models that are already produced at plants in Mexico or Canada and the U.S. The Chevrolet Silverado, for instance, is made at two plants in the U.S. and one each in Mexico and Canada. On Thursday, GM announced that it will add as many as 250 jobs to increase production at an Indiana plant that makes the Silverado and GMC Sierra trucks. Other news has been less promising. Stellantis, which owns Dodge, Jeep, and Chrysler, has announced that it will temporarily lay off 900 employees in the U.S., including workers at two plants that provide parts to factories it's idling in Mexico and Canada as a result of the tariffs. 'Most automakers are running at a pretty good capacity rate in the U.S., so the opportunity to move things around is small,' Brinley added, emphasizing that most automakers had yet to announce major production decisions. 'This notion that you can pick up a piece of machinery and drive it up north is not even close' to reality, she said. 'To make a meaningful move is going to take a year, year and a half. And that's just if you're talking about duplicating production. If you're talking about a new plant, that's three years.' Where any new domestic production spurred on by these tariffs takes place will depend on factors ranging from local economic incentives to how quickly certain plants are able to be retooled, and how close certain parts—often produced by third parties—should be made to assembly plants. Considering that nonunion car factories now outproduce the Big Three unionized legacy U.S. automakers, much of that work could go to workers who aren't represented by unions, in right-to-work states like Alabama and Kentucky. As the Trump administration continues its attempts to undermine the National Labor Relations Board, organizing those shops could become much more difficult. Increasing production at existing plants and building new ones, moreover, represent big corporate commitments. Those generally require a high level of certainty about what policies will be in place over the coming months and years. The Trump administration, by contrast, has announced and rolled back tariffs at a rapid clip, maximizing chaos. Although some automakers, like Ford, have said they'll lower prices in response to tariffs, manufacturers are likely to pass at least some of the cost of tariffs on to consumers, adding potentially thousands of dollars to the cost of new cars. Autotrader predicts that the cost of new foreign cars currently priced at less than $40,000 could increase by as much as $6,000. Higher prices are likely to lead to lower sales, and the prospect of a recession—heightened by stock market turmoil this week after the 'Liberation Day' announcements—could make companies and investors wary of spending billions of dollars responding to tariffs that might not exist in a month or a year. That might also make them less willing to invest in lines of business where they've so far struggled to earn profits, including electric vehicles. 'Think about a world where we're spending billions in capital, and then it ends. We can't be whipsawing the business back and forth,' GM CFO Paul Jacobson told investors in February when discussing the tariff prospect. An economic downturn in the U.S. may pose unique risks to Ford and GM, which sell the vast majority of their vehicles domestically. During the last financial crisis—when the government bailed out and briefly took ownership stakes in GM and Chrysler, now owned by Stellantis—foreign markets buoyed declining sales in the U.S. Since that time, legacy U.S. automakers have largely stopped selling compacts and sedans and have withdrawn from international markets; in December, GM announced that it was writing down the value of its business in China by more than $5 billion amid mounting losses there to Chinese companies such as BYD. That U.S. automakers' sales are so heavily concentrated around selling trucks and SUVs in the U.S. could make them less nimble this time around, especially if penny-pinching consumers opt for smaller, cheaper vehicles now made primarily by foreign automakers. As happened during the recession too, automakers are liable to use any pressure on their bottom lines as an excuse to lay off more workers in the name of efficiency, undermining wages and working conditions. 'If North America has a downturn—or if the U.S. has a downturn—they don't have another market as strong as this one to offset' losses here, Brinkley said. 'If that market is struggling, it'll have a different kind of an impact' than in 2008. There's no way of knowing what exactly the future holds, either for the U.S. auto sector or the economy as a whole, of course. While some are optimistic that Trump's tariffs will rebound in autoworkers' favor, the next few months will almost certainly find the industry wading through uncharted, potentially dangerous waters.
Wall Street Journal
03-04-2025
- Business
- Wall Street Journal
Exempt or Not, the Chip Industry Won't Escape Tariffs
It sounded like a welcome reprieve. But Donald Trump's exemption of semiconductors from his reciprocal tariffs offers little comfort for an industry whose products live inside an ever-expanding set of consumer goods. The exemption means the U.S.'s direct chip imports, which totaled around $82 billion last year, will only be subject to Trump's baseline 10% tariff. Yet most chip imports are indirect. Chips typically are made overseas, packaged up there and inserted into electronics shipped across the globe—including to the U.S., where they will be subject to tariffs as high as 49%. Even many U.S.-made chips are sent to Taiwan, China or Southeast Asia for final assembly before being re-exported to end customers. That indirectness makes sizing up the impact to the semiconductor industry difficult. One thing is for sure: The hit will be substantial. The U.S. imported some $521 billion of machinery, $478 billion of electronics and $386 billion of vehicles last year, according to a Bernstein Research analysis. Those things tend to contain a lot of chips, and chip sales fall if people respond to higher prices by buying fewer of them. That will eventually translate into lower revenues and growth rates for chip makers, potentially crimping profits and stock-market valuations. 'Overall we don't see much in the way of positive feelings here for the semi group (or frankly for anything else),' Bernstein analyst Stacy Rasgon said in a note. No wonder the biggest chip stocks tumbled Thursday; the PHLX Semiconductor Sector index was down about 7.5% at one point. Big chip buyers fell too: Apple was down around 8% and PC manufacturer Dell Technologies fell more than 15%. It's hard to find bright spots. The tariffs give chip makers no additional incentive to grow manufacturing in the U.S. Their products are generally exported into the Asian supply chain anyway before they come back inside tariffed goods. Companies that already have large U.S. footprints, like Texas Instruments and Analog Devices, don't get a leg up on foreign competitors because those rivals receive the semiconductor tariff exemption. Both of their stocks were down sharply Thursday. A wave of order cancellations through the supply chain is likely on tap as chip makers and their customers anticipate flagging consumer demand caused by higher prices, Wolfe Research analyst Chris Caso said in a note. This would be similar to what happened during Covid lockdowns in 2020. Consumer electronics will likely be hit hardest, but the tariffs will also increase the cost of highly demanded artificial-intelligence servers proffered by Nvidia, he said. This likely calls into question second-quarter earnings guidance across the industry. 'We think there is simply nowhere to hide from these effects,' Caso said. Nvidia was down more than 6% Thursday. Chip companies have yet to issue profit warnings, reflecting the as-yet-uncertain extent of the impact. To dampen it, the industry may try to negotiate with the Trump administration to reduce tariffs where they hurt most, or to exempt more electronics and other goods that chips go into. In a best-case scenario, the Trump administration responds by backing off many of the most damaging tariffs, making Thursday's declines a buying opportunity. Given Trump's penchant for doubling down instead of backing down, the opposite scenario—even more tariffs—seems more likely. Write to Asa Fitch at
