Recently, investors have been reminded of the concept of “risk” in financial markets. This is particularly true in the areas of the financial world that also seem to present the greatest growth prospects.
The two ideas are inextricably entangled: High growth markets invite the most speculation, and then become the most volatile during periods of risk aversion.
Right now, the poster boy for this experience is the cryptocurrency space. Bitcoin has fallen as much as 50% in the past three months, and many stocks in the space have been hammered as a result.
For most of them, there is a direct relationship between the price of BTC and the promise of the investment story for the company. But there are plays in the space that manage to have their cake and eat it, too.
With that in mind, we take a look a handful of crypto stocks that could be better able to brace against bitcoin volatility while still benefiting from the ultimate upside inherent in the decentralized digital currency theme over time.
Robinhood Markets Inc. (Nasdaq:HOOD) has been hammered of late, but the company has established itself as a leadership name in the cryptocurrency theme on the service side through its broker and trading app.
The company bills itself as a financial services platform that pioneered commission-free stock trading with no account minimums and fractional share trading. The firm is focused on providing retail brokerage and offers trading in U.S. listed stocks and Exchange Traded Funds, related options, and cryptocurrency trading, as well as cash management, which includes debit cards services.
Robinhood Markets Inc. (Nasdaq:HOOD) recently announced financial results for the fourth quarter and full year ended December 31, 2021, including total net revenues for the quarter that increased 14% to $363 million, compared with $318 million in the fourth quarter of 2020, and for the year increased 89% to $1.82 billion, compared with $959 million for the year ended December 31, 2020.
“We had a momentous year, nearly doubling the number of customers on the platform and making critical investments in our team and infrastructure to support growth,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. “This year, we’ll expand our ecosystem of products that make Robinhood the best place to start investing and build wealth for the long term.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. HOOD shares have been moving higher over the past week overall, pushing about 8% to the upside on above average trading volume. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.
Robinhood Markets Inc. (Nasdaq:HOOD) managed to rope in revenues totaling $362.7M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 14.2%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($10.2B against $0).
ISW Holdings (OTC US:ISWH) is an OTC stock, but it’s also a clear rising star in the crypto space, outperforming just about any other player in the space last year, rising from $0.03/share in December 2020 to as much as $3.50/share ten months later. It is also positive over the past two months – a period that saw Bitcoin fall by 40% crashing many stocks in the space.
One good reason for that resilience is the company’s model – it isn’t a pure miner, but a hosting and mining hybrid. The company put together a partnership last fall with Bitmain Technologies as part of its project to pair 56,000 mining rigs with 200 megawatts of power on a hosting basis at its Southeastern US site. It also has a growing mining footprint through its POD5 units, developed in partnership with Bit5ive. In other words, it gets to have its cake and eat it, too. As a result, ISWH has been outperforming from this best-of-both-worlds arrangement while showing very strong overall growth.
ISW Holdings (OTC US:ISWH) recently put out a corporate update showing a revenue run rate that has begun to exceed expectations.
The company reported revenue from operations of $1.075 million (including deferred revenues), up 2,435% on a year-over-year basis. That didn’t include a full three months of 550 new miners acquired from Minerset, 150 of which came as a result of ISWH meeting stock performance milestones.
In addition, total assets during Q3 increased 5,263% year to date to $9.56 million, while total liabilities decreased 73%, and total derivative liabilities decreased 98% to under $340,000.
According to the company’s release, revenue at its Pod City site will be comprised of hosting service fees, which aren’t contingent upon cryptocurrency pricing, as noted above. Once running at full capacity, the company estimates annual revenue in excess of $7 million per month, a tremendous improvement compared to current capacity with the benefit of being recurring under service contracts.
ISW Holdings (OTC US:ISWH) has been consolidating in a sideways pattern during the recent dive in Bitcoin. That suggests it could be a good time to give the stock a closer look. If bitcoin starts to base and move into a fresh leg higher, the stock’s relative strength during the BTC pullback could potentially show up in upside outperformance when the sun comes back out.
Bakkt Holdings Inc. (NYSE:BKKT) operates as a digital asset marketplace that enables institutions and consumers to buy, sell, store, and spend digital assets. The firm’s retail platform, amplifies consumer spending, reduces payment costs, and bolsters loyalty programs, adding value for all key stakeholders within the Bakkt payments and digital assets ecosystem.
Bakkt’s platform is now available through the Bakkt App and to its partners. The platform was launched in 2018 and has been a key target for speculators since it was tied to Mastercard in an announcement last year. The stock has been hammered of late, which shows the excess of its initial run.
Bakkt Holdings Inc. (NYSE:BKKT) recently announced a partnership with leading regulated digital assets institution Nexo, to custody cryptocurrency assets in the Bakkt Warehouse, the company’s regulated custodian, which allows for safe and secure storage of bitcoin and Ethereum.
“The cryptocurrency market continues to expand at a robust pace, leading reputable crypto companies to diversify custody of assets. We are pleased that Nexo has chosen the Bakkt Warehouse as a trusted solution,” said Dan O’Prey, Chief Product Officer, Crypto at Bakkt. “As we build upon our partnerships with businesses and expand our network of operations and revenue, secure custody continues to be a pillar of Bakkt’s strategy, leveraging state-of-the-art physical and cyber security, institutional grade technology and governance, and backed by insurance.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. BKKT shares have been moving higher over the past week overall, pushing about 5% to the upside on above average trading volume. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -49%.
Bakkt Holdings Inc. (NYSE:BKKT) had no reported sales in its last quarterly financial data. But the future could be promising if it can leverage its partnerships toward commercial gains and a defensible market position.
Other key names in the crypto space include Riot Blockchain Inc. (Nasdaq:RIOT), Hive Blockchain Technologies Ltd. (Nasdaq:HIVE), MicroStrategy Inc. (Nasdaq:MSTR), and Silvergate Capital Corp. (NYSE:SI).