** Introducing “Crypto.com Arena”
** Don’t touch this hyped-up EV stock
** Stephen’s first disruptor stock hits all-time high
Crypto is taking over the sports world.
This Christmas, the iconic Staples Center—home to the LA Lakers—is getting a new name:
Source: LA Times
Crypto.com—a popular crypto exchange—bought the naming rights last week. Its name will now be seen by hundreds of thousands of fans every time NBA superstar Lebron James brings the ball up the court.
The deal’s worth over $700 million, according to the LA Times—one of the biggest in sports history.
And that’s just one of many huge advertising deals that crypto companies have struck in sports lately…
In September, Crypto.com became the official jersey patch sponsor for the Philadelphia 76ers. It also struck a deal with auto racing league Formula 1 in June.
FTX, another crypto company, bought the naming rights to the Miami Heat's stadium in March.
FTX also signed a deal with Major League Baseball—the first-ever partnership between a crypto firm and a major US sports league.
Baseball superstar Shohei Ohtani recently joined Tom Brady and Steph Curry as spokesmen for and investors in FTX.
And the New York Mets now feature an ad for Tezos—a blockchain network—on their massive billboard in the outfield:
The list goes on.
According to CoinDesk, “Crypto exchanges FTX and Crypto.com have invested over $1 billion in sports sponsorships in the past year.”
That’s a lot of money—and a lot of eyeballs to be bombarded with crypto for decades. FTX, for example, is tied to the Miami Heat until at least 2040!
In short—if you needed any more proof crypto is officially going “mainstream”—this is it.
And yet, most Americans aren’t invested. CNBC recently reported that only 13% of Americans have bought crypto:
That number will likely double… triple… or even quadruple as crypto advertising appears on the TV of tens of millions of American households.
It’s easy to forget just how early we are in crypto adoption. If you’re one of the 87% of Americans who has not touched crypto yet, RiskHedge Chief Analyst Stephen McBride recommends looking at Ethereum (ETH)—the world’s second-largest crypto.
Let Rivian’s (RIVN) chart serve as an important reminder…
Rivian is a much-hyped electric pickup truck company that just went public.
According to VOX, it was the largest IPO in the US since 2014:
The 12-year-old company, which is backed by Amazon and considered one of the biggest threats to Tesla, is now one of the world’s most valuable automakers, worth billions more than Ford or GM—even though, as of October, it’s only delivered 156 vehicles.
IPO expert and RiskHedge Chief Trader Justin Spittler—whose subscribers booked a 395% win in electric trucking startup VTIQ last year—warns investors to be very careful with big, hyped-up IPOs.
Especially when the numbers don’t add up. Justin:
Rivian isn’t a legitimate business. It’s an idea.
It’s recorded less than $1 million in revenue… yet it has a market cap of over $100 billion.
It’s done zilch… yet it was the world’s third most valuable car company when it went public.
If that’s not a red flag, I don’t know what is.
Longtime readers know Justin avoids wildly popular IPOs for a simple reason:
They rarely deliver.
Although an over-hyped company isn’t necessarily a bad company... you should usually stay far away from their stocks in the first couple months of public trading.
Uber (UBER) and Lyft (LYFT) crashed 35%+ during their first six months of trading. Even Facebook (FB) plunged 54% in its first five months as a publicly traded company.
After storming out of the gate, Rivian shares are in freefall… down 25%+ since their high on Nov 16.
This is one to avoid like the plague for now.
We’ll revisit Rivian when it’s trading for a saner price.
Before I sign off…
Congratulations if you bought one of Stephen McBride’s first disruptor stock picks and held on through the recent volatility…
I’m talking about online advertising pioneer The Trade Desk (TTD).
Longtime readers know TTD runs a “stock exchange” for digital ads. In short, the company helps advertisers buy the right targeted ads online.
You might call TTD Stephen’s “baby.”
He first highlighted the stock back in June 2018 in one of his earliest RiskHedge Reports… and he’s been following it ever since.
Keep in mind, this is rare. Our analysts normally don’t track the specific companies they mention in this free RiskHedge Report. That’s what our premium advisories are for.
But Stephen started writing about TTD before he had a “paid” letter.
He even doubled down on his call this March, when TTD was struggling, saying: “If you missed my best disruptor stock ever… now’s your second chance.”
If you followed Stephen’s guidance early on and managed to hold on to TTD through its recent volatility … you’re sitting on an 11-bagger.
TTD wasn’t always easy to hold. After a blistering rally in 2020, it lost its momentum early this year and had been treading water.
But TTD’s been on an absolute tear over the past couple months. It just hit an all-time high after reporting stellar earnings on November 8, and is now up 1,060% since Stephen’s first writeup.
Executive Editor, RiskHedge
Have any questions for our analysts? Send them to me at email@example.com, and I’ll feature some of them here in our Monday Mailbag.
Question: What’s the smartest way to position in Apple (AAPL) to take advantage of this inevitable upward price move?
I'm thinking some kind of options strategy, but I'm not very experienced with options... and yes, I consider this 100% speculative risk money! —Dale
Chris Wood: Good question, Dale.
I do think a big upward price move is inevitable. But it’s not necessarily imminent.
AR is a long-term trend that’s just getting started.
Long-dated call options would give you leverage. But they only go out up to two years and eight months I believe. And this is more of a 10-year-type investment.
So I’d simply play this as a long-term buy and hold.
Apple is what I like to call a “Coffee Can” stock.
The idea of a Coffee Can Portfolio began with a portfolio manager named Robert Kirby back in the mid-1980s. It dates back to the Old West when folks kept their valuables in a coffee can under the mattress.
So coffee can stocks are stocks for the long haul. The idea is you buy them and let them sit for 10 years.
That’s the easiest and best way to play Apple right now.
Question: Personally I am an Android user and most likely will stay one—based on Android faithfulness among other consumers as well, should there not be an opportunity for other smartphone makers like Samsung to challenge in this space? Of course Samsung has some very mature businesses alongside smartphones and microchips, so less of a pure play, but it seems to me they could challenge in AR, NO? Sony? —Leo
Chris Wood: Leo, don’t tell anyone, but I’m an Android and Samsung guy too.
My family’s been trying to get me to switch to Apple forever, but I’ve resisted. I just don’t want to get “trapped” in that ecosystem.
That said, Apple’s customers definitely don’t consider it being trapped.
To answer your question, yes, there’s certainly an opportunity for other smartphone makers like Samsung in the AR space.
But AR sales aren’t going to move Samsung’s stock nearly as much as Apple’s. That’s because Samsung is much less profitable.
Apple’s net margin averaged 23% over the past years. Samsung’s net margin averaged 12% over the same time frame.
Assuming both companies maintain similar margins going forward, and assuming they sell AR headsets for around the same price, each sale by Apple adds about twice as much to the bottom line as each Samsung sale.
For simplicity’s sake, let’s say Apple and Samsung both sell 10 million AR units in one year at $1,000 each. That’s $10 billion in revenue for both companies. But it works out to a net profit from the AR business of $2.3 billion for Apple compared to $1.2 billion for Samsung.
If investors apply a multiple of, say, 20 to those earnings then the AR business will add $46 billion to Apple’s market cap and just $24 billion to Samsung’s.
It wouldn’t work out like that in the real world, of course. Apple actually trades at a much higher multiple than Samsung, so the difference would be even greater. But you get the point.
Apple’s superior profitability allows it to benefit much more than Samsung for each unit sold.