Blockchain Stocks Weekly Update – August 17: Nvidia Forecasts Soft Blockchain Related Sales

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SSC Stock Analysis August 17 2018

The week started with yet another warning from government regulators and this time it was the Saudi Arabian Monetary Authority (SAMA) that issued a statement saying cryptocurrencies are illegal in the country. The SAMA announcement warned citizens who are involved in trading cryptocurrencies are taking “high risk” and there will be “negative consequences” if anyone found dealing in bitcoin or other cryptos.

On Wednesday, Bloomberg reported that Americans now can invest in Bitcoin Tracker One, which is essentially an exchange-traded note (ETN) and it is listed as CXBTF and can be bought with the U.S. Dollar. “Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona,” said Ryan Radloff, the CEO of CoinShares Holdings Ltd., the parent of the company that offers the ETN.

There was some concerning news about cybersecurity in the UK as well. Another report from the Internet of Business said 30% of large-scale businesses in the country suffered from crypto-mining attacks in the last month alone. The research from Citrix which was carried out by OnePoll said hackers tried to use the processing power of the computer systems utilized by British enterprises to mine cryptocurrencies!

However, this week’s barrage of negative news in the arena didn’t stop crypto-based hedge fund Pantera Capital to seek $175 million for its third venture fund to build a diversified portfolio of assets that have asymmetrical returns as bitcoin. Also, the blockchain technology continues to penetrate into traditional financial institutions this week as the Bank of Montreal (BMO) reported to launch a blockchain-based pilot for fixed income deals.

Based on our research, we found that the following blockchain stocks demonstrated notable price movements based on shifts in their company fundamentals.



Nvidia Corp

Nvidia Corp (NVDA) reported its Q2’18 earnings report on Thursday and investors were a bit disappointed to see its revenue outlook is actually not that good. The company said sales related to the mining of cryptocurrencies such as Ether were much lower than expected in the second quarter.

Nvidia Corp’s stock slipped around 5% after releasing their Q2 earnings after it said they don’t expect to make significant blockchain-related sales during the next two quarters of 2018.

NVDA Stock Analysis August 17 2018

There was a bearish divergence on the 240-minute chart of Nvidia Corp and the news about soft crypto-based sales prompted investors to start panic selling its stock. So far, NVDA managed to trade above the major support around $254.0 per share.

However, given that the management of Nvidia Corp outlined a much weaker sales in the rest of the year, the prospects for its stock is appearing rather gloomy. From a technical perspective, NVDA’s CCI has already gone down below the 100 level and it is signaling a downturn.

If we see the blockchain stock’s price breaking below the support near $254.0 per share, it could certainly trigger another round of bearish moves in the short-term.



Seven Stars Cloud Group Inc

Seven Stars Cloud Group Inc (SSC) reported a $133 Million revenue in Q2 2018, up 207% compared to the same quarter last year. Its year-to-date revenue turned out at $319 million, a sizable 317% increase compared to the year-to-date revenue in 2017.

While the company posted impressive top-line growth, its cost of revenue also went up to $131.5 million in Q2, leaving hardly any profits during the second quarter of 2018. In Q2’17, the cost of revenue was around $43.3 million.

SSC Stock Analysis August 17 2018

Nonetheless, the CEO of Seven Stars Cloud Group Inc, Bruno Wu, sounded optimistic and said during the earnings call that he is “positioning the Company to be a leading global fintech and asset digitization service provider.”

While most blockchain stocks struggled to grow revenue in Q2, Seven Stars Cloud Group Inc is a rare exception that not only grew its revenue but came close to breakeven in a drastically growing industry.

Although SSC’s stock price was rejected around $2.10 per share earlier on Thursday, its long-term fundamentals look appealing. If we see the stock breaking above this key resistance, it will certainly open up the target around $2.55 per share, which hit touched just last week.



Bottom Line

It was a mixed week for blockchain stocks as the bitcoin momentarily fell below the coveted $6000 per bitcoin rate against the U.S. Dollar and graphics chip maker Nvidia Corp made some soft revenue forecast from its blockchain based product sales.

However, broader industry news demonstrated the viability of the technology to disrupt the fintech industry and a number of companies raised large sums of capital to continue expanding their respective initiatives.

Disclaimer

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