The Coles Group Ltd (ASX: COL) share price is having a strong finish to the week.
In afternoon trade, the supermarket giant’s shares are up 2% to $16.57.
Can the Coles share price keep rising?
Whether or not the Coles share price keeps rising from here could depend on a couple of things.
One is the performance of the ASX 200 index and the other is the company’s first quarter update later this month.
In respect to the latter, let’s take a look to see what the market is expecting from Coles during the quarter.
What is expected from Coles during the first quarter?
According to a note out of Goldman Sachs, its analysts expect a decent update from Coles this month.
However, it has warned that there are signs that cost of living pressures have led to consumers shifting to value options. This could have an impact on Coles, which has the biggest customer cross-over with discounters such as Aldi.
Goldman explained:
Our recent conversations with industry suppliers suggest that volumes are still holding up strongly (a positive surprise) and trading into Christmas will likely be resilient. However, there are increasing signs in value shift (as an example canned foods are having a strong growth YoY) and it is expected that it will become increasingly obvious in FY2H23 as consumers feel the increasing pinch of higher cost of living. Interestingly, cross-shopping data between the different supermarkets suggest that COL has the highest cross-shopping with discounters such as Aldi.
Nevertheless, the broker is still expecting Coles to report Supermarket same store sales growth of 2.5% for the first quarter and then 4.3% for the first half. This is then expected to ease to 3.4% in the second half and 3.8% for FY 2023.
The company’s Liquor operations aren’t expected to fare as well, with Goldman forecasting a 1% decline in same store sales during the first quarter. It then expects an improvement to flat same store sales for the first half and 0.5% growth for FY 2023.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/tHzIa51
Stock markets the world over haven’t reacted well to the sudden re-emergence of inflation in 2022.
That’s because fast-rising consumer and producer prices have seen central banks resort to aggressive interest rate hikes.
The Reserve Bank of Australia has hiked rates from an all-time low of 0.10% to the current 2.60%. While the US Federal Reserve has been even more hawkish, raising rates to the current 3.25%.
How have stock markets reacted to the inflation-busting rate rises?
As we said, not well.
The S&P/ASX 200 Index (ASX: XJO) is down 11.1% year-to-date, following a strong run in 2021.
And in the US, the S&P 500 Index (INDEXSP: .INX) has tumbled 23.5%.
But something strange just happened.
What’s happening with the ASX 200 and US markets?
As we reported here, the S&P 500 closed up 2.6% yesterday, surging 5.1% higher after opening sharply lower.
And the ASX 200 is following suit today, up 1.7% during the lunch hour.
Why is that strange?
Because the September inflation figures released out of the US yesterday still revealed prices in the world’s largest economy were rising at the fastest rate in 40 years. That, in turn, would indicate investors can expect more aggressive rate rises from the US Fed, which has classically been a headwind for stock markets.
Some analysts suggest yesterday’s rally in US stock markets and the big boost on the ASX 200 could be due to over-leveraged, bearish options traders getting caught on the wrong side of the trend and forced to cover their shorts.
But economist Peter Esho, co-founder of Wealthi, has a different take.
Are stock markets starting to indicate inflation is under control?
Commenting on the stock market rally in the face of inflation, Esho said (courtesy of The Australian Financial Review):
We think that there is a growing consensus in markets that inflation is now under control and as recent interest rates start to flow through into the economy over the next year, inflation will be brought back under control.
Inflation was in line with expectations, but that’s not to say there weren’t positive glimpses in there. Composition is very important and we know from past history that it takes time for prices to stop rising.
Esho said higher interest rates don’t have an immediate impact on inflation.
“Monetary policy and rising rates have a 12-18 month lag, so we will only start to see rate rises take effect in the next few months before their full force being felt next year,” he said.
In potentially good news for stock markets, he added, “Bottom line: We think the RBA read things perfectly when they raised by only 25 basis points in October, balancing inflationary pressure with the need to maintain financial stability.”
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/ha2z5cT
The CSL Limited (ASX: CSL) share price is trading 1.27% higher on Friday at $279.93.
It’s a positive day for the market overall, with the S&P/ASX 200 Index (ASX: XJO) up 1.68%.
CSL has been a market darling of the ASX 200 for many years. But CSL shares were smashed during the pandemic when lockdowns made the blood plasma collections that the biotech relies on very difficult.
Just before the pandemic, the CSL share price was trading at a record high of $336.40. Then came the COVID-19 market crash, when CSL shares hit an initial low of $270.88 in March 2020.
CSL has been rangebound ever since between the mid-$200s and about $315. The CSL share price hasn’t been above $300 since December 2021.
One broker reckons that won’t last long.
CSL to be a ‘reopening’ winner, says Wilsons
As reported in The Australian, Wilsons Advisory says CSL is among the next “reopening” stocks likely to take flight due to surging demand.
Wilsons reckons CSL shares will receive a boost alongside Qantas Airways Limited (ASX: QAN), Tabcorp Holdings Limited (ASX: TAH), and Aristocrat Leisure Limited (ASX: ALL) shares.
Wilsons analysts Rob Crookston and David Cassidy said:
Even though the ASX 200 hit its COVID trough more than two years ago, many post-COVID recovery stocks have yet to reach their full potential. We think this creates a significant opportunity that is still not fully appreciated.
This year’s market sell-off has led to a further discounting of these reopening stocks. To date, the CSL share price is down 5.5% in 2022.
What else is happening with the CSL share price?
CSL conducted its annual general meeting on Wednesday.
In terms of guidance for Financial Year 23, I am pleased to reaffirm that: Revenue growth to be in the range of 7 to 11% over Financial Year 22 at constant currency, with net profit after tax expected to be approximately in the range of US$2.4 to US$2.5 billion at constant currency. On a like for like basis, this represents a growth of between 10 – 14%.
This guidance excludes Vifor earnings and acquisition costs, as well as non-recurring COVID-19 vaccine contributions. CSL will give a fuller update later this month.
Looking further ahead, Perreault is confident:
To close, I am absolutely certain that the fundamentals of our business are strong and the diversity of our pipeline is rich. This really sets up CSL to build on our track record of sustainable growth for years to come.
Wayne said CSL was a great earner and a beneficiary of a weaker Aussie currency:
It’s a large company but still delivering double-digit revenue and earnings growth. We expect that to continue to deliver over the years to come …
… they are a US dollar earner so they generate their revenues and a lot of their earnings in US dollars and you convert that back to an Aussie dollar share price, it’s a tailwind, particularly when you see the Aussie dollar come back as much as it has.
Motley Fool contributor Bronwyn Allen has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/vFT6phY
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
If you’ve been investing for any decent amount of time, you likely have a story of “the one that got away.” I have several of them, but these stocks never fall off my radar.
Instead, I keep them on a list, and I open a position when the valuation is correct. I may not have the same great returns I would if I had purchased it years ago, but if the business still has room to run, it can still be a great investment.
One stock that I recently initiated a position in is Amazon (NASDAQ: AMZN). I whiffed on buying this stock when the market crashed because of the COVID-19 pandemic, and I watched it run all the way up in 2020 and 2021.
However, Amazon’s stock is now about where it was in May 2020, despite growing its revenue by 64% since the first quarter of 2020.
This decline isn’t the only reason I opened an Amazon position. Let’s dig into the rest.
My primary investment catalyst
While Amazon may be known for its e-commerce business, I’m more interested in Amazon Web Services (AWS).
This cloud computing business provides the infrastructure for its clients to run apps and websites or process computations through its data centers.
Cloud computing is a massive market, and Precedence Research projects it will grow by 17.4% annually through 2030 to $1.6 trillion.
AWS is currently the cloud computing market leader and commands a 34% market share. Cloud infrastructure makes up about half of that cloud computing market share, so if AWS can maintain its 34% market size, then it should generate about $272 billion in annual revenue in 2030.
For reference, AWS brought in $19.7 billion in the second quarter of this year, and Amazon as a whole generated $470 billion in 2021.
The massive potential for cloud computing is my top reason to own the stock. However, there’s another reason why I thought now was a prime opportunity.
A reasonable valuation
On a price-to-sales (P/S) basis, Amazon is the cheapest it has been in some time.
The last time it reached this level, AWS didn’t make much money, so Amazon was valued solely as an e-commerce business. Plus, Amazon also has a robust advertising business today to consider.
So, now that the stock has returned to this level, it may be smart to value Amazon’s business by segment, as each is vastly different.
First, let’s look at the revenue these businesses generated over the past 12 months.
Segment
Revenue (TTM)
Commerce
$379.9 billion
Advertising
$33.9 billion
AWS
$72.0 billion
Data source: Amazon. TTM = trailing 12 months.
Now, let’s assign a business to compare these segments to and see what we learn. For commerce, I’ll choose Walmart, arguably Amazon’s biggest commerce competitor.
Walmart stock trades at a P/S ratio of 0.6, but I’ll give Amazon a 33% premium to that because of its much smaller physical footprint and millions of Prime subscribers — which is a high-margin business.
Advertising is a bit trickier as there isn’t a great comparison. I’ve selected Alphabet because 80% of its revenue is derived from advertisements.
These ads are placed on Alphabet’s platforms (such as YouTube and Google), much like how Amazon’s ads are placed on its platforms. I’ll use Alphabet’s P/S ratio of 4.7 without any premium because these are similarly strong businesses.
Finally, AWS can be compared to DigitalOcean, a pure-play cloud computing company. However, AWS is growing faster than DigitalOcean, has a larger addressable market, and is profitable, so I’ll increase its valuation by 25% from DigitalOcean’s P/S ratio of 7.8.
From this, I can derive a valuation for Amazon’s stock by multiplying its trailing 12-month revenue by an adjusted P/S ratio to get a business value.
Segment
Revenue (TTM)
Comparison Company P/S Ratio
+ Estimated Premium
Segment Valuation
Commerce
$379.9 billion
0.8
$303.9 billion
Advertising
$33.9 billion
4.7
$159.3 billion
AWS
$72.0 billion
9.8
$705.6 billion
Data source: Amazon and Y! Charts.
Altogether, that equates to Amazon being fairly valued at $1.17 trillion (at least according to my valuation technique) — it currently trades at $1.15 trillion.
While that’s not a massive discount, it at least informs me that I’m not overpaying for Amazon, something I was concerned about when Amazon traded for $1.6 trillion or more from July 2020 to June 2022.
By summing all the parts of Amazon’s business together, investors can realize what the most valuable portions of Amazon’s business are. Additionally, it can be used to assess the fair value of a business with many segments (like Amazon).
With the market opportunity of AWS and Amazon trading for a reasonable valuation, I was finally able to open up a position.
Just because you miss a stock once doesn’t mean you’ve missed it forever. With many stocks in the market reaching lows not seen for many years, now could be a great time to check up on some of the stocks you missed and see if the companies behind them are still worth buying.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet (C shares) and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, DigitalOcean Holdings, Inc., and Walmart Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and DigitalOcean Holdings, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
from The Motley Fool Australia https://ift.tt/Z81TKUr
It’s a good day on the All Ordinaries Index (ASX: XAO) as it’s bolstered by three shares soaring to long-forgotten – or, in some cases, never-before-seen – heights.
Right now, the index is up 1.79% at 6,956 points. That’s around 0.3% lower than it was at last Friday’s close.
So, what’s helping to boost these All Ords shares to multi-year highs today? Keep reading to find out.
3 All Ords shares hitting long-forgotten highs
These three All Ords shares are launching to multi-year, or even record, highs on Friday afternoon.
First off, is the share price of S&P/ASX 200 Index (ASX: XJO) constituent IGO Ltd (ASX: IGO). It lifted 3.8% to hit an all-time high of $15.97 earlier today.
That was followed up by two more announcements from the company’s other JV partners yesterday. One updated the market on more rare earth finds at the Burracoppin project, while another announced high-priority anomalies at the Narryer nickel-copper-platinum group elements project.
Another ASX All Ords share leaping to a multi-year high on Friday is Monadelphous Group Limited (ASX: MND). The stock surged to $14.05 earlier today, marking a 2.1% jump to its highest point since early 2021.
Interestingly, the market hasn’t heard any news from the engineering group for more than three weeks.
And finally, ASX 200 and All Ords share New Hope Corporation Limited (ASX: NHC) took off to hit an all-time high of $6.95 on Friday. That marks a 3.4% gain.
The company has been quiet over the last few weeks. However, its shares appear to be gaining amid surging coal prices, which will help bolster its bottom line.
Indeed, the coal producer posted a 1,139% year-on-year increase in after-tax profits for the 12 months ended 31 July last month.
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/ruxVAsW
S&P/ASX 200 Index (ASX: XJO) resources goliath Rio Tinto Limited (ASX: RIO) is rumoured to be scouting for lithium buys, with some of the market’s favourite shares named as potential targets.
It comes just months after fellow mining giant BHP Group Ltd (ASX: BHP) made an $8.3 billion play for copper miner OZ Minerals Limited (ASX: OZL). The once-takeover target is expected to benefit from the global decarbonisation and electrification movement.
As are ASX lithium shares, with such expectations potentially drawing the eye of the iron ore monolith.
The Rio Tinto share price is up 1.3% right now, trading at $96.89. Meanwhile, the ASX 200 is posting a 1.7% gain.
Let’s take a closer look at the buzz surrounding Rio Tinto on Friday.
Is Rio Tinto eyeing ASX lithium shares?
Rio Tinto is believed to be on the hunt for lithium buys, unnamed sources told The Australian.
ASX 200 favourites including Pilbara Minerals Ltd (ASX: PLS), IGO Ltd (ASX: IGO), Allkem Ltd (ASX: AKE), Core Lithium Ltd (ASX: CXO), and Liontown Resources Limited (ASX: LTR) are all said to be possible contenders.
Even $13.4 billion materials company Mineral Resources Limited (ASX: MIN) is reportedly a potential target. It recently confirmed it was considering, among other things, its own lithium spin off.
Though, such acquisitions would likely be costly. The ASX 200 lithium shares have surged as much as 38% so far this year. Only the share prices of Liontown and Lake Resources have recorded year-to-date losses.
It hasn’t been all that long since the market heard news of a lithium acquisition from Rio Tinto. It bought the Argentinian Rincon lithium project for US$825 million late last year.
The ASX 200 giant has since approved the development of a battery-grade lithium carbonate plant at the project. The starter plant will have 3,000 tonnes of annual capacity, with its first saleable production expected in 2024.
It also follows the Serbian government’s decision to revoke permits for the company’s $2.4 billion Jadar lithium-borate project.
Finally, Rio Tinto shares provide exposure to lithium from the company’s Boron mine. A demonstration plant is producing battery-grade lithium from waste rock at the project.
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/vEbZHIo
For over two decades, Telstra Corporation Ltd (ASX: TLS) shares have been among the most popular options for income investors on the ASX 200 index.
However, there’s no getting away from the fact that the last few years have been tougher than normal for shareholders.
The arrival of the NBN led to the removal of its landlines from homes and created a major gap in its earnings. This unfortunately put pressure on its earnings and ultimately its dividends.
But would an investment five years ago still have been worth it? Let’s take a look at what a $5,000 investment would have generated for investors.
How would a $5,000 investment in Telstra shares five years ago have fared?
Five years ago, the Telstra share price was fetching $3.52. This means that if you had invested $5,000 into its shares, you would have received 1,452 shares.
Firstly, with the telco giant’s shares currently trading at $3.85, these shares would now have a market value of approximately $5,590. So, while this is not a great start, at least there is some form of return here before dividends.
As for dividends, here’s what Telstra paid during the last five financial years:
FY 2018: 22 cents per share
FY 2019: 16 cents per share
FY 2018: 16 cents per share
FY 2018: 16 cents per share
FY 2018: 17 cents per share
That’s a total of 87 cents per share in fully franked dividends over the five years. If we multiply this by the 1,452 shares you received from your investment, this equates to total dividends of $1,263.24.
This brings the value of your total investment to $6,853.24, which represents a 37% total return for investors over the five years.
This is actually better than the market, which based on the ASX 200 accumulation index (which includes dividends), has generated a return of approximately 35% over the last five years.
So, all in all, Telstra shares have proven to be a decent investment despite all the NBN disruption.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/LJAHCdl
Commonwealth Bank of Australia (ASX: CBA) shares are lifting today, and one analyst is optimistic about the big four bank’s share price compared to its peers.
CBA shares are up 1.47% today and are currently trading at $99.57. For perspective, the S&P/ASX 200 Index (ASX: XJO) is rising 1.67% today.
Let’s take a look at the outlook for CBA shares amid potentially higher interest rates.
CBA lifted to neutral
ASX bank shares are rising today following a positive night of trading on Wall street overnight. For example, Westpac Banking Corporation (ASX: WBC) is lifting 1.93%, Australia and New Zealand Banking Group Ltd (ASX: ANZ) is up 1.23%, and National Australia Bank Ltd (ASX: NAB) is climbing 1.63%.
This follows financial shares jumping on Wall Street overnight. The S&P 500 Index (SP: .INX) leapt 2.6% in the US on Thursday, while the Dow Jones Industrial Average Index (DJX: .DJI) jumped 2.83%.
Meanwhile, JP Morgan has upgraded its outlook for CBA shares to neutral. The broker is positive on CBA shares amid higher rates. In quotes cited by The Australian, the broker said:
….we struggle to see CBA underperforming peers meaningfully as it offers the best leverage to rising rates and has the most defensive loan book, in our view.
The Reserve Bank of Australia (RBA) raised the official cash rate by 0.25% in the first week of October. The bank is predicting “further increases” in the future.
CBA held its AGM on Wednesday. The company’s chief executive Matt Comyn said: “Overall, we remain fundamentally optimistic about the medium to long-term opportunities for Australia.”
CBA share price snapshot
The CBA share price has slid 2.4% in the past year, while it has lost 1.5% year to date.
For perspective, the ASX 200 has fallen nearly 8% in the past year and 9% in 2022.
CBA has a market capitalisation of nearly $169 billion based on the current share price
Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/r4tLxhP
The Woodside Energy Group Ltd (ASX: WDS) share price is leaping higher today, up 4.1% at the time of writing.
Woodside shares closed yesterday trading for $32.65 and are currently trading for $34.00 apiece.
It’s a good day for the Aussie markets overall, with the S&P/ASX 200 Index (ASX: XJO) currently up 1.6%.
But like the Woodside share price, most energy stocks are outperforming today, with the S&P/ASX 200 Energy Index (ASX: XEJ) up 3.4% at this same time.
This comes on the heels of a big up day in US markets yesterday (overnight Aussie time).
That charge higher counterintuitively followed surprisingly high inflation data out of the world’s top economy.
Those gains look to have been fuelled by overleveraged short-sellers, caught out by the market upswing, finding themselves forced to cover their shorts.
But why is the Woodside share price outperforming?
Why are ASX energy shares leaping higher?
The Woodside share price and most ASX energy shares look to be benefiting from a solid uptick in oil prices.
International benchmark Brent crude oil is up 2.3% overnight, currently trading for US$94.57 per barrel. That’s up from the recent 26 September lows of US$84 per barrel.
Investors may be looking ahead to the supply cuts recently announced by OPEC+.
The two million barrel per day reduction, which in reality will take some one million barrels per day out of global markets as many OPEC+ nations are already producing well below their caps, takes effect on 1 November.
The cartel is aiming to keep crude prices above US$90 per barrel, which would certainly offer some strong tailwinds for the Woodside share price.
Oil prices also appear to have gotten a boost from the latest US Energy Information Administration report.
While there was a 9.9 million barrel increase in the nation’s crude inventories, drawdowns from the US strategic petroleum reserves (SPR) and distillate stockpiles pointed to potential looming tight supplies.
Commenting on that report, Matt Sallee, portfolio manager at Tortoise, said (courtesy of Bloomberg):
It’s a super bearish headline, but if you look at the underlying data, it tells a different story. The combination of a big distillate draw, another big SPR draw and then a reversal in the exports. I think if you back those things out, this was probably a more bullish report.
Woodside share price snapshot
With Brent crude oil prices up 22% in 2022, the Woodside share price has rocketed 50%. That’s in a year that’s seen the ASX 200 fall 11%.
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/g1SAOtQ
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
Yet another massive hack in the world of cryptocurrency could be considered par for the course. This year, more than $2 billion has been exploited from various crypto projects, with Tuesday’s hack of Solana-based decentralized lending platform Mango Markets creating a tremendous amount of concern among investors.
As of 2 p.m ET on Thursday, Solana (CRYPTO: SOL), XRP (CRYPTO: XRP), and Cardano (CRYPTO: ADA) were down 2.6%, 1.4% and 2.9%, respectively, over the past 24 hours. That said, it should be noted that these cryptocurrencies have regained much of their losses throughout the trading day. Earlier this morning, these 24-hour declines had been as much as 9%, 8.7%, and 10.4%, respectively.
This hack has resulted in Solana losing approximately one-quarter of its total value locked (TVL) on its protocol. Total value locked is a key metric used to determine aggregate use of a network, with declines suggesting investors are pulling their capital out of a given ecosystem.
This recent hack appears to be the result of a sophisticated investor taking out large positions in leveraged perpetual contracts on the Mango Markets platform. This allowed for a mark-to-market surge in the perpetual contracts held by the trader, boosting the value and allowing the hacker to then essentially withdraw all of the liquidity on the protocol.
So what
This sort of attack on a given project’s collateral is one that clearly took a tremendous amount of time and effort. Now, the hacker in question is reportedly open to returning the exploited funds back to the protocol, so long as “bad debt,” which arose from a bailout paid to a highly leveraged whale, is repaid. In any case, the ability of one individual to effectively shut down a large and important decentralized lending protocol is big news.
For Solana specifically, this is the latest in a string of security-related issues that have concerned investors. For investors in other projects such as XRP and Cardano, exploits of top-10 projects have clearly provided concern. XRP is battling its own project-specific headwinds tied to an ongoing battle with the Securities and Exchange Commission over whether its token constitutes a security, and Cardano’s ecosystem has lost some of its luster following its highly anticipated Vasil Hard Fork upgrade.
Now what
Exploits (or hacks) will remain a key focal point for investors, particularly those who might be skeptical about the underlying technology to begin with. It’s still early innings for the nascent crypto sector, and mistakes are going to be made. That said, until the kinks are worked out, many institutional investors might choose to stay on the sidelines.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Chris MacDonald has positions in Solana. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Solana. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
from The Motley Fool Australia https://ift.tt/gBahyMN
