Category: Stock Market

Key points

• The Nitro share price has fallen out of favour with investors but Goldman Sachs thinks it’s too cheap to ignore
• The ASX tech shares operate in a US$34bn market that has a positive growth outlook
• The broker initiated coverage on its shares with a ‘buy’ recommendation and $2.95 price target

---

The Nitro Software Ltd (ASX: NTO) share price rebounded on Friday after Goldman Sachs listed the company as its latest ASX tech ‘buy’ idea. This comes after Nitro ended the previous two days in the red.

Shares in the global document productivity software company jumped 1.85% to close at $1.93 apiece.

In contrast, the S&P/ASX 200 Index (ASX: XJO) ended the day up 0.59% at 7,120 points.

Nitro share price falls from grace

The threat of interest rate hikes is weighing on ASX tech shares but Goldman Sachs believes the Nitro share price is cheap.

The broker initiated coverage on the company and pointed out that its total addressable market (TAM) stands at US$34 billion.

“Nitro operates in large, underpenetrated markets supported by structural growth tailwinds including remote work, enterprise digitisation, and e-signing adoption,” said the broker.

“We estimate Nitro can increase its TAM penetration from 0.15% to 1.4% by FY40 implying 9x uplift to Nitro’s current revenue base.”

That assumption may sound too aggressive to some, but Goldman believes it’s achievable for three reasons.

First is Nitro’s core competitive advantages. Its products are cheaper, easy to use, and come with good customer service.

Further, there is strong underlying market growth. Additionally, the large market leaves plenty of room for Nitro and its competitors to grow sales.

The fact the Nitro share price has fallen so hard shows how much investors are underappreciating its growth potential.

How much is the Nitro share price worth?

Goldman noted the Nitro share price trades at around a 70% discount to its software-as-a-service (SaaS) peers.

The broker’s 12-month price target is $2.95 a share. This implies a 53% upside to the current share price.

But investing in Nitro isn’t without risks. Competition from larger rivals and other challengers and execution risks are some of the factors investors should be cognisant of.

Other concerns highlighted by Goldman include higher-than-expected investment levels and currency risks.

The post ‘Plenty of uplift’: Here’s why the Nitro (ASX:NTO) share price took off today appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX tech shares Goldman Sachs rates as buys
• Why AnteoTech, Newcrest, Nitro, and ResMed shares are falling
• Here’s why the Nitro (ASX:NTO) share price is backtracking 6% today
• 3 exciting small cap ASX shares to watch
• 2 buy-rated ASX tech shares with 100% upside in 2022

Motley Fool contributor Brendon Lau 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 Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/fPFHjQN

The rise of the exchange-traded fund (ETF) has been one of the most prominent investing themes of the ASX over the past decade or so.

From the humble beginnings of the index fund, ASX ETFs now cover almost every sector and theme imaginable on the share market. ETFs have also exploded in popularity in recent years. In fact, 2021 was the best year ever for the sector which saw both record inflows and funds under management.

But one investing expert is sounding the warning bell for ASX ETF investors.

Investment strategist and former chief investment officer at JB Were, Giselle Roux recently appeared on The Australian‘s Money Cafe podcast to discuss the emergence of ETFs in Australia.

She made some interesting points about the modern structure of the ETF market.

So a common misconception amongst some investors is that ETFs are all structured in a similar way, or even that all ETFs are index funds. That was perhaps more or less true once upon a time but is certainly not in 2022.

The rise of the ‘active ETF’ poses challenges

Roux said that the ETF sector has been increasingly seeing more ‘active ETFs’. These ETFs function in a manner similar to a managed fund, rather than an index fund.

Roux called out this phenomenon as ‘trying to have the best of both worlds’. She explained that they harness the ‘passive-nature’ reputation of ETFs but use active stock selection to build portfolios.

Roux said:

What you have seen is the ETF space had diversified to where in many cases a lot of the ETFs currently on offer are arguably active funds, because they have narrowed their universe to a set of companies in an industry or to a factor… Then you’re starting to muddy the water between the purest ETF, a simple index tracker… versus an active manager that does fundamental research and makes a decision on stocks that is not based on an algorithm.

She pointed to how ETFs such as the BetaShares Robotics and Automation ETF (ASX: RBTZ) and the ETFS S&P Biotech ETF (ASX: CURE) have recently taken tumbles far nastier than the S&P/ASX 200 Index (ASX: XJO) as an example of this playing out.

Roux stated that some of these ‘thematic ETFs’ hold very concentrated portfolios. This can give the provider liquidity issues if there are large volumes of inflows or outflows at any given time.

So, some things to think about when you’re considering your next ASX ETF investment!

The post Expert sounds the warning bell on ASX ETFs… Here’s why appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Friday
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• Should you buy ASX shares now or wait just a little bit?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/NI24LJP

It has been a difficult couple of years for the Transurban Group (ASX: TCL) share price.

With its toll roads becoming a ghost town during the height of the pandemic, its earnings and distributions have suffered and this has put significant pressure on its shares.

Is the TCL share price about to get some TLC?

According to the team at Morgans, the Transurban share price could be heading a lot higher from current levels.

The note reveals that Transurban is one of its best ideas at the moment and could offer investors significant upside potential.

Morgans currently has an add rating and $14.57 price target on the toll road giant’s shares. This implies potential upside of almost 13% over the next 12 months based on the current Transurban share price.

In addition, the broker is expecting the company to reward its shareholders with a 35 cents per share distribution in FY 2022. If we add this into the equation the total return stretches to beyond 15%.

And it is also worth noting that Morgans expects a big recovery in its distribution in FY 2023, with its analysts pencilling in a 58% increase to 55.3 cents per share.

Why is Morgans positive on Transurban share price?

Morgans is positive on the company due largely to its exposure to regional population and employment growth and urbanisation trends.

It explained: “TCL owns a pure play portfolio of toll road concession assets located in Melbourne, Sydney, Brisbane, and North America. This provides exposure to regional population and employment growth and urbanisation. Given very high EBITDA margins, earnings are driven by traffic growth (with recovery from COVID) and toll escalation (roughly half at CPI and the remainder fixed c.4% pa).”

“We think TCL will continue to be attractive to investors given its market cap weighting (important for passive index tracking flows), the high quality of its assets, management team, balance sheet, and growth prospects. Watch for rapid recovery in DPS alongside traffic recovery and WestConnex acquisition prospects,” it concluded.

The post Here’s why Transurban (ASX:TCL) shares could be in for some investor TLC appeared first on The Motley Fool Australia.

More reading

• Morgans names 4 more of the best ASX shares to buy in February
• Broker names 2 ASX 200 dividend shares to buy in February
• Why has the Transurban (ASX:TCL) share price tumbled 12% so far in 2022?
• 2 ASX dividend shares Morgans rates as buys
• Brokers name 2 ASX 200 dividend shares to buy

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 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/mln5zkd

The REA Group Limited (ASX: REA) share price has edged lower despite the company’s impressive half-year results released earlier today.

In its report, the real estate classifieds company recognised a 37% year-on-year gain in revenue and a similar jump in net profit and earnings per share (EPS).

Not only that, but REA’s board declared a juicy 75 cents per share interim dividend for shareholders to bite into – a spike of 27% on the last payment.

The REA share price ended today’s session at $142.83, down 0.65% after a wild ride today.

Earlier this morning, the REA share price soared by 5.5% to $151.99. In intraday trading though, it dropped as low as $139.83, representing a 2.9% decline on yesterday’s close.

With such a strong business performance clearly on display, and a fluctuating share price, is REA a buy right now? Let’s see what these experts have to say.

Is REA Group a buy?

According to analysts at investment bank Citi, REA is worth considering for ASX investors.

The broker said REA’s strong performance took the market by surprise, as it beat expectations on both revenue and expenditure.

Of particular note was the circa 25% growth in turnover from financial services. This was alongside the company’s outsized growth in its India operations, both of which impressed the broker.

Even though REA missed Citi’s forecasts on commercial developer revenues by approximately 10%, it reckons this half’s outcome is sure to result in a suite of analyst upgrades on FY22 estimates.

Not only that, but the earnings surprise should bode well for the REA share price, Citi says. This is especially because market pundits were baking in lower results from the company.

As such, analysts at Citi recommend REA as a buy and price the company at $144.04 per share.

Analysts at Citi weren’t the only ones chiming in with an update on REA today.

Andrew McLeod of Morgan Stanley also reaffirmed their overweight/attractive rating for REA shares, assigning a $182.50 price target in the process.

However, the team at Barrenjoey Markets were less constructive, leaving a neutral rating on REA. They have a $175 per share valuation. That’s substantially lower than other price targets, but curiously, higher than the bullish Citi’s valuation.

According to a list of analysts provided by Bloomberg Intelligence, more than 56% of coverage has REA as a buy. Just 1 broker has it as a sell.

The consensus price target on the company is $165.54 (ex-dividend), suggesting a potential 16% upside.

REA share price snapshot

The REA share price has collapsed by 17% since 1 January amid a broad market sell-off in classifieds shares.

However, the trend has been in situ for some time, with classifieds shares tumbling over the previous quarter to trade at around 52-week lows. Other classifieds shares caught up in the sell-off include Carsales.com Ltd (ASX: CAR) and Seek Limited (ASX: SEK), which are down 13% and 17% respectively.

The post Stellar earnings beat but REA (ASX:REA) share price dips… Do brokers say buy? appeared first on The Motley Fool Australia.

More reading

• Why Boral, Magellan, REA, and SEEK shares are falling today
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• REA (ASX:REA) share price higher after smashing first half expectations
• 5 things to watch on the ASX 200 on Friday
• Top brokers name 3 ASX shares to buy next week

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow 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 REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/BvYTJ8P

Key points

• ASX 200 iron ore majors struggled through 2021
• This expert believes the slump means they are now trading for bargain prices
• Additionally, with China expected to grow in 2022, they might be set to take off

---

There’s been a lot going on with S&P/ASX 200 Index (ASX: XJO) iron ore giants in 2022. Notably, BHP Group Ltd (ASX: BHP) has unified with its London listing to become the biggest company on the ASX.

But with the 3 majors – BHP, Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG) – having ended 2021 in the red, they might not seem like the best investment in 2021.

However, Randal Jenneke, head of Australian equities at T. Rowe Price, disagrees. He believes 2022 will be China’s year and the iron ore majors will be taken along for the ride.

Let’s take a closer look at what the expert is predicting will be in store for ASX 200 iron ore giants this year.

Are iron ore giants 2022 in the ‘buy’ zone?

The 3 major iron ore stocks of the ASX 200 ended last year in the red. The Fortescue Metals share price led the fall, tumbling 18%.

Meanwhile, those of BHP and Rio Tinto slid 2% and 12% respectively.

However, Jenneke is predicting blue (green?) skies for the companies in 2022, driven by growth in China.

He said the Chinese market was one of the only global markets to fall in 2021 – slipping 21%. That leaves the nation pushing for more growth while much of the world attempts to slow down inflation.

“If you think about the story for China for 2021, it was a story about deceleration of growth, dealing with the property market issues, and high levels of leverage,” said Jenneke.

“But China slowed too much. China finished 2021 with about 4% GDP growth. Their target for 2022 is 5.5% to 6%.

“So, that’s really interesting because what that means is, we think the demand environment is going to improve for commodities … therefore, the big miners should be positioned to do much better.”

He said the recent poor performance may have put ASX 200 iron ore stocks back into the buy zone.  

“When you come back to the valuations of some of the big miners like BHP and Rio, they’re quite cheap versus their history and on most valuation metrics they screen attractive,” said Jenneke.

How have ASX 200 iron ore shares performed in 2022 so far?

This year has been a good one so far for ASX 200 iron ore giants.

The Fortescue Metals share price – last year’s worst performer – has gained 7% year to date.

Meanwhile, the BHP share price is also in the green, perhaps unsurprisingly given its unification. It has surged 10%.

Finally, the Rio Tinto share price is leading the pack with a gain of 14%.

The post Is now the time to buy shares of ASX 200 iron ore giants? Expert weighs in appeared first on The Motley Fool Australia.

More reading

• Do any ASX lithium shares pay dividends?
• Why this broker thinks the Fortescue (ASX:FMG) dividend will come under significant pressure
• Top brokers name 3 ASX shares to sell today
• These 3 ASX 200 shares are topping the volume charts this Thursday
• Morgans names the best ASX resources shares to buy in February

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/UeQt8w6

Key points

• ASX 200 energy shares have been boosted by rising oil prices
• OPEC may not be able to increase supplies enough to meet demand
• US shale oil producers are planning huge production increases

---

S&P/ASX 200 Index (ASX: XJO) energy shares like Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL) and Beach Energy Ltd (ASX: BPT) have been enjoying some welcome tailwinds from rocketing oil prices.

The index itself is up 0.25% in afternoon trading.

But buoyed by rocketing oil prices, the Santos share price is up 0.68%, the Woodside share price is up 0.65% and Beach Energy shares are up 1.70%.

With Brent crude oil soaring from US$77.80 at the start of 2022 to US$91.60 today, an almost 18% increase, these ASX 200 energy shares have also smashed the benchmark’s year-to-date returns.

What’s driving surging crude prices?

After falling off a cliff in the early months of the global pandemic, the oil price has been marching higher.

That’s partly been due to a dearth of new investment in exploration and capacity expansion. Now, as the world reopens, energy demand is outpacing supply.

Then there’s the Organization of Petroleum Exporting Countries and its partners (OPEC+). The cartel managed to drastically cut its combined oil output after the 2020 price crash. And it’s only gradually lifting its production quota.

Yet even with the modest lifts in permitted capacity (see here for more), many of the member states aren’t able to pump up to their quota levels.

Commenting on that situation, John Driscoll, director of JTD Energy Services said (quoted by Bloomberg), “Oil prices remain constructive on solid fundamentals. OPEC continues to fall short of its target, although it is promising to do better.”

Throw in various geopolitical tensions in oil rich areas – from Russia and Ukraine to Libya and the United Arab Emirates – and you’ve got the perfect recipe for rising energy prices. And soaring ASX 200 energy shares.

And crude prices could head significantly higher yet. Goldman Sachs is forecasting US$100 per barrel.

But wait. Haven’t we been here before?

How US producers could spoil the party for ASX 200 energy shares

If you have a look at the crude oil price charts in 2018, you’ll see that Brent was steadily gaining and notched just over US$84 per barrel on 5 October. Then it cratered.

By 28 December 2018, that same barrel was trading for US$52. A loss of 38% in less than 3 months.

That drop wasn’t due to a pandemic or any other major events impacting energy demand.

Rather it came as US shale producers, spurred by the high market prices, pumped record amounts of oil. At times this saw the US top Saudi Arabia as the world’s number 1 oil producer. And for the first time in many decades, the world witnessed the US export its first oil shipments.

Now 2022 and 2023 could be shaping up in a similar way.

According to US oil giant ConocoPhillips, output from the oil rich Permian Basin is set to grow by a phenomenal 900,000 barrels per day (bpd) in 2022, far above the latest estimates from the Energy Information Administration.

As Bloomberg reports, ConocoPhillips CEO, Ryan Lance’s forecast of a 900,000 bpd output lift points to “surprise announcements in recent days by Exxon Mobil Corp. and Chevron Corp. to aggressively ramp up Permian Basin production“.

With West Texas Intermediate (WTI) crude also topping US$90 per barrel, the US shale industry is tipped to generate record cash flows in 2022.

Lance said he was caught off guard by Exxon’s announcement this week that it intends to ramp up its Permian Basin output by 25%. Chevron is also opening the spigots wider, with a 10% increase on the cards.

That much new supply could certainly bring down the crude price and throw up some headwinds of ASX 200 energy shares.

“We were a bit surprised at the strength of some of the numbers that we were hearing,” Lance said.

From an oil trader’s perspective he added, “I’m absolutely concerned about. If you’re not worried about it, you should be.”

How these ASX 200 energy shares have been performing

With oil prices running hot so far in 2022, the Santos share price has gained 18%, the Beach Energy share price is up 19%, and Woodside shares have gained 19%.

This over a period that’s seen the ASX 200 fall 5%. 

The post Could US producers spoil the party for ASX 200 energy shares? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Morgans names the best ASX resources shares to buy in February
• The 2022 outlook for Beach Energy (ASX:BPT) shares is sunny: expert
• Own ASX 200 energy shares? Here’s what OPEC’s been up to
• 5 things to watch on the ASX 200 on Thursday

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/pfnGIRE

It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Appen Ltd (ASX: APX)

According to a note out of Citi, its analysts have retained their buy rating and $14.80 price target on this artificial intelligence data services company’s shares. The broker has been looking into recent industry developments and doesn’t believe the Meta (Facebook) high-performance self-supervised algorithm, data2vec, is an imminent threat to Appen’s business. Particularly not for its Relevance business. In addition, it sees opportunities for Appen to shift to more complex work that would be out of reach for this algorithm. The Appen share price is trading at $9.40 today.

Aristocrat Leisure Limited (ASX: ALL)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $46.00 price target on this gaming technology company’s shares. While the broker acknowledges that Aristocrat’s failure to close the acquisition of Playtech is disappointing, it remains positive on the future. This is due to its strong performance and outlook of the core business and its mountain of cash following its capital raising. The Aristocrat share price is fetching $41.04 on Friday.

Westpac Banking Corp (ASX: WBC)

Analysts at Morgans have retained their add rating and $29.50 price target on this banking giant’s shares following its first quarter update. According to the note, Morgans believes that Westpac’s update supports its view that the challenges the bank is facing are not unsurmountable and that its shares should not be priced like a value trap. The Westpac share price is trading at $21.45 on Friday afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• Why is Meta’s earnings miss bad news for the Appen (ASX:APX) share price?
• Hunting for ASX shares? Experts say to avoid this sector in 2022
• Is the Westpac (ASX:WBC) share price good value after its first quarter update?
• 5 things to watch on the ASX 200 on Friday
• What can the Westpac results tell us about the outlook for ASX 200 bank shares?

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd. The Motley Fool Australia owns and has recommended Appen Ltd. 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/LyiMzpE

The S&P/ASX 200 Index (ASX: XJO) just can’t seem to figure out what it wants with this Friday’s trading session. At the time of writing, the ASX 200 has gained 0.09% and is sitting at 7,084 points after seesawing between positive and negative territory all day thus far.

But rather than trying to figure all of that out, let’s instead take a look at the ASX 200 shares that are topping the market’s trading volume charts right now, according to investing.com.

The 3 most traded ASX 200 shares by volume this Friday

Scentre Group (ASX: SCG)

ASX 200 real estate investment trust (REIT) Scentre Group is our first cab off the rank today. The Westfield owner has seen a hefty 13.1 million of its units trade on the ASX thus far. There hasn’t been too much in the way of news or announcements out of Scentre so far today.

However, we have seen significant volatility in the Scentre unit price. The company is presently down 0.17% at $2.94 a unit, but has been as high as $2.99 and as low as $2.93 over the trading day. It’s probably this bouncing around that is responsible for so many shares trading on the markets.

Paladin Energy Ltd (ASX: PDN)

Next up, we have ASX 200 uranium miner Paladin Energy. Paladin has had a substantial 26.3 million shares swap owners as it currently stands. Again, we have no major developments out of Paladin so far today, although the company did release an investor presentation yesterday morning.

However, the Paladin share price has also been showing some volatility this Friday. The company is currently enduring a 0.42% loss at 69 cents per share. But this company has been both down 1% and up more than 3% in the span of today’s session. Once more, it’s this whipsawing that is likely to be the smoking gun behind this elevated trading volume.

Sydney Airport (ASX: SYD)

Last, but certainly not least, in terms of trading volumes we have Sydney Airport. This ASX 200 infrastructure stalwart has had a whopping 30.35 million shares bought and sold on the markets today. The Sydney Airport share price hasn’t done too much this Friday. It’s currently cruising at a flat $8.72.

However, we got the news yesterday that shareholders have voted overwhelmingly in favour of Sydney Airport’s buyout by the Sydney Aviation Alliance. It’s now very likely that the company will be delisted from the ASX next week. So this volume could be the result of investors looking to cash out ahead of time.

The post These 3 ASX 200 shares are topping the volume charts on Friday appeared first on The Motley Fool Australia.

More reading

• Tech stocks crash, while Nufarm soars. Scott Phillips on Nine’s Late News
• ASX 200 (ASX:XJO) midday update: REA and News Corp impress, Boral plummets
• Should you buy ASX shares now or wait just a little bit?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/SkH4Xip

Key points

• Crypto startups racked up a total of US$25 billion in funding last year
• January saw a continuation in access to capital for crypto companies with FTX and Fireblocks gaining US$1.35 billion
• One insider expects more to come as the industry matures

---

Even as cryptocurrency prices take a nosedive, cryptocurrency startups are raking in cash.

In fact, they raised a record $25 billion in 2021. This is an eightfold increase from the previous year.

While some investors may be growing wary of the collapse in cryptocurrency valuations, it doesn’t seem to be putting a damper on investment in crypto and blockchain startups.

Taking the picks and shovels approach to cryptocurrency

January was another unkind month for crypto investors, following a trend that began in November last year. During the month, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) tumbled a further 17% and 29% respectively.

Yet, some private companies operating in the crypto-sphere have been going from strength to strength. In doing so, raising mindboggling amounts of money to fuel more growth.

Crypto derivatives exchange provider, FTX closed another round of funding in January amounting to US$800 million, ballooning its valuation to US$40 billion. The additional injection of funds was backed by Temasak, Paradigm, the Ontario Teachers’ Pension Plan Board, and NEA.

In another example of crypto companies raising funds despite the weakness in cryptocurrency prices, digital asset custody start-up Fireblocks scored $550 million in funding. The series E funding pushed the company to a sizeable US$8 billion valuation.

The institutional interest in these types of private companies in the crypto space exhibits a more ‘picks and shovels’ approach to the volatile industry. To a degree, these companies offer a ‘safer’ entrance into the growing cryptocurrency market.

US-based crypto exchange, Coinbase Global Inc (NASDAQ: COIN) is an example of this more traditional play. Irrespective of digital asset prices, the company continues to pull in revenue from people using its exchange.

In addition, Coinbase earns a small fee on crypto-assets in its custody. This was last reported to be more than 50% of the US$90 billion on its books.

What is driving this trend?

One would suspect that crypto companies would come under pressure as cryptocurrencies begin to falter. Especially when some spectators are anticipating the dawn of a ‘crypto winter‘.

So, what could be enticing sophisticated investors and institutions to keep pouring capital into these companies? Well, according to Fireblocks co-founder and CEO Michael Shaulov, part of the reason is maturing of the space.

Shaulov said:

What is very clear to us is that the investment in the infrastructure is not going to stop.

Further to this, the fast-growing crypto company co-founder highlighted more sophisticated uses of cryptocurrency. The potential posed by stablecoins and blockchain-based securities is attracting attention beyond speculation.

The post Cryptocurrency crash fails to put a dampener on cash-raising fiesta appeared first on The Motley Fool Australia.

More reading

• Is Bitcoin using lots of energy actually a good thing?
• Bitcoin price slides again. Here’s what crypto investors are watching
• Why these five cryptos could leave Bitcoin in the dust in 2022
• What are Stablecoins and how do they differ from other cryptocurrencies?
• Here’s why the leading cryptocurrencies are ticking higher

Motley Fool contributor Mitchell Lawler owns Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns Bitcoin and Ethereum. The Motley Fool Australia owns Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/x4KmHJ2

Key points

• The Liontown share price is up 5% today
• The company has raised $12.9 million from its share purchase plan
• This comes after it recently completed a $450 million institutional placement.

---

The Liontown Resources Limited (ASX: LTR) share price is leaping today.

This comes after the battery metals explorer revealed after the market closed yesterday that it had completed its share purchase plan (SPP). The SSP was first announced at the start of December.

Currently, the Liontown share price is up 5.45 % at $1.45.

Let’s take a look at the news out of Liontown.

What’s pushing up the Liontown share price?

Liontown’s SPP has closed with subscriptions from eligible shareholders totalling $12.9 million. The explorer initially aimed to raise up to $40 million (before costs).

In the placement, shareholders were given the opportunity to apply for up to $30,000 worth of Liontown ordinary shares. This was under the same price and conditions as the explorer’s recently completed placement of $450 million at $1.65 a share, without paying any brokerage costs, commission, or other transaction costs.

Some 7,819,543 new shares were issued today and are expected to be quoted on Monday. However, shareholders were encouraged to confirm actual holdings prior to engaging in the new shares.

In its recent quarterly activities report, the company advised the $450 million placement had received “strong demand” from “high-quality domestic and offshore institutions”. These funds have allowed the explorer to de-risk and further develop its Kathleen Valley site in Western Australia.

Comment from management

Speaking on the announcement likely pushing up the Liontown share price today, managing director and CEO Tony Ottaviano said:

On behalf of the Board, I would like to thank shareholders for the strong support they have shown through the SPP during what has been a very volatile period in global markets since the start of the year.

The funds raised under the SPP together with the proceeds of the A$450 million institutional placement completed in December have significantly de-risked our development pathway and put Liontown firmly on track to achieve its objective of becoming a world-class battery materials company.

Liontown share price snapshot

Over the last 12 months, the Liontown share price has increased by around 253%. It has also seen a 51% increase in the last six 6 months.

During the past year, it reached its highest price of $1.94 in November and its lowest of 40 cents almost a year ago.

The explorer has a market capitalisation of $3 billion and 2.18 billion shares issued.

The post ‘Strong support’: Here’s why the Liontown (ASX:LTR) share price is pouncing higher today appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Monday
• 2 ASX lithium shares analysts rate as buys
• Why Liontown (ASX:LTR) could be a lithium share to buy in 2022
• Liontown (ASX:LTR) share price leaps again as boss dismisses lithium supply glut concerns
• Here are the 3 most heavily traded ASX 200 shares on Thursday

Motley Fool contributor Alice de Bruin 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/9mDTA3q