The Qantas Airways Limited (ASX: QAN) share price is slightly in the red today.

Qantas shares are falling 0.22% at the time of writing, currently trading at $4.49 each. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.13% today.

So what is new at Qantas today?

Qantas highlights new staff, more resources

The Qantas share price is outperforming fellow ASX 200 travel shares today. The Webjet Limited (ASX: WEB) share price is down 2.10% today, while Flight Centre Travel Group Ltd (ASX: FLT) shares are 0.99% in the red.

Qantas domestic and international CEO Andrew David has revealed the airline is hiring more staff. He said since Easter, Qantas has hired 1,000 people.

Speaking on 2GB radio, David issued an apology to listeners, adding:

We are the national carrier, people have high expectations of us, we have high expectations of ourselves and clearly over the last few months we have not been delivering what we did pre-COVID

David said the company has put a “lot of resources” into call centres, leading to single digit response times last week.

Commenting on 13 flight cancellations in Sydney yesterday, David said “our cancellation rate is now close to what it was pre-COVID, it’s not quite there yet”. He added that mishandled bag numbers are almost at pre-COVID levels too, commenting:

On average pre-COVID we had about five mishandled bags in every thousand, when I checked this morning, yesterday it was about seven

In June, BITRE on-time performance figures showed 59.4% of Qantas network planes arrived on time, with 40.6% late. Cancellation rates were 7.5% in June.

As highlighted in a market update in late June, Qantas is reducing domestic flight numbers from October until the end of March 2023.

Qantas share price snapshot

The Qantas share price has descended 4% in the past year and 10% in the year to date.

For perspective, the ASX 200 has slid nearly 9% in the last 12 months.

Qantas has a market capitalisation of nearly $8.5 billion based on the current share price.

The post What’s happening to the Qantas share price today? appeared first on The Motley Fool Australia.

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More reading

• ‘At tipping point’: Qantas share price slides as chaos continues
• Why are ASX 200 travel shares having such a stellar session?
• Why are Flight Centre, Webjet, and other ASX travel shares sinking today?
• UBS tips Qantas share price to surge 40%
• Qantas share price dips amid record delays

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 Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The JB Hi-Fi Limited (ASX: JBH) share price has improved by 11% during the month of July thus far.

That’s more than double the performance of the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) which has gained 5.4% over the same timeframe.

This is pretty impressive given rising inflation (now at 6.1% according to new data today) and interest rates are risk factors for ASX retail shares.

Falling property prices are also a risk because they degrade what’s known as the ‘wealth effect’. When the value of our homes — usually our biggest assets — is rising, we feel wealthier and this translates into more consumer spending. Like buying new electronics or DVD box sets at JB Hi-Fi.

Latest CoreLogic data shows a decline in Australian dwelling values in May and June. Sydney house prices are down 2.4% and Melbourne house prices are down 2.1% in the year to date. That might not sound like much but on a $2 million residence, that’s a $40,000-plus drop in value.

How JB Hi-Fi performed in FY22

As an article in today’s Australian Financial Review (AFR) points out, JB Hi-Fi eventually became a COVID-19 winner after the initial market crash when pretty much every ASX share cratered.

People then went on to buy lots of new things for their homes, to enable them to work and to keep themselves entertained during lockdowns.

The JB Hi-Fi share price reached an all-time high of $55.85 in March as a result. The wealth effect likely helped this price surge as well, with dwelling values up 18.2% over the 12 months to 31 March.

Then the market lost confidence, as it did in many ASX shares, and “a third of its sharemarket value vanished in less than three months as many investors decided this would be as good as it gets, and the dream run may be over,” according to the article.

The share price seemed to find a floor at about $37 in mid-June. Since then, it has risen to $42.92 today.

On 19 July, JB Hi-Fi released its preliminary results for FY22. As my Fool colleague James reported, JB Hi-Fi had a strong fourth quarter which led to record sales and earnings for the full financial year.

Sales were up 3.5% to $9,232 million, EBIT was up 6.9% to $794.6 million, and net profit after tax (NPAT) was up 7.7% to $544.9 million.

What’s next for the JB Hi-Fi share price?

AFR surveyed a bunch of brokers to get their views on where the share price could go from here and why.

Citi analyst Adrian Lemme has a buy rating on JB Hi-Fi, but has reduced his 12-month share price target from $52 to $47.

According to the article:

Lemme said JB Hi-Fi was a strong operator and well-positioned to withstand the drag from increasing cost-of-living pressures in households. The discretionary retailing sector was “unloved” and on a risk-reward basis JB Hi- Fi was looking more favourable for investors after its share price dropped by one third between March 30 and mid-June, suggesting investors had already factored in a tougher outlook.

JP Morgan analyst Bryan Raymond has a neutral rating on JB Hi-Fi and a share price target of $44.

UBS analyst Shaun Cousins has a neutral rating and a price target of $42.

Jarden analyst Ben Gilbert has an underweight rating on JB Hi-Fi shares and a price target of $34.90.

Gilbert said: “The market appears to currently be pricing a scenario whereby house prices fall greater than 20% and spending falls 10%-plus for household goods.”

Gilbert is also concerned about rising competition from Bunnings, Kmart, and Amazon.com Inc.

Goldman Sachs analyst Lisa Deng says sell and has the same share price target as Gilbert.

The post What are brokers predicting for the JB Hi-Fi share price in FY23? appeared first on The Motley Fool Australia.

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More reading

• Down 24% in FY22, can the JB Hi-Fi share price bounce back this year?
• Top brokers name 3 ASX shares to buy today
• Why Iluka, JB Hi-Fi, Megaport, and Zip shares are racing higher
• Why JB Hi-Fi, Mesoblast, Pendal, and Woodside shares are pushing higher
• ASX 200 retail shares rise as consumer confidence improves

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in JB Hi-Fi Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Goldman Sachs. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. At the time of writing, the benchmark index is up a fraction to 6,810.2 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are racing higher:

Alcidion Group Ltd (ASX: ALC)

The Alcidion share price is up 15% to 15.5 cents. Investors have been buying this healthcare technology company’s shares after it reported a record performance during the fourth quarter. This led to FY 2022 revenue coming in at $34 million, up 31% year on year. Also getting investors excited was the company reporting positive fourth-quarter operating cash flow of $3.3 million.

Betmakers Technology Group Ltd (ASX: BET)

The Betmakers share price is up 2.5% to 49.7 cents. The catalyst for this was the release of the betting technology company’s fourth quarter and full year update. For the 12 months, Betmakers reported cash receipts of $26.2 million. This was a massive 194% increase on the prior corresponding period.

BrainChip Holdings Ltd (ASX: BRN)

The BrainChip share price is up 2.5% to $1.19. This follows the release of the semiconductor company’s quarterly update. Although the company reported second quarter cash receipts of just US$1.2 million, that hasn’t stopped investors driving its market capitalisation to the $2 billion mark today.

Zip Co Ltd (ASX: ZIP)

The Zip share price is on form again and up a further 7% to $1.10. Investors have been buying the buy now pay later (BNPL) provider’s shares this week despite there being no news out of it. Though, Zip isn’t alone in experiencing some investor love. Fellow beaten down BNPL share Sezzle Inc (ASX: SZL) is also rocketing higher on no news.

The post Why Alcidion, Betmakers, BrainChip, and Zip shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• Why are Zip shares getting the attention of investors today?
• Alcidion share price surges 18% higher on record quarter
• BrainChip share price powers ahead amid quarterly update
• BetMakers share price lifts as full year revenue surges 370%
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended Alcidion Group Ltd, Betmakers Technology Group Ltd, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Alcidion Group Ltd and Betmakers Technology Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSL Ltd (ASX: CSL) share price has strengthened so far in H1 FY23, gaining 7.5% over the past month of trade.

Meanwhile, the broader sector has pushed higher recently as well. The S&P/ASX 200 Health Care Index (ASX: XHJ) has also lifted around 7% in the past month.

Broker downgrades CSL earnings forecasts

Analysts at investment bank Jefferies have reduced their earnings per share (EPS) projections for FY23 in a recent note.

The broker now estimates CSL will achieve EPS of $2.81 per share for the full year. That’s a 6-cent reduction off previous estimates of $2.87.

However, the consensus of analyst estimates has projected CSL to deliver $2.49 in EPS for the coming 12 months.

Despite the downgrade, Jefferies still sits roughly 15% above the consensus with its bottom-line estimates for CSL. It also forecasts $3.40 in EPS for FY24 from the biotech giant.

Further, every analyst covering the company rates it a buy right now, according to Refinitiv Eikon data.

As such, momentum continues for the company. The CSL share price has opened in the green today and is currently trading at $292.13, up 1.88%.

The company generated $464 million in free cash flow (FCF) last half, with a 14% return on invested capital.

Investors realise a 1% yield on this FCF with a corresponding 1% dividend yield.

It also sits on a debt to asset ratio of 23%, with debt financing just 28% of the company’s total capital, according to calculations derived from CSL’s financial statements.

The consensus price target on the stock is also $316 per share, according to Refinitiv Eikon’s consensus data.

The post Why did Jefferies slash its FY23 earnings forecast for CSL shares? appeared first on The Motley Fool Australia.

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• Expert prediction: 3 ASX 200 shares that can ‘do well’ in volatile times
• Why these blue chip ASX 200 shares are rated as buys by experts
• Up 10% so far in July, is the CSL share price heading back above $300?
• 2 ASX shares in healthcare ripe to buy right now: experts
• 3 blue chip ASX 200 shares experts say are buys

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 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.

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The Nitro Software Ltd (ASX: NTO) share price has tumbled deep into the red again on Wednesday.

In afternoon trade, the document productivity software company’s shares down a further 7% to $1.17.

This means the Nitro share price is now down a very disappointing 28% over the last two trading sessions.

Investors have been selling the company’s shares after it downgraded its FY 2022 annual recurring revenue (ARR) guidance for FY 2022.

Is the Nitro share price crash a buying opportunity?

The team at Goldman Sachs believe the Nitro share price crash has created a very attractive buying opportunity for investors.

According to a note, its analysts have retained their buy rating with a revised price target of $2.05.

Based on the latest Nitro share price, this implies potential upside of 75% for investors over the next 12 months.

Why is Goldman still bullish?

While Goldman was disappointed with the update it saw enough to remain positive. Particularly given that the company now has a clear path to breakeven.

It explained:

In our view, today’s update should serve to re-base market expectations both in terms of NTO’s growth outlook (lower) and its progression to cash flow breakeven (sooner), which we see as key changes to NTO’s growth narrative going forward.

While digestion of another quarter of sales execution issues may require consecutive quarters of strong performance to rectify, we see the new guidance range as providing a lower hurdle for NTO to clear going forward while operating more efficiently closer to cash flow breakeven.

We think that NTO’s cost out programme largely answers questions on balance sheet risk, with improving execution (within NTO’s control) and more benign macro conditions (out of NTO’s control) dictating NTO’s ability to beat and raise ARR guidance going forward.

The post Down 28% in two days: Is the Nitro share price crash a buying opportunity? appeared first on The Motley Fool Australia.

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More reading

• Why Flight Centre, Iress, Nitro, and Perseus shares are dropping today
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• Analysts have named these top growth shares as buys
• Here’s why analysts are tipping these ASX growth shares as buys
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23

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 recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX 200 tech shares are slightly in the red today, however, not all technology stocks are falling. Despite the NASDAQ dropping in the US on Tuesday, it is picking up in after-hours trade. This follows strong earnings results from Microsoft Corporation (NASDAQ: MSFT)and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG).

Among the technology shares falling on the ASX today are Block Inc (ASX: SQ2), WiseTech Global Ltd (ASX: WTC), and NextDC (ASX: NXT). However, the Xero Ltd (ASX: XRO) share price is up in morning trading.

So what is going on with Australian technology shares today?

Why are ASX 200 tech shares falling?

At the time of writing, Block is down 4.66%, WiseTech Global is 3.31% lower, and NextDC is 0.95% in the red. Meanwhile, the Xero share price is 0.44% higher. Block’s US listing also descended 7% on the New York Stock Exchange on Tuesday.

In Australia, the S&P/ASX All Technology Index (ASX: XTX) is currently down 0.86% while the S&P/ASX 200 Information Technology Index (ASX: XIJ) is also 0.83% lower.

This follows the technology-heavy NASDAQ Composite dropping 1.87% in the US on Tuesday. Amazon.com Inc (NASDAQ: AMZN) was among the biggest fallers, slipping 5.23%, while Meta Platforms Inc (NASDAQ: META) slumped 4.5%.

However, in after-hours trade on the NASDAQ, technology shares are picking up on the back of earnings reports from tech giants Microsoft and Alphabet.

Microsoft reported its revenue jumped 18% to $198.3 billion in FY22. Net income soared 19% while diluted earnings per share increased 20%.

Meantime, Alphabet reported revenue of $69.7 billion in the second quarter, up 13% year on year. Microsoft shares are nearly 4% higher in after-hours trade on the NASDAQ while Alphabet shares are up nearly 5%.

However, data released on Tuesday showed consumer confidence fell in the US in July amid inflation and rising interest rate fears. In comments cited by Reuters, Spartan Capital Securities chief market economist Peter Cardillo said:

The majority of companies that reported today beat earnings, and that’s been the case. But of course there have been some warnings, and that’s what the market is focusing on.

The US Federal Reserve is due to make a decision on interest rates on Wednesday.

The post How are ASX 200 tech shares performing on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Analysts name 2 ASX growth shares to buy in August
• Top broker rates Xero share price a buy with 20% upside
• These are the 10 most shorted ASX shares
• Why are ASX 200 tech shares having such a lousy start to the week?
• Is the Xero share price heading back over $100?

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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Block, Inc., Meta Platforms, Inc., Microsoft, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are some S&P/ASX 200 Index (ASX: XJO) shares this fund manager owns which it thinks can still do well in the current investment environment.

The fund manager in question is Perpetual Limited (ASX: PPT) and the fund is focused on Australian shares, particularly ASX industrial and resource shares. This fund aims to outperform the S&P/ASX 300 Accumulation Index over three-year periods.

At 30 June 2022, the net returns of the fund had outperformed the index by an average of 2.3% per annum over the previous three years.

The fund manager’s view is that “markets are poised for further rotation to a more value-orientated investment environment as COVID-19 disruptions, waning stimulus and war combine keep consumer price inflation at high levels”.

Perpetual’s strategy

With that outlook, Perpetual has a view on what’s going to happen next and what this will mean for certain ASX shares and how to invest. Perpetual said:

In our view, rising bond yields will eventually lead overpriced growth stocks into a more sustained and overdue correction, challenging investors with large growth exposures. We think, in the years ahead, markets will need to become accustomed to more inflation than previously experienced. This distinct shift in the macro backdrop is already playing out across asset classes. In these conditions, our focus on value style investing, buying quality companies with strong balance sheets trading at reasonable valuations, should continue to do well and offer attractive opportunities for investors.

So which ASX shares does it own?

At the end of June 2022, Perpetual had a few key positions in businesses with big weightings in the portfolio.

Some of those big ASX share positions were: Santos Ltd (ASX: STO) at 5.9% of the portfolio, Insurance Australia Group Ltd (ASX: IAG) at 5.8% of the portfolio, and Ramsay Health Care Limited (ASX: RHC) at 4.3% of the portfolio.

Santos is benefiting from the higher energy prices amid the Russian invasion of Ukraine. Perpetual said the spike in prices has contributed to near-term inflation expectations.

Ramsay has been a recent performer after receiving a conditional, non-binding and indicative proposal from a KKR-led consortium to buy the business. Ramsay shareholders will get $88 cash per share, less any dividends paid. The Ramsay board has given the consortium due diligence materials on a non-exclusive basis.

On IAG, Perpetual noted that the insurer has received regulatory approval for the sale of AmGeneral, a Malaysian business in which it holds a 49% stake. The sale proceeds will be around $340 million, with an expected net loss after tax of AU$90 million. However, “it will improve its regulatory capital position by AU$150 million at completion”.

The ASX share recently gave a profit update for FY22 and guidance for FY23.

IAG said its FY23 guidance reflects “strong underlying business momentum”.

IAG expects gross written premium growth to be “mid-to-high single digit growth”. This will be “primarily rate driven to cover claims inflation, higher reinsurance costs and an increased natural peril allowance”.

The reported insurance margin is likely to be higher than FY22. In FY23 the company expects this to be between 14% and 16%.

The post Looking for value: The ASX shares this fundie is holding amid rising inflation appeared first on The Motley Fool Australia.

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• Is the IAG share price a buy following the insurer’s latest update?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Why did ASX 200 energy shares fire up on Tuesday?
• Own Santos shares? Here’s why the company’s international exports could come under pressure

Motley Fool contributor Tristan Harrison 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 Insurance Australia Group Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Insurance Australia Group Ltd (ASX: IAG) share price is rangebound today and now trades flat at $4.52 apiece.

After posting its preliminary FY22 results and FY23 guidance last week, IAG shares took off and now trade at their highest mark since June.

The insurer booked a $347 net profit after tax (NPAT) and forecasted FY23 gross written premium in the range of 14–16%.

Is the IAG share price a buy?

Analysts at UBS certainly don’t think so. The broker rates IAG a sell and values the company at $4.10 per share.

Following IAG’s preliminary results, the UBS team was unimpressed with the growth trends and noted profit margins are below consensus estimates.

It said that “[r]eserve levels have again proved insufficient as a further top-up was required,” which poses a key downside looking ahead.

Meanwhile, analysts at Macquarie led by Andrew Buncombe reiterated the bank’s outperform rating with a $5.40 price target.

In fact, Macquarie joined 7 other brokers in revising their price targets and/or recommendations on IAG following its preliminary earnings update, per Refinitiv Eikon data.

This contrasts against 2 brokers rating the IAG share price as a hold and sell respectively.

The consensus price target from this list is $4.98 per share, suggesting a small amount of mispricing versus market price.

It is yet to be seen if further upgrades/downgrades are to come through from brokers covering IAG.

In the past 12 months, the IAG share price has lost 9%, despite clipping a 6% gain this YTD.

The post Is the IAG share price a buy following the insurer’s latest update? appeared first on The Motley Fool Australia.

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More reading

• Looking for value: The ASX shares this fundie is holding amid rising inflation
• Here are the top 10 ASX 200 shares today
• Why Damstra, Flight Centre, IAG, and Pantoro shares are pushing higher
• Why is the IAG share price lifting 6% higher today?
• Why Accent, Humm, IAG, and Webjet shares are dropping

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 positions in and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s a mixed day in the markets today, but you won’t hear investors in this ASX mining share complaining.

In late morning trade the Cobre Ltd (ASX: CBE) share price is up 96%, having earlier posted gains of more than 106%.

So, why are investors piling into this tiny ASX mineral explorer?

Why is the ASX mining share rocketing?

The Cobre share price is rocketing after the miner reported its first intersection of significant copper mineralisation at the Ngami Copper Project located in Botswana.

Cobre said the visual copper mineralisation was intersected in its first diamond drill hole at the project, situated within the Kalahari Copper Belt.

According to the ASX mining share, the promising early drill results highlight the strong potential of the area. The miner has 57 priority targets across KML’s extensive license holding on the northern margin of the Kalahari Copper Belt.

Commenting on the early drill results, Cobre managing director Martin Holland, said:

Now we have a promising copper intersection, on one of the most prospective Copper belts in the world. This result, one-kilometre away from the previous historic hole, shows the current mineralisation thickens over a one-kilometre zone to date…

We have prioritised this portion of the belt due to its favourable geological setting. These results, which confirm the presence of significant copper mineralisation, validate the district scale opportunity of Cobre’s, soon to be 100%-owned, extensive license package within the Kalahari Copper Belt.

The ASX mining share has a second diamond hole currently being drilled further along the strike.

“With diamond drilling ongoing in Botswana, we anticipate ongoing exploration updates to follow and look forward to updating our shareholders in due course,” Holland added.

Cobre share price snapshot

With today’s big leap factored in, the ASX mining share is up 4% in 2022. That compares to a year-to-date loss of 12% posted by the All Ordinaries Index (ASX: XAO).

The post Guess which ASX mining share just exploded 100% on a new discovery appeared first on The Motley Fool Australia.

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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.

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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

Like other top cryptocurrencies, Solana (CRYPTO: SOL) has seen some significant selling pressure Tuesday. As of 12:50 p.m. ET, the proof-of-stake project’s tokens had sunk by 8.4% over the previous 24 hours. That positioned Solana as the second-worst performer among the top 10 tokens by market cap, just behind Ethereum (CRYPTO: ETH), which had declined by 9.5%.

Macro factors are certainly among the drivers of Solana’s decline. Most major tokens are down substantially Tuesday as investors consider the risks associated with this week’s Fed rate hike decision, among other factors.

However, Solana has been grabbing the attention of prominent crypto proponents, who have cited a rather compelling bear case for it. Among the most ardently bearish individuals on Solana of late is Justin Bons, founder and chief investment officer of the crypto venture capital fund Cyber Capital. Bons is well-respected in this space, and his opinion carries weight with many who follow him on social media.

The bear thesis Bons has outlined is multifaceted.

First, in recent months, Solana’s blockchain has seen significant downtime relative to other top projects in this space. In fact, Bons highlights the fact that Solana is the only blockchain to have undergone seven outages in recent months, making it a worrisome outlier.

Second, Bons has called into question Solana’s peak throughput metrics. Solana Labs claims its blockchain maxes out around 400,000 transactions per second. In reality, it typically operates at a much slower throughput level, even at peak times.

Additionally, Bons and others believe that Solana’s recent launch of an Android smartphone could be a decoy the Solana Labs team will use as a way to “cash in” before the selling pressure really beings.

Finally, overarching issues of the blockchain’s security have Bons concerned. He suggests that relative to other blockchains, a 51% attack may be more likely with Solana, given centralization issues with how the network’s validators operate. Among the reported issues causing validator centralization are higher comparative equipment costs.

So what

There’s a lot to digest when it comes to Bons’ bear thesis on Solana. Many may be aware of the various outages the blockchain has experienced. This isn’t a new issue, and we’ve been covering it for months. 

However, these concerns are certainly worrisome for investors. When well-known individuals in this space such as Bons highlight why these concerns should be taken seriously, many ears in the crypto community perk up. Mine certainly did as I read through his previous threads on Solana.

Now, the Solana Labs team has responded to many of these concerns, suggesting that Bons’ theses have largely been debunked. Many networks experience outages or downtime. Accordingly, the recent attention Solana has received from distributed denial-of-service (DDoS) attackers isn’t out of the ordinary.

Additionally, developers behind the Solana blockchain have come up with some detailed fixes they hope will provide long-term solutions for many of these issues. While these fixes may take time to implement, the suggestion is that investors need to be patient through these growing pains.

Now what

Solana’s speed and cost advantages, relative to behemoth Ethereum and other competitors, are what make this project enticing for long-term investors thinking about the high-level problems crypto could eventually help solve. Many have touted Solana as a potential “next-generation” or “improved” version of Ethereum, and one that could see similar price appreciation over time, assuming its ecosystem growth follows a similar trajectory.

However, the question is whether Solana’s blockchain gives up too much in the way of security and stability in the pursuit of these advantages. Ethereum’s blockchain has been remarkably stable, and that’s one of the reasons why it’s the top dog. It’s hard to make the argument that Solana could surpass Ethereum given its stability concerns.

Thus, Bons appears to highlight some pertinent issues which could provide near-term headwinds for this project. While I’m bullish on Solana in the long term, in the medium term, it’s clear there’s plenty of work to be done. Accordingly, as always, when considering this token as a potential investment, investors ought to consider the risks as well as the catalysts.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why is the Solana price sinking today? appeared first on The Motley Fool Australia.

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Chris MacDonald has positions in Ethereum and Solana. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum and Solana. The Motley Fool Australia owns and has recommended Ethereum and Solana. 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.

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