It’s not looking good out there for cryptocurrencies.
Bitcoin, often used to gauge the pulse of the crypto-market, has fallen 45% over the last six months. Ethereum, once a crypto-darling in the space, has fallen nearly 60% in the same period. All this, on top of Luna’s $40 billion collapse, and thousands more digital tokens likely to follow suite in the coming years, yet the number one crypto-trading platform Coinbase (COIN) is one of my top watchlist picks this week.
Okta, Inc. (OKTA)
This San Francisco-based software company provides identity solutions used by enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally.
On Friday, shares gapped-up more than 14% at the open after the company reported first quarter earnings for fiscal 2023 that beat on the top and bottom lines.
For the quarter, the company generated revenue of $414.8 million, which represented a 65% increase year-over-year.
That’s impressive, but the bottom line tells another story.
Adjusted earnings for the quarter came in at a $0.27 per share loss, compared to a $0.10 per share loss a year ago. Even though Friday’s loss was smaller than expected, it’s still moving in the wrong direction – especially considering the company saw revenue increase by 65%.
And that brings me to the earnings estimate beat.
Most investors look at an earnings beat and think shares are going to trade higher, but in the case of OKTA, the company beat earnings estimates in the five previous quarters and shares still dropped 65% since February 2021.
If history is any guide, I think Friday’s pop will give way to lower prices ahead.
At this point, I like buying the OKTA August 15, 2022 $95/$90 Put Spread for $2.15 or less. Plan on exiting the OKTA August 15, 2022 $95/$90 Put Spread for a 100% profit or if shares of OKTA close above $113.00.
Coinbase Global, Inc (COIN)
Here’s why I’m watching the popular crypto-currency trading platform.
On Thursday the company announced it will extend its hiring freeze indefinitely and rescind “a number” of already accepted job offers, citing current market conditions and efforts to revamp its business.
That’s no surprise, considering Bitcoin and Ethereum have lost 56% and 63%, respectively, since November 2021, while shares of COIN dropped more than 80% over the same period.
After the pullback in cryptos (in general) and then the collapse of the Terra protocol as its UST stablecoin and its sister-token, LUNA, many investors have walked away from crypto, and that means less trading revenue for COIN.
It’s going to take a lot of damage control and hype to get burned investors back into the crypto space which means COIN could be facing a pretty stiff headwind – at least for the foreseeable future.
At this point, I like buying the COIN August 15, 2022 $60/$55 Put Spread for $2.40 or less. Plan on exiting the COIN August 15, 2022 $60/$55 Put Spread for a 100% profit or if shares of COIN close above $85.00.