We’re all crypto people now

]

Turkey’s Crypto Pain Grows With Second Exchange Collapse

]

Benzinga

There’s a cloud hanging over automakers these days, and it’s made of silicon. A global semiconductor shortage has been rippling through the auto industry, which needs chips for infotainment systems, engine management for better fuel economy, and power braking and steering. But amid news that legacy automakers, as well as Chinese electric vehicle maker NIO (NIO), have been halting production because of the chip shortage, Tesla’s (NASDAQ: TSLA) production and delivery numbers are at record highs. Tesla did halt production at its Fremont, California, plant in February for two days because of what CEO Elon Musk called “parts shortages.” He didn’t elaborate on which parts were in short supply, but in the company’s Q4 earnings conference call, TSLA’s chief financial officer said “we’re working extremely hard to manage through the global semiconductor shortage, as well as port capacity.” The global chip shortage appeared to be compounded for TSLA as Samsung Electronics in February said it has paused production at a factory in Austin, Texas, which TSLA has said before makes chips for the electric vehicle maker, according to Reuters. That stoppage came as severe winter weather caused power outages. While investors next week are likely eager to hear more about how Tesla is navigating the chip shortage, there seem to be some clues heading into Monday’s earnings release. FIGURE 1: EXTRA JUICE. Although the past 12 months’ return for the S&P 500 Index (SPX—purple line) has been nothing to sneeze at, it pales in comparison to shares of Tesla (TSLA—candlestick). One period of heightened interest in the stock was the lead-in to TSLA’s joining the SPX in December, 2020. Data sources: S&P Dow Jones Indices, Nasdaq. Chart source: The thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results. Record Deliveries Despite Chip Shortage Earlier this month, Tesla said it delivered 184,800 vehicles. Almost all of that record number came from deliveries of its Model 3 and Model Y, with just 2,020 of the more expensive Model S and Model X delivered out of inventory, with no new ones produced. Both the S and X models are due for upgrades and in the early stages of ramping up production. So it seems possible that TSLA may have been able to prioritize chips for 3 and Y models. Investors may want to keep in mind that the higher volume 3 and Y models don’t capture as much margin as the more expensive S and X models. There may also be other reasons why Tesla may be weathering the chip shortage better than other automakers. “Other automakers purchase much less valuable silicon content, and become less of a priority when compared to Tesla, who designs chips in house, secures wafer supply from foundries directly, and buys chips directly from the various chip designers like NXP, Infineon, and so forth,” according to a note from Cho Research. “They don’t outsource the design of their chip stack; they in-source wherever possible and work extremely closely with their suppliers.” Musk alluded to good supplier relationships with a tweet after the latest production and delivery figures came out, saying: “Thanks Tesla suppliers for providing us with critical parts!” Fatal Crash, Chinese PR Headache Mar Current Quarter In addition to the chip shortage, the Fremont closure, and port capacity issues, it seems like TSLA’s first quarter may also have been impacted by a fire at its Fremont, California, plant, although it remains to be seen whether that is material enough for executives to discuss next week. View more earnings on TSLA TSLA also appears to be hitting some speed bumps more recently. While these happened during the second quarter—past the Q1 reporting period—investors may be hoping for more clarity from executives next week. TSLA got a black eye recently when a customer complaint in China went viral, and the company stumbled in its response. The company has been in the crosshairs of Chinese media and regulators, but its cars remain quite popular in China, and shares don’t seem to have suffered much. Authorities in the United States are also eyeing TSLA after a fatal crash involving a Model S in Texas. The National Highway Traffic Safety Administration and the National Transportation Safety Board have opened investigations into the incident amid scrutiny from lawmakers. The crash brings renewed attention to TSLA’s Autopilot advanced driver-assistance feature. Consumer Reports said this week that it was able to get the Autopilot system of a Model Y to drive the car even with no one in the driver’s seat. Musk tweeted that data logs showed that Autopilot wasn’t enabled in the Texas crash and the car did not purchase TSLA’s separate Full Self-Driving system that also requires human supervision. He also said cars operating with Autopilot engaged have an almost 10 times lower chance of getting in an accident than an average vehicle. The Road Ahead If you recall, last quarter TSLA revenue came in ahead of expectations but earnings fell short, coming in at $0.80 vs. a consensus expectation of $1.03. Investors were also disappointed that the company didn’t provide clearer guidance for this year’s delivery expectations. Later, the company said “over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021.” By a back-of-napkin estimate that could mean 750,000 deliveries this year, but the phrasing isn’t as catchy as its 500,000 vehicle forecast for 2020, which it just slightly missed. And investors may want to see more specific guidance this time around. If TSLA does start facing increasingly serious repercussions from the global chip shortage during the current quarter, that might hamper production at a time when automakers could see increased demand, at least domestically as the pandemic eases, travel opens up, and people spend stimulus money and have a brighter outlook for the economy and their jobs. Over the longer term, it seems that the increasingly crowded field for electric vehicles could be a challenge for Tesla. The EV market has gotten more crowded, with new interest from not only legacy auto companies and EV startups, but also from big tech players Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN). For now, TSLA is still in the driver’s seat in terms of its place in the electric vehicle market. TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options Image by Qube’s Pictures from Pixabay See more from BenzingaClick here for options trades from BenzingaIntel, American Express, Honeywell All Under Pressure After Earnings, But Snap ReboundsStrong Results From IBM And Johnson & Johnson Not Enough As Covid Worries Rise© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Turkey probes second crypto exchange as market implodes

]

ISTANBUL: Turkey on Saturday (Apr 24) detained the chief of one of the country’s biggest cryptocurrency firms after launching a manhunt for the founder of another exchange who fled to Albania.

The Turkish crypto boom threatens to go bust quickly as companies fold and President Recep Tayyip Erdogan’s government prepares to rein in the unregulated digital currency market.

The volume of crypto purchases in the nation of 84 million people rose 10-fold between November and March as Turks sought ways to preserve their savings during a steep drop in the value of the lira currency.

But the market began to unravel when the Istanbul-based Thodex exchange’s founder Faruk Fatih Ozer fled to Albania with a reported $2 billion in investors' assets this week.

Thodex shut down while holding investments from nearly 400,000 users.

Turkey issued an international arrest warrant and detained dozens of Thodex employees in raids staged across the country on Friday.

Officials also blocked the account of the Vebitcoin exchange - one of Turkey’s five-largest - and launched an investigation after it also abruptly ceased operations.

Local news reports said police detained Vebitcoin chief executive Ilker Bas and three other company employees on Saturday as part of a broader fraud probe.

“Due to the recent developments in the crypto money industry, our transactions have become much more intense than expected,” Vebitcoin said on its website.

“We would like to state with regret that this situation has led us to a very difficult process in the financial field. We have decided to cease our activities in order to fulfil all regulations and claims.”

STOLEN WALLETS

Data shared with AFP by the Chainalysis and Kaiko analytics firms show the daily volume of all crypto purchases in Turkey rising from around 500 million liras (US$60 million) in November to as much as six billion liras in March.

Coinhills ranks Turkey as the fifth-biggest crypto market in the world.

It could be bigger still because many Turkish traders use popular off-shore exchanges in countries such as Malta.

But Erdogan’s government is preparing to tighten regulations after deciding to ban cryptos from being used for purchases of goods and services starting on April 30.

The Turkish central bank warned last week that cryptocurrencies “entail significant risks”.

“Wallets can be stolen or used unlawfully without the authorisation of their holders,” the central bank said.

The problems at Thodex started after it ran a promotion offering Dogecoins to investors at one-fourth the price the popular currency was selling on other exchanges.

But Thodex users complained that it was a scam that prevented them from re-selling the coins at their full market value or trading them for other cryptos.

Turkish prosecutors accused Ozer of “aggravated fraud and founding a criminal organisation”.

The tumult in Turkey created ripples across the global crypto market and saw the value of bitcoin slip back under US$50,000 after reaching US$57,000 at the start of the week.

Analysts say the lack of oversight makes users more susceptible to fraud in Turkey than they would be in countries, where digital trades are reported to officials and taxed.

“Because cryptocurrency is currently unregulated (in Turkey), it could be more vulnerable to abuse and illicit activity,” Chainalysis’s government affairs chief Jesse Spiro told AFP.

“In general, regulations help build trust in this new asset class. On the other hand, the instability of the lira could make cryptocurrency more attractive.”

follow us