3 Stock Highlight: December 2021 Edition

By: Jake Sheckter  |  December 19, 2021
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By Jake Sheckter, Business Editor

 Each month’s edition of the YU Observer this year will include a “3-Stock Highlight” on a few stocks that have been in the news lately, have fascinating stories, or provide for an interesting read. On behalf of the YU Observer, we’d like to remind everyone that these stock picks are for educational purposes only and are not to be taken as financial advice or used for investing any real cash. This month, we will be highlighting Apple Inc. (AAPL), Coinbase Global Inc. (COIN), and Rivian Automotive Inc. (RIVN).

Apple Inc. (AAPL)

Even if you aren’t familiar with the stock market world, chances are you still have an Apple product in your pocket right now, that is if it’s not in your hand reading this article on the YU Observer website. This helps explain the fact that Apple Inc. is currently approaching a $3 Trillion dollar market capitalization. If (most likely when) Apple reaches this incredible benchmark, shares of Apple’s stock would hit around $182 each, and Apple will once again enter historic territory. This month, analysts from Morgan Stanley, JPMorgan, and Evercore ISI have increased their price targets on the stock to $200. 

There are a few reasons for the raised price target: optimistic views on Apple’s newest iPhone, rumors regarding upcoming products including an Augmented and Virtual Reality (AR & VR) headset, and of course, Apple’s superstar ability to attract users and keep them close with sticky products. One of the major “sticky factors” Apple uses to hold on to its customers is pretty straightforward: App Store Apps. If you own an iPhone, chances are you’re going to download or purchase a ton of apps, and when it’s time to buy a new phone, you’ll buy another iPhone to keep those apps. The same type of idea may apply to Apple’s VR/AR headset, that is if they can incorporate some third-party developer support we already love on our iPhones. What do you do when you’ve already become the company with the largest market cap? You find new services to monetize to become even bigger. 

For those who enjoy looking into stocks’ fundamentals (like me), there is a lot to like about Apple. Shares of the stock have gained nearly 19% over the last 30 days, annihilating the S&P 500’s 0.3% gain over the same time period. With such a drastic spike in share prices, many investors may feel like they’ve missed the boat, but this stock definitely isn’t one to shrug off so easily. Looking at Apple’s most recent earnings report, the tech giant has shown off incredible revenue and earnings per share growth. Revenue during the period climbed 29% year over year to $83.4 billion, and earnings per share increased from $0.73 in the period a year ago to $1.24. Additionally, Apple boasted record revenue in every one of its geographic and product segments. What makes this outstanding performance even more impressive is the current supply-constrained operating environment. Apple’s management has stated that revenue would have been nearly $6 billion higher during the recent period if it wasn’t for silicon shortages and COVID-related interferences in manufacturing.

The shareholder-friendly ways that Apple is deploying its cash position of $66 billion should also be noted. Apple gave back roughly $24 billion to its shareholders during the fourth fiscal quarter, $3.6 billion of this amount going towards dividends and $20 billion to open-market purchases of stock. By repurchasing its own shares, Apple reduces its total share count and therefore increases the stake of each share in the business.

Coinbase Global Inc. (COIN)

If you can stomach the major swings running rampant throughout the market these days, specifically with regards to the cryptocurrency industry, you may already be a fan of this stock. For Coinbase Global Inc., volatility has been the name of the game. Second to COVID-19 and the pandemic, there has been perhaps no other topic receiving as much attention as cryptocurrencies in 2021. With opinions circulating that cryptocurrencies may have the potential to disrupt the very concept of money itself, along with the seemingly endless stream of new industries and profit opportunities, crypto has shaken up the financial world. 

With regards to obtaining exposure to the cryptocurrency industry, Coinbase comes to the mind of many investors as a pick-and-shovel investment source. It is important to note, however, that cryptocurrencies are mainly treated as assets with real-world applications still in the early stages and speculation driving most of the activity today. Let’s break down its activity. Coinbase generates the large majority of its revenue from transaction fees  (88% in the most recent quarter). Therefore, Coinbase’s performance heavily depends on the volatility of the crypto market. Consequently, as cryptocurrencies such as Bitcoin rise in value, investors become more inclined to trade. This predicament tends to make it extremely difficult to predict the financial results for the next quarter or year. 

 

On the bright side, assets on Coinbase’s platform now total roughly $255 billion. While the number of users making transactions monthly was down in the third quarter from the last quarter to 7.4 million, they are up 252% year over year. Coinbase now has around 73 million users. As rough as the ride may be for this blooming market and its respective investors, they have shown off an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 50%.

Rivian Automotive Inc. (RIVN)

Over the last couple of years, Electric Vehicles (EVs) and autonomous vehicles have been the subject of news conversation and speculation with valuations soaring left and right. It’s plain to see that the EV manufacturer Tesla (TSLA) has been the highlight of the EV market throughout the pandemic, also factoring into making CEO Elon Musk not only the richest man on the planet a few times, but also Times Magazine’s person of the year. However, Tesla has not been the only EV company to spread throughout the news publications recently. Rivian Automotive Inc. (RIVN) recently went public on the stock market via an IPO (initial public offering), although they are technically still in the R&D (research and development) stage and are only beginning to ramp up production. Starting off their production are the R1T and R1S models, an electric pickup truck and electric sport utility vehicle respectively. 

But what really put Rivian on the map was the (2019) deal with Amazon (AMZN), in which the massive delivery company said they would purchase 100,000 electric delivery vehicles from Rivian, making this the largest order of electric delivery vehicles ever. Amazon CEO Jeff Bezos stated (at the time) that while prototypes for the delivery EV will be on our roads next year (2020), they expect all 100,000 to be deployed by 2024. Amazon’s purchase comes as a part of its plan to convert its delivery fleet to 100% renewable energy by 2030 (with 40% of its fleet already running on renewable energy currently). Additionally, Rivian has boasted some other services including insurance for its vehicles, a subscription to its charging network, and an on-demand servicing program where a Rivian service team will travel to you for EV-related issues. For the EV market, the future is just beginning, and with new additions to the industry coming out consistently, there’s a lot to look forward to. 

If you would like to learn more about the stock market and its components, you may want to look into the Yeshiva University Stock Exchange (YUSE) Club. Learn more about the YUSE at Yusegroup.weebly.com or on Instagram at @Yusegroup.

 

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