1/ On $OSTK, Piper out again, reiterating their conviction in the stock as the most mispriced in their coverage universe.
2/ They see the upcoming launch of tZero Crypto 2.0 as a material unlock to higher Crypto trading activity (the platform currently has a v low trading limit of $500/ week which will change to $25k/ day with the Version 2.0).
3/ Trading vols only $8m in Q1 (and $5m in all of 2020), mgmt said volumes could 10x or more with Version 2.0. As well as higher trading limits, they're increasing tradable cryptos from 4 to 10+ and increasing marketing from $150-250k to $10m/ year.
4/ tZero management believe matter of "when, not if" the SEC classifies NFTs as securities, at which point tZero could be the only viable trading platform for NFTs as has gone through extensive regulatory approvals to become an SEC-registered platform.
5/ tZero will integrate its ATS platform with the Crypto platform in Q2 & recently got approval to trade public securities, will be only platform to offer trading across the 3 asset classes of public securities, crypto and tokenised trading/ private securities later in 2021.…
6/ …tZero is looking to raise $100m to help it scale more quickly.

Piper note out today with heading "tZero Update Suggests Significant Unlocks for Both Near & Long-term":

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More from @anthonyc3004

18 May
1/ $TMUS - very high conviction holding, a few musings. I'd been underwriting to $220 ish on the basis of 15x $15 in FCF/share in 3 years. I see 19.4% IRR based on 15x their guided ("more than") $18bn in FCF by 2026 & adjusting for $60bn buyback.
2/ Some may feel stock right up there and hence missed it but trading at same level as in Nov 20 with super strong FCF growth & buyback story ahead, still looks timely to me and breaking out of 6m sideways trading range:
3/ Guiding to "more than $18bn" in FCF by 26, putting this on 15x and adjusting for $60bn buyback (guided for 2023-25 based on what mgmt consider a "very conservative leverage ratio") gets to $333/ share in 5 years, a very attractive 19.4% IRR.
Read 19 tweets
9 Apr
1/ The more I work on $SPOT the more bullish I get about its long term prospects (and bearish on the long-term prospects for the big labels) and about the fact that consensus/ investors are still pretty sceptical about its ability to break free of the labels' hold on its…
2/ …margin structure, which drives really good upside at the current sub 4x forward EV/sales multiple. I think they are being deliberately very slow with putting through pricing as they currently pay so much of incremental revenue away to the labels.
3/ Game theory wise it makes total sense for them to keep prices low, gain share and hence improve their bargaining power vs the labels to extract better economics over time, at which point they get to keep more of the economics from price rises.
Read 8 tweets
9 Apr
1/ $OSTK - interesting to see Piper call it out as the most mispriced stock in their coverage universe. Front page of note:

They see tZero as worth $500m-740m (vs mkt cap $3.1bn) and see GSA-related revs as contributing 15-25% to total sales over time.
2/ I didn't know that only $OSTK, $AMZN and $TMO won the GSA RFP process out of 15 applicants with $OSTK's best-in-class security commended by the GSA diligence committee, who went through an extensive 18m diligence process.
3/ Piper think this win could make $OSTK an acquisition target for other large box retailers that did not get selected as part of the GSA process. Contract began with 5 federal agencies to buy up to $6bn in annual purchases over 3 years.
Read 5 tweets
7 Apr
1/ Re $GOOGL $GOOG and their cloud business: V upbeat messaging from a Google Cloud partner interviewed by Jefferies. Have read similar stories elsewhere, that GCP is set to really accelerate this year.
2/ Given Google's still attractive valuation (especially factoring in Other Bets losses and cash on balance sheet, even better if assign meaningful valuation to under-monetised YouTube) and upside from Covid re-opening (travel-related ads 12-15% of ad revenues), the shares…
3/ …remain well-positioned to continue to perform in here in my view, despite having outperformed most of FAANG.

Jefferies hosted the CEO of a premier-level partner of Google Cloud.
Read 19 tweets

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