ChatGPT is beating out stocks such as online learning support company Chegg as bitcoin miners surge in the wake of crypto’s strong year.
IInvestors who kept their confidence in the stock market after heavy losses in 2022 saw the S&P 500 climb 14%, boosted by big gains in tech giants such as Nvidia (up 189%). It went up and paid off big in the first half of this year. , Metaplatform (138%), Amazon (55%). But investing in small-cap stocks can be hit or miss.
The Russell 2000 Index gained another lukewarm 7.2% this year, but is still 23% below its November 2021 all-time high. Small-cap stocks are typically more vulnerable to rising interest rates, limited access to bond markets, and slowing economic growth. The regional banking crisis triggered by the failure of Silicon Valley Bank also hampered the earnings of the Russell 2000, which has a 14% weighting in the financial sector.
Still, small caps are on the rise as a group, and many of the biggest winners in the first half came from perhaps 2022’s biggest loser, the crypto industry.bitcoin mining stocks bit digital 627% surge, outperforming peers crypto mining and applied digital It wasn’t too late. All three stocks are among the four best performing U.S. listed stocks in 2023 so far, with market capitalizations in the $300 million to $2 billion range. Marathon Digital Holdingsis the largest Bitcoin miner with a current market cap of $2.3 billion, up 297% this year. The performance of these stocks has been closely correlated with the price of Bitcoin, which has surged 85% this year to over $30,000.
HC Wainwright analyst Kevin Dede said, “Miner shares allow us to gain bitcoin exposure using traditional financial infrastructure without involving the bitcoin network.” “You don’t have to worry about your wallet.”
When bitcoin ended 2022 at a two-year low of around $16,500, mining was a loss-making endeavor for some companies whose energy costs were higher. Bitcoin mining requires enormous computing power to solve complex math puzzles and mine each block, but this comes with his block reward of 6.25 Bitcoins. This reward halves roughly every four years, with the next halving expected to occur in April 2024 or He May.
Until then, the current surge in Bitcoin prices will give some miners, who were put on life support last year, some breathing room. Several prominent cryptocurrency companies such as FTX, Three Arrows Capital, Voyager Digital and Celsius Network went bankrupt or bankrupt, clouding the industry with Cipher Mining and Bit Digital both trading at 40 cents a share or less. It was trading for 50 cents. Bit Digital shares are currently at $4.32 and Cipher is trading at $2.92 per share.
San Diego-based biotech rivals Bitdigital in the rest of the small-cap space Ambrx Biopharma It is up 619% this year, thanks to promising results from a phase II trial in China being developed to treat breast cancer. Here are the rest of the top 10 small cap stocks for 2023 so far:
Small cap first half winners
small cap first half losers
On the loser’s side, some of the once Silicon Valley darlings are now in serious trouble. No U.S.-listed small-cap stock has performed as badly this year. we work, decreased by 82%. SoftBank has poured billions into the company that manages shared office space, giving it a private-market valuation of $47 billion in January 2019. By the time the company finally went public via a SPAC merger in October 2021, its valuation had fallen to $9 billion, and has since fallen steadily to $545 million.
CEO Sandeep Masrani, who took over in 2020 following the ouster of founder Adam Neumann, abruptly resigned on May 16, with no successor in place, and a week later. CFO Andre Fernandez later stepped down as well. WeWork, which trades at just 26 cents a share, was notified in April that it was in danger of being delisted from the New York Stock Exchange if it didn’t regain compliance with the $1 minimum share price within six months.
Another big loss is checkbecame one of the hottest stocks of 2020 as students in remote classes flooded subscription services seeking a treasure trove of learning support resources and solutions to textbook problems for cheating homework and tests. . In the same year, sales rose 57% to $644 million and the stock price surged 138%.
Since then, however, the company’s stock has fallen 92% from its peak in February 2021 as students take tests in classrooms and return to face-to-face instruction from tutors and professors. . Now ChatGPT poses an existential—and free— threat to enterprising college students trying to shove their homework. CEO Dan Rosensweig said during the company’s first-quarter earnings call that ChatGPT was impacting the rate at which it added new customers, and the acknowledgment sent the stock down 48% in one day.
“They were the first publicly traded companies to talk about the negative impact generative AI could have on them,” says BMO analyst Jeff Silver. “College turnover is so high that if you lose a freshman a few semesters, it becomes very difficult to get them back.”
Chegg is responding by embracing artificial intelligence in a new product it’s developing called CheggMate. It aims to integrate Chegg’s content with OpenAI’s GPT-4 to create a more interactive experience for students. Analysts don’t expect the work to be completed by the start of the fall semester, when new classes of college students will be looking for homework help, and are watching for signs of a decline in the meantime.
“During the first quarter conference call, Chegg management was adamant that the only weakness they perceive was net new subscribers, and that retention remains very strong.” says Needham’s Ryan McDonald. “If subscriber numbers start to drop significantly in the second quarter, that will be a bigger concern.”
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