📊 Is Visa A Monopoly?

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Happy Sunday!

Over the past year, Bitcoin has surged an impressive 143%.

One company reaping the rewards? MicroStrategy.

The business intelligence software firm holds a massive 252,200 Bitcoin, now valued at $16.6B based on Bitcoin’s current price of $65,782.

This represents an enormous $6.7B in profit.

Thanks to its sizable Bitcoin stash, MicroStrategy’s stock has roughly tripled Bitcoin’s return, soared nearly 440% over the past year.

If Bitcoin continues to climb, there’s a good chance MicroStrategy will likely follow.

Some key data bites from this week that you should know:

• Micron’s $MU revenue jumped 93% YoY to $7.75B.

• Google $GOOG will invest $3.3B to build 2 new data centers in South Carolina.

• Apollo $APO has proposed a potential $5B investment in Intel $INTC.

• SpaceX plans to invest $1.5B in Vietnam to launch StarLink.

• Americans have $27B in unused gift cards.

• U.S. money market assets hit a record $6.42T.

• China will issue $284B of sovereign debt to stimulate the economy.

• Google $GOOG paid $2.7B to rehire an “AI genius” who quit.

• Global debt reached an all-time high of $312T in the first half of 2024.

• Smartsheet $SMAR is being taken private for $8.4B.

• Argentina’s poverty rate has crossed above 50%.

In today’s newsletter:

• 🕵️ Who Owns Trump Media

• 💳 Is Visa A Monopoly?

• 💸 The 53 Dividend Kings

• 🛒 Costco’s Earnings

• 🎨 Adobe Dominates Creative Software

Why have Trump Media shares been slumping?

Shares have tumbled 27% over the past month, as insiders are now allowed to sell their shares, following the expiration of the lock-up period on September 19th.

• While Trump has declared he doesn’t plan to sell his shares, that doesn’t prevent other insiders from doing so.

• In fact, United Atlantic Ventures, who as we see from the visual previously had a 5.5% share, recently sold all of its position except for 100 shares.

• Per Reuters, Donald Trump currently owns 56.6% of Trump Media & Technology Group.

As of 9/28, the unprofitable company trades at a $2.95B market cap, meaning Trump’s stake is roughly valued at $1.67B.

With just $3.4M in revenue over the last twelve months, Trump Media is trading at a 868x price-to-sales ratio.

And that astronomical ratio isn’t driven by growth—revenue actually declined 9.2% YoY.

With the company now trading near 52-week lows, its future will likely depend on whether Trump decides to hold or sell his stake, as the stock clearly isn’t trading relative to its fundamentals.

The DOJ has knocked on Visa’s door.

According to Bloomberg, the Justice Department filed a lawsuit against Visa last Tuesday, accusing the company of monopolizing the U.S. debit card market. 

• The antitrust division claims Visa prevented tech companies from entering the space and made special deals to block competitors from growing their networks.

• Interestingly, this investigation began after Visa’s failed attempt to acquire fintech company Plaid in 2021.

Research from The Motley Fool, based on the Nelson Report, shows that in 2022, Visa had a 71% share of general debit and prepaid cards purchase volume, with the remainder on Mastercard-branded cards.

Since its IPO, Visa has been an incredible investment, with a total return of +2,082%, representing a 20.5% CAGR, per FinChat.

From 2004 to the most recent quarter, Visa’s annual revenue has skyrocketed from $2.4B to $34.9B.

Unless you’ve been living under a rock, you know by now that the Fed recently cut rates.

• The Fed Funds Rate currently sits between 4.75% and 5%, with the dot plot projections indicating another 50 bps cut by the end of 2024.

• When rates rise, many people park their cash in high-yield savings accounts or treasury bonds, which offer higher yields with minimal risk. 

• But as rates fall, cash tends to flow into stocks and other “risk-on” assets in search of higher returns.

As interest rates are expected to drop further over the next year, dividend stocks will likely become a prime destination for those seeking passive income.

A great place to start? The Dividend Kings list.

• These aren’t just any dividend stocks. 

• To make the list, a company must have increased its dividend for 50 or more consecutive years.

Keep in mind, dividends are never guaranteed and can be cut at any time. 

It’s crucial to analyze a company’s payout ratio and free cash flow to ensure they can continue supporting their dividend long-term.

That said, the companies on this list provide a solid starting point, with five decades of dividend increases reflecting their commitment to shareholders.

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On Thursday, Costco reported earnings for its fiscal fourth quarter of 2024, which saw a relatively muted price reaction.

Here’s a rundown of the numbers (Est. from FactSet):

• Earnings: $5.29 (vs. $5.08 Est., +9% YoY Growth)

• Revenue: $79.69B (vs. $79.91B Est., +1% YoY Growth)

• Overall Company Comparable Sales: +5.4% YoY (vs. +5.7% Est.)

Costco delivered a solid earnings beat but fell slightly short on revenue and comparable sales.

• E-commerce comparable sales jumped 18.9%, with hot-ticket items including appliances, gold/silver bullions, home furnishings, and gift cards.

• Demand for gold bars at Costco has skyrocketed, and the metal is having its best annual performance in 14 years.

Membership growth remained strong, up 7% YoY, bringing the total to 136.8M cardholders.

• Gross margins also expanded by 40 bps compared to last year.

Despite a slight after-hours dip of nearly 2%, Costco’s stock has continued to outperform the S&P 500, up 36% this year.

Is Adobe the DOJ’s next target?

According to Bloomberg, Adobe holds a staggering 71% share of the creative software market.

One competitor rising in the ranks? Canva.

• The graphic design tool has seen explosive growth, reaching 190M monthly active users in 2024.

• This is up from just 10M in 2018. 

• Canva was most recently valued at $26B in 2022, making it the world’s most valuable female-led startup.

• This however, is down from a peak valuation of $40B in 2021.

Despite Canva's rapid growth, it holds less than 4% of the creative software market, highlighting Adobe’s grip on the market.

• The company recently announced a $2.5B secondary sale, sparking speculation about a potential IPO.

• However, several bankers believe this may not happen until 2026.

Notable Companies Reporting Earnings This Week:

I use EarningsHub to track earnings, estimates, and receive AI summaries of investor calls.

If you’d like an all-in-one earnings tool, I definitely recommend you check it out!

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Buys

• Greg Landsman (D)

  • Company: Arista Networks ($ANET)

    • Amount Purchased: $16K - $65K

• Jonathon Jackson (D)

  • Company: Simon Property Group ($SPG)

    • Amount Purchased: $15K - $50K

Sells

• Jonathon Jackson (D)

  • Company: Lam Research ($LCRX)

    • Amount Sold: $15K - $50K

• Bill Keating (D)

  • Company: Comcast ($CMCSA)

    • Amount Sold: $15K - $50K

• Greg Landsman (D)

  • Company: Amazon ($AMZN)

    • Amount Sold: $15K - $50K

  • Company: Adobe ($ADBE)

    • Amount Sold: $15K - $50K

• Michael Burgess (R)

  • Company: Illumina ($ILMN)

    • Amount Sold: $15K - $50K

Buys

• BioAge Labs ($BIOA)

  • Insider: Vijay Pande (Director)

    • # of Shares Purchased: 900,000

    • $ Amount: $16,200,000

    • SEC Forms: [1]

  • Insider: James Healy (Director)

    • # of Shares Purchased: 666,665

    • $ Amount: $11,999,970

    • SEC Forms: [1]

  • Insider: Patrick Enright (Director)

    • # of Shares Purchased: 400,000

    • $ Amount: $7,200,000

    • SEC Forms: [1]

Sells

• Palantir ($PLTR)

  • Insider: Peter Thiel (Director)

    • # of Shares Sold: 16,178,415

    • $ Amount: $316,710,018

    • SEC Forms: [1]

• Dell ($DELL)

  • Insider: Michael Dell (CEO)

    • # of Shares Sold: 1,166,595

    • $ Amount: $136,975,866

    • SEC Forms: [1]

🤝 Review of the Week