Bitcoin Explodes, Resignations Continue and a Very Niche IPO
Updated: Dec 14, 2021
Welcome to "This Week In The Market" where I cover the week's biggest financial news in easy-to-read chunks. This week, I cover Bitcoin's incredible week, the continuation of the Great Resignation and Gitlab goes public. Let's go!
Bitcoin's Explosive Week
The Headline: Bitcoin sprinted past $60,000 per coin this week for the first time since April on the back of news that a Bitcoin ETF will be approved for trading by the SEC next week.
The BFD: Despite previously being a currency only your incel cousin would bring up at Thanksgiving, Bitcoin has quickly gained steam as one of the more dominant asset classes in the investable space. It's the best performing asset of the previous decade, having rocketed 20,000,000% since 2011. That's an annualized return of 230%. For reference, it outperformed the Nasdaq by a factor of 10, and Nasdaq was in second place! Bitcoin holders have been richly rewarded (literally), but investors still see more room to run. With the unveiling of a Bitcoin ETF next Tuesday, coupled with big banks offering exposure in their wealth services and El Salvador adopting the currency, the crypto space could be headed higher and higher for years to come. Or, according to the executive director of digital assets at ARK36 Mikkel Morch, crypto could be in for a "short term pullback."
How Can This Make Me Rich?: I'm a Bitcoin bull, and full disclosure that I own both Bitcoin and Ethereum. I think both of these are here to stay, so I'm riding this wave right here with you. My plan? Buy and hold, continuing to add consistently. I wrote a piece earlier this week on the possibility of a $5 million Bitcoin, so this could have more room to run. Do you want to get started investing in cryptocurrency, but don't know where to start? My friends at Coinbase are giving you a free $10 worth of crypto when you sign up for a new account using this link right here!
And You Get a Job, And You Get a Job, And You Get a Job...
Back in April, a curious side-effect of the pandemic took hold: people were quitting their jobs en masse. While the restaurant and shift worker industry was hit hard by the increased unemployment check amounts which disincentivized workers from, well, working, the rates people were leaving their jobs continued to accelerate; and it wasn't just shift workers. A combination of workers leaving the cities their headquarters were located in, along with upskilling while remote working, led to employees flocking for greener pastures. This has actually been happening for so long that I wrote an article about it in July, and it still rings true. Go check it out, it's pretty good.
However, now we're seeing these mass resignations getting worse and worse. Not only are white collar workers looking to change career paths, but shift workers and more blue-collar positions like truck drivers are hanging up their hats. A recent report by the Bureau of Labor Statistics shows a 6.8% quit rate in the food service industry, and a general 2.9% quit rate. For food service, this is way over the standard 4.1% annual rate over the last 20 years, and even tops the peaks in 2006 and 2019 of 5%. Recent earnings reports have also backed up this report, with Domino's Pizza the first, um, domino to fall.
Earnings reports from food service companies this week indicated a brutal outlook for staffing. Domino's Pizza had their first down quarter in the last 41 quarters reported in same-store sales, blamed mostly on having to cut down on store hours due to staffing shortages. Caribou Coffee's CEO also noted the difficulty of attempting to staff their existing stores, while also attempting to open new ones.
Finally, the staffing shortage is going to hit everyone in the feels this year when they can't get their hands on a Thanksgiving turkey, the hottest Christmas item or, if you're in the U.K, general heating and power. That's thanks to the mass resignations hitting the delivery and logistics industries, causing record numbers of ships stuck at sea full of cargo with no one to unload them. It's worse in the United Kingdom, where delivery driver shortages have hit the energy industry. The lack of delivery trucks has caused a shortage of coal and oil, resulting in sky high prices at the pump and energy bills jumping by as much as 300% this winter. Prime Minister Boris Johnson is now issuing visas to foreign truck drivers in an attempt to spur employment, directly contradicting the Brexit movement which he spearheaded several years ago.
Revenge of the Nerds
Code-sharing website Gitlab went public this week, trading under the symbol "GTLB" and entering the market at $77, priced above their intended IPO range. The company jumped 35% on its opening trading day, pushing the market cap to a whopping $14.9 billion.
This company is in an interesting situation. With the general rise of coding as a standard skill, Gitlab has positioned itself nicely in the industry. It also features a strong B2B product called "DevOps" that allows product managers and their I.T teams to execute coding sprints from start to finish. They have a strong customer base, with nearly 400 customers spending over $100,000 per year on the product. However, they are directly competing with both Atlassian and Microsoft. Competing with Microsoft. Not great Bob.
The also lost $40 million in the last quarter. Not quite what you want.
Thanks for joining me for this week's edition of "This Week In The Market!" Make sure to check us out tomorrow for my dive into Affirm Holdings, and next week for Disney Week! Have a great weekend!