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There are a lot of great underpinnings to what’s going on with the growth and market expansion: Hennessy Funds Portfolio Manager

Josh Wein, Hennessy Funds Portfolio Manager joins the Yahoo Finance Live panel to discuss Coinbase direct listing today on the Nasdaq and the latest market action.

Video transcript

AKIKO FUJITA: Let's bring in our next guest here to take a broader look at the market action today. We've got Josh Wein, Hennessy Funds portfolio manager. Josh, I know you've been sitting, listening to this conversation with Garry. I'd love to just get your take on, number one, the valuation that we're seeing, potentially $100 billion if it holds at where the indicated price is right now. You heard Garry say we're still-- we've still got eight more innings to go.

JOSH WEIN: Yeah, it's good to be with you, Akiko. Yeah, it's incredible. I was just looking before joining you. And I think at the open, Coinbase will be about the same market cap as Goldman Sachs. So it is incredible. And it brings, I mean, two things or two thoughts to put it in perspective, at least for myself. And I think that we're going to collectively say this is crazy and oh my gosh. I think the analog may be Amazon, in its early days, where people said, look at that valuation. They sell books and CDS. And all along, they were looking forward at selling basically everything.

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So I think for Coinbase, you know, it's the non-fungible tokens, both kind of the silly ones and also the very legit ones for pieces of music or pieces of art or whatever it may be. And so, if that's the idea, then this feels a little bit like 1995, where, you know, Yahoo went public. And if memory serves, it kind of opened the floodgates for new entrants into this, as we call it, this space. So, yeah, it's exciting. I don't have a horse in the game. I wish I did. But it was nonetheless exciting. I had to write down what 11 figures is. And that's a lot. I've never--

ZACK GUZMAN: Yeah, it's a lot of zeros involved in a number that large. I guess, you know, we're kind of comparing back to some other debuts, too, here, and you bring up Amazon's early days. There is, of course, an important distinction here when we look at the size of Coinbase's growth. It's also matched by adjusted EBITDA profitability of approximately $1.1 billion at last clip, right? So that's in Q1.

So I mean, it's a profitable company, as well as one that's growing massively right now. So you pair those two things together, not a surprise to see this much excitement on day one. But when you step back and maybe look at where we're at in the market, I wonder how much of that just kind of stems from what would just be general exuberance right now as we sit at record highs on the Dow and the S&P 500, kind of pairing perfectly for this company right now.

JOSH WEIN: Sure, yeah, it's a great point because I think about it a lot because the market's hitting new highs almost every day now. And I think that I don't view the market as terribly frothy or expensive. I think the risk is that people look at a Coinbase. And if they don't buy the premise for crypto and everything related to it, then they kind of tie the two together and say, oh my gosh, we have euphoria. And this is like 2000 and all that I think that at the end of the day, it all comes down to interest rates and the level and the trajectory.

And with the 10-year about 1.6 and the earnings yield on the S&P at about 4, 4 and 1/2, that relationship is fairly robust. It's as robust as it was before the pandemic started. So remain bullish. I think there are a lot of great underpinnings to what is going on here with growth and margin expansion. So I think that if you think Coinbase is frothy or electric vehicles or whatever it may be, I think that that's fine, but it should not be confused with the fact that the market being at highs is not-- they are slightly different. I think that-- I think we're very constructive on the market, as we all like to say.

AKIKO FUJITA: Josh, Coinbase aside, we are seeing big moves in financials today, some big results out from Goldman Sachs. Wells Fargo also up on the news, as well as JP Morgan, although they were under pressure despite beating on top and bottom lines. How are you playing the financial space right now?

JOSH WEIN: Yeah, so yeah, financials, I think they always kick off earnings season. And it's an interesting read broadly on the economy, the macro picture. And so, I'll leave it to my colleague Dave Ellison to comment on financials. He runs our small cap and large cap financial fund. But I think that this quarter certainly for earnings, I think everyone gets a little bit of a pass because a year ago marked the beginning of what we're living through right now. But I think it's just, you know-- it's guidance, and it's just the Q&A sessions of these earnings calls.

And I think that to the extent that Jamie Dimon will say that, oh, we've never been more busy, and others might say that their trends are favorable, you know, that's a great tell for what's going on certainly in the capital markets, but I think to a large degree, you know, with the real economy, loan loss reserves and provisions thereof. And I think it's all very interesting. I think it's an interesting tale on what we're going to be seeing in the next couple of weeks from other companies.