In this article, we will discuss 5 Crypto Stocks for 2022. If you want to read our detailed analysis of the crypto industry, you can go directly to 10 Crypto Stocks for 2022.
5. Shopify Inc. (NYSE:SHOP)
Number of Hedge Funds: 73
Shopify Inc. (NYSE:SHOP) has allowed merchants on its platform to accept payments in cryptocurrencies for their goods and services. The Ottawa, Canada-based entity provides online merchant services to 1.75 million retailers globally. Shopify Inc.’s (NYSE:SHOP) focus on cryptocurrency payment processing has increased following the integration of CoinPayments earlier in 2021 to boost the e-commerce experience of customers globally. Cryptocurrency acts as a secure payment method due to the strong controls and stability embedded in blockchain technology. Furthermore, the transaction fee is only 0.5%.
Shopify Inc. (NYSE:SHOP) expects the adoption of cryptocurrency to increase conversions and bring a greater customer in-flow in the form of cryptocurrency users. In August 2021, Binance, the biggest cryptocurrency exchange in the world, allowed its users to make payments through cryptocurrency on Shopify Inc. (NYSE:SHOP) due to a partnership with crypto-fiat gateway Alchemy Pay. This partnership enables users to make payments in more than 40 cryptocurrencies.
In its Q2 2021 investor letter, Worm Capital LLC discussed its stance on Shopify Inc. (NYSE:SHOP). Here’s what the firm had to say about the company:
“In particular, the very nature of travel is changing: Longer stays, more flexible remote work policies, and so on. As its marketplace matures, we see significant similarities to our position in Shopify: An international focus led by managers who understand that, in land-grab environment, focusing on its unique value proposition for its sellers—i.e. keep costs low, improve the platform with additional features, etc.—takes precedent over short-term earnings. In other words, we like businesses that play the long game. Unlike Airbnb, Shopify drove positive attribution this past quarter. Still, we think this opportunity is still vastly undervalued over the long-term.
Last year, in the Q2 2020 Investor Letter, we wrote a bit about the similarities and differences between AMZN and SHOP, but concluded they “both display winner-take-most dynamics in their respective domains.” We still believe that thesis is true: E-commerce is still, relatively speaking, in its early days. Despite the pandemic push, e-commerce retail still represents less than 15% of overall retail sales, per latest Fed data.
What that means, in practice, is that the opportunity for low-end disruption (i.e. create a scalable backbone for sellers to launch e-commerce business cheaply) is an enormous, underappreciated opportunity to create new economic value. Shopify is growing its GMV at high velocity (114% YoY in its most recent quarter to over $37 billion) but it’s a tricky business to value—which is good. We like tricky valuations. Our research process looks out several years into the future, which is really the only way to value a business properly—especially in a disruptive environment. (Trying to look at potential short-term earnings or even a simple price-to-sales multiple is not a good way to model out valuations on Shopify.) When thinking about a position like Shopify, we view them as generational company—much like AMZN—that is building the global infrastructure to enable small and medium-sized business to transact online, and, most importantly, keep their unique identity and branding.
Where AMZN optimizes for efficiency, SHOP optimizes for experience. The scale of this opportunity is vast, and Shopify’s reach is wide. The focus—much like ABNB—is keeping costs low for sellers, attract new vendors, improving the ecosystem for merchants. “The rebels are winning,” Shopify president Harley Finkelstein said recently (in a quote we liked so much we made it the title of this letter). “We are betting on a different vision of the future of commerce. We are making it possible for every business to present their brand in their own unique way. A stark contrast to selling on a centralized marketplace.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Funds: 83
NVIDIA Corporation (NASDAQ:NVDA) is not directly involved in the cryptocurrency value chain. However, the company is involved in the manufacturing of Graphics Processing Units (GPUs), an integral element in the mining of cryptocurrencies. This makes the company a great play in the cryptocurrency universe.
Blockchain technology and the science of cryptography need a massive amount of computational power, and GPUs are used to provide the required power. GPUs have been known for accommodating the graphics of premium video games; however, they are now employed at data centers and crypto mining locations. There have been instances when the stock price of the Santa Clara, California-based company has experienced a sudden surge following an increase in the demand for GPUs for cryptocurrency mining.
In March 2021, to capitalize on the boom of cryptocurrency mining, NVIDIA Corporation (NASDAQ:NVDA) launched the CMP series, a line of GPUs dedicated to cryptocurrency mining with a hash rate ranging from 26 MH/s to 86 MH/s. This move was made to ensure that there is not a shortage of gaming GPUs as professional miners bought these GPUs to fulfill their need for mining cryptocurrency. Since its launch, the CMP chip has generated total revenue of $526 million for NVIDIA Corporation (NASDAQ:NVDA). This is equivalent to 3% of the $19.27 billion in total revenue generated by NVIDIA Corporation (NASDAQ:NVDA) during the same period.
NVIDIA Corporation (NASDAQ:NVDA) was mentioned in the Q3 2021 investor letter of Harding Loevner. Here’s what the investment management firm said:
“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer wellknown for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”
3. Block, Inc. (NYSE:SQ)
Number of Hedge Funds: 98
Block, Inc. (NYSE:SQ), formerly known as Square, Inc., has been at the forefront of the cryptocurrency revolution. Back in 2017, Cash App allowed users to buy, sell or hold Bitcoins. According to the Q3 2021 results published on November 4, Block, Inc. (NYSE: SQ) revealed that it generated $1.82 billion in revenue through Bitcoin via its Cash App. Meanwhile, the total revenue for the three months was $3.84 billion.
The company is also buying Bitcoin as its CEO Jack Dorsey is bullish on cryptocurrency. Block, Inc. (NYSE:SQ) has bought $50 million and $170 million worth of Bitcoin in October 2020 and February 2021, respectively.
In July 2021, Block, Inc. (NYSE:SQ) announced that it is launching a business unit focused on DeFi (Decentralized Finance). The former CEO of Twitter, Inc. (NYSE:TWTR) revealed that the San Francisco, California-based digital payment processing company is working on coming up with an open developer platform with the single intention of creating a “non-custodial, permission-less, and decentralized financial services.” The new business unit will comprise the Seller, Cash App, and recently bought assets of the Tidal business. According to DeFi Pulse, $55.21 billion is locked into DeFi-based contracts around the world.
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Funds: 123
PayPal Holdings, Inc. (NASDAQ:PYPL) has allowed its users to trade cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc., with an initial investment of only $1, directly through the PayPal digital wallet and Venmo. Furthermore, the San Jose, California-based financial technology corporation is working on making cryptocurrency an acceptable payment method across its extensive merchant network of 26 million globally. Currently, cryptocurrencies can be used for the payment of selected purchases.
The induction of cryptocurrencies in digital payment platforms like PayPal Holdings, Inc. (NASDAQ:PYPL) is attracting millions of users towards them. Like most of the stock, currency, commodity, and even cryptocurrency exchanges, there is a fee for trading cryptocurrency on the PayPal Holdings, Inc. (NASDAQ:PYPL) network.
The payment processing corporation also received a conditional Bitlicense from the New York Department of Financial Services (NYDFS) back in October 2020. This was the first-of-its-kind license issued by the state of New York that was aimed towards raising awareness about cryptocurrencies, such as the opportunities and risks of investing in cryptocurrencies and the know-how of the blockchain network.
Investment management firm Alger shared its stance on PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2021 investor letter. Here’s what the firm said:
“PayPal Holdings, Inc. was among top detractors from performance. PayPal is a pure play on e-commerce and electronic payments which is driving the company’s high unit volume growth. As a digital payments company, it is helping to facilitate the shift to a cashless society. The coronavirus pandemic has significantly accelerated the adoption of e-commerce and the utilization of digital payments platforms. In our view, PayPal is currently positioned to benefit the strength in e-commerce trends, including increasing net new active users and increased engagement per user. PayPal also has launched a service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account. PayPal’s vision is to become a Super App that integrates payments, commerce and financial services, as well as crypto capabilities. After outperforming earlier in the year, the performance of PayPal shares weakened in the third quarter with the company facing potentially higher transaction expenses and credit losses. The higher transaction expenses are driven by a shift by consumers to the higher cost travel and entertainment categories which skew toward less profitable credit transactions.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Funds: 248
Meta Platforms, Inc. (NASDAQ:FB), formerly known as Facebook Inc., was a pioneer in Web 2.0 as it allowed users to create and share information online. However, since 2014, the world is now pivoting itself to Web 3.0, a term coined by Ethereum co-founder Gavin Wood. Web 3.0 is based on the premise that there should not be any centralized monitoring. Instead, users should have the ability to communicate and join forces without the presence of a single authority. This thought has given way to blockchain technology and DeFi.
Meta Platforms, Inc. (NASDAQ:FB) is gearing itself up for Web 3.0 by working on its new cryptocurrency known as Diem, previously known as Libra. The California-based tech giant is building a global financial payment system backed by the needed infrastructure that is decentralized and can be accessed from anyone or anywhere in the world. Along with this, Meta Platforms, Inc. (NASDAQ:FB) is also working on Move smart contract programming language.
Canterbury Tollgate mentioned Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter. Here’s what the investment management firm said:
“To say traditional media is anti-Facebook would not be an overstatement. An already intense and multi-year critique of (or attack on) Facebook has ratcheted up in recent weeks. Facebook’s research efforts have been reported on, if often derided, for nearly a decade. Going back to 2014, Slate.com called their research practices “unethical” when FB tried to study the impact social posts had on users. Now those efforts have been turned against them for the kill shot.
My job is to observe, assess, and allocate. Not to commentate on all the whims and wishes of media narrative. However, in the case of Facebook I cannot avoid going into some detail re: the onslaught against them, which I find to be most unwarranted and insincere.
Last month the Wall Street Journal ran a five-piece series titled “The Facebook Files” which allegedly shows how toxic Instagram is for teens. The foundation of their argument was a single slide from an internal presentation claiming, based on FB’s own research, that of teens who had a negative self-image, one-third said Instagram “made them feel worse.”iii Somehow the implication here is that this is not an inescapable aspect of either the human psyche and/or society-atlarge, but that it is of Facebook’s doing…” (Click here to see the full text)
You can also take a peek at the Billionaire Israel Englander is Buying These 10 Stocks and 10 Canadian Dividend Stocks to Buy.
