Eric SJ

Earnings beat expectations but still couldn’t sway the market??

The current Micron earnings situation is basically a level-hell difficulty

$MU — Shares fell more than 3% in the first hour

And the earnings released after the close yesterday were above market expectations

On one side, memory demand is being described in increasingly exaggerated terms

On the other side, the market widely doubts the durability of that momentum

And this skepticism has been present in the market for a while

Just when you think this time’s upside surprise is already “locked in,” the market says, “Not yet—there’s still room to be even more surprising than expectations.”

When you bet on the next “even more than even more” upside surprise, the market has already priced in (“over-discounted”) this “even more than” part ahead of time

I’ve seen market voices say, “Earnings beat expectations but still couldn’t impress the market.”

Based on the numbers, this earnings report’s revenue and EPS:

➠[Q4 revenue was $54.23 billion, versus market expectations of about $51.07 billion; adjusted EPS was $3.342, versus market expectations of $3.161]

The midpoint for next-quarter revenue guidance is $61.5 billion, whereas the market had only expected around $57 billion. The EPS guidance is also higher than market expectations

Within the guidance, the less encouraging figure is the gross margin guidance, which declines slightly quarter over quarter

➠[Micron’s Q4 adjusted gross margin was 87%, but next quarter’s guidance is 86.25%]

In other words, while revenue grows sharply, gross margin actually dips slightly quarter over quarter

However, management specifically explained on the earnings call that the Q1 gross margin decline is largely due to Q4 increasing employee incentives

So at least according to management’s explanation, this quarter-over-quarter gross margin drop is not mainly caused by demand or pricing hitting a peak

And if you look at the capital expenditures line item, there’s also no obvious cause

This looks pretty similar to the general expectations from prior quarters: capacity expansion, continuous expansion

So endlessly asking the same question doesn’t really matter

If they stop expanding capacity, the market might actually be even less happy

Therefore, if you absolutely have to find a fundamental change inside the report that could explain a 3% drop, it feels a bit too far-fetched

And it’s hard to say the market simply won’t buy this deal......

There’s a difference between on-chain and the secondary market: for the same order of magnitude—millions to ten-millions-level assets—

For Robinhood Chain, you basically can’t see what people call so-called support and resistance levels.

A 20M position can return to 5M in thirty minutes, and a 2M asset can also be ramped to 10M within thirty minutes.

But for assets in the millions to tens-of-millions range, on-chain is much, much better than the secondary market.

Because the latter most likely has a large trapped-fund supply—coming down from hundreds of millions to over a billion.

So on-chain vs the secondary market for selecting assets—the answer is very clear to me.

At the level of ten-million and below, the on-chain risk-reward is a bit higher.
But if it’s a market cap in the hundreds of millions, the secondary market is more稳妥.

What size of capital should go into what kind of pool to “fish”?

This long medical-industry report of mine

If I had to recommend just one company, I would recommend Intuitive Surgical $ISRG.US


Why?

Because it is almost like the [Apple of the medical field]

Robotics + healthcare is a market with both high certainty and ample room for imagination

According to estimates from third-party reports

[Intuitive Surgical’s share in the global surgical robotics market is close to 60%, and in sub-segments its share is even close to about 80%]

Its core product is a surgical system known as [da Vinci]

This is not a robot that performs fully autonomous surgeries—it assists surgeons during operations

Its business model is similar to Apple’s: it sells expensive equipment to customers first, and then it keeps charging around that equipment through consumables and after-sales service

So, Intuitive Surgical actually has three layers of revenue:

(1) Selling or leasing surgical robots

(2) As the number of procedures increases, it continues selling instruments and accessories

(3) Providing maintenance services to hospitals that already have the installed equipment

Among these, the parts that can generate long-term repeat revenue are the latter two

➠ In the most recent quarter, Intuitive Surgical achieved $2.892 billion in revenue, including $1.735 billion from instruments and accessories and $472 million from service revenue

That means instruments, accessories, and services together contribute about 76% of revenue, while revenue from selling robots alone accounts for only about 24%

As shown in Figure 1, it reflects Intuitive Surgical’s installation growth trend over the past six quarters and changes in its fee structure

The combined share of average revenue for both items remains above 75%, and installation volume growth is also steadily expanding

And what these later charging steps reflect is the workflow that customers build around the same system

That workflow itself is the moat—and an exceptionally clear one. Even if later competitors build a robot with parameters close to da Vinci, they can’t directly replace da Vinci

The entire business model is driven by a double-helix mechanism:

The more robots installed, the more doctors adopt the da Vinci system, and the higher the replacement cost later
The more robots installed, the more after-sales services and accessory consumables are needed

From the current market view, the W-bottom pattern formed on the daily chart is at a key resistance level, waiting for a confirmed breakout

That’s all for now. The above

What trashy and counterfeit market trends are starting on the market right now

Can this really be called an End-of-the-World war machine?

A real End-of-the-World war machine—I only recognize these three $DOT $FIL $ICP

If I have to add one more, it would be the legendary $EOS from days gone by (now it has been converted into $A)

In the last two rounds, every counterfeit coin faces these four ancient true gods—it’s like a minor vs a major

They all have a few common traits:
（1）All were once in the top ten by market cap
（2）A large number of holders
（3）Top-tier narratives
（4）God-tier lineups

The activity on Robinhood Chain has pushed up its unit gas price

At the same time, it has also brought its daily revenue to $5M (after deducting the 10% shared with Arbitrum)

Fun fact: Base has never reached this level of revenue at any point in the past

RB’s current daily chain revenue is even three times Base’s peak revenue

If it can maintain daily revenue of $2.5M going forward

Then each quarter it will contribute more than $200 million in revenue to Robinhood $HOOD

What does that mean?

Robinhood’s transaction business generated a total of $776 million in revenue last quarter

➠"Of which, revenue from options was $342 million, event contracts (prediction markets) $156 million, stocks $129 million, and crypto trading revenue $100 million"

If Robinhood Chain can really sustain an average daily revenue of $2.5 million, then compared with last quarter’s business scale on a static basis

It would surpass event contracts, stocks, and crypto trading, ranking only behind options

Even this portion of revenue could account for more than 15% of Robinhood’s total revenue last quarter

And I think the change Robinhood Chain brings to Robinhood

Is that it expands this revenue boundary beyond the Robinhood App

As for the largest current source of on-chain gas, I just came across a research article, and the findings (Figure 2) can roughly infer that:

Many transactions are not initiated through the Robinhood App, and the users behind them may even have never registered a Robinhood account

At Robinhood’s previous latest earnings call, Vlad @vladtenev said

"I think reaching $1 trillion is going to be very, very difficult. No financial company has ever reached a market cap of $1 trillion yet, but I think it is achievable"

And among the several growth paths he listed afterward, Robinhood Chain was one of them

The revenue Robinhood Chain is generating now may be the first financial signal that this new story is starting to be realized

This content pulls back the curtain on some so-called “buyback” design projects.

In the past 24H, Pons’s on-chain revenue was $950,000.

It’s almost the same as the entire Robinhood Chain’s revenue.

With a dramatic lead—80% of its revenue is used to buy back $PONS.

Its market cap has also reached 250 million.

After Hyperliquid, the market has started discussing buyback mechanisms again due to a certain protocol.

But it overlooks the most important prerequisite:

Creating revenue.

Fun fact: $OP actually has a buyback mechanism, but it has already stopped buying back for months.

It’s not because the governance layer stopped the buyback—in fact, the original buyback plan already included a preset condition:

➠ If the revenue generated by the Optimism Collective in a given month is less than $200,000, the buyback for that month is paused and carried over to the next month.

Base has stopped contributing revenue since it no longer continues within the SuperChain framework.

As a result, the revenue contributed to Optimism from the entire SuperChain is under $200,000 in a single month (see Figure 2).

Base stops contributing = $OP revenue is not enough = buybacks stop.

If this Robinhood Chain phase were using the Optimism tech stack, the situation would be entirely different—unfortunately, it isn’t.

And just a few days ago, another well-known project, Ethena, also released a revenue buyback plan. As it stands, it is very likely to be approved.

I saw a media outlet saying, “Ethena will use 95% of its revenue for buybacks.”

But this is actually a very serious piece of misinformation, and it can easily mislead people who come across it.

Because it doesn’t explain the buyback conditions.

Like Optimism, its buyback is also conditional. The “95%” here refers to the buyback ratio of the foundation’s revenue.

But the precondition is that $USDE must reach a specific circulating supply level; in practice, the actual percentage is much lower (see Figure 3).

➠ Also, the trigger uses the USDe 14-day average circulating supply, which prevents buybacks from starting immediately after a single large mint pushes supply briefly over the threshold.

Has it done buybacks? Yes, but with conditions—and the threshold isn’t low.

What does that mean?

To put it simply: with USDe’s current circulating supply at 4 billion, to reach the first-tier buyback threshold, you’d need to nearly double it.

Here’s the full path:

USDe size → Ethena generates total revenue → extract 5% to 20% by tiers (Figure 3) → go into the foundation → then, and only then, buy back 95% of ENA.

All I can say is: the “real value” of $HYPE and $PONS is still increasing.

Nvidia’s latest earnings report for $NVDA showed revenue up 106% year over year and gross profit up 113% year over year.

Yet after-hours trading, the stock fell for a while.

But soon after the earnings call began, it quickly turned upward.

Based on the order in which information was disclosed afterward, we can attribute the two phases of the chart roughly to two different sets of data the market received.

1. The after-hours drop may have been caused by Nvidia’s guidance for next quarter’s gross margin being slightly below market expectations.

(Nvidia expects next quarter’s gross margin to be about 74%, slightly lower than the market’s 74.77%.)

For a company whose valuation depends heavily on growth quality,

having revenue come in above expectations but gross margin decline is the most obvious negative signal for the market right after the report.

In addition, at the start of the earnings call, management also said: due to rising memory prices, gross margin could fall further in the fourth quarter.

However, this data suggests that gross-margin pressure may last longer—but since it was disclosed only during the call, it can’t explain the first segment of the decline immediately after the earnings release.

2. The subsequent rebound is easier to understand.

Nvidia expects FY2028 revenue growth of about 70%, whereas the pre-report market consensus was only around 44%.

That is a significant beat versus market expectations.

And combined with the factors affecting gross margin, this is still a forecast constrained by supply limits.

There is also a direct quote from the call. Before the official assumption of 70% growth, there’s an assumption that is not constrained by supply:

“Customer-provided guidance points to Nvidia achieving nearly double-digit growth in the next fiscal year.”

In other words, based on the demand forecasts provided by customers, market demand—at least in theory—could support Nvidia achieving nearly double-digit growth in the next fiscal year.

But the company’s current overall supply capacity can only support growth of roughly 70%.

Judging from the after-hours price action, the market’s better-than-expected long-term growth ability temporarily outweighed the negative impact of falling gross margins.

That said, this is only a quick interpretation based on cross-checking the after-hours chart, initial earnings-release data, and transcript information from the earnings call.

It’s not a complete view of this earnings report.

Including what changes have occurred in Nvidia’s business structure, which customers are driving the growth, and what costs may be required to support growth in the next stage.

More later~

Montreal Bank $BMO.US Q3 earnings report shows a year-on-year net profit decline of -25%

But that doesn’t necessarily mean its operations deteriorated. Adjusted net profit increased 19% year-on-year, and adjusted earnings per share grew 22%

This suggests that there were one-off factors affecting the reported accounting profit this time, rather than any core deterioration in profitability.

As for this one-off factor, after the earnings report came out, not many people talked about it—but the answer was disclosed as early as two or three months ago.

That’s also why the market didn’t really discuss much about this earnings report.

(What the market mainstream mainly discussed was that the adjusted data still indicates the core business is healthy, and then they moved on.)

First, this one-off factor is due to the sale of two businesses: transportation finance and vendor finance.

The former provides financing loans to the transportation industry, while the latter provides financing loans to various manufacturers and suppliers.

And this divestment isn’t a simple small-scale adjustment—it involves a loan and lease asset portfolio of about CAD 14.5 billion.

In an official filing before that (in May), the impact of this transaction was already explained.

➠ Let me boil it down to one point: this sale has a short-term negative impact on the profit numbers reported for the period, while it improves return on equity in the long run.

How to understand it? For example, suppose Montreal Bank invests one million. Because it has a diverse product mix, the total revenue generated across different products is spread out.

Now it sells two products. The products themselves aren’t necessarily problematic, but the profit generated per unit may be relatively lower compared with other products.

So by “reducing the denominator,” the return on [invested yield] improves—that’s the underlying logic of this transaction.

In the company’s filing, it also stated that this transaction would contribute 30 basis points to return on equity.

Also, BMO isn’t completely exiting these two businesses.

After the transaction closes, BMO will still retain about 19.9% equity in the new company.

That means it doesn’t believe the business has no value, nor is it abandoning this market entirely.

Instead, it participates in a different way: previously it held the products and underlying assets itself while bearing the corresponding capital usage.

Now, through an equity investment approach, it continues to share in future business growth, thereby reducing its own capital pressure.

In practice, this not only optimizes its own “product mix,” but also preserves part of the revenue stream from the original product channels.

I’m writing an article about the reinsurance track—if I move fast, I’ll publish it tomorrow.

This segment is one of the few relatively newer developments from this round.

Also, while looking at the concepts of RWA and reinsurance, I gained some new insights.

Scale matters, but distribution coverage is the real key.

On the XRP chain, a power token with a very high TVL was issued. The TVL is now as high as 2.2 billion, but what is the distribution rate on-chain?

Very low—almost none.

Also, after Securitize’s Q2 earnings report was disclosed earlier, I only then understood the business model of RWA asset issuers. Profitability and asset size aren’t perfectly correlated either.

To a certain extent, these RWA issuers are doing something a bit like service providers that specifically supply TVL data for different protocols, which can easily create a sense of false prosperity.

Besides keeping an eye on whether this market trend associated with $BTC will continue,

we also need to pay close attention to the trends in Web3’s primary-market funding amount and number of deals. Right now, both of these figures have fallen to the lowest levels in six years.

In the past, these numbers would rise in tandem as the secondary market recovered.

In the past few months, there was a divergence between funding amount and the number of funding events, suggesting that a small number of projects are receiving more capital support.

After several rounds of industry activity, it is still mostly narrative-driven, with insufficient verifiable business models.

Meanwhile, AI has become the new focal point of technical narratives in the capital market, pulling large amounts of capital toward infrastructure/compute power, models, and the application layer.

As a result, Web3 has lost its previous-cycle advantage in attracting capital attention.

Some may say that capital concentrating its bets is a sign of industry maturity, but I don’t think this is the kind of scenario an industry that is still in development should have.

Because it means that large amounts of space for innovation and experimentation are shrinking.

I looked at how funding amounts are distributed across different tracks this year, and the answer is also very clear: VCs are no longer buying “narratives” alone.

Large primary investments are mainly concentrated in the two tracks, CEFI and DEFI. The shared characteristic of these two tracks is a “verifiable business model.”

Various paradigms and applications that were discussed in the past no longer appear on my timeline.

Walmart $WMT The free cash flow that needs to be generated in the second half should be at least $10.9 billion

This actually isn’t a figure from the earnings report itself, but something I inferred based on a single line from management during the earnings call.

“We expect Walmart’s free cash flow for this fiscal year to achieve double-digit growth.”

In the prior fiscal year, Walmart $WMT full-year free cash flow was $14.923 billion.

Based on the minimum 10% projection, this fiscal year would also need to reach at least $16.415 billion.

So

Subtract the results already achieved in the first half from this number, and you get approximately $10.9 billion in free cash flow data, representing year-over-year growth of about 36.4%.

That means it would need to generate an additional $2.906 billion.

The purple portion in my image should make it clear that the required year-over-year growth rate is as high as 36%.

I honestly don’t think Walmart can achieve this kind of free cash flow growth in the next two quarters.

The last two instances of more than 36% year-over-year growth both occurred after the 2022 inventory crisis. But this time there’s no motive or backdrop like that.

“Management says it’s mainly due to strategic projects and inflation, with no obvious inventory risk.”

So this time, Walmart has to create nearly an additional $2.9 billion in free cash flow while keeping capital expenditures at a high level, and with inventory not having much room to be reduced significantly.

The complete Bitcoin spot ETF data for the past week is finally in.

As expected, it turned out to be the largest net inflow in a single week this year.

There is an underlying logic worth paying attention to behind this move.

This time, the week-on-week price increase of $BTC is the largest in the past two and a half years, but the inflow amount has not yet exceeded several of this year’s earlier peak levels—so it can only be considered normal volume.

The price change fundamentally comes down to: buying power vs. selling power.

This rally isn’t because the buy side suddenly became super strong; rather, the sellers’ willingness has dropped to a near-freezing point. With just a little push, it shot up like a fuse being lit.

So right now, price is determined by both: capital inflows + supply contraction.

Looking at the ETF inflow amounts from the last two days, the inflow on the 21st was nearly 50% less than the previous day (this change could just be noise).

If ETF inflows continue to slow down, the price may still remain strong.

Then this would further validate another viewpoint: around $80,000, the supply willingness of holders has not increased noticeably.

This kind of situation can amplify volatility, because once the market enters a low-supply state, price sensitivity to incremental capital becomes much higher.

A small amount of new buy orders could drive a larger surge; conversely, the downside would also be larger.

There are two relatively optimistic data points in this round of the upward move:

Whether it’s $BTC or $ETH , the spot ETF’s net inflow for the week has hit a new high in nearly half a year, and the second highest this year.

(And this set of statistics isn’t complete—only three days have been counted so far this week.)

If we include the remaining two days of data that haven’t been disclosed yet, it’s very likely to be the largest single-week net inflow this year.

Looking at the weekly K-line chart, the last time BTC had a single-week gain of over 20% was in February 2024.

That means

this rally has also set the record for the biggest single-week gain over the past nearly two and a half years (not for haters).