eyeQ: taking an interest in this cheap bitcoin proxy
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. This stock screens as extremely cheap.
15th August 2024 12:34
by Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Block
Trading signal: long-term strategic model
Model value: $69.83
Fair Value Gap: -12.26% discount to model value
Model relevance: 82%
Data correct as at 15 August 2024. Please click glossary for explanation of terms.
Block Inc Class A (NYSE:SQ) is a financial services company that is often associated with bitcoin. Its Square Cash App helps people manage money and make payments, including buying stocks and cryptocurrencies. It has also developed a crypto mining division, plus it has been buying bitcoin to add to its own balance sheet. As such, it is often used by investors as a proxy way to gain exposure to bitcoin.
It is now 12.26% cheap to macro conditions. These are extreme levels. It’s rarely been this cheap when in a macro regime (i.e. our macro relevance number is greater than 65%). That suggests these are levels worth paying attention to.
The stock hasn’t done much of late. It didn’t suffer badly in the early August “flash crash”, but equally it hasn’t benefited from the more recent snapback in equity markets. For whatever reason, the stock simply isn’t getting much attention from investors right now.
Meanwhile, macro conditions are improving. eyeQ model value has risen 17.6% since the 5 August lows.
For those who want bitcoin exposure without the hassle of owning a crypto wallet, then Block looks interesting.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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Disclosure
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