August 23rd, 2023 | 08:40 CEST
Adyen - a warning signal for NVIDIA and Co? Power Nickel as an alternative
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"[...] China has become the manufacturing capital of the World, and because of its infrastructure, expertise and capabilities, Silkroad Nickel has strategically positioned itself to partner with Chinese companies in the Stainless Steel and EV industries [...]" Jerre Foo, Corporate Development Executive, Silkroad Nickel
Adyen: The competition never sleeps
When Wirecard imploded in 2020, many private investors' securities accounts crashed along with it. In addition, Wirecard gave us all a tangible robbery story: ex-CFO Jan Marsalek is still on the run and is currently presumed to be in Russia. Adyen was quickly seen as an alternative to Wirecard. The Dutch company pursued a similar business model to Wirecard but was considered reputable. Even today, there is no doubt about its reliability. However, the Company has made a mess of its growth aspirations. Among other things, Adyen processes payments for Netflix and Spotify. For many years, the business was considered solid and profitable.
Now, however, competitors such as Stripe, Fiserv and PayPal are giving Adyen a hard time. Most recently, Adyen disappointed with its six-month figures. Despite a 21% increase in revenue, growth was deemed insufficient by analysts.** On a one-week view, the stock has lost about 50% of its value. Previously, Adyen was always considered promising but expensive. Analysts have also increasingly criticized the rising costs. Since the business in North America currently accounts for around 25%, investors are eagerly awaiting new market developments and are approaching the stock cautiously.
When will the chip and AI dawn follow?
A similar development, as seen with Adyen, could also be in store for chip and AI stocks. Currently, chips are considered essential for generating future growth. The German government is luring chip manufacturers like Intel to Germany with billions in subsidies. The underlying idea is to diversify the supply of computer chips across multiple sources, which is sensible. Currently, Taiwan is the undisputed market leader for chips. If China were to target Taiwan, the dependence on China would quickly become significant. From this perspective, it makes sense to establish new capacities around chips.
Thanks to subsidies, chip manufacturers also seem to be on the safe side in the short term. In the medium and long term, however, there is a threat of overcapacity for chips. As with payment providers, whose services are fundamentally scalable, supply is growing for chips. The chip shortage in the automotive industry already gave the go-ahead for investments about three years ago. The geopolitical situation since February 2022 has done the rest. In addition, despite numerous advantages, AI remains a black box: how great the benefits will ultimately be is by no means certain. In the case of stocks, such as NVIDIA, a lot of fantasy is likely also priced in by now. Once margins come down and chips are available like sand on the beach, some stocks from the sector could experience their Adyen moment.
Power Nickel: E-car profiteer - but without hype
An alternative to hype stocks, such as NVIDIA and Co., are stocks that benefit from fundamental trends but are still comparatively low-valued. One stock that fits this bill is Power Nickel . The Company operates its NISK project in the secure Canadian district of Quebec. There are already three advanced mining projects in the vicinity of NISK. For this reason, the advanced infrastructure around NISK is largely in place for eventual production. The Power Nickel team intends to use NISK to mine nickel for e-car batteries. In doing so, the team is emphasizing a comprehensive ESG profile.
Recently, Power Nickel and CVMR Corporation, a leading producer of nickel powders and anodes, signed an agreement to conduct advanced technical studies on the feasibility of the NISK project. CVMR is unlisted and operates in 18 countries in the mining and processing of raw materials. "We were excited when we discovered the NISK project and believe Power Nickel is pursuing a promising nickel project. We cannot yet estimate the size of the project, but we believe it has the potential to be a commercial mine. We will initially focus on a plant with a capacity of 10,000 tons per day. We take a modular approach to the development of our processing plants. This will allow us to quickly scale our plants to match both the demand for our products and the availability of the raw material," commented Kamran Khozan, CEO of CVMR, on the deal, which also includes a flow-through financing of 4.5 million shares at CAD 0.50.
Both parties are confident that the NISK project will be able to satisfy the growing demand for high-purity nickel for the battery industry. In order to be able to assess the perspective, they intend to carry out corresponding analyses in the next few months. The fact that Power Nickel has prospects is shown, among other things, by the return on investment over one year - the share price rose by almost 100%. After prices of just under EUR 0.25 in February, however, the value has come back again. Given a market capitalization of just under EUR 20 million, the stock could still have much more upside, unlike hyped stocks from the chip or AI sectors. The only stumbling block remains the Company's early stage: Power Nickel is yet to go into production - however, the Company has already gained the trust of a significant market participant.
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