Looking at the $SOFI chart we need it to clear that Sept $18 level and the 200 day EMA. Then clear $20 and hold to stay away from goblin town we just pumped out of. More SoFi analysis to come! Two recent posts linked in the replies.

$SOFI is making more profit from their revenue but they raised so much new equity that returns on that equity haven’t improved as much. Their CFO said they still have a lot of extra capital to grow with. To reach their ROTCE target of 20% to 30% they need to put it to work and generate much more revenue from the capital they have. ROTCE went up to 9.9% in Q3 which is the highest it has been and most of that came from margins. But after selling about $3.3B of new stock each $1 of equity brings in 56 cents of revenue a year compared to 68 cents before. To hit their target, their margins have to keep going up and that 56 cents has to get a lot closer to $1. They plan to do that by putting the extra capital into more loans. Making more loans for partners also helps because they bring in fees without using much of their capital. But keeping more loans also means more risk from rates. This quarter their loans lost over $800M in value mostly from higher rates and their hedges made back about $734M of it.

$SOFI Q3 earnings are out and about 90% of their revenue comes from lending and banking like it did in Q2. Lending and financial services both grew 13% from Q2 so the split stayed about the same. The biggest change in their fee revenue is origination fees which went from $198.5M to $270.9M. 74% of their fee revenue now comes from loans compared to 72% in Q2. Out of every $100 (adjusted net revenue $1,371.1M): $59 lending ($807.4M) $45 financial services and tech platform ($525.1M + $87.4M = $612.5M) minus $4 corporate items (−$48.7M) That $45 is: $21 net interest income from deposits and credit cards ($281.3M) $11 loans made or referred for other lenders and investors ($151.2M) $13 card fees, brokerage, tech and other ($180.0M) $59 + $21 + $11 = $91 so about $90 of every $100 ($1,239.8M) is lending or banking. Lending share: 51% a year ago ($481.4M of $949.6M), 59% in Q2, 59% now.

The dollar’s rally has stalled at its 200 week MA. The weak euro is what is mainly keeping the dollar up. France has a lot of debt and can’t agree on a plan to cut its deficit. A lot of hedge funds had borrowed to buy French bonds for the extra yield. When the budget news got worse and oil went back above $100 it looks like they got rinsed. When people are worrying about France’s debt they start worrying about the euro. It looks like some of the money coming out of French bonds is leaving the euro completely. The euro is ~58% of DXY so a weak euro helps hold DXY up. Moody’s didn’t cut France’s rating on Friday and the selling has stopped for now. But the euro could stay weak until France shows it can actually cut its deficit. The next vote on France’s budget is November 3.

With Anthropic filing their S1 today it looks even more likely they are the customer behind 1/3 of $SPCX Q3 revenue. In the S1 Anthropic says they’ll spend up to $120.5B with SpaceX into 2029. That’s up from about $45B when SpaceX filed to go public in May and $84.5B in the draft Reuters saw in September. They expect all their capacity to be up and running in December and then pay SpaceX about $3.1B a month. The customer SpaceX didn’t name made up about $5.0B of their Q3 revenue which is about $1.7B a month. That would make sense if Anthropic was still getting more capacity added in Q3. There’s also the $1.11B a month deal SpaceX said would start December 1. They never said who it was with and I think it could be Anthropic since that’s when Anthropic expects to get all their capacity. We can’t confirm Anthropic is the customer yet because the S1 doesn’t show what they paid SpaceX in Q3. But I think the deal makes them too big to be anyone else in SpaceX’s numbers.

$META didn’t wait for the new Class C shares to start selling stock to pay for their AI buildout. They just announced $35B in stock offerings today and plan to sell up to $60B more once the Class C shares start trading next year. Their filing last week said it’s getting harder to raise money because so many other AI companies need it. It looks like they want to get theirs before there is less left. These Class C shares have no votes. I have posted a lot on this and the quote thread is linked below. This first sale can’t be Class C yet but Meta set it up so most of it can end up as Class C later. That helps protect Zuckerberg’s voting power. $NVDA $AMD and $AVGO might buy up to $5B of it between them. Meta buys chips from all three so some of this money could go right back to them.

Quality matters in the neocloud space. I think lumping them all together is a mistake. Neoclouds can still get loans but it’s getting harder and how much they pay comes from how risky they look. Lenders care a lot about how strong customers are and how long those customers are signed up for since that’s the money that is paying back the loan. How new the company is and how much debt it already has are obviously key as well. Musk is arguing lenders have mostly stopped lending to companies that don’t bring in a lot of revenue outside AI data centers and he uses $SPCX as the example. They have Starlink and launch revenue and last week it cost about 2.3% a year to insure their debt against default. $CRWV makes almost all their money from AI data centers and it cost about 11% a year to insure their debt. But it doesn’t look like you need outside revenue to borrow yet. $NBIS makes almost all their money from AI cloud. They have customers like Microsoft and Meta and on Oct 17 during this selloff they got a one year $3.5B loan from Citi starting at about 6.7%. Compare this with Volta which is a new company and got a loan at about 10.5% two days earlier. They had to pay more than first planned to get it sold.

I think Trump’s deal with Russia is about getting Ukraine to stop hitting Russian refineries. Trump keeps pushing for it since Ukraine hitting those refineries is a big part of what’s holding back Russian fuel. If Ukraine stopped Russia could fix them and export more but bigger repairs take months. I don’t think Russia is offering unlimited diesel. Their deputy prime minister said buyers can have as much as they want from what Russia will export. And so far this month Russia is exporting about the same amount as last month. Not sure this does much for diesel prices. The deal is also a big change in US policy. The US is letting Russian diesel in even though Congress banned it. I have seen senators from both parties say this breaks that law so we have to see how this develops.

$META new non voting shares let Zuckerberg keep control while Meta can raise money and he can sell some stock. Looking more into the filing Meta’s board members did push back on the size of the share dividend. Zuckerberg wanted 20 new shares for every share. The board offered 1 for every 9 and they ended up at 1 for 1. More new shares would mean more stock he could sell without giving up votes. But they didn’t get any limits on his control. In 2016 Facebook’s board made him agree that in most cases he would lose control if he left the company. This time he said no to that kind of rule and they approved it anyway. Last week a Delaware court blocked a similar deal at $NET because Cloudflare’s board members likely went along with what their founders wanted. Meta’s board also went along with Zuckerberg on control but nobody has sued yet so we don’t know how a court would rule.

Continuing to monitor the 2022/2023 bitcoin:native fractal situation! Retest of support is normal so let's see what happens. Hope everyone has a great weekend!

$META new non voting shares let them raise money without Zuckerberg losing control. It should be harder to challenge than when $GOOGL or Meta (Facebook) tried it. Google tried this in 2012 and got sued. They settled in 2013 and agreed to pay shareholders if the new shares traded lower. The shares did trade lower and Google paid $522 million in 2015. Meta tried it in 2016 when they were Facebook but got sued and dropped it right before trial in 2017. A new Delaware law in 2025 protects deals like this if independent board members approve them “in good faith”. Meta had independent board members approve it and Zuckerberg signed off with his own votes. But last week a Delaware court blocked a similar deal at $NET because Cloudflare’s board members likely didn’t act in good faith. It now goes to trial. Not a lawyer and I don’t play one on X!

With $BE they are bringing in more revenue than ever but growing is now eating into their cash and right now the market seems to want cash more than growth. Why? Well a lot of Bloom’s customers are AI companies that are borrowing more to build and in the higher rate environment that money is getting harder to get. If it keeps getting harder Bloom could end up waiting longer to get paid. AI spending being ahead of revenue is well known. But right now that worry is hitting AI stocks in general and Bloom is caught up in it.

Gold is back in a tricky spot near the summer lows. Oil is back up with these attacks on Saudi Arabia. This is putting continued pressure on inflation and it is keeping rate hike odds in December high. This AI stock selloff has people moving into bonds instead of gold. US10Y had its biggest one day drop in over two years and that should have helped gold but it kept going down. This could be gold investors selling gold for cash to cover any positions that got hit in this AI tech selloff.

So many are wondering what’s going on with $BE after such a great quarter. Bloom hasn’t been paid for a lot of what they sold yet and permits are now slowing down some of their projects. Bloom made $250M of profit in Q3 but their operating cash flow was negative $27M. In the 10-Q you can see a lot of that comes from $464M of Q3 revenue they haven’t been able to bill yet. They only get to bill once a project reaches certain stages or the customer signs off on it. Q1 and Q2 were both positive so operating cash flow is still $273M for the year. Bloom’s CFO said they don’t expect Q3’s negative cash flow to keep going. But that depends on projects staying on schedule. Bloom has paid suppliers $337M in advance this year and if projects get pushed back they could end up with more inventory than they need and less cash. They say permits are now delaying some of their projects. They usually can’t sell the systems to the investors paying for a project until it has its permits so a delay can mean Bloom gets paid later. Their biggest project is the $ORCL data center in New Mexico and it still doesn’t have its air permit. The permit hearing isn’t until December 7 and an October 26 hearing will look at whether to throw out the application.

The yen continues to strengthen with inflation numbers coming in above BoJ target. The BoJ has been saying it’s worried about waiting too long to hike. The issue is hiking enough before inflation gets stuck above 2%. And now with headline and core both above 2% I think a December hike is more likely. Global stocks also sold off today and that helps the yen. People buy the yen as a safe haven when stocks drop and some close out carry trades which means buying the yen back. US yields also dropped today because money moved into US Treasuries. People hold dollars over yen because US rates pay more and when US yields drop that extra pay gets smaller. It looks like the carry trade is fairly calm for now. Yen short positions are a lot smaller than they were in July after most of them were closed out in August and September.