Google, McDonald’s, Exxon Headline Busy Earnings Week
Source link
Climate change concerns are driving a massive transition away from carbon-emitting fossil fuels to lower-carbon alternatives. While this energy transition will take decades to complete, many companies aren’t waiting around. They’re starting their transition now, so they don’t fall behind.
TotalEnergies (TTE 0.85%), NextEra Energy (NEE 2.43%), and Enbridge (ENB 0.35%) stand out to a few Fool.com contributors for the steps they’re taking to future-proof their businesses. Here’s why they believe that makes them stand out as great energy stocks to buy and hold for years to come.
Today and tomorrow
Reuben Gregg Brewer (TotalEnergies): The world continues to need carbon-based fuels. In fact, under the most realistic scenarios of the future, oil and natural gas will remain important sources of energy for decades to come. French integrated energy giant TotalEnergies is built to serve those needs, with a globally diversified business that spans the entire oil and natural gas value chain from the upstream (drilling) through the midstream (pipelines) and into the downstream (refining and chemicals).
And yet, at the same time, TotalEnergies is very cognizant of the fact that cleaner energy options are increasingly important. This is why it has long invested in the space, with plans for more to come. In fact, it has now broken out its clean energy investments as a stand-alone division so investors can better assess the company’s progress. The integrated power division is small, at just about 5% of net operating income, but the goal is to keep expanding it along with the global shift toward clean energy.
In other words, TotalEnergies is not only doing what needs to be done today, but it is doing what needs to be done to ensure its long-term future, as well. And investors can collect a generous dividend yield along the way (note that U.S. investors have to pay French taxes on the dividends).
Reap rich returns from this stock
Neha Chamaria (NextEra Energy): Renewable energy is believed to be the future of energy, and there’s quite a bit of truth to the idea. Global renewable electricity capacity additions hit a record in 2022, and the International Energy Agency (IEA) projects renewables capacity expansion between 2022 and 2027 to be 85% faster than in the previous five years. The IEA also expects renewables to become the world’s largest source of electricity generation by 2025.
Going by these numbers, you’d be smart to buy a clean energy stock now and hold it for practically forever. A top stock to consider is NextEra Energy, also the world’s largest producer of electricity from wind and solar energy. The company also owns and operates the largest electricity utility in the U.S.
NextEra Energy has a huge pipeline and could double its renewable generation capacity by as early as 2026. That growth should show up on the company’s top and bottom lines. So far, NextEra Energy has executed well on its growth plans, with its expertise and strong balance sheet playing a vital role.
NEE Cash from Operations (TTM) data by YCharts
Between 2007 and 2022, NextEra Energy grew its adjusted earnings per share by a compound annual growth rate (CAGR) of 8.3% and dividends by a CAGR of 9.9%. Reinvesting those dividends has generated multi-bagger returns for investors who bought the stock years ago and forgot all about it. That’s something you could do too — buy and forget NextEra Energy shares, expecting multi-bagger returns in the coming decades as the company takes advantage of the growth opportunities in clean energy.
Slowly transitioning to a lower-carbon future
Matt DiLallo (Enbridge): Enbridge is slowly transitioning its business mix from oil to lower-carbon energy sources. Before 2016, the company got 74% of its earnings from liquids, 21% from gas, and 5% from renewable power. Today, it gets more than half its earnings from lower-carbon energy sources (gas and renewables).
That steady shift toward cleaner energy should continue. The Canadian energy infrastructure giant has about 17 billion Canadian dollars ($12.9 billion) of commercially secured expansion projects in its backlog. Nearly all of them support lower-carbon energy. Projects include natural gas pipeline expansions, liquified natural gas (LNG) export capacity, renewable natural gas (RNG) projects, and European offshore wind farms.
Meanwhile, the company has additional lower-carbon energy projects in development. It’s pursuing several emerging technologies, including carbon capture and sequestration, hydrogen, and blue ammonia. It has also acquired a couple of expandable platforms in the past year to help power future growth. In September 2022, it bought Tri Global Energy, a top 10 developer of renewable energy projects in the U.S. Meanwhile, in March 2023, it purchased a 10% stake in Divert, which developed technology to turn food waste into RNG.
Enbridge expects to invest billions of dollars annually to expand its lower-carbon energy platforms in the coming years. These investments should grow the company’s cash flow at around a 3% to 5% annual rate. That should support continued growth in Enbridge’s dividend, which currently yields 7%. The company’s growing earnings and dividends should give it the power to produce attractive total returns in the years to come.
Quick Take
The U.S. Department of the Treasury publishes a monthly report known as the Treasury International Capital (TIC) report, which provides information on the holdings of U.S. Treasury securities by foreign countries.
Japan and China are traditionally the largest foreign holders of U.S. Treasury securities. These holdings are significant because they indicate these countries’ confidence in the U.S. economy. When Japan and China buy U.S. Treasury securities, they effectively loan money to the U.S. government and show confidence in the U.S. economy’s stability.
However, both Japan and China are continuing to decrease their holdings in U.S. Treasury securities, it could indicate various economic scenarios. It could be a sign that these countries are diversifying their foreign reserves away from the U.S. dollar or a signal of their decreasing confidence in the U.S. economy. It could also indicate domestic economic changes within Japan and China, causing them to sell off foreign reserves.
The post Shifting sands: Japan and China’s decreasing holdings in U.S. treasury securities appeared first on CryptoSlate.
Meta Platforms (META -2.73%) recently announced that it will make its new large language model (LLM) for artificial intelligence (AI) freely available as open-source software. It’s a move that contrasts with strategic shifts that generative-AI leader OpenAI has made for its own hugely popular ChatGPT service.
While OpenAI previously made its LLM software available on an open-source basis, the company ultimately decided that the approach wasn’t a good idea. Meta’s move to offer Llama 2 as freely available and customizable software might close off some sales opportunities and create some additional downsides, but CEO Mark Zuckerberg believes it’s ultimately the right move for the company. Here’s why.
Meta aims to shake up the AI space
In a post published on Meta’s Facebook platform, Zuckerberg outlined details about the launch of his company’s new large language model and the decision to make the software freely available for most commercial users. Here’s what he said on the significance of making Llama 2 open source:
Open source drives innovation because it enables many more developers to build with new technology. It also improves safety and security because when software is open, more people can scrutinize it to identify and fix potential issues. I believe it would unlock more progress if the ecosystem were more open, which is why we’re open-sourcing Llama 2.
While the core service won’t generate any direct revenue for Meta, the company may be able to sell additional support and add-on services. Making the software open source will also potentially curb growth opportunities for its biggest rivals in the AI space.
Rather than pay for commercial LLM software, many potential users may opt to use Meta’s free offering. This could lay foundations for the company to generate valuable data that can be used to train increasingly advanced artificial-intelligence models.
The launch of Llama 2 also represents an expansion of Meta’s existing partnership with Microsoft. The social media giant has chosen Microsoft’s Azure cloud infrastructure service as the preferred partner for its new, open-source large language model. The software has already been made available on Microsoft’s Azure cloud infrastructure service, and it will also be available on Amazon‘s AWS, Hugging Face, and other providers.
While Meta competes with a wide range of players in the tech space, its focus on the digital advertising market means that Alphabet is one of its biggest rivals. Apple is another company of concerned. Because Alphabet and Apple own the leading operating systems for mobile platforms, decisions they make can have a large impact on Meta’s business.
By offering Llama 2 as open-source software, Meta may be able to head off some of Alphabet’s and Apple’s moves in the AI space. But OpenAI believes that making advanced LLMs freely available for use and customization also opens doors for potential misuse.
Is OpenAI right about the dangers of open source?
OpenAI actually started as a company focused on providing open-source AI software. While the company’s name hasn’t changed, its approach to software access and customization has. The artificial intelligence specialist has pivoted away from making code and information about data training available, and it believes that trying the open-source approach was a mistake.
While OpenAI has cited competitive reasons as the primary rationale for ditching the open-source approach, top executives at the company have also cited safety concerns as a motivating factor for shifting to a closed model.
In particular, Open AI’s chief scientist and co-founder Ilya Sutskever has warned about the potential for abuse as AI models become more advanced. Sutskever believes that it will eventually be very easy for bad actors to use artificial intelligence applications to cause harm — and that making access to the inner workings of AI software less readily available could help avert damaging outcomes.
While it remains to be seen whether Llama 2 will be abused by bad actors, it’s clear why Zuckerberg and Meta have a different take on the competitive aspects of open source. As a massive social networking technology company that also has business and potential growth drivers in a wide range of other categories, Meta isn’t as dependent on directly monetizing its LLMs.
By bringing more users into its own AI ecosystem, Meta strengthens its ability to compete with ChatGPT, Bard, and other leading offerings in the space. Additionally, Llama 2’s open-source status comes with a bit of a catch — at least for some of Meta’s biggest competitors. The company has stipulated that potential licensees with more than 700 million monthly active users must receive special permission to use the software.
Therefore, while remaining open source clearly wasn’t the right move for OpenAI, it could wind up paying off for Meta Platforms.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.
A team of international experts has launched an effort to transfer more than one million barrels of oil from an abandoned tanker before it spills off Yemen’s Red Sea coast. WSJ’s Sune Rasmussen explains what’s at stake in this high-risk operation. Photo: Yahya Arhab/Zuma Press
Oil prices are expected to increase in the second half of 2023, according to the International Energy Forum.
Christopher Furlong | Getty Images News | Getty Images
Oil prices are set to rise in the second half of the year as supply struggles to meet demand, according to the Secretary General of the International Energy Forum.
Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession.
“So, for the second half of this year, we’re going to have serious problems with supply keeping up, and as a result, you’re going to see prices respond to that,” McMonigle told CNBC on the sidelines of a meeting of energy ministers from the group of the 20 leading industrial economies (G20) in Goa, India, on Saturday.
McMonigle attributes the push in oil prices to increasing demand from China — the world’s largest importer of crude oil — and India.
“India and China combined will make up 2 million barrels a day of demand pick-up in the second half of this year,” the Secretary General said.
Asked if oil prices could once again spike to $100 a barrel, he noted that prices are already at $80 per barrel and could potentially go higher from here.
“We’re going to see much more steep decreases in inventory, which will be a signal to the market that demand is definitely picking up. So you’re going to see prices respond to that,” McMonigle said.
However, McMonigle is confident that the Organization of the Petroleum Exporting Countries and its allies — collectively known as OPEC+ — will take action and increase supply, if the world eventually succumbs to a “big supply-demand imbalance.”
“They’re being very careful on demand. They want to see evidence that demand is picking up, and will be responsive to changes in the market.”
Brent crude futures with September expiry last settled at $81.07 per barrel on the Friday close, while West Texas Intermediate crude with September delivery ended the trading day at $76.83.
No room for complacency
McMonigle also spoke about the liquified natural gas market, crediting the stability in Europe’s energy market to a warmer-than-expected winter in 2022.
“The weather was probably the luckiest thing to have happened,” he said, but warned that “it’s not just this winter, [but] the next couple of winters” that could be rocky.
Global policymakers cannot turn complacent just because LNG prices have fallen, and more investment in renewable energy is needed to ensure the lights continue to stay on, he said.
The LNG-fueled container ship “Containerships Borealis” of the shipping company Borealis moored in the port at HHLA’s Burchardkai terminal.
Picture Alliance | Picture Alliance | Getty Images
Once “whispered” about, energy security has now become the main focus of summits such as the G20, McMonigle signaled.
“We definitely have to keep pursuing the energy transition, and all options have to be on the table,” he highlighted, adding that prices and volatility in the energy markets has to be closely watched.
“I’m worried that if the public starts to connect high prices and volatility in energy markets to climate policies or the energy transition, we’re going to lose public support,” he said.
“We’re going to be asking the public to do a lot of difficult and challenging things in order to enable the energy transition. We need to keep them on board.”
Over the long run, the stock market is a wealth-building machine that’s outperformed bonds, gold, oil, and housing on an annualized basis. But over shorter periods, Wall Street can take investors on a wild ride.
Since the summer of 2021, the three major indexes have ascended to new closing highs, as well as stumbled into a bear market. The growth-driven Nasdaq Composite (^IXIC -0.22%) has had what’s arguably the wildest ride of all. It shed 33% of its value in 2022 and has come roaring back with a 36% year-to-date gain through July 17, 2023.
Image source: Getty Images.
However, this widely followed index still sits around 2,000 points below its all-time intra-day high set in November 2021. In other words, bargains can still be found for opportunistic investors willing to put in the work to seek them out.
What follows are four incomparable growth stocks you’ll regret not buying in the wake of the Nasdaq bear market dip.
Visa
The first unique growth stock that’s begging to be bought in the shadow of the Nasdaq bear market is industry-leading payment processor Visa (V -0.15%). Although Visa is cyclical and would, therefore, struggle with lower consumer and enterprise spending if the U.S. were to fall into a recession, there are far too many competitive advantages for investors to ignore.
Let’s first address the biggest concern facing Visa: the potential for a U.S. recession. While recessions are a normal and inevitable part of the long-term economic cycle, they’re also short-lived. All 12 recessions since the end of World War II have lasted just two to 18 months. Comparatively, most periods of economic expansion have gone on for years. It’s easy for a payment processor like Visa to grow when it’s spending far more time in the sun than under murky skies.
Size is another key edge for Visa. In 2021, it claimed a 52.6% share of U.S. credit card network purchase volume, among the four major payment processors. That’s about 29 percentage points higher than its next-closest competitor — and this gap has grown meaningfully since the end of the Great Recession. Domestically, Visa is cleaning up.
But there’s an even more intriguing growth story beyond the borders of the United States. Many of the world’s fastest-growing economies and regions remain underbanked, including Southeastern Asia, the Middle East, and Africa. Not surprisingly, some of Visa’s strongest growth can be found in cross-border transactions, which registered a 32% increase in currency-neutral cross-border volume, excluding intra-European transactions, in Visa’s fiscal second quarter (ended March 31, 2023).
Despite its shares being near an all-time high, Visa’s forward price-to-earnings ratio of 25 is near a decade low.
JD.com
A second incomparable growth stock you’ll regret not scooping up in the wake of the Nasdaq bear market swoon is China-based e-commerce stock JD.com (JD 1.09%). While China stocks contend with a unique basket of headwinds, the risk-versus-reward for JD.com is very much tilted in favor of optimists at the moment.
The top hurdle for China stocks has been the COVID-19 pandemic. Chinese regulators imposed strict mitigation measures (known as “zero-COVID”) to contain the spread of the SARS-CoV-2 virus that causes COVID-19, leading to supply chain issues and lower consumer spending across a variety of sectors and industries.
The seemingly good news for China is that regulators abandoned the controversial zero-COVID mitigation approach this past December. While China’s reopening has been a bit bumpier than expected, and it’ll take time for its residents to build up some level of immunity to the SARS-CoV-2 virus, a reopened economy bodes well for the nation’s No. 2 e-commerce player, JD.com.
Despite playing second fiddle to Alibaba (BABA 0.29%), China’s largest online retailer, JD.com is the company that’s better positioned to grow its operating margin and bottom line. Whereas Alibaba’s online marketplace primarily relies on third-party retailers, JD.com operates a direct-to-consumer model. It directly oversees its inventory and operates the logistics networks responsible for getting products to consumers. This gives JD.com more power to adjust its overhead expenses.
Furthermore, JD.com followed in Alibaba’s footsteps in late March and announced plans to spin off two of its units (property and industrial). Spin-offs allow for cleaner earnings comparisons and can unlock value for shareholders.
At just 11 times forward-year earnings, JD.com is historically inexpensive.
Image source: Pinterest.
The third one-of-a-kind growth stock you’ll regret not adding to your portfolio following the Nasdaq’s bear market drop is social media company Pinterest (PINS -1.76%). Even though the advertising environment has been challenging for more than a year, Pinterest has well-defined catalysts that should lead to long-term, double-digit earnings growth.
Similar to Visa, Pinterest is a company that benefits from disproportionately long periods of economic expansion. Recessions and downturns may be inevitable, but Pinterest is going to possess strong ad-pricing power more often than not.
However, the real key to Pinterest’s success has been its ability to monetize its user base. Even with advertisers paring back their spending in 2022, Pinterest delivered global average revenue per user (ARPU) growth of 10%. With 463 million global monthly active users (MAUs) as of March 31, 2023, and this figure somewhat steadily expanding, when examined over five years, advertisers have demonstrated a willingness to pay a premium to get their message(s) in front of the company’s MAUs.
To add to the above, Pinterest’s platform is well protected from the data-tracking changes implemented by app developers. While most social media platforms rely on likes and other data-tracking tools to help advertisers target users, the entire premise of Pinterest’s social site is for users to freely and willingly share the things, services, and places that interest them. This is vital information the company can present to advertisers that, in turn, boosts its ad-pricing power.
Pinterest’s earnings per share is expected to more than double by mid-decade, which is what makes it a no-brainer buy right now.
CrowdStrike Holdings
The fourth incomparable growth stock you’ll regret not buying in the wake of the Nasdaq bear market dip is cybersecurity company CrowdStrike Holdings (CRWD 1.91%). Though CrowdStrike trades at a seemingly high price-to-earnings ratio, a deeper dive suggests this end-user cybersecurity provider is worth every penny — and potentially much more.
One factor working in CrowdStrike’s favor is that cybersecurity solutions have evolved into necessity services for businesses of all sizes since the beginning of the century. Hackers have become more sophisticated, and they don’t take time off just because Wall Street or the U.S. economy is struggling. Businesses with a growing online or cloud presence must protect their data, which leads to highly predictable quarterly/annual cash flow for CrowdStrike.
But what allows CrowdStrike to stand apart from its peers is Falcon, the company’s cloud-native, artificial intelligence (AI)-driven cybersecurity platform. As a cloud-based software-as-a-service (SaaS) solution, Falcon is growing smarter by the day and overseeing trillions of events each week. Thanks to its machine learning capabilities, Falcon is nimbler than on-premises security solutions when it comes to recognizing and responding to threats.
One reason CrowdStrike’s forward-year earnings multiple of 50 is more reasonable than you might otherwise think is its ability to grow add-on sales. As of the April-ended quarter (the company’s fiscal first quarter of 2024), 62% of the company’s more than 23,000 customers had purchased five or more cloud-module subscriptions. That compares to a single-digit percentage of its clients that had purchased four or more cloud-module subscriptions in fiscal 2017. These add-on sales are critical to lifting its adjusted subscription gross margin to nearly 80%.
CrowdStrike’s customers are also sticking with the company like never before. Its gross retention of 98% is more than four percentage points higher than where things stood six years ago.
A couple accused of money laundering in connection to a 2016 hack of the crypto exchange Bitfinex have reached a plea deal, Reuters said on July 21.
Senior Judge Colleen Kollar-Kotelly has reportedly ordered prosecutors to file a copy of the plea deal from the accused, Heather Morgan and Ilya Lichtenstein, by July 27. A plea hearing will then take place in a Washington court on Aug. 3.
Reuters based its information on current court filings. Though it did not identify the document in question, a summary of a July 20 filing indicates that the magistrate case for both individuals has been closed pending deadlines, motions, and excludables.
Morgan and Lichtenstein were arrested in February 2022 and were accused of laundering approximately 100,000 BTC from a hack on Bitfinex six years earlier.
Case continues to develop
CryptoSlate previously reported that the couple allegedly laundered 119,756 Bitcoin (BTC). The stolen funds were worth close to $3.6 billion at the time of the seizure, though they were worth $4.5 billion when the story emerged in February 2022. The above amount is once again worth $3.6 billion at current market prices.
Prosecutors charged the couple with conspiracy to commit money laundering conspiracy and conspiracy to defraud the United States. Those charges carry potential maximum sentences of 20 years in prison and five years in prison, respectively.
Reuters said in its current report that prosecutors now aim to force Morgan and Lichtenstein to forfeit assets worth about $3 billion, based on the current spot prices of various cryptocurrencies. Incidentally, the demanded assets include not just crypto, but also gold coins “excavated and recovered by law enforcement” in California.
Morgan and Lichtenstein maintained a public presence. Morgan had an online rap-hop career under the alias “Razzlekhan.” Lichtenstein acted as a serial entrepreneur and also ran a YouTube channel as an amateur magician.
The couple’s off-beat personal life and alleged high-profile crimes have led Netflix to announce a series based on the two individauls. That series has not yet been released.
The post American couple accused of laundering stolen Bitfinex funds arrange plea deal appeared first on CryptoSlate.
(Bloomberg) — Global fund managers are tamping down expectations ahead of China’s Politburo meeting, with many bracing for prolonged gloom in the stock market on bets that any policy support will lack potency.
Most Read from Bloomberg
Chinese stocks notched its worst week in four despite a series of vows to boost consumption and businesses, underscoring deep market skepticism. While the high-level economic policy meeting slated for next week should unveil further measures to revive spending and the ailing property sector, investors see no easy fix to the lack of confidence plaguing the market.
Beijing faces the dilemma of ensuring the economy achieves its roughly 5% growth target, while refraining from the type of all-out stimulus that may yield asset bubbles. With a broad rally seen unlikely, money managers are choosing to focus on more specific opportunities within sectors including Internet, consumer discretionary and energy transition that align with policy goals.
The “market is pricing some continued policy support, but no bazooka-like stimulus,” said Kevin Net, head of Asian equities at LA Banque Postale Asset Management in Paris. “It’s best to focus on the fundamentals, in particular the sectors and stocks that will benefit from government support and help China gain more self reliance.”
READ: Xi’s Big Private-Sector Push Runs Into Wall of Skepticism
The CSI 300 benchmark of mainland shares fell 2% this week even as officials released 31 measures to improve conditions for private business and are considering easing home buying restrictions in the nation’s biggest cities. The Hang Seng China Enterprises Index lost 2.2%, firming its status as one of the year’s worst performers among 92 major gauges tracked by Bloomberg.
Key Chinese indexes are down for the year, losing out on a rally seen across Japan, India and the US. While not a game changer, the Politburo meeting will offer some tactical trading opportunities.
“I would watch for rhetoric that aims to boost private sector confidence and a combination of stimulus,” said Steven Luk, chief executive officer at FountainCap Research & Investment in Hong Kong. With downside risks to the government’s 5% target for this year’s growth, measures announced at the meeting will be critical, he said.
Wall Street Cuts China Growth Forecasts as Economy Disappoints
But any rhetoric short on detail will likely be received poorly by investors jaded from multiple false dawns. Just last month, a rally in the wake of promises for “more forceful” policies at a State Council meeting turned into renewed selling given the lack of specific measures.
“If the government just sticks with a continuation of incremental policy easing to keep growth at around 5%, that gives no trigger for investors to move,” said Chi Lo, investment strategist for Asia Pacific at BNP Paribas Asset Management Asia Ltd. “The market is likely to stay in range-bound trading with no conviction but volatility.”
For some investors, such deep pessimism and low positioning suggest opportunities to the upside. The MSCI China Index is trading at ten times forward earnings versus its five-year average of about 12. Citigroup Inc. strategists wrote in a July 14 note that they remain overweight on the market as cheap valuations offer an attractive entry point should Beijing deliver any positive surprise on stimulus.
Here’s How China Is Supporting Economy as Stimulus Awaited
“Risk reward is getting actually quite favorable to China equities and once things start to normalize, the upside can be quite meaningful,” said Cynthia Chen, portfolio manager at PineBridge Investments Asia Ltd.
Even if the policy rollout disappoints, Chen isn’t too concerned as she remains focused on a “bottom up stock selection.”
That strategy of seeking idiosyncratic opportunities is also shared by other money managers including Janus Henderson Investors SP Ltd., who favors companies in travel, food retailing, and those in industrials that benefit from increased localization trend and have the potential to become more like General Electric Co. or Siemens AG.
“It’s possible the market may go nowhere, but there will be companies that can carry their businesses through this cycle in China,” said May Ling Wee, a portfolio manager at Janus Henderson Investors. “It may not be a big scale market opportunity, but we do think on the company basis we are able to find those opportunities.”
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
Binance France first audited financial records covering 14 months between when the company was created in November 2021 to December 2022 showed that the exchange recorded a loss of €4 million.
Throughout the period, Binance France incurred total expenses of €14 million to cater for its staff payroll, marketing, administrative costs, taxes, and professional fees. However, it generated only €10 million in revenue during the same period.
The exchange explained that the loss was because it generated revenue for six out of the 14 months of expenses. Although it started operating in November 2021, the exchange did not service customers until it got regulatory approval from the Autorité des marchés financiers (AMF) in mid-2022.
Meanwhile, the exchange said it expects to profit in 2023 when it has a full year of revenue to match operating expenses.
RSM Paris, a leading auditing service provider, audited Binance France.
Binance holds €1B in crypto for users
Binance France revealed that it holds about €1 billion worth of crypto assets for its users. The platform did not provide a breakdown of these cryptocurrencies in its audit report.
The exchange stated that it holds $7 million in USDT in its account.
A translated copy of the audit showed a caveat where RSM stated that it has no comments on the “sincerity and consistency” of the information provided in the annual accounts as it was the responsibility of the firm’s management to “establish annual accounts presenting a faithful image in accordance with French accounting rules and principles.”
Binance struggles in Europe
While Binance remains bullish on its prospects in France, its outlook in other European countries appears grim as it has struggled to get regulatory approvals to continue operations in several markets, including the Netherlands, Cyprus, United Kingdom, and others.
Meanwhile, the exchange said it is shifting its focus to ensuring it is ready for the upcoming Markets in Crypto Assets (MiCA) rules, which come into force in 2024 and will establish a framework of regulation and licensing for the industry.
The post Binance France records €4 million loss in 2022, optimistic for profit in 2023 appeared first on CryptoSlate.