Good morning and welcome to the stock market today! Investors are focusing on Home Depot (NYSE:HD) earnings, rising consumer prices, and all sorts of crypto drama. So what will the stock market do today?
- The S&P 500 is up 0.01%
- The Dow Jones Industrial Average is down 0.25%
- The Nasdaq Composite is up 0.66%
So what will the stock market do today? Here are some of the top stories.
What Will the Stock Market Do Today? Follow Musk.
Elon Musk sure knows how to spark investor interest.
His appearance on SNL took Dogecoin (CCC:DOGE-USD) to new highs, and then his less-than-inspiring commentary on the meme coin sent it falling. Similarly, his announcement that Tesla (NASDAQ:TSLA) was adding Bitcoin (CCC:BTC-USD) to its balance sheet and accepting BTC as a form of payment served as a major endorsement for cryptocurrencies. When he backed down, citing environmental concerns, he took the entire crypto market down.
Today, Musk is sparking a new sort of crypto interest. After tweeting a marquee sign for Starbase, investors are flocking to meme coins en masse. But why?
— Elon Musk (@elonmusk) May 18, 2021
Importantly, his tweet appears unrelated to cryptos. Musk has previously said that he wants to create Starbase, a new city in Texas, that will serve as a stop on his professional journey to Mars. However, the crypto influencer has inspired a rush of meme cryptos like Dogelon Mars (CCC:ELON-USD). Another appears to be Starbase (CCC:STAR-USD), which is now up more than 700% in the past 24 hours. According to its website, Starbase is all about subservience to the Doge.
So what is the bottom line? Even after disappointing crypto fans, Musk still clearly has sway. However, not everyone is a fan. Investors learned today that Michael Burry of Big Short fame has reported more than 800,000 put options on Tesla stock. According to a March filing, this position is worth more than $500 million.
Will Bitcoin Be the ‘AOL of Crypto’?
Writing for Bloomberg, Tracy Alloway has a wake-up call for Bitcoin. Its days as the No. 1 cryptocurrency by market capitalization… and mainstream recognition… could be numbered. More specifically, Alloway warned that “there’s nothing to stop Bitcoin from being the AOL of the crypto age.”
What does that mean? Alloway looks to AOL as a winner during the dot-com boom of the 1990s. It was a market leader in providing dial-up, but proved that it was unable to innovate. When broadband technology came into the spotlight, AOL did not pivot, losing subscribers and revenue. Its market cap ultimately fell by 90%.
The same could happen to Bitcoin. BTC is currently the No. 1 crypto in more ways than one. It is the largest in market, Wall Street following, mainstream integrations, etc. However, it falls flat in terms of technological capabilities. Critics find fault in its proof-of-work protocols and its leaderless structure. Bitcoin needs to embrace a more environmentally friendly method, and without clear leaders, it may be hard for it to stay in touch with the times. As we saw with Elon Musk and Tesla, Bitcoin is already taking a backseat thanks to its high energy consumption.
So what is the bottom line? Alloway is not betting against cryptocurrencies. Instead, just like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) emerged as real winners, she thinks investors may find a new winner. The current altcoin frenzy underway is shining a spotlight on proof-of-stake cryptos like Cardano (CCC:ADA-USD) and Polygon (CCC:MATIC-USD). Is the No. 1 spot in their future?
Indulgent Snacking: One Last Bite for Hostess?
Yesterday, shares of Twinkie maker Hostess (NASDAQ:TWNK) fell despite the snacks company beating estimates for earnings and revenue. Hostess reported earnings of 20 cents per share on revenue of $265 million, coming in above expectations.
According to the team at Robinhood Snacks, there may be a more interesting story here. Underneath the earnings action is the reality that consumers are snacking. More specifically, Robinhood writes that “indulgent snacking is thriving.”
Since the start of the pandemic, U.S. consumers have been turning to snack foods, following historical trends. One report from the NPD Group shows that as of June 2020, snack food consumption increased by 8% during the first few months of the pandemic. This outpaces the 1% increase in snack food consumption during the Great Recession. Consumers looking for comfort and indulgence as the world flipped upside down sought to keep salty snacks, frozen desserts and other comfort foods on hand.
For Hostess and its large pantry of indulgent snack items, this has been a real plus. However, the immediate reaction to TWNK stock earnings may be indicative of what is to come. Early reports already suggest that consumers will shift to prioritizing healthy eating in 2021 as the U.S. reopens.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.