Wall Street Lunch: Adios Bitcoin? (Cryptocurrency:BTC-USD)

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Country will sell or discontinue wallet Chivo as part of deal. (0:16) GDP revised higher. (1:05) Micron stumbles and quantum computing stocks take breather. (3:12)

The following is an abridged transcript:

El Salvador will sell or discontinue its bitcoin (BTC-USD) wallet Chivo as part of a new deal with the International Monetary Fund.

El Salvador, the first country to make bitcoin legal tender, agreed to scale back on its bitcoin-related policies. Under the $1.4 billion loan deal, the nation will allow businesses to voluntarily accept bitcoin as a means of payment, while ensuring that taxes will continue to be paid exclusively in U.S. dollars, rather than in BTC.

For the public sector, participation in bitcoin-related activities, as well as transactions and purchases involving bitcoin, will be restricted, the IMF said in a statement.

Still, the Central American country, where bitcoin remains — and will continue to be — legal tender, will keep adding bitcoin to its reserves “at possibly an accelerated pace,” Stacy Herbert, director of the national bitcoin office, wrote.

Looking to the economy, the third estimate of U.S. GDP in Q3 2024 settled at +3.1% Q/Q, up from the Commerce Department’s previous estimate of 2.8%, reflecting upward revisions to exports and consumer spending.

Those upward adjustments were partly offset by a downward revision to private inventory investment. Imports, which are subtracted from GDP, were revised up, reflecting a drag on U.S. economic growth.

The revised number shows that Q3 growth ticked up from the already strong 3.0% Q/Q rate notched in Q2 2024 and provides further evidence that the U.S. consumer continues to drive economic growth.

And weekly initial jobless claims fell by 22,000 to 220,000, compared with the 229,000 consensus.

Economist Mohamed El-Erian says the strong GDP number, combined with the decline in initial jobless claims “will dampen hopes of an immediate retracement of yesterday’s surge in bond yields (which was the largest since the 2013 Taper Tantrum).

The 10-year Treasury yield (US10Y) is now close to 4.6%.

But in equities, unlike George Washington’s troops who holed up in Valley Forge for the winter on this day in 1777, buyers are still visible. Stocks are rebounding slightly, with the major averages up +0.5%.

Among active stocks today, the focus is on the tech sector.

Micron Technology (MU) suffered from a greater-than-expected revenue decline in NAND flash memory when it reported its first quarter fiscal 2025 results after the bell yesterday, leading to multiple price target cuts by analysts.

And quantum computing stocks took a breather from their rally.

IonQ (IONQ) struggled for gains in spite of D.A. Davidson starting coverage with a Buy rating and $50 price target.

D.A. Davidson’s analysts said they believe IonQ represents a compelling pure-play investment positioned to capitalize on quantum computing’s rapid growth, driven by the growing inadequacy of classical computing for solving complex problems.

Chris Ciaccia, team leader for tech news coverage, has more:

“So, since we’re in the holiday season, I think Micron can best be, likened to a Charles Dickens’ movie — or Charles Dickens’ novel, A Tale of Two Cities. You’ve got the data center and high-bandwidth memory business, which are incredibly strong, driven by AI.

“Revenue was up 400% year-over-year, but it’s the PC and consumer business that are really weak. So, that’s why you’re seeing the stock down 15% today. Expectations were a little high going into the print last night, with the guidance being weak, and the company is saying that it’s not really going to see a turnaround in the consumer business until the second half of the year.

“That’s why you’re seeing the stock sell off when investors are disappointed. So, it’s more of, like I said, A Tale of Two Cities for Micron. The data center and the AI business are super, super strong, but the consumer business is weak, and that’s what’s impacting the stock.”

“Quantum computing is really, really heavy stuff. It’s basically taking complex math formulas and calculations that are not able to be performed by your traditional computing. So, it doesn’t operate in your 0 and 1 binary situation. It operates in something called qubits, which are super, super complex, and quantum technology. And these are really, really nascent areas of technology.”

“You’ve seen this market. You’ve seen these stocks rally, in some cases, 2,000% this year, and it’s a case of another Charles Dickens novel, Great Expectations. There’s a lot expected from quantum computing, but there’s just not a lot there yet.”

“You’re talking about some companies that — in the case of Quantum Computing, it’s based out of a college in New Jersey, and it did around a $100,000 in revenue in the third quarter, yet the company is valued at $3 billion. So, it’s just — it’s a lot of hype around these companies, especially given what you saw with Google’s Willow chip couple of weeks ago, and investors seem to have just gotten ahead of themselves, and I think that’s why you’re starting to see the stocks correct today.”

In other news of note, Hims & Hers Health (HIMS) is under pressure after the FDA determined that there is no shortage of Eli Lilly’s (LLY) GLP-1 medication tirzepatide. That’s the active ingredient in its weight loss and type 2 diabetes therapies Zepbound and Mounjaro.

The decision is seen as a blow to Hims and other companies selling compounded versions of popular GLP-1 therapies.

Hims sells a compounded version of Novo Nordisk’s (NVO) semaglutide, the active ingredient in Wegovy and Ozempic for weight loss and type 2 diabetes. Although an FDA drug shortages website lists all doses of both Wegovy and Ozempic as available, the agency said they are still in shortage.

The FDA said it would not take action against drug compounders who sell tirzepatide until either Feb. 18 or March 19, 2025, depending on how they are licensed, “to avoid unnecessary disruption to patient treatment.”

And in the Wall Street Research Corner, another day, another 25.

UBS analysts updated their highest conviction calls of 25 stocks for 2025.

Analyst Joseph Parkhill says: “We’ve focused on stocks where we believe our analysts have a differentiated view vs. consensus, and where we have interesting or proprietary data sources.”

Analysts also consider the potential upside to each stock’s price target, the risk/reward skew and each of the stock’s exposure to important themes for the next year.

The picks include 3M (MMM), Amazon (AMZN), Conoco Phillips (COP), Keurig Dr. Pepper (KDP), Mastercard (MA), Oracle (ORCL) and Texas Instruments (TXN).