MarketBites Daily Investment Commentary: Looking Ahead To The Affirm IPO ll NYSE Wrestles With Chinese Equities

Stock Market Commentary for 1/6/2021:
  • The General Theme:
    Stocks rose Tuesday, ahead of runoff Senate elections in Georgia. The results will determine which party is in control of the chamber. A win for Democrats would likely signal more aggressive government spending. A Republican victory would divide the legislative branch, and many would expect the status-quo.
  • What Happened Tuesday:
    – Major indices rose slightly across the board. The S&P 500 and the Nasdaq Composite Index gained .7% and .6% respectively, during Tuesday’s session. The Dow Jones Industrial Average fared slightly better; rising 120 points, or 1% upon the closing bell.- QuantumScape ($QS) has been incredibly volatile as of late. The stock rose 19.10% Tuesday. In mid-December, the firm was trading at nearly $120/share. $QS closed yesterday at $59.50.
    Read more here on QuantumScape’s recent lawsuit that has sent the stock tumbling.
  • Coronavirus tracker: Per Johns Hopkins, the U.S. reported 218,134 new cases yesterday, and current hospitalizations are at 131,195.

– By Jack Dunne

 


Would you like to receive these daily stock market updates directly in your inbox? MarketBites is the go-to daily stock market newsletter for anyone interested in keeping up with stock market, investment, and business news within 3-minutes. MarketBites is completely free. SIGN UP NOW!

Top Investment Story #1: Affirm Kicks Off 2021 IPO Watch

What is Happening?

Affirm Holdings Inc. is looking to raise nearly $935M via an IPO early this year. Affirm is a point of sales lender, that some have speculated could be as valuable as $10B. This news comes after Affirm postponed its IPO late last year.

Why does this Matter?

Max Levchin, CEO of Affirm, is the latest member of the now-famous “PayPal Mafia,” to cash in on his brainchild. His equity stake in Affirm is approximately 11% of all outstanding shares, which would value his holdings at about $1B. Levchin was part of the PayPal founding team, which bred the likes of Peter Thiel, Elon Musk, and others. Multiple household names have been created by members of “PayPal Mafia,” including YouTube, Tesla, LinkedIn, SpaceX, Yelp, and Planatir.

In terms of Affirm, the company looks to raise capital and diversify its revenue stream. Currently, Affirm’s largest partner, Peloton, accounts for 28% of its revenue. This percentage is rapidly growing, as Peloton continues to be a champion seller during Coronavirus. There are other reasons the value of Affirm has tripled in the last two years though.

The firm’s newest partnership with Shopify has been a major growth catalyst. The partnership allows Affirm to scale in an unprecedented manner. They currently power “Shop Pay,” which is Shopify’s point of sales loan tool. Shopify has a massive e-commerce footprint, and the duo gives a broad base of consumers access to Point of Sale loans.

The Takeaway:

Affirm comes from a great pedigree, and will most likely be one of the first hot IPOs of 2021. As of now, analysts expect the firm to debut somewhere between $33 – $38 /share.

– By Jack Dunne

– Published in MarketBites Daily Newsletter


Top Investment Story #2: NYSE & Chinese Telecom

What is Happening?

In November, President Trump signed an order barring U.S. citizens from investing in firms that were tied to the Chinese military. The original demand listed 35 different firms and their parent companies. Tuesday, NYSE officials decided against parts of the order, as Chinese telecom firms and their depositories now remain.

Why does this Matter?

For some investors in these Chinese telecom stocks, the decision from NYSE officials comes as a relief. Analysts from various firms noted that the order was forcing shareholders to sell-out, while prices were near the bottom. Growth stocks have dominated investor demand over the past year. Telecom is typically seen as a defensive sector, and has thus been out of demand recently.

The three telecom firms in question are: China Mobile, China Unicom, and China Telecom. All three have been traded on U.S. exchanges for 19+ years, and raised billions of IPO dollars across the globe.

Chinese security regulators argued that the initial order was solely for “political purpose,” and that the ruling was significantly harmful to all firms and investors involved. While it may be true that the motive was political, in terms of the three aforementioned telecom giants, the delisting would cause very little impact. U.S. depositary receipts are accountable for only 3% to 8% of each firm’s tradeable shares. Additionally, each firm has minimal U.S. based operations.

ETFs and major indices dropped the three firms from the barred list in late December.

The Takeaway:

A response from the current administration is still pending. For the time being, NYSE officials hope to have productive conversations with legislators in order to determine which firms should stay and which should go. Investing in any of these companies bears the risk of forced delisting in the future.

– Written By Jack Dunne

– Published in MarketBites Daily Newsletter


Meet the Authors

Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
Sign Up For Our Daily Investment Newsletter
Join Thousands of Readers
MarketBites, Your Daily Stock Market Newsletter (6)
Browse Our Latest Stock Market News Stories From Our MarketBites Newsletter
MarketBites Daily Investment Commentary: Amazon Bulks Up Streaming I Peloton’s $400M Announcement
Stock Market Commentary for 5/25/2021: + Indices Up Across The Board:  The market saw plenty of...
MarketBites Daily Investment Commentary: Bitcoin’s Big Drop I Travel Fares On The Rise
Stock Market Commentary for 5/24/2021: The Big Picture: + Manufacturing:  United States manufacturing jumped to an...
MarketBites Daily Investment Commentary: Travel Prices Become Smarter I The New Big Short
Stock Market Commentary for 5/18/2021: + Mask Free Shopping:  Costco, Walmart, Target, CVS, Starbucks, Kroger, and...