Finimize - 📉 Robinhood goes from bad to worse

Hi Reader, here's what you need to know for August 4th in 2:57 minutes.

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Today's big stories

  1. PayPal’s trying to tap into a younger market
  2. The harder life gets for the euro, the better this trade stands to perform – Read Now
  3. BMW warned that sales are going to slow down sooner than investors thought

Young At Heart

Young At Heart

What’s Going On Here?

PayPal posted strong quarterly results earlier this week.

What Does This Mean?

PayPal’s been struggling in the last few months, both as inflation has continued to drag on online spending and as eBay has moved payments away from the platform. So the company has now shifted its focus from adding users to getting existing ones to use its platform more often. It made progress on that front last quarter: the average number of transactions per active account jumped 12%, which helped overall revenue climb by a better-than-expected 9%. And there was plenty more good news: PayPal upped its full-year profit outlook, announced a new $15 billion share buyback program, and saw its stock surge 13% after activist investor Elliott Management revealed it had become one of the company’s biggest shareholders.

Why Should I Care?

The bigger picture: PayPal wants the Gen Z dollar.
PayPal’s next big priority is to reduce costs, and it’s hoping that certain measures – like hiring in low-cost regions – will save it about $900 million this year and $1.3 billion next. But it is still planning to invest in payment app Venmo: PayPal wants to improve the way it works alongside its flagship platform, as well as make the app available to teenagers in a bid to boost user numbers.

Zooming out: Robinhood’s not-so-merry men.
PayPal said last year that it was thinking about adding stock trading capabilities to its app, but cost-cutting measures have seen it abandon the push. That might be a smart move: Robinhood just posted another decline in both users and user investments last quarter, sending its revenue down 44% from the same time last year. Things are so bad, in fact, that the darling of the pandemic trading boom said it’s going to be cutting nearly a quarter of its workforce.

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Analyst Take

How To Profit From A Euro-Based “Carry Trade”

How To Profit From A Euro-Based “Carry Trade”
Photo of Reda Farran

Reda Farran, Analyst

It’s been a tough year for the euro, which has fallen to parity with the US dollar amid a dicey backdrop for Europe.

But this situation has also boosted the potential of one trade that’s both shown big gains – as much as 29% this year – and low correlation with traditional asset classes.

In fact, the harder life gets for the euro, the better this “carry trade” stands to perform.

So that’s today’s Insight: how it works exactly, and how you can replicate it yourself.

Read or listen to the Insight here

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Check It Out

The Whining

The Whining

What’s Going On Here?

German carmaker BMW gave a disappointing outlook for the rest of the year on Wednesday.

What Does This Mean?

BMW barely produced any more cars last quarter than it did during the same time in 2021, with chip shortages slowing production to a crawl. That must’ve been especially frustrating given that orders – particularly for EV models, which are on track to make up 10% of all BMW’s deliveries this year – were at a record high. It’ll be hard not to look at that as a missed opportunity: the carmaker said demand was already starting to slow down, particularly as European customers contend with rising inflation and interest rates. And since BMW thinks this dynamic and the aforementioned chip shortage will stick around, the carmaker was pretty dispirited about its outlook for the rest of the year. Investors know the feeling: they sent its stock down 6%.

Why Should I Care?

The bigger picture: BMW is a warning light.
BMW's outlook was in contrast to rival Mercedes, which said last week that it’s expecting orders to hold up this year. And while Peugeot-parent Stellantis admitted demand would fall eventually, it was confident that this year would be fine. So it’s not like investors were naive to the possibility that an economic downturn would impact the industry: they just thought they had till 2023 before the cracks started to show.

Zooming out: Eat the rich.
Europe’s gas shortage is set to hit harder in the next few months, which will make things even more complicated for carmakers like BMW. For consumers too, which might be why the International Monetary Fund said on Wednesday that European governments should pass price increases on to wealthier individuals and shield the poorest with targeted relief. That, it thinks, will encourage people to save more energy or switch to greener alternatives (tweet this).

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💬 Quote of the day

“I have tried to know absolutely nothing about a great many things, and I have succeeded fairly well.”

– Robert Benchley (an American humorist)
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🌍 Finimize Live

🎉 Coming Up This Week…

All events in UK time.

🚀 The Next Six Months For Stocks And Crypto: 5pm, August 3rd
🎉 What’s Next For NFTs: Innovations, Utility, And Trends: 5pm, August 4th

🥳 And After That…

📈 A Case For DAO Treasury Diversification: 6pm, August 9th
💰 The Secret To Making Money During High Inflation: 1pm, August 16th
🤑 How To Protect Your Crypto Portfolio During A Recession: 5pm, August 15th
💻 How To Spot The Best Tech Stocks: 6pm, August 16th
🤯 Inflation Strategies For Savvy Investors: 12pm, August 18th
🏈 Crypto And The Sports Community: 5pm, August 23rd
👑 How To Invest In Gold On The Blockchain: 5pm, August 25th
😎 How To Spot The Next Ethereum Killer: 1pm, August 30th
🎉 How To Build Wealth In Your 20s: 5pm, September 1st

🎯 On Our Radar

  1. Paychecks aren’t stretching far enough right now. At least you’re not getting paid in crypto.
  2. More houses or more data centers? London’s favoring the latter.
  3. Buyers’ remorse. The pandemic made us do – and buy – some crazy things.
  4. Out with a bang. This grandmother’s final wish was really something.
  5. So long, choco taco. Food trucks just lost a bit of their joy.
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