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Today's big stories

Amazon reported better-than-expected earnings, but Jeff's stepping aside
One market legend has laid out his investing dos and don’ts – Read Now
Alphabet beat analysts' expectations, and it lifted the lid on its cloud segment's profitability

Underrated

What’s Going On Here?

Looks like Amazon’s investors got exactly what they’d ordered late on Tuesday: the ecommerce giant’s fourth-quarter results beat expectations.

What Does This Mean?

It was the success of Amazon’s two biggest businesses that drove last quarter’s strong performance: AWS – Amazon’s cloud computing segment – did typically well, while pandemic-fueled ecommerce growth sent the company’s retail business to new heights.

And the good news didn’t stop there: Amazon primed investors for another impressive quarter, saying it’ll earn 8% more in revenue than analysts are forecasting. There was a “but”, mind you: Amazon founder and CEO Jeff Bezos announced he’d be transitioning to the role of executive chair later this year. That’ll no doubt raise questions about the company’s future, and might be why its $1.7 trillion valuation barely climbed after the update (tweet this).

Why Should I Care?

The bigger picture: Retailers are trying to be more like Amazon.
One of the reasons Amazon’s so dominant in the ecommerce space is that it’s a “multi-brand” retailer, meaning it gives its customers a broader range of options than just Amazon-branded products. That’s a lesson British online fashion retailers ASOS and Boohoo seem to have learned too: they both expanded further past their eponymous brands last month, with the former buying Topshop and Miss Selfridge for $400 million, and the latter bankrupt retailer Debenhams for $75 million. The hope’s that those additions will bring in more customers and offer existing ones more choice, giving both companies’ growth a lasting boost.

For markets: Tech stocks aren’t done yet.
Analysts might’ve seen this promising update and upbeat forecast coming, and not just because Amazon’s been on a long run of form. The odds were in its favor after its Chinese ecommerce doppelgänger, Alibaba, announced its own better-than-expected quarterly earnings on Tuesday, along with a first-time profit for its cloud segment.

You might also like: Are Amazon’s shares worth all that money?

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2. Analyst Take

One Investing Legend’s Investment-Picking Dos and Don’ts

What’s Going On Here?

Just last week, Jeremy Grantham – chief investment strategist at GMO – told you why he thinks the stock market could be about to crash by as much as 50%.

But there was a lot more we wanted to know, like how he picks stocks when the time is right.

And he had a pretty interesting take – one that favors a “decent dividend discount model” over standard valuation metrics, like price-to-earnings ratios.

He also shared his thoughts on interest rates (“the Fed isn’t going to protect you”), bitcoin (“a licence to lose money”), and green investing.

The latter, says Jeremy, is a no-brainer: “a wonderful combination of doing the right thing and making money at the same time”.

So today’s Insight is the world according to Jeremy: why he’s anti-bitcoin and pro-green, and how he thinks you can use your clout to tackle climate change.

Read or listen to the Insight here

Lucky Break

What’s Going On Here?

Google-parent company Alphabet pressed all investors’ right buttons late on Tuesday: the tech giant posted better-than-expected earnings, and its stock initially jumped 6%.

What Does This Mean?

The pandemic’s been forcing us to spend more and more of our time and money online, and advertisers have followed suit: they’ve been spending big on ads across Google and YouTube, which make up the majority of Alphabet’s income. Add to that the jump in demand for its cloud business thanks to the surge in home-working, and it's easy to see why its revenue topped analysts’ forecasts. The company managed to keep its costs in check too, pushing its profit above expectations.

Why Should I Care?

Zooming in: Cloud’s got some way to go.
Ads are Alphabet’s biggest revenue stream, sure, but investors are paying just as close attention to its fast-growing cloud business. Alphabet’s been investing in the segment for years in hopes of getting a slice of the $1 trillion industry, but the company hadn’t told investors how profitable it was until now. Or rather, how unprofitable it was: the segment posted a loss of over $1 billion last quarter, suggesting Alphabet has some way to go to catch up with front-runners Amazon and Microsoft…

Bigger picture: The regulatory walls are closing in.
To top it all, Australia just proposed a law that would force Big Tech to pay media outlets to show their content in their search feeds. And while Google only made around 2% of its revenue from the country in 2019 – low enough that it’s threatened to ditch Oz altogether – this is becoming a worrying pattern: the tech giant’s already paying for search feed content in France. Still, if Google thinks that’s bad, it ought to spare a thought for all the Aussies out there who might now have to go back to using Bing…

You might also like: Why an investment in Alphabet is more than an investment in Google.

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💬 Quote of the day

“Ever tried? Ever failed? No matter. Try again. Fail again. Fail better.”

– Samuel Beckett (an Irish novelist, playwright, and short story writer)

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📚 What we're reading

The pandemic’s extra-isolated (The Verge)
An investment opportunity in ethical facial analysis (Zenus)*
It’s like Fyre Festival all over again (Vice)
When language barriers get life-threatening (Mother Jones)

*This sponsored content helps keep this newsletter free.

🤔 Q&A · RE: Freshly Squeezed

Q: “How can hedge funds mitigate the risk of a short squeeze?”

– Muskan in the UK

“As you might’ve noticed over the last few days, Muskan, there isn’t much an investor can do other than try to minimize their losses. But there are a few red flags they might look out for to spot a potential squeeze in the first place. For one, there’s usually high ‘short interest’: the proportion of available shares that are being used to bet the price will fall. The higher that number, the greater the risk and effect of a squeeze. And for another, the stock is generally ‘illiquid’: very few shares change hands on an average day, meaning they’ll be even harder for investors to get their hands on in a short squeeze.”

🙋 Ask a question

🌍 Finimize Community

💀 To bitcoin, or not to bitcoin…

Ah, the great investment debate: should you invest in bitcoin or ethereum – or neither? Find out everything you need to know about both sides of the digital coin debate and whether either of them is right for you. Join us on Friday February 5th – it’s going to be a good’un.

🏡 Crowdfunding US Real Estate: 12pm NYC Time, February 3rd
👾 Bitcoin vs Ethereum: 7pm France Time, February 5th
✌️ Dimensional Investing vs ETFs: 9pm Singapore Time, February 9th
🤖 What’s next for Crypto?: 9pm Hong Kong Time, February 11th
🙋 Developing a Framework to Invest in Women: 6pm UK Time, February 25th
🏳️‍🌈 Financial Planning for the LGBTQ Community: 2pm NYC Time, February 26th
💪 Q&A with Finimize CEO, Max Rofagha: 1.30pm UK Time, February 26th

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Finimize - 😨 Jeff Bezos is calling it quits

Today's big stories

Underrated

What’s Going On Here?

What Does This Mean?

Why Should I Care?

One Investing Legend’s Investment-Picking Dos and Don’ts

Lucky Break

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💀 To bitcoin, or not to bitcoin…

Older messages

🧐 Redditors are back at it

😬 5G did it

📉 Tesla’s got it all wrong

🌤 Microsoft’s on cloud nine

🛁 Goldman's worried about the bubbles

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