🤫 Palantir says the magic word

"Bitcoin." whispers Palantir | Roblox is the perfect parenting solution |

Hi Reader, here's what you need to know for May 12th in 3:12 minutes.

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Today's big stories

  1. Palantir revealed big plans for bitcoin when the big data firm reported its quarterly earnings
  2. Junk bonds have gone from risky and rewarding to just plain risky, so there might be big money in betting against them – Read Now
  3. Gaming platform Roblox posted strong earnings in its first set of results as a publicly listed company

Bro Code

Bro Code

What’s Going On Here?

Software firm Palantir reported quarterly earnings that met analysts’ expectations on Tuesday, and ambivalent investors shrugged off the – wait, what was that about bitcoin?

What Does This Mean?

Palantir – which makes analytics tools for major corporations and the defense industry – saw its revenue grow 49% compared to the same time last year, beating both the company’s own forecasts and analysts’ expectations. But ballooning costs – salaries, mainly – kept its profit from doing the same, and investors were feeling pretty lukewarm about the whole thing.

That is, until Palantir mentioned the magic word in its conference call: the firm’s decided to accept payment in bitcoin, and it’s even thinking of buying the OG cryptocurrency to bolster its own balance sheet. That might’ve done the trick: investors initially sent its shares 5% higher.

Why Should I Care?

For markets: Palantir’s focused on quality, not quantity.
One of investors’ biggest worries about Palantir is its dependence on a small number of big contracts. Lose one, and it’ll massively dent its profitability. But the company had some good news on that front: it added 11 new customers last quarter, bringing the total to 149. Those new additions might also be why the company’s forecasting 5% more sales this quarter than analysts were anticipating.

The bigger picture: Big Tech will be the first to go.
Palantir’s shares actually fell to their lowest level so far this year at the start of the week, in what was part of a wider pattern: the Nasdaq index – heavy on Big Tech names – is down around 5% this month. That’s mostly down to a key measure of US inflation expectations, which hit heights not seen since 2006 earlier this week (tweet this). After all, if prices rise too high, too fast, the US Federal Reserve is more likely to step in and boost interest rates to slow down the climb, which would make riskier stocks – tech stocks like Palantir among them – suddenly look more expensive.

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2. Analyst Take

Should You Bet Against Junk Bonds?

What’s Going On Here?

One man’s trash is another man’s treasure, and junk bonds have certainly promised untold riches over the last twelve months.

Now, though, some of the world’s biggest hedge funds seem to have smelled a rat.

For one thing, the reward from junk bonds is pretty low these days, with the influx of new investors pushing yields below 4% for the first time ever earlier this year.

The risks, meanwhile, are only growing: company debt is at new highs, for one, making junk bonds vulnerable to any potential snag in the economic recovery.

That’s why hedge funds have taken their biggest short position on them since 2008, and it’s a bet you might want to replicate for yourself.

So that’s today’s Insight: how you can go about betting against junk bonds.

Read or listen to the Insight here

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Cash Grab

Cash Grab

What’s Going On Here?

You might want to double-check your bank statement if you have kids, because Roblox posted strong quarterly earnings earlier this week on the back of a lot of in-game purchases…

What Does This Mean?

Roblox is every preteen’s go-to at the best of times, but it becomes a must-have when the real world is in lockdown. That’ll be why the number of daily active users surged almost 80% last quarter compared to the same time last year, and why they played almost 10 billion hours on the platform overall.

Plenty of users is all well and good, but investors are more interested in how successfully Roblox is monetizing them. Pretty successfully, it turns out: the amount of virtual currency – which users buy using, y’know, real currencies – grew by an better-than-expected 46%, and investors sent the company’s shares 6% higher.  

Why Should I Care?

For markets: Kids are hooked.
With the world opening back up again, investors might’ve been nervous that kids would start losing interest in the game. Roblox certainly was, acknowledging in March that hours spent on the platform could drop by as much as 11% this quarter. But the Ro-pioid addiction might well and truly have set in: even in less-restricted April, daily active users were up 37% compared to the same time last year.

The bigger picture: This is a pause, not a game over.
Despite impressive earnings from Roblox this week and Activision Blizzard last, a new report suggests revenue in the global gaming market will actually drop off this year. But that’s probably just down to last year’s lockdown-driven boom, which saw revenue in the market grow by 23% compared to 2019. Things are expected to pick up again imminently, with the industry expected to grow 16% over the next two years. That’ll mostly be driven by mobile gaming, but console games are expected to play their part too – especially when gamers are finally able to get their hands on long-delayed consoles.

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💬 Quote of the day

“It isn’t where you come from, it’s where you’re going that counts.”

– Ella Fitzgerald (an American jazz singer)
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How to maximize your investments

It’s Tax Day on Monday, so it’s a good thing you have TurboTax Premier to help you file your investment taxes with confidence.

You might be surprised how much you learn when you do – like how to maximize your tax outcome and get every deduction you deserve.

That’s the beauty of TurboTax: you don’t need to be an expert or have any tax knowledge to file your own taxes.

You can just answer simple questions about your life, auto-import your tax documents (including your investment financial transactions), and leave TurboTax to take care of all the rest.

It’s the smartest way to get your taxes done: just don’t forget to do it by the tax deadline on May 17th.

Visit TurboTax

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📚 What we're reading

  • Astronauts: the 2021 version (GQ)
  • The savings and investments app of the future – capital at risk (Chip)*
  • Sorry folks, the mask-burning’s canceled (Eater)
  • An impossible school lunch (Engadget)

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🌏 Finimize Community

📺 The revolution should be televised

Green bonds could provide the solution to a more sustainable future – not to mention a more profitable one. So join us on May 19th for The Green Bond Revolution, and find out why all eyes should be on this brave new asset.

☄️ How To Invest In Hot Commodities: 6pm UK time, May 12th
🤖 How To Buy Your First NFT: 5pm UK time, May 13th
🎙 How To Become A Community Host: 11am UK time, May 14th
📈 How To Prepare For The Coming Market Shift: 5pm UK time, May 18th
♻️ How To Build A Sustainable Portfolio With Bonds: 6pm UK time, May 19th
📚 How To Do Your Due Diligence On A Stock: 6pm UK time, May 20th
💪 Investment Opportunities In The Circular Economy: 5pm UK time, May 25th
🌍 Why You Should Broaden Your Investing Horizons: 6.30pm UK time, May 25th
🚨 How To Keep Your Crypto Safe: 12pm NYC time, May 26th
🛍 How To Protect Yourself From Rising Prices: 2pm UK time, May 27th
📲 How To Profit From The AI Industry: 6pm UK time, May 28th
🇨🇳 How To Profit From Chinese Innovation: 5pm UK time, June 1st
🤔 How To Understand Fundamental Analysis: 5pm UK time, June 8th
😎 How To Make Your Own Investing Rules: 5pm UK time, June 9th

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