🤭 Robinhood reveals all

Tell me no lies, Robinhood | Give me jobs, or give me cake |

Hi Reader, here's what you need to know for July 5th in 3:11 minutes.

☕️ Finimized over a strawberry banana smoothie at Coffee Bar Bonch in Saint Petersburg, Russia (31°C/87°F ⛅️)

Today's big stories

  1. Robinhood revealed both surging revenues and losses ahead of its much-anticipated initial public offering
  2. Renewable energy stocks are looking relatively cheap right now, and here’s how to find the most promising of them – Read Now
  3. The US economy added a higher-than-expected 850,000 jobs in June

Outlaw And Order

Outlaw And Order

What’s Going On Here?

Robinhood doesn’t do things by the book: the trading app revealed both surging revenues and losses late last week ahead of its much-anticipated initial public offering (IPO).

What Does This Mean?

New retail investors flocked to Robinhood last year, pushing its first-quarter revenue 300% higher and its monthly active users to 18 million – twice as many as the same time the year before. That was mostly down to an explosion in cryptocurrency trading, which made up 17% of Robinhood’s first-quarter revenue.

But things weren’t all hunky dory. A lot of the crypto revenue was from less-than-reliable dogecoin trading – the joke cryptocurrency that’s now down by more than 65% from May highs (tweet this). Likewise, the company carried out some emergency fundraising amid the “meme stock frenzy”, which led to an extraordinary $1.4 billion loss in the first quarter.

Why Should I Care?

For markets: New versus old.
Robinhood’s revenue has surged almost fourfold to $1.3 billion in the last four quarters – a growth trajectory that could see its revenue hit $5 billion over the next four. With its IPO rumored to value the firm as much as $40 billion, that’d imply a valuation multiple of 8x forecasted sales. That’s not outlandish, especially considering it’s not far off that of brokerage Charles Schwab’s. But there is one big difference between the two: the bulk of Robinhood’s revenue comes from selling its customer’s orders to so-called market makers in a practice known as “payment for order flow” – one that’s increasingly at risk of regulatory clampdown.

The bigger picture: South Korea steps up.
This listing would give America’s record-setting IPO market another shot in the arm. But South Korea is giving the country a run for its money: Kakao Pay – the country’s biggest online payment provider – filed for a listing that could raise the fintech company as much as $1.4 billion. And that comes hot on the heels of blockbuster IPO filings from fellow Korean fintech Kakao Bank, as well as video game maker Krafton.

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2. Analyst Take

Why Aren’t Renewable Energy Stocks Getting Any Love?

What’s going on here?

Renewable energy stocks had a stellar rise in 2020.

But they’ve fallen out of favor this year, with the European Renewable Energy index down around 25% from its January peak.

That seems odd: they’re cheap relative to their growth potential, and they’re looking at decades of growth as governments roll back fossil fuels.

That might be why investment banks from Goldman Sachs to Royal Bank of Canada think the recent selloff’s presented you with the perfect entry point.

So that’s today’s Insight: why renewable energy stocks are remarkable value right now, as well as how to pick the winners.

Read or listen to the Insight here

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Hire And Hire

Hire And Hire

What’s Going On Here?

Data out on Friday showed the US economy was topped up with a more-than-expected 850,000 jobs in June – the biggest gain in 10 months.

What Does This Mean?

It’s true that the unemployment rate unexpectedly ticked up last month. But the US economy is benefiting from both the lifting of restrictions and a successful vaccination program, not to mention trillions of dollars in economy-boosting measures from the country’s government and central bank. The data also suggests restaurants and bars are starting to have more success recruiting workers to keep up with the reopening of the economy. That might have something to do with the higher wages they’re offering to attract new hires, with Friday’s data showing a 2.3% increase in average hourly earnings in the leisure and hospitality industry versus the month before.

Why Should I Care?

For markets: Bad news is good news.
Investors were happy about the jobs report on Friday for two main reasons. For starters, the report showed an easing in the labor market shortage that’s been holding back the jobs market in the last few months. And second, there are still almost 7 million fewer jobs in the US economy than there were before the pandemic. That doesn’t sound great, sure, but as long as the US central bank is contending with low employment, it’ll keep propping up markets with low interest rates.

Zooming out: Eat the rich.
Companies aren’t just dealing with higher wage costs, they’re now potentially facing higher taxes too: 130 countries just signed up to the tax agreement first reached last month by the world’s seven leading developed nations. The historic agreement will force the biggest companies – including Big Tech – to pay at least $100 billion a year more in taxes, with a lot more going to the countries where they actually do business instead of where they’re based.

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💬 Quote of the day

“You’ve got to learn to leave the table when love’s no longer being served.”

– Nina Simone (an American singer, songwriter, musician, and civil rights activist)
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🌎 Finimize Live

🥊 Don’t call it a comeback

Bitcoin’s been beaten black and blue in the last few weeks, sure. But it’s had a rough time of it in the ring before, and you’d be wise not to count it out just yet. So join EQUOS’s Justin d’Anethan for How To Bet On Bitcoin’s Next Run, and find out how to take advantage when the crypto king comes out swinging.

💡 Finding Wisdom In A Crowd: 2pm UK time, July 2nd
🤑 How To Bet On Bitcoin’s Next Run: 2pm UK time, July 6th
🌎 How To Profit From Diversity And Inclusion: 5pm UK time, July 7th
😎 How To Craft Your Own Trading Strategy: 6pm UK time, 8th July
💰 How To Make Crypto Work For You: 6pm UK time, July 14th
🤔 What Does Inflation Mean For Your Portfolio: 2pm UK time, July 15th
🍷 How To Invest In Wine: 6pm UK time, July 19th
🦄 How To Catch Your Own Unicorn: 5pm UK time, July 22nd
🌿 How To Invest In The Future Of Cannabis: 6pm UK time, July 23rd
📈 How To Protect Yourself From Rising Prices: 6pm UK time, July 26th
🤔 Are You An Investor Or A Trader?: 12pm UK time, August 25th

🎯 On Our Radar

  1. Who cares about meat anyway. Vegan food is delicious now.
  2. Not your typical Yosemite story. Just a really long highline.
  3. A shortage of je t’aime? Why the French rarely say “I love you”.
  4. Enough – but not too much – work. The time you need to feel fulfilled is surprisingly little.
  5. Four wheels and a suitcase. The world’s slowest invention.
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