⚡️ Wise – the next Spotify – hits the market

Wise up to Wise | Samsung is all stars |

Hi Reader, here's what you need to know for July 8th in 3:00 minutes.

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Today's big stories

  1. Wise hit the stock market via a hotly anticipated direct listing at an initial $11 billion valuation
  2. Finimizers are becoming more optimistic about everything, but that might not be a good thing – Read Now
  3. Samsung’s second-quarter profit is expected to hit a three-year high thanks to the global microchip shortage

Direct To Investors

Direct To Investors

What’s Going On Here?

Payments giant Wise – formerly known as TransferWise – sent its shares out onto the stock market on Wednesday in the UK’s biggest “direct listing” yet.

What Does This Mean?

Eschewing the investment banks (and the hefty fees) involved in an initial public offering (IPO), Wise’s early investors and employees instead sent around 25% of their existing shares straight to the trading floor. One major drawback of direct listings is that companies can’t generally pocket cash from selling new shares at the same time – but that was no biggie for Wise. The London-based fintech firm, which began helping people transfer money overseas for less back in 2010, has been profitable since 2017. What’s more, Wise’s shares “went public” at a price which values the entire company at almost $11 billion – up from $5 billion less than a year ago (tweet this).

Why Should I Care?

The bigger picture: Is it Wise to hope?
Spotify’s 2018 direct listing sparked a copycat craze in the US, and some analysts reckon Wise’s groundbreaking move could mean the same for the UK – Europe’s busiest stock market. Still, that may rely on investors getting on board with Wise’s “dual-class” share structure. A favorite of tech firms, this gives early shareholders (including bosses) much more power than later investors. While dual-class companies are currently barred from the top tier of the UK market – and the FTSE 100 share index – Britain’s financial authorities are considering a shakeup. But if Wise’s newly public shares follow Deliveroo’s second-class stock south, hopes for similar future listings could evaporate.

For markets: Keeping clever company.
Wise’s enterprise value is now approximately 48x its estimated earnings (before a few adjustments) in 2023 – even higher than the 45x average for rivals PayPal, Square, and Adyen. Still, fintech stocks are all the rage at the moment, and Wise could justify that valuation if it continues to grow earnings faster than the others.

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2. Analyst Take

Is A Boom On The Way?

What’s Going On Here?

Finimizers are growing more optimistic about the outlook for stocks and the economy – and are more fascinated than ever by crypto, according to our latest Casual Investor Survey.

But that’s arguably a contrarian signal suggesting you should be more cautious with your investments.

The survey’s last investing signal turned out pretty well, so ignore this latest warning sign at your peril.

So that’s today’s Insight: what you should do next – and which industries Finimizers are most and least excited about investing in right now.

Read or listen to the Insight here

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Feeling Chipper

Feeling Chipper

What’s Going On Here?

Korean tech giant Samsung Electronics said on Wednesday that it expects its second-quarter profit to be its sunniest in three years, buoyed by the global semiconductor shortage.

What Does This Mean?

Samsung’s the world’s biggest producer of memory chips, so it stands to reason that the imbalance of microchip demand and supply has proved a helpful tailwind. Prices of widely used dynamic RAM memory chips, for instance, rose 27% in the second quarter of this year versus the first. The company reckons it’ll turn in some $11 billion of quarterly profit as a result – up 53% on the same time last year, and ahead of investor expectations. And the rest of 2021 looks bright for Samsung too: memory chip prices are forecast to increase at least another 10% this quarter, with high demand – and therefore higher prices – also expected to continue on into next year.

Why Should I Care?

For markets: Sunny side down.
Despite Samsung’s better-than-expected earnings update, its share price actually fell a little on Wednesday. See, analysts and investors have known about chip shortages since February – and Samsung’s stock has already flown up some 50% this year, compared to the Korean stock market’s 6% rise. Investors may therefore have used Wednesday’s positive news as an opportunity to sell some shares and lock in a profit.

The bigger picture: The chip chat puts some carmakers in the driving seat.
While major automakers like Jaguar Land Rover and Mercedes-Benz are falling short of output targets on the back of semiconductor shortages, other firms are benefiting. Data out this week showed that German rival BMW had cannily stockpiled enough chips to keep production running and cars selling as planned – catapulting the company into pole position in terms of US luxury car sales this year.

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💬 Quote of the day

“Whoever established the high road and how high it should be should be fired.”

– Sandra Bullock (an American actress and producer)
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🎯 On Our Radar

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  2. Keep HODLling and carry on. You don’t need to be a trader to invest in crypto – you just need to know how to hold your assets safely.
  3. Too much IQ, not enough cognitive flexibility. The real key to learning and creativity.
  4. You can change a mind. Even when it’s dead-set on something.
  5. The power of gratitude. There’s nothing like a handwritten note.

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🎉 The best is yet to come

Six months in, and 2021’s had a lot to say for itself. But there’s plenty more where that came from: join BlackRock’s Karim Chedid for Global Trends That Matter To Your Portfolio and find out which major investment trends you ought to be paying attention to in the second half of the year.

💉 Global Trends That Matter To Your Portfolio: 2pm UK time, July 8th
😎 How To Craft Your Own Trading Strategy: 6pm UK time, July 8th
💰 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
🌍 Why It Might Be A Good Time To Buy Emerging Market Stocks: 5pm UK time, July 20th
💥 How To Profit From The Commodities Boom: 1pm UK time, July 21st
👟 How To Invest In Sneakers And Streetwear: 1pm 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
👑 How To Invest Like The Ultra-Wealthy: 5pm UK time, July 28th
🌎 How To Profit From Emerging Markets: 6pm UK time, July 28th
🏙 Investing In A Sustainable Metropolis: 11am UK time, July 29th
💰 How To Make Money From Money: 3pm UK time, August 4th
🤔 Are You An Investor Or A Trader?: 12pm UK time, August 25th

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