09/17/2020

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Friday,
October 2, 2020

Market recap

Dow Jones

27,816.90

35.20

S&P 500

3,380.80

17.80

Nasdaq

11,326.51

159.00

Disney

$123.31

-$0.77

Google

$1,487.90

$22.30

PepsiCo

$140.80

$2.20

Amid evolving news + uncertainty surrounding COVID-19, your financial needs are our top priority. For more information on COVID-19 and your finances click here.

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Update: Markets are trading lower on higher perceived risk with the POTUS and First Lady testing positive for COVID-19. Any level of uncertainty can rattle investor sentiment, particularly in an election year when the prevalence of COVID has already called the election process into question.

Prior to today, SPX and Nasdaq have risen 50% and 65% from March lows, and were up 2% and 26% for the year.

Top Story

The Housing Boom Could Continue for Years

Home Prices and Sales Are Climbing

The housing market has boomed in 2020, and analysts say this trend could continue for years to come. Recently, average home prices and sale numbers have reached levels not seen since the 2000s.

In August, the overall US home price average was a record $319,178, up 13% year over year. New home sales exceeded 1 million for the first time since 2006 in August, marking a 43.2% jump from last year.

The Pandemic Is Not the Only Reason for the Boom

Low interest rates are certainly a factor contributing to the boom in demand for houses. Additionally, the COVID-19 pandemic has spurred many to buy homes sooner than they might have otherwise, because they are looking for more room to work and sequester. People are moving out of urban centers like New York and San Francisco and settling in more affordable suburban areas like Phoenix and Boise, and concerns about COVID-19 are a contributing factor for some.

Though the pandemic has been the catalyst for many home-buying decisions, analysts say there are other trends which will continue to fuel demand for housing even after the pandemic subsides. Older millennials, the country’s largest living adult generation, are reaching their late 30s. This is a time in life when it is common for people to become homeowners. For decades, there has been a 20-percentage point gap between the percentage of homeowners under 35 and the percentage of homeowners between the ages of 35 and 44. If this trend continues, a wave of older millennials may be looking to purchase homes over the next five years.

Looking Ahead

Home prices are climbing because of rising demand coupled with limited supply. Since the global financial crisis of 2008, homebuilders have been reluctant to construct new housing. Yet despite climbing prices, many homebuyers’ monthly payments are relatively small, thanks to low mortgage rates.

The Federal Reserve has promised to keep interest rates at zero through at least 2023, meaning that this trend could continue. Leaders in the real estate industry, as well as homeowners and potential homeowners will be eager to see if demand for housing stays strong in 2021 and beyond.

Planning Your Family's Future with Modern Fertility

Are you thinking about starting a family soon or hope to one day in the future? SoFi and Modern Fertility have come together to help you learn how to be more proactive about family planning—both financially and in your reproductive health.


Friday Fundings: Allbirds, VTEX, and Rally

Shoe Company, Allbirds Raises $100 Million

Allbirds, which makes soft, comfortable shoes famous for being popular among people working in the tech industry, has raised $100 million in a Series E funding round. The company, valued at $1.7 billion, says it only set out to raise $50 million in this funding round, but it encountered more investor interest than expected. The round was led by Franklin Templeton with participation from T. Rowe Price, Baillie Gifford, and other investors.

The money will be used to open more physical Allbirds stores, invest in direct-to-consumer sales operations, and expand product offerings. Allbirds was founded in 2016 and gained traction with its signature wool sneakers. Since then, it has created a wider variety of shoes, as well as socks and underwear. It plans to design and sell even more products that will be comfortable, sustainable, and functional.

VTEX Raises $225 Million Amidst Booming Demand for Ecommerce

Companies across industries have been scrambling to connect with consumers virtually during the pandemic. VTEX, a company that develops cloud-based ecommerce solutions, is stepping in to help them. VTEX recently raised $225 million in a new funding round which brought its valuation to $1.7 billion. Tiger Global and Lone Pine Capital co-led the round with participation from several other investors. VTEX got its start helping Walmart with its ecommerce operations in Brazil. Since then, the company has worked with Sony (SNE), Whirlpool (WHR), Coca-Cola (KO), and other big names in markets around the world. Analysts expect that many consumers will stick with online shopping habits they formed during the pandemic, which will mean that demand for ecommerce will continue to rise. For this reason, VTEX may be positioned for even more growth.

Online Investment Platform Rally Raises $17 Million

Rally, a startup with a unique strategy for helping people invest, just raised $17 million in new funding. The company has created a platform on which people who own rare collectables can list items and other people can invest money in them. Rally started three years ago and mainly dealt with classic cars. Since then, it has incorporated wine, sports memorabilia, watches, and other items into its platform. People can make investments of as little as $1 on Rally and the average Rally investor is just 27 years old. The company reports it has about 200,000 users and transactions on the platform have climbed by about 195% in the past 12 months.

Not-So-Breaking News

  • Google (GOOGL) has pledged to pay news publishers $1 billion over the next three years with a new initiative called Google News Showcase. Through the new platform, which will first go live in Brazil and Germany, Google will pay media outlets to write and curate content. Google made this announcement after it and other tech companies like Facebook (FB) faced backlash related to the way they share stories without compensating the companies and people who create it.

  • Nine years after founder Hugh Hefner took Playboy private, the company is making plans to return to the public market by merging with a SPAC called Mountain Crest Acquisition. The agreement values Playboy at about $415 million. Once the deal has closed, Mountain Crest will change its name and will use the ticker “PLBY” to trade on the Nasdaq.

  • In other SPAC-related news, Hims Inc., a direct-to-consumer prescription drug company, is planning to go public by merging with a SPAC called Oaktree Acquisition Corp (OAC). Hims began by selling hair loss treatments and has expanded to offer birth control, dermatology treatments, and other medications. The deal values the company at $1.6 billion.

  • It's also worth noting that a SPAC ETF made its debut on Thursday. The Defiance NextGen SPAC Derived exchange-traded fund will trade under the ticker "SPAK" on the New York Stock Exchange. Roughly 80% of the ETF will be weighted toward firms that have already gone public through these special purpose acquisition companies, while the remaining 20% of the fund will be allocated to up-and-coming acquisitions.

  • Pepsico (PEP) reported that its net sales climbed by 5.3% during its last quarter to hit $18.09 billion, well above expectations of $17.23 billion. The food and beverage giant’s Frito-Lay and Quaker Foods brands performed particularly well during the period.

  • When it comes to family planning, there’s a lot to think about. Visit the SoFi Blog to learn some tips for preparing your professional life and finances for a new baby.

Financial Planner Tip of the Day

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