Friday,
October 30, 2020

Market recap

Dow Jones

26659.11

139.16 (0.52%)

S&P 500

3310.11

39.08 (1.19%)

Nasdaq

11185.59

180.72 (1.64%)

Tiffany

$130.81

$0.86 (0.66%)

Pinterest

$62.53

$13.28 (26.96%)

Spotify

$266.87

-$9.27 (-3.36%)

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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As we head into November, we're calling on the SoFi community to take our survey to capture the year-in-review. 2020 has been a unique year; we want to hear about it, from challenges you may have faced to the accomplishments you're most proud of. It should take no more than 10 minutes and can be accessed here. We appreciate your support!

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The SoFi team

Top Story

Tiffany and LVMH Make Amends

A Quick Review

Iconic jewelry brand Tiffany & Co. (TIF) and French luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton SE (LVMUY) have reached an agreement after weeks of tense negotiations. LVMH will buy Tiffany for a slightly lower price than the companies agreed upon previously.

Before the pandemic, LVMH had been working on a deal to acquire Tiffany, but last month the French company tried to back out of the deal, citing trade disputes between the US and the EU as the reason for the change of plans. Tiffany then sued LVMH, saying it had no legal grounds to walk away from the deal. Then LVMH countersued Tiffany, emphasizing that the pandemic had caused “devastating and lasting” effects on Tiffany’s business.

Looking at Both Perspectives

The companies have reached a new deal and an acquisition is expected to close in early 2021. LVMH will now pay $131.50 per share of Tiffany, down from the original price of $135 per share. This values Tiffany at $15.8 billion—$400 million less than the first price of $16.2 billion.

Tiffany’s board likely feels that the company being acquired at a discount is a better option than the deal falling through. For LVMH, this is still a costly purchase at a time when the future of jewelry and other luxury goods is uncertain. Analysts expect that Tiffany’s earnings will not get back to 2019 levels until 2023. However, Tiffany’s sales have recovered somewhat over the summer. Additionally, by going through with the deal, LVMH avoids the risk of losing a legal battle and avoids potential damage to its reputation.

Unique Challenges for the Luxury Goods Industry

The pandemic has put the luxury goods industry in a particularly difficult position. High-end clothing and jewelry brands depend heavily on in-person shopping and tourism, both of which have been hampered by the pandemic. Analysts at Bain predict that global luxury goods sales will decline by 20% to 35% in 2020.

Though the dispute between LVMH and Tiffany has been high-profile, many other retail companies, like L Brands (LB), the parent company of Victoria’s Secret, have also been caught in disputes over mergers recently. Investors will be eager to see if LVMH and Tiffany’s decisions will help the brands weather this difficult, uncertain period.

The Importance of Portfolio Diversification with Ro$$ Mac

Financial educator Ro$$ Mac explains the concept of diversification and the benefits of using this strategy for your investment portfolio.


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Pandemic Pursuits: Pinboards, Peacock, and Podcasts

Pinterest User Numbers Soar

Third quarter earnings season continues this week. Several recent reports show interesting trends in how the pandemic impacted consumer behavior over the summer and early fall.

Pinterest (PINS), the social media platform specializing in DIY inspiration, beat Wall Street expectations with its Wednesday report. Pinterest’s revenue clocked in at $443 million compared to the $383.5 million expected by Refinitiv. Pinterest also saw its monthly active user numbers rise 46% last quarter compared to the same period a year ago.

Pinterest’s traffic is up because people around the world are doing more cooking, crafting, and other projects to fill time at home. Pinterest also saw an uptick in advertising business as companies boycotted Facebook (FB) because they disagreed with the way the platform monitored hate speech. Snapchat (SNAP) saw a similar jump in advertising business as companies shifted money away from Facebook. Heading toward colder weather and the holiday season, Pinterest anticipates 60% year-over-year Q4 revenue growth.

Comcast Businesses See Mixed Results

Comcast (CMCSA) also beat expectations with its earnings report yesterday. Its revenue hit $25.53 billion compared to Refinitiv estimates of $24.74 billion.

The media conglomerate saw mixed results from its array of businesses during the quarter. Quarterly revenue from the company’s theme parks tumbled 81% to $311 million as Universal Studios Hollywood remains closed. Universal parks in Florida and Japan have reopened with limited capacity.

In more positive news, Comcast reported that its streaming service Peacock now has nearly 22 million subscribers. Comcast also added over 633,000 high-speed internet customers over the course of last quarter.

Spotify Listenership Recovers from Early Pandemic Slump

Spotify (SPOT) also shared mixed results from the quarter ending on September 30. The audio streaming company missed expectations for Q3 sales and earnings, but gained more new subscribers than expected. Early in the pandemic, the company saw a user engagement slump because people listened to less content on the platform during commutes, but now consumers are collectively spending more time on Spotify than they were before the pandemic.

Some of this jump in listenership is a result of Spotify’s efforts to expand its podcast library. The company now offers 1.9 million podcasts, including The Michelle Obama Podcast, which was the most popular podcast on Spotify through August, and The Joe Rogan Experience, which is currently the platform’s number one show. Both podcasts are exclusive to Spotify.

Speaking of podcasts, if you like the SoFi Daily newsletter, be sure to check out our Daily podcast on Spotify, Apple, or wherever else you get your podcasts!

Friday Fundings: Whoop, Scopely, and FreshToHome

Whoop, the Fitness Tracking Company, Raises $100 Million

Whoop, the fitness tracking company, closed a $100 million Series E funding round. This values the company at $1.2 billion. The round was led by IVP, a venture capital firm. Several high-profile athletes have also invested in the company, including Patrick Mahomes, Rory McIlroy, and Kevin Durant.

Whoop’s wristbands track movement, sleep, and workouts, and its popularity has climbed during the pandemic. More people are exercising alone instead of at gyms or in classes, so they are turning to Whoop for guidance. Additionally, sports leagues have used Whoop bands to monitor athletes for symptoms of COVID-19, which has put the product in the spotlight. Some companies also adopted the bands as a way to monitor employees for COVID-19 symptoms. With the new capital, Whoop plans to grow its membership and make improvements to its software, hardware, and analytics.

Scopely Raises $340 Million Amidst Gaming Boom

Scopely, a mobile game company, just raised $340 million in a Series E funding round from investors including Wellington Management, NewView Capital, and TSG Consumer Partners. The funding round brings Scopely’s valuation to $3.3 billion—nearly double what it was worth earlier this year.

Scopely’s games, including Star Trek: Fleet Command and Marvel Strike Force, have been wildly popular during the pandemic as people look for ways to entertain themselves at home. With its new funding, Scopely plans to acquire more games and expand into new product categories.

FreshToHome Secures $121 Million in Fresh Funding

FreshToHome, an India-based ecommerce company, just raised $121 million in Series C funding led by Investment Corporation of Dubai. FreshToHome specializes in online sales of meat, fish, vegetables, and other fresh produce. The company says its goal is to “Uber-ize farmers and fishermen” by connecting consumers directly to the people providing their food.

FreshToHome offers service in Delhi, Mumbai, Pune, Bengaluru, Hyderabad, and several other Indian cities. During the pandemic, the startup’s popularity has soared as people have been reluctant to shop at meat and vegetable markets in-person. FreshToHome is currently processing about 1.5 million orders each month, compared to 420,000 monthly orders during this period last year.

Not-So-Breaking News

  • The Commerce Department reported that US GDP expanded at an annualized rate of 33.1% during the third quarter. Economists surveyed by Dow Jones expected 32% annualized growth. It’s a welcomed rebound, but investors noted that the economy is still 3.5% smaller than it was at the end of last year.
  • United Airlines (UAL) will offer pre-flight COVID-19 testing for passengers traveling from Newark to London on some flights. Passengers who do not want to be tested will be moved to different flights so that everyone on board certain planes will know that their fellow passengers have all tested negative for the virus.
  • ExxonMobil (XOM) will keep its Q4 dividend flat, which will make 2020 the first year since 1982 that the oil company has not raised payouts for shareholders. ExxonMobil also announced plans to cut about 1,900 jobs yesterday.
  • Tapestry (TPR), which owns handbag brands Kate Spade and Coach reported that its revenue per bag climbed by over 25% during the fiscal first quarter. The company is discounting its bags less, and reducing its dependence on department stores, which take a cut of profits. Additionally, it seems that consumers are shopping for larger, more expensive bags to hold hand sanitizer and wipes.
  • Yesterday, Netflix (NFLX) raised the monthly subscription fee for its standard plan to $13.99 and the fee for its premium plan to $17.99 in the US. Netflix’s basic plan will still cost $7.99. Shares of the streaming giant were up about 4% on the news.
  • Building an investment portfolio is tough, but it doesn’t have to be! Visit SoFi Learn to find some best practices for how to build an investment portfolio.

Financial Planner Tip of the Day

"Oftentimes, risk comes in the form of volatility, which is how much the price of an investment type fluctuates. Although these fluctuations are often temporary, it can take months or even years for returns to even back out to their historical averages."

Brian Walsh, CFP® at SoFi

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