Tuesday,
February 9, 2021

Market recap

Dow Jones

31385.76

237.52 (0.76%)

S&P 500

3915.59

28.76 (0.74%)

Nasdaq

13987.64

131.35 (0.95%)

Tesla

$863.42

$11.19 (1.31%)

Facebook

$266.58

-$1.52 (-0.57%)

Palantir

$36.10

$2.05 (6.02%)

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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Top Story

Tesla’s Plans to Accept Cryptocurrency Payments

Tesla’s Bitcoin Investment

Tesla (TSLA) announced yesterday that it has acquired $1.5 billion worth of Bitcoin. The company had about $19 billion in cash at the end of 2020, and the Bitcoin investment represents a substantial portion of its assets. Tesla says the move into Bitcoin will give it “more flexibility to further diversify and maximize returns on [its] cash.”

The EV maker also shared that it plans to start allowing customers to pay for Tesla vehicles with Bitcoin, which would make it the first major car company to accept cryptocurrency payments. Following the announcement, Bitcoin prices surged to new heights.

Elon Musk Voices Support for Crypto on Twitter

Tesla’s investment in Bitcoin has raised questions surrounding Elon Musk’s tweets about Bitcoin and other cryptocurrencies. In the past, the billionaire CEO of Tesla has faced criticism, as well as charges from the SEC, related to his market-moving tweets. It is not yet clear how regulations might apply to his recent tweets about cryptocurrencies.

Two weeks ago, Musk added #bitcoin to his Twitter (TWTR) bio—a move which briefly caused the cryptocurrency’s price to spike 20%. Musk’s recent tweets about Dogecoin, another digital currency, caused the token’s price to spike by 37% in 24 hours between Sunday and Monday.

Looking Ahead

Some say Tesla’s moves into Bitcoin means that cryptocurrency is becoming more established.

Other analysts believe the current crypto trends won’t last.In 2017, many celebrities voiced support for cryptocurrency, which pushed the price of Bitcoin to nearly $20,000, but then it fell to $3,000 the next year.

Crypto skeptics and supporters will be eager to see what lies ahead.

Learn How to Invest in a Volatile Market

Has the market volatility had you questioning your investing strategy? Join us this Wednesday, February 10th at 12pm PT to learn investing tips and tricks from SoFi Financial Planner Brian Walsh. Reserve your seat today.


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TikTok’S US Ecommerce Push

Taking on Facebook

TikTok, the short-video app, is making plans to expand into the US ecommerce market with a variety of new features. It will battle with Facebook (FB) and other US social media platforms for traffic from users looking to shop online.

TikTok is owned by Chinese parent company ByteDance, and faced many regulatory challenges during the Trump administration. Though it is not yet clear how Biden’s team will handle TikTok, a number of brands and advertisers seem to be less concerned about the app’s future in the US than they were several months ago.

Rolling Out New Features

Last year TikTok announced a partnership with Shopify (SHOP) promising to create ways for Shopify’s over 1 million sellers to reach younger consumers and boost their sales. Now TikTok is unveiling a number of these new features.

The app will soon allow popular creators to share links to products in their videos and earn commissions on sales of these items. TikTok also has plans to give brands new ways to showcase and advertise their products. It will start offering “live streamed” shopping as well, which will be similar to traditional shopping TV channels. Users will be able to buy products with a few clicks after learning about them from TikTok creators.

US Competitors Respond

US social media companies are working on ways to respond to TikTok’s ecommerce push, though some of their recent efforts have had disappointing results. Instagram, which is owned by Facebook, launched a video sharing feature called Instagram Reels last August which was meant to mimic TikTok. So far, Reels has failed to gain as much traction as its creators hoped while TikTok’s popularity continues to surge.

TikTok has access to a younger demographic than many other platforms. According to the company, 40% of TikTok users do not have a Facebook account and 63% do not use Twitter (TWTR). As this generation ages, if TikTok is able to continue attracting young consumers, its influence will become even more significant in the coming years.

The Oil Market Shows Signs of Strength

Crude Oil Prices Begin to Recover

Crude oil prices have reached their highest prices since close to the start of the COVID-19 pandemic. This is a result of gradually recovering demand as well as production limits.

Brent-crude futures have climbed by over 50% since the end of October, and they topped $60 per barrel for the first time since the coronavirus slashed demand for oil in early 2020. Futures for West Texas intermediate climbed above $55 per barrel last week for the first time in more than a year.

Demand for Oil and Energy Stocks Climb

After facing significant hardships in 2020, energy stocks have been the most successful performers on the S&P 500 in 2021. These stocks include ExxonMobil (XOM) and ConocoPhillips (COP).

This recovery for oil and gas producers has been faster than many analysts anticipated. Large stockpiles of oil which built up during the early months of the pandemic have been depleted more quickly than was expected. Since the peak of the energy market crisis in April, OPEC and its allies have cut production by a cumulative 2.1 million barrels of oil. There is not a shortage of oil currently, but as demand picks up and production stays low, the amount of excess oil is shrinking.

Zooming Out

The oil market is recovering against a varied economic backdrop. Data released last week showed that the US added 49,000 jobs in January after payrolls dropped sharply in December. This is a positive trend, but shows that it could be a long time until the labor market fully recovers from the pandemic. This could impact Americans’ disposable income and demand for oil.

Analysts are also considering the possibility of an increase in oil exports from Iran, which could cause oil prices to drop. Additionally, though vaccine rollout efforts will likely help demand for oil recover in the long term, concerns about new coronavirus variants could impact demand in the short term.

Not-So-Breaking News

  • On Monday Kia Motors and Hyundai (HYMTF) said they are not in talks with Apple (AAPL) to develop an autonomous vehicle. Shares of Hyundai and Kia Motors fell roughly 6.2% and 15% during the trading session in South Korea.
  • Palantir Technologies (PLTR) and International Business Machines, or IBM (IBM), announced they are joining forces. The global partnership will expand Palantir's sales reach and enhance IBM’s artificial intelligence products, which will make them easier to use.
  • Target (TGT) reported that its fitness apparel line All in Motion generated $1 billion in annual sales as people purchased comfortable clothes and equipment to work out at home. The company has grown its market share during the pandemic and sees these exclusive brands as a potential way to hold on to new customers.
  • Automatic, the company behind the open-source website building platform WordPress, announced that it is acquiring Parse.ly, an analytics provider. As the pandemic has moved businesses’ operations online, many have turned to Automatic’s platforms to build websites. Now, these customers will have access to new tools.
  • Shares of Westport Fuel Systems (WPRT) surged Monday after the company said Amazon (AMZN) ordered roughly 1,000 truck engines that run on compressed natural gas for its fleet of delivery vehicles. Amazon is trying to have net-zero carbon emissions across the entire company by 2040.
  • Brian Walsh, SoFi’s senior manager of financial planning, outlined three steps for anyone apprehensive about the market. Visit the SoFi Blog for how to approach a volatile market, no matter a person’s experience in investing.

Financial Planner Tip of the Day

"It can be a good idea to save money right after getting paid—before the cash sits in checking long enough to spark the urge to spend it. So, why not save automatically upfront? Automating can make saving money less of a chore."

Brian Walsh, CFP® at SoFi

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