Wednesday,
March 3, 2021

Market recap

Dow Jones

31,391.52

-143.99 (-0.46%)

S&P 500

3,870.29

-31.53 (-0.81%)

Nasdaq

13,358.79

-230.04 (-1.69%)

Zillow

$161.86

-$5.14 (-3.08%)

Tesla

$687.16

-$31.27 (-4.35%)

Zoom Video

$372.79

-$36.87 (-9.00%)

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

Compass Files to Go Public

Compass’ Revenue Climbed 56% Last Year

Compass, the tech-powered real estate brokerage firm, filed to go public earlier this week. As housing prices surged last year, the company’s revenue climbed 56% to $3.7 billion. Compass also had $270 million in losses last year, but that was an improvement from 2019 when its losses were $388 million.

Compass has over 19,000 agents on its platform. To date, these agents have closed more than $300 billion worth of deals and have worked with over 275,000 homebuyers and sellers. The New York-based company is the largest independent brokerage firm in the US, measured by gross transaction volume. It has about 4% market share in the US.

Understanding Residential Real Estate Trends

The residential real estate market has boomed over the past year. Interest rates have been low and people have sought more space to work and social distance at home due to COVID-19. Now, some companies and workers have decided to keep remote work structures in place for the long run, so people are continuing to purchase homes where they plan to work remotely even after the pandemic subsides.

The supply of new homes has not been able to grow as quickly as demand, which has caused home prices to surge. In December 2020, home prices across the country rose 10.4% compared to the same month a year prior. This was the largest annual growth rate in over six years.

Shares of Zillow, Redfin Have Surged

Investors are eager for Compass to begin trading. Though tech-powered real estate companies had their share of difficulties at the onset of the pandemic, they have seen their share prices and demand for their services surge since then.

Online real estate site Zillow (ZG) has seen its stock price triple over the past year. Shares of real estate brokerage firm Redfin (RDFN) are up nearly as much. Though it has been a year of uncertainty and conditions could change, many are hoping that Compass’ IPO will provide another way to invest in a company seeing gains from the current residential real estate boom.

Renting vs. Buying a House: Pros & Cons

Are you trying to figure out if you should rent or buy a house? Watch this video to understand some pros & cons of each option.


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Volvo Sets Sustainability Goals

Volvo’s Transition to Electric Cars

Yesterday, Volvo announced that it plans to stop selling fossil fuel-powered cars by 2030. By 2025, the company wants half of its sales to be electric cars and the other half to be hybrid vehicles.

In just four years the company will no longer sell vehicles powered by only gasoline or diesel. "There is no long-term future for cars with an internal combustion engine," said Volvo’s Chief Technology Officer Henrik Green in a statement.

A Growing Trend

Volvo’s ambitious goals reflect a growing trend in the auto industry. Carmakers around the world are responding to pressures from governments and consumers to offer sustainably-powered vehicles. Volvo is based in Sweden and many of its customers are European. The EU government is at the forefront of passing regulations to limit pollution from vehicles.

Legacy US carmakers are also working to make sure they stay relevant as the market changes. Ford (F) said that by 2030 it will only sell electric passenger cars in Europe. General Motors (GM) said that by 2035 it plans to sell only emission-free vehicles worldwide.

Keeping Up With Tesla

Volvo is also planning major investments in online sales. By the time it makes the transition to all electric vehicles, it also aims for all its sales to take place online. As part of this initiative, it will make its product offerings less complex and will make its pricing more transparent.

These techniques are similar to strategies used by Tesla (TSLA), which only sells its cars online. Tesla is building its first factory in Europe outside of Berlin, with the plant scheduled to begin production later this year. Volvo and other carmakers want to stay competitive with Tesla in Europe and around the world.

Zoom’s Post-Pandemic Future

Zoom’s Rise to Fame

The pandemic made Zoom Video Communications (ZM) into a household name and an investor favorite almost overnight. Over the past year, people around the world have turned to the platform for work, school, and socializing.

Some investors have worried that Zoom will not be nearly as important for daily life post-pandemic. However, a better-than-expected earnings report earlier this week lifted Zoom’s stock price. Many are forecasting growth for the company even after the pandemic subsides.

Zoom’s Stock Price Over the Past Year

Since news of the first COVID-19 vaccine breakthroughs in early November, Zoom’s stock price has fallen by about 18%. From the first of the year up until that point, Zoom’s share price was up 635%. After Monday’s earnings report, Zoom stock spiked again.But yesterday, shares were down about 9% at market close.

Zoom shared that its revenue grew 369% year-over-year during the quarter that ended on January 31. Zoom also announced that it expects to see 42% revenue growth during the fiscal year ahead, even as vaccine rollout unfolds and people are able to return to some pre-pandemic routines.

Zoom’s Corporate Customers Are Likely Here to Stay

Some analysts expect that Zoom’s individual customer base will shrink after the pandemic as people will no longer need the platform for birthday parties, happy hours, and other remote social events. However, Zoom’s corporate customers may be more likely to continue paying for the service.

The number of Zoom customers paying more than $100,000 per year climbed 156% between the quarter which ended in January and the same period a year ago. Many corporations have decided to allow employees to work remotely for the long-term. Additionally, companies may be less likely to want to spend money on business travel now that people have become so accustomed to Zoom calls. Though Zoom’s role in people’s lives will likely change over the coming year, many expect that the platform will stay relevant—especially in the context of work.

Not-So-Breaking News

Financial Planner Tip of the Day

“Whether you rent or own, housing is the largest expense the average US consumer must deal with every month. And if you can reduce your payment, you’ll likely have a bit more flexibility in choosing where to allocate your money—whether that’s spending it, paying down debt, or saving for a future goal. Along with reducing small indulgences, cutting your rent can be an effective way to free up more cash in your budget.”

Brian Walsh, CFP® at SoFi

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