Tuesday,
March 9, 2021

Market recap

Dow Jones

31,802.44

+306.14 (+0.97%)

S&P 500

3,821.35

-20.59 (-0.54%)

Nasdaq

12,609.16

-310.99 (-2.41%)

Microsoft

$227.39

-$4.21 (-1.82%)

Disney

$201.91

+$11.92 (+6.27%)

dMY Tech Group

$10.90

-$1.80 (-14.17%)

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

How Discord Tripled Its Revenue Without Selling Ads

The Many Uses of Discord

Discord, the instant messaging and calling platform, has seen a huge jump in its revenue and user numbers over the past year. The five-year-old startup began as a way for gamers to chat in real time while playing online video games together. People have found many other ways to use the service during the pandemic. For example, students use it to do homework together, friends use it to discuss shows and movies in real time, and retail investors use it to talk about trades.

Discord’s monthly user base doubled last year, hitting about 140 million. The company’s revenue hit $130 million—up from $45 million in 2019.

Real Time Conversations

In contrast to other services which people have been using to stay in touch during the pandemic such as Facebook (FB), Twitter (TWTR), and Snapchat (SNAP), Discord does not sell ads. The company was able to nearly triple its revenue last year just by selling subscription access to various perks on the platform. These perks include enhanced video resolution and special emojis.

Discord’s leadership says it plans to stick with this model. Discord is different from social media sites where people read and comment on posts throughout the day because almost all conversations on Discord take place in real time. This means that advertisements would be more intrusive than they are on a platform where people mainly scroll passively.

Investors Look Ahead

Despite Discord’s devoted user base and growing popularity, the company is not yet profitable. Tech investors tend to be enthusiastic about subscription-based models because they provide consistent, predictable revenue.

Many people have purchased Discord subscriptions for the first time during the pandemic. Now investors are wondering whether or not they will renew these subscriptions as more COVID-19 vaccines are distributed and vaccinated people are able to gather in-person again.

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Saks Fifth Avenue Separates its Online Business

Insight Partners Invests $500 Million in Saks.com

HBC, the owner of Saks Fifth Avenue, plans to separate the brand’s brick-and-mortar stores from its ecommerce operations. Venture-capital firm Insight Partners invested $500 million in Saks.com, the iconic brand’s online division.

“By separating the dot-com business, we can show investors its value,” explained HBC CEP, Richard Baker. “Investors don’t want to put their money in bricks-and-mortar retailers right now.”

Luxury Brands Go Digital

Luxury brands have been slow to build their ecommerce operations in recent years. The in-person shopping experience at a store like Saks Fifth Avenue has been difficult to replicate virtually.

However, the pandemic has changed these trends. Online sales of luxury handbags, clothes, and other items have surged. The valuations of online luxury goods platforms like Zalando and Farfetch (FTCH) have climbed over the past year. Saks.com’s sales hit $1 billion last year.

Rethinking the Digital Luxury Shopping Experience

With the new funding, Saks.com will improve its customer service and return procedures. It will also speed up its shipping process. Saks’ physical stores will still be integrated into online operations. For example, customers will be able to order online and pick up their purchases at store locations.

Saks.com also plans to invest in rethinking the digital luxury shopping experience. Sebastian Gunningham, a former Amazon (AMZN) executive who will join the board of Saks.com, said, “Today, you buy a toothbrush online the same way you buy a $1,000 dress.” Saks.com wants to change that.

IonQ Makes Plans to Go Public

IonQ Will Merge With dMY Technology Group

Quantum computing startup IonQ is making plans to go public by merging with blank-check company dMY Technology Group (DMYI). The deal values the combined entity at about $2 billion.

If the deal takes place, IonQ will be the first publicly traded company specifically specializing in commercializing quantum-computing software and hardware. The company competes against several tech giants which are also working on quantum computing technology including Google (GOOGL) and Microsoft (MSFT).

What Is Quantum Computing?

Quantum computers use quantum physics to analyze a vast number of possibilities to find a probable solution. These calculations happen within a fraction of a second. The technology has applications in industries from finance to drug development.

Quantum computing is booming. Analysts expect that 20% of organizations around the world will budget for quantum computing projects by 2023, including companies and governments. In 2018, under 1% of organizations were investing in quantum computing.

Manufacturing New Hardware

With the money raised from its listing, IonQ plans to manufacture a new quantum computing machine. It will be about the size of an Xbox console and it will be able to run at room temperature.

Most machines on the market today are significantly larger than this product and require supercooling technology, so IonQ’s machine would have significant advantages for customers. The company plans to finish building the device by 2023. Many investors expect that quantum computing will continue to gain traction in the coming years, and IonQ could be an important part of this growth.

Not-So-Breaking News

Financial Planner Tip of the Day

“One way to build credit is to display a history of responsible borrowing. For that reason, you may want to place monthly bills and other expenses on your credit card—being sure to pay the bill in full each month by the due date.”

Brian Walsh, CFP® at SoFi

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