March 10, 2021

Market recap

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+30.300 (+0.10%)

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Top Story

T-Mobile’s Targeted Ad Plan

T-Mobile Will Automatically Enroll Users in a Targeted Ad Program

A number of large tech companies have made decisions to move away from targeted ads recently, but T-Mobile (TMUS) is taking a different approach. Starting on April 26, the cell phone carrier will automatically enroll subscribers in an advertising program centered around their online activity unless they choose to opt out.

T-Mobile is the second largest US carrier by subscribers. At the end of 2020, the company had over 60 million customers under its main brand and over 20 million customers on prepaid plans.

Google and Apple Make Changes

Regulators and privacy advocates have been scrutinizing large tech companies’ targeted ad policies recently. In response, Google (GOOGL) said it will remove the tracking technology known as third-party cookies by 2022 and will not replace it with an alternative tracking technology.

Apple (AAPL) is also rolling out strict privacy protections which will limit advertisers’ ability to collect data about iPhone users. This will have a significant impact on Facebook (FB).

T-Mobile Hopes for Positive Response from Customers and Brands

T-Mobile believes that as tech companies phase out their targeted ad technologies, brands will be eager to receive data about customers from other sources. AT&T (T) and Verizon (VZ) also enroll their subscribers in an ad program which groups them based on interests, like cooking, buying a car, or sports.

T-Mobile says that some of its customers prefer to see ads that are targeted to their interests. Customers will not be forced to enroll in the ad program, so those who do may appreciate receiving ads related to their internet activity.

Targeted ads have been a topic of intense discussion in the tech industry, the advertising industry, and among lawmakers. Many will be eager to see how customers and advertisers respond to T-Mobile’s strategy.

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Chinese Electric Vehicle Companies Eye Listing Closer to Home

Li Auto, Nio, and Xpeng Plan Second Listings

Three Chinese electric vehicle makers which are listed in the US are making plans to pursue second listings in Hong Kong. Li Auto Inc (LI), Nio Inc (NIO), and Xpeng Inc (XPEV) hope to draw on an expanding Chinese investor base.

The three automakers will sell at least 5% of enlarged share capital in Hong Kong. Based on their market capitalization, this could raise as much as $5 billion. The three companies combined have raised $14.7 billion on US markets over the past two years.

China’s Growing EV Market

Analysts expect that sales of new-energy vehicles in China will climb nearly 40% this year compared to last year, which is equivalent to 1.8 million units. Because of this expected growth, it is a crucial time for EV makers to solidify market share.

Tesla (TSLA) and other international EV makers are ramping up their presence in China. The three Chinese companies hope that the capital they raise in Hong Kong will help them expand sales networks and fund technology development in order to keep up with other EV makers vying for attention from Chinese consumers.

Chinese Companies Pursue Listings Close to Home

The trio of carmakers will join a growing number of New York-listed Chinese companies pursuing dual listings closer to home. Ecommerce powerhouse Alibaba (BABA), fast food restaurant operator Yum China (YUMC), and a number of other large Chinese companies have used this strategy over the past year.

This trend is partially because Chinese companies are wary of more stringent regulations in the US and partly because Chinese companies want to take advantage of a growing base of domestic investors. The three carmakers are still in the early stages of pursuing dual listings, but analysts expect they could begin trading in Hong Kong at some point this year.

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Target Adapts to Changing Market Conditions

Rolling Out a New Food and Beverage Line

Target (TGT) is launching a new food and beverage line early next month. The new grocery brand is called Favorite Day and is focused on snacking and indulging. It will include more than 700 products from premium ice creams to beverage mixers to cake decorating supplies.

Target gained roughly $9 billion in market share last year. Customers have turned to Target for home goods, electronics, workout gear, groceries, and other items during the pandemic. As Target looks ahead toward a time when more people will be vaccinated and may return to pre-pandemic habits, the retailer wants to hold onto its new customers. It sees brands like Favorite Day as a way to do this.

Target’s Sales Soared Last Year

Target’s food and beverage sales climbed by almost 21% in 2020 compared to 2019. This was higher than the growth rate for the industry as a whole, which was about 15%. Walmart (WMT), the largest grocer in the country, saw about 9% growth for the year.

Groceries are not as profitable as some of Target’s other merchandise. However, groceries draw people to Targets stores and its website, which fuels sales of other products.

Looking Ahead

Target’s stock price has climbed almost 67% over the past year. It hit a 52-week high of $199.96 on January 13, but it has dropped since then as analysts predict that the company will have trouble beating its 2020 performance.

Target has done an impressive job adapting to unique market conditions over the past year though offering curbside pickup, ramping up its ecommerce offerings, designing masks as part of its clothing lines, and more. With Favorite Day, Target is making an effort to adapt to another unpredictable year.

Not-So-Breaking News

  • Dick’s Sporting Goods (DKS) beat expectations with its fourth quarter report, but shares of the sporting goods retailer fell on warnings of slower sales in the coming months.
  • Peloton (PTON) announced plans to launch in Australia yesterday, its first foray into the Asia Pacific Region. Meanwhile, Sam’s Club (WMT) said it is planning to sell a connected fitness bike similar to Peloton’s for $799, which is significantly cheaper than Peloton’s products.
  • Shares of Stitch Fix (SFIX) fell after the subscription styling service missed expectations for its latest quarter. The company has faced challenges with shipping delays and lower demand, partly because customers have had fewer work-related and social opportunities to dress up over the past year.
  • The FDA has approved a treatment for retinitis pigmentosa, or RP, created by Second Sight Medical Products (EYES). The company’s stock price surged on the news.
  • For the first time since 2019, Boeing’s (BA) monthly aircraft orders outpaced cancellations last month. Airlines are still trying to conserve cash, but some are beginning to invest in new planes anticipating that customers will be eager to fly once more people receive COVID-19 vaccines.
  • There are a few key differences between index funds and mutual funds. Learn more about these funds and see what is best for your investing goals.

Financial Planner Tip of the Day

“For individuals who want to invest in the markets and not think about it, then the broad exposure—and generally lower fees—offered by index funds may make sense. Investing in index funds tends to work best when you hold your money in the funds for a longer period of time, or use a dollar-cost-average strategy, where you invest consistently over time to take advantage of both high and low points”

Brian Walsh, CFP® at SoFi

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