March 25, 2021

Market recap

Dow Jones


-3.09 (-0.01%)

S&P 500


-21.38 (-0.55%)



-265.81 (-2.01%)



-$31.89 (-4.82%)

Yum Brands


-$0.92 (-0.85%)



-$61.41 (-33.79%)

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Top Story

US Customers Can Now Purchase Teslas With Bitcoin

Elon Musk’s Announcement

Elon Musk announced earlier this week that US customers can now purchase Tesla (TSLA) vehicles using bitcoin. International customers will be able to buy Teslas with the cryptocurrency later in 2021, Musk said.

Last month, the electric car company shared that it had purchased $1.5 billion worth of bitcoin and that it planned to begin accepting the cryptocurrency as payment. The system for customers to do this is now officially in place.

Tesla Will Not Convert Bitcoin to Dollars

Tesla’s decisions, and other contributing factors, have caused the price of bitcoin to hit record highs in recent weeks. Though it continues to be volatile, the price of the cryptocurrency passed the $60,000 mark earlier this month.

Tesla says that when customers buy cars with bitcoin, it plans to hold the digital currency instead of converting it to dollars. It will handle cryptocurrency transactions internally. Essentially, Tesla will turn one-time payments into assets with changing value.

Environmental Concerns

Many cryptocurrency enthusiasts have cheered Tesla’s moves to embrace Bitcoin.

But others are critical of the company’s investments in Bitcoin because of the cryptocurrency’s environmental impact. Tesla builds sustainable vehicles, but Bitcoin is not currently an environmentally sustainable form of conducting transactions. The annual carbon emissions from the electricity that goes into mining Bitcoin and processing transactions is equal to the carbon emissions of all of New Zealand. Tesla’s moves into Bitcoin seem at odds with its goal of making vehicles more sustainable.

Tax Implications

One thing to keep in mind, should you choose to use Bitcoin for a Tesla purchase, is the potential tax liability. The IRS views Bitcoin and other cryptocurrencies as property, so when you sell it or exchange it for a product, taxes have to be paid on any appreciation in value from when it was purchased.

If you’ve owned your cryptocurrency for less than 12 months, you’ll pay short-term capital gains rates, which are the same as your normal income tax rate. If you’ve owned it for more than a year, you’ll pay long-term capital gains rates, which vary from 0% to 20% depending on your income.

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KFC, Pizza Hut, and Taco Bell Roll Out Text Message Ordering

Yum Brands Acquires Tictuk

Yum Brands (YUM), which owns restaurant chains including KFC, Pizza Hut, and Taco Bell, is acquiring an Israeli startup called Tictuk. With Tictuk’s technology, customers will be able to place orders at Yum-owned restaurants through text messages as well as through Facebook’s (FB) platforms, Messenger and WhatsApp.

Yum Brands has been testing Tictuk’s technology at about 900 restaurant locations in 35 countries and has found that it significantly boosts sales. Tictuk’s system can be used for delivery, pickup, or dine-in orders, and it can turn around an order in as little as 60 seconds.

Retaining Customers Post-Pandemic

During the pandemic, more customers went to fast food restaurants because sit-down restaurants were shuttered. As more people receive COVID-19 vaccines and indoor restaurants begin to reopen, fast food chains are looking for ways to keep demand strong. Many of these strategies are focused on delivery, online ordering, and overall convenience.

Yum Brands earned $17 billion from online sales last year—a 45% jump compared to 2019. Margins on online orders tend to be higher for fast food restaurants because they require less labor than a traditional in-person restaurant transaction.

Other Fast Food Companies’ Strategies

Yum Brands is not alone in its goal of retaining customers by incorporating more technology into its business model. Restaurant Brands International (QSR), which owns Burger King, Tim Hortons and Popeyes Louisiana Kitchen, has started offering online ordering and delivery at almost 10,000 locations across the US and Canada. In 2018 these services were only available at a few hundred of its restaurants.

Though it is difficult to predict exactly how consumer habits will shift as more people receive COVID-19 vaccines, fast food companies hope that by offering tech-powered, convenient experiences, they will be able to keep up the momentum they have built over the past year.

Fintech Companies Look Ahead

Fintech Companies Respond to Changing Habits

During the pandemic, daily habits have been altered and fintech companies such as PayPal (PYPL) and Square (SQ) have stepped in to meet consumers’ changing needs in a variety of ways. One interesting trend is that more consumers have been using debit cards recently. This has benefitted a number of fintech companies.

Fintech stocks rallied during 2020 with Paypal, Square, and Shopify (SHOP) stock prices more than doubling. These stocks have gained less than 5% so far in 2021. But if these companies are able to continue meeting customers’ needs as the economy begins to reopen, they could see more growth.

Debit Cards Gain Popularity

Debit cards have gained popularity over the past year. According to Visa (V) and MasterCard (MA), debit card dollar payment and purchase volume was up 23% year over year in the quarter ending last fall. This was more than twice the growth rate before the pandemic. In contrast, the same measure for credit cards dropped by 8%.

This is partially because stimulus checks from the federal government are sometimes sent out on prepaid debit cards or they are deposited into checking accounts linked to debit cards. A number of fintech companies earn substantial revenue from fees collected on debit cards.

The Rise of Digital Payments

Fintech companies have also given consumers and businesses access to online and digital payment systems over the past year. People have increasingly used these systems for small, everyday purchases like groceries. These purchases also tend to be more debit-oriented.

Additionally, “buy now, pay later” systems have gained popularity recently. These payment methods allow consumers to make purchases in chunks on debit cards rather than with credit cards.

Millions of Americans are currently receiving stimulus checks. Meanwhile, sectors of the economy are beginning to reopen. Investors are curious to see if fintech companies will be able to adapt to changing conditions and continue the growth they have seen over the past year.

Not-So-Breaking News

Financial Planner Tip of the Day

“As you work toward paying your credit card debt, consider making more than the monthly minimum payments. This can help you pay off your debt faster and in doing so, could help you reduce the amount of money you spend in interest over the life of the debt. This can be helpful in both the avalanche and snowball methods of debt repayment.”

Brian Walsh, CFP® at SoFi

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