Monday,
March 29, 2021
Market recap
Dow Jones
33,072.88
+453.40 (+1.39%)
S&P 500
3,974.54
+65.02 (+1.66%)
Nasdaq
13,138.72
+161.04 (+1.24%)
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Top Story
The Week Ahead on Wall Street
Economic Data
There are no economic data reports scheduled for today. Tomorrow, the January Case-Shiller National Home Price Index and the March Consumer Confidence Index will be released. In February, consumer confidence was up as the labor market showed signs of improvement and COVID-19 vaccine rollout progressed.
On Wednesday, look for the February Pending Home Sales Index, March Chicago PMI, and the March ADP employment report. This monthly report comes from Automatic Data Processing, which handles payroll for about 20% of US private employment. The report showed that private sector employment increased by 117,000 between January and February.
On Thursday, March markit manufacturing PMI, the March ISM Manufacturing Index, February construction spending, and March motor vehicle sales will be released. Initial jobless claims will also be published. Last week, jobless claims reached the lowest level seen since the pandemic began.On Friday, March average hourly earnings, March nonfarm payrolls, and the March unemployment rate will be published. In February, the unemployment rate was 6.2%. Most of last month’s job gains came from the leisure and hospitality industries.
Earnings Reports
Canoo (GOEV), a California-based electric vehicle startup, will report earnings today. The company focuses on affordable commercial vehicles to be used by car rental and rideshare companies. Earlier this month, the company shared plans for an electric pickup truck which will be available in 2023.
Look out for a report from Chewy (CHWY) tomorrow. The online pet supply retailer has seen surging demand over the past year as consumers have adopted pets and purchased goods online. However, the industry is getting more crowded and Chewy is ramping up its marketing budget to stay competitive. This could have an impact on its bottom line.
On Wednesday, Walgreens (WBA) will share its latest results. Walgreens has said it has the capacity to distribute 20 million to 25 million vaccine doses per month as long as a supply of shots is available.
Micron Technology (MU) will also share its latest results on Wednesday. PC manufacturers and data-center operators have rushed to buy the company’s products over the past year. However, global supply chain challenges have resulted in a worldwide chip shortage, which could weigh on Micron’s earnings.
CarMax (KMX), the largest used car retailer in the US, will share its earnings report on Thursday. The company beat expectations with its last earnings report as consumers looked for ways to avoid public transportation without spending money on a new car. Investors will be curious to see if this trend has continued.
The Week Ahead at SoFi
Enjoy the beginning of spring and some exciting events. Join us for tips on networking and a new segment of Your Next Dollar—live on LinkedIn, Twitter, and Zoom. RSVP in the SoFi app!
WeWork Plans to Merge With a SPAC to Go Public
BowX Acq Corp Will Join With WeWork
Co-working space company WeWork has agreed to merge with a SPAC called BowX Acq Corp (BOWX) in order to go public. WeWork made plans to pursue a traditional IPO about two years ago, but these plans unraveled.
BowX raised $420 million as an empty shell last year and then began looking for a business to take public. Shares of the blank check company climbed on news that it will merge with WeWork.
WeWork’s Business Model
WeWork signs long-term leases with landlords. It then renovates and furnishes spaces and subleases offices and conference rooms to businesses and individuals. These subleases are sometimes as short as one month.
The pandemic created significant hardships for WeWork. Its clients were able to pull out of leases quickly when the world began working from home, but WeWork was left locked into long-term agreements with its landlords. WeWork’s occupancy rate around the world tumbled to 47% during 2020 and it lost $3.2 billion.
The Future of WeWork and Coworking
BowX values WeWork at $9 billion including debt. This is far lower than WeWork’s $47 billion valuation from 2019. The past two years have been tumultuous for WeWork because of its failed IPO and the pandemic.
However, some investors have high hopes for WeWork’s future and for the coworking industry as a whole. A number of companies will likely continue to offer remote work options even after the pandemic subsides. Meanwhile, some office workers have grown weary of working at home during the pandemic. WeWork may be able to provide a useful solution during a time of changing norms in the way workers and employers are thinking about the role of offices.
ThredUp Makes its Public Debut
ThredUp’s First Trading Day
Online second hand clothing platform ThredUp (TDUP) made its public debut on Friday. The company set its final listing price at $14. At the end of the trading day, ThredUp’s share price was $20.
ThredUp was most recently valued at $1.3 billion. The company’s revenue was $186 million in 2020—a 14% increase from the previous year. But ThredUp lost $48 million in 2020, which was up from $38 million in 2019.
The Rise of Online Thrifting
ThredUp specializes in used women’s and children’s clothing. Thrifted clothing has surged in popularity recently, especially among younger consumers who are conscious of their clothing’s impact on the environment. Because visiting in-person thrift shops was not an option for some of the past year, online used clothing retailers have seen their user numbers climb significantly.
At the end of 2020, ThredUp had 1.2 million active buyers—a 24% jump from the previous year. These shoppers placed 3.2 orders on average during the year and visited the ThredUp site six times per month.
The IPO Boom Continues
There was a flurry of IPOs in 2020. New public listings raised more funds than in any single year during the dot-com boom. This trend shows no signs of slowing down in 2021. So far this year, 88 companies have made their public debuts through IPOs. This is a 267% increase compared to the same period last year.
There have already been several successful IPOs in the online second hand clothing space. Poshmark (POSH) went public in January and its stock price more than doubled on its first trading day.
As more people receive vaccines and begin to return to some pre-pandemic habits, investors are curious to see what lies ahead for the online second hand clothing industry. Consumers may be eager to return to in-person thrift shops, though others may continue to scour online platforms for unique items and deals.
Not-So-Breaking News
- GlaxoSmithKline (GSK) and Vir Biotechnology (VIR) applied for emergency use authorization from the FDA for their monoclonal antibody drug used to treat COVID-19 symptoms. In a trial, the drug reduced hospitalizations and death from the coronavirus by 85%.
- Chinese EV maker Nio (NIO) and American auto giant Ford (F) announced they have halted production at some of their factories because of the global chip shortage. Honda (HMC) and General Motors (GM) made similar announcements earlier last week.
- Madison Square Garden Entertainment (MSGS), a company which manages professional sports teams and entertainment venues, has come to an agreement to buy MSG Networks in an all-stock deal. The tie-up will hopefully help Madison Square Garden Entertainment make up for losses during the pandemic by growing its sports betting operations.
- Recent data shows that US consumer spending, which accounts for over two-thirds of economic activity in the country, dropped by 1.0% in February. In January, the metric climbed by 3.4%. In March, consumer spending is likely to rise as Americans receive their $1,400 stimulus checks.
- Pilot, an accounting startup backed by Jeff Bezos, hit a $1.2 billion valuation after a recent funding round. The company helps business outsource tasks like payroll and bookkeeping. Demand for Pilot’s services have surged during the past year.
- SoFi now offers eligible members the opportunity to participate in upcoming initial public offerings, or IPOs. Read our step-by-step guide on how to participate in IPOs at the pre-listing stage with What to Know About SoFi's Pre-listing IPO Offers.
Financial Planner Tip of the Day
“In the stock market, volatility is another word for risk. So, the higher the volatility, the riskier the investment. The volatility of an investment is often measured by its standard deviation of returns as compared to a broader market index or even it’s own past returns.”
Brian Walsh, CFP® at SoFi