Tuesday,
April 20, 2021

Market recap

Dow Jones

34,077.63

-123.04 (-0.36%)

S&P 500

4,163.26

-22.21 (-0.53%)

Nasdaq

13,914.77

-137.58 (-0.98%)

Facebook

$302.24

-$3.94- (1.29%)

ExxonMobil

$56.48

-$0.18 (-0.32%)

Harley-Davidson

$44.29

+$3.91 (+9.68%)

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

The Social Audio Market Is Booming

Clubhouse Hits $4 Billion Valuation

Clubhouse, an audio social media app, was recently valued at $4 billion after a Series C funding round. This is particularly impressive because the app is still in beta and has no revenue. Meanwhile Facebook (FB) is launching its own set of social audio products.

Clubhouse's huge valuation and Facebook's move into the social audio space underscore the growing power of social audio apps. People flocked to audio entertainment as a way to pass the time and to combat “Zoom fatigue” during the pandemic. As of mid-March, Clubhouse was downloaded more than 12 million times. Though pandemic restrictions are easing, both investors and consumers are enthusiastic about the future of audio-based social media.

Other Tech Companies Want to Join the Audio Club

Facebook is taking note of the social audio boom and is launching a series of new products. The company announced that it is exploring building its own Clubhouse-type app as well as a podcast feature. It is also working on an asynchronous voice messaging system, which will allow Facebook users to leave audio messages for one another. Facebook also plans to launch an audio-only version of its video conferencing platform, Rooms.

Facebook isn't the only tech company going after the social audio market. Spotify (SPOT) inked a deal in March to buy live audio app company Betty Labs, and Twitter (TWTR) is bringing its audio tools to its desktop platform soon. Messaging app Discord recently launched audio-only chat rooms, and Apple (AAPL) is expected to announce audio features at a product launch event this week.

Challenges in the Social Audio Space

Despite Clubhouse's lofty valuation and other tech giants’ enthusiasm for social audio, this emerging industry is not without its challenges. Moderating audio chat rooms has proven difficult so far, with the potential for trouble on display this past weekend. Clubhouse had to shut down rooms after reports of anti-Semitic comments showed up on Twitter. The social audio industry is also getting more crowded, so companies will need to find unique ways to get listeners’ attention.

Despite these potential stumbling blocks, investors, tech companies, and consumers are optimistic about the future of audio communication and entertainment. As more companies enter the industry and consumers’ habits change after the pandemic, many will be listening closely to hear what comes next for the social audio sector.

Say Hello to the Safety Net

Truth: 17% of people have less than one month of living expenses saved for emergencies, according to our recent 2021 Money Moves Survey by SoFi.*

If you’re one of them, you’re not alone—and we’ve got a new money move to help: the Safety Net. What does this move entail? If you’re living paycheck to paycheck, tracking expenses is just one way to get started. Find out how else to make this move by exploring our new tool.


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Oil Companies Work to Store and Capture Carbon

ExxonMobil and Shell Seek New Revenue Stream

Energy companies including ExxonMobil (XOM) and Royal Dutch Shell (RDSA) are exploring ways to reduce their carbon emissions and help other companies do the same.

Oil companies' fortunes have long been tied to extracting carbon from the ground and using it to produce oil. They now want to capture carbon and put it back in the ground. Oil companies may do this to reduce their own emissions and sell this service to other high-pollution industries.

Consumers are becoming more inclined to support green companies, and oil giants have growing concerns about the future of their core business. Capturing and storing carbon could provide a helpful new revenue stream for oil companies.

Is Carbon Burying a $2 Trillion Industry?

In March, Shell partnered with Total (TOT) and Equinor (EQNR) to create a joint venture which stores carbon in Norway. It is slated to be operational in 2024, and the carbon will be buried in a rock formation deep beneath the sea. When the project launches, it will give non-oil companies the opportunity to have their carbon collected and stored. Shell has plans to bury carbon for Fortum Oslo Varme and HeidelbergCement (HDELY) and has said 10 other companies have also expressed interest in the service.

Meanwhile, ExxonMobil is also creating a new unit to capture and store carbon for companies. The company thinks it may be a $2 trillion industry by 2040. Chevron (CVX) and BP (BP) are also working on carbon storage projects.

Questions About Carbon Capturing Costs

The oil companies are optimistic about the potential revenue stream but have not said how much it will cost to offer carbon capturing services. They also have not yet laid out what the profits may look like, saying numbers will depend on demand and other factors. Executives in the oil industry have said they expect the cost of capturing carbon to decline over time.

As it stands, most of these carbon-storage projects are backed by governments. For example, Norway is footing about 80% of the costs for the Shell project, which amounts to $1.6 billion. Whether the oil companies can successfully handle carbon capturing on their own remains to be seen. Though there are unanswered questions about carbon capturing, the world is becoming more aware of the need for controlling emissions. Oil companies are working on ways to address that shift.

What the New SEC Head Means for Investors

Changes for the SEC

Gary Gensler, a veteran banker and regulator, was confirmed as the new Chairman of the Securities and Exchange Commission last week, and was sworn into office over the weekend.

Gensler's appointment comes at a time when the stock market is surging, cryptocurrencies are gaining prominence, SPACs are becoming commonplace, and environmental investing is growing in popularity. Here’s what his appointment means for investors:

Gensler to Address Recent Stock Market Challenges

Gensler will be faced with several unique challenges in his new role. He will need to address recent stock market events including the GameStop (GME) buying spree and the collapse of Archegos Capital Management.

Gensler is known for being a tough regulator and is credited with overhauling the swaps market following the 2008 financial crisis. His supporters hope he will take a similar approach with the stock market. Many want him to pass regulations which will make public companies disclose more information to investors. The Trump Administration rolled back certain protections for investors and many Democrats want to bring them back.

“Consistency and Comparability” for Investors

Some lawmakers also want the SEC to require companies to disclose more information about threats to their business from climate change. Gensler indicated that he supports these initiatives. During his Senate confirmation hearing he said the SEC plays a role in bringing "consistency and comparability" when it comes to information available for investors.

At a time when many discussions are happening around cryptocurrency regulations, it’s worth noting that Gensler will help shape those conversations. As SEC chair, he will play a role in adding new regulations to the industry or determining how existing regulations should apply. “Bitcoin and other cryptocurrencies have brought new thinking to payments and financial inclusion, but they’ve also raised new issues of investor protection that we still need to attend to,” Gensler said during a confirmation hearing. “[I’ll] work with fellow commissioners to both promote the new innovation, but also at the core to ensure investor protection.”

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From climate change to trading, President Biden's pick to head the SEC has a lot on his plate. With the way the markets have been behaving recently, Gensler will likely face more unexpected challenges in the coming months.

Not-So-Breaking News

  • Mastercard (MA) is buying Ekata, an identity verification company, for $850 million. Ekata makes APIs and tools to help merchants, marketplaces, and financial firms authenticate the identities of their customers. The acquisition will boost Mastercard's security and digital identification capabilities.
  • Coca-Cola's (KO) Q1 demand in North America and Western Europe remained flat, compared to a year ago. The beverage giant did say global unit case volume in March returned to 2019 levels. Coca-Cola expects revenue growth in the high single digits for the year.
  • Harley-Davidson's (HOG) retail sales grew by 30% in the first quarter, marking the first year-over-year sales increase for the company in six years. The motorcycle maker also upped its full-year sales growth forecast. Harley-Davidson is focusing on pricier bikes and is exiting less profitable markets. So far, these strategies are proving successful.
  • The UK government may launch its own digital currency. The Treasury and the Bank of England will work together to explore this possible initiative. The digital token would exist alongside cash and deposits.
  • CVS Health (CVS) will soon offer three over-the-counter COVID-19 tests at its drugstores and online. The home tests were developed by Ellume, Abbott Laboratories (ABT), and Labcorp (LH). None of the tests require a prescription and consumers can purchase them even if they don’t have COVID-19 symptoms.
  • The only way to stay ahead of unexpected expenses is to plan for them. Learn how you can be prepared for the unexpected with an emergency fund and more.

Financial Planner Tip of the Day

“An emergency fund is intended to be used at a moment’s notice. For the most part, you’ll hear that a healthy emergency fund should cover between three and six months worth of living expenses—which would include rent, mortgage, bills, food, and other essentials. And since you never know when an emergency might happen, it’s best to keep your fund relatively liquid.”

Brian Walsh, CFP® at SoFi

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