SPACs Invest in EV Truck Startups

Embark Trucks Valued at $5.2 Billion

Embark Trucks, a self-driving truck software company, is going public via a SPAC deal. The transaction with Northern Genesis Acquisition Corp. II gives Embark Trucks a valuation of around $5.2 billion.

The startup is joining a growing list of self-driving truck companies tapping the public markets to raise money in order to expand their offerings. Plus, which is going public via a $3.3 billion SPAC deal, just received a 1,000-plus truck order from Amazon (AMZN). Additionally, Amazon has the option to buy as much as 20% of the company. TuSimple (TSP), another company in the self-driving truck space, raised $1 billion in a SPAC deal earlier this year.

Embark Eyes Partnerships

Embark is going after the shipping market, partnering with companies like Anheuser-Busch InBev (BUD), and Knight-Swift Transportation (KNX), North America’s largest truckload carrier, to bring down costs of shipping and improve safety on roadways. Embark’s competitors, like Plus and TuSimple, are chasing the market in China while Embark is focused on growing in North America.

Embark currently operates a small fleet of self-driving trucks which are being tested on routes in Southern California. The company’s goal is to commercialize the technology and license it to other truck carriers. Embark is aiming to differentiate its technology by making it easy to integrate with many different types of trucks.

Not Always a Home Run

Northern Genesis is among the blank check companies investing in firms focused on sustainability. The SPAC took Lion Electric (LEV), another EV company, public in November 2020 and has high hopes for its deal with Embark.

While SPACs are pouring money into the EV market, not all of the transactions are panning out for investors from a performance perspective. It will be interesting to watch how Embark’s public debut unfolds.

Credit Card Utilization: What You Need To Know

The world of credit scores can make your head spin, but what we know for sure is that credit card utilization plays a big role in how companies compute your credit score. In fact, about 30% of your credit score is determined by your credit card utilization rate. That means a high credit card utilization rate can adversely affect your credit score.

The general guideline is that you should not exceed a 30% credit card utilization rate. Track your credit score for free in the SoFi app, where the factors affecting your score are broken out to make them easier to understand.

Liz Looks at: Getting Back to Basics

A Weekly Column With Liz Young

Every week, SoFi’s Head of Investment Strategy shares her economic and market insights in order to help empower readers to take a more active role in their financial futures. This week, see what Liz has to say about getting back to basics in the second half.

Be Timeless, Not Trendy

We are quickly approaching the midpoint of the year, which means we’ll start talking about markets in terms of the “first half” and the “second half” of 2021. This week’s message is one of principle rather than analysis, but I think it’s an important one for investors to remember in the second half.

The rebound in markets from last Spring’s lows has brought about several new trending topics—meme stocks, stay-at-home stocks, crypto assets, SPACs, NFTs, to name a few. These topics have driven media commentary, sparked debates, and importantly, gotten a lot of newer investors interested in markets.

The market is undoubtedly different than it was 10 years ago. Today’s market offers us a number of new asset types where we can invest in things that weren’t available to the average investor before. I think that’s a wonderful thing. I think widespread interest and engagement in investing is critical to this country making a smoother economic transition across generations.

I also think we’ve spent a lot of time talking about the trending topics and not enough time on the cornerstones of investing.

3 Mantras for the Second Half of 2021

Covering all the tenets of risk management, diversification and time horizon considerations is beyond the scope of this piece, but here are some things I want investors to remember in the second half of 2021 when I believe markets will reward fundamentals and diversification over momentum and trends.

There is life outside of large-caps. For many reasons, we’ve focused on the large-cap stocks more than other size categories. But as small businesses come back to life and people return to work, I see good opportunities in small- and mid-cap stocks. Despite underwhelming second quarter performance in small-caps, the rest of 2021 will focus more on fundamentals and revenue growth potential, which should reward smaller-cap stocks.

It was a global crisis; it will be a global recovery. Although it’s completely natural to focus more on investments on our home turf, it’s also important to spread exposures abroad to capture the opportunities that could exist and enhance diversification. Many parts of the globe are behind the US on their recovery timeline, but the second half of this year is when they may play catchup. In particular, I believe European markets can do well as we move through the rest of 2021.

It’s not all supposed to work at the same time. One sign of a well-diversified portfolio is that the assets don’t all behave the same way. That doesn’t mean they’re misbehaving. There should be parts of the portfolio that slink into the background when others step into the spotlight. The former are the ones you’ll be glad you own when the lights go off and fear strikes.

At the end of the day, investing is a marathon that requires planning and stamina. It’s okay to invest in trendy assets, but don’t let them overwhelm the foundation of a durable portfolio, or cause you to redefine your risk tolerance just to “get in the game.”

-Liz Young, Head of Investment Strategy at SoFi

Tech Companies Chase Green Energy

Tech Companies Among the Top Buyers

Technology companies including Amazon (AMZN), Google (GOOGL), Facebook (FB), and Microsoft (MSFT) are in a race to secure renewable energy to power their massive data centers and meet goals of curbing emissions. These four firms are among the top corporate buyers, accounting for 30% of renewable energy purchase agreements.

The tech giants are using their large cash reserves to fund solar, wind, and other renewable energy projects at a rate never seen before. Developers in some countries said the tech giants will pay upfront and agree to lock in a price for extended periods of time.

Amazon Eyes Big Purchase

Amazon plans to purchase 1.5 gigawatts of renewable energy from 14 new solar and wind plants as it aims to have enough alternative energy to cover its operations by 2025. The projects spread across seven states in the US as well as in Canada, Finland, and Spain.

The plants will power Amazon’s cloud and web services businesses. Operations will begin over the course of the next three years. With these new deals, Amazon is now the number one US corporate buyer of renewable energy. Meanwhile, Microsoft recently inked power-purchasing deals that are expected to push it to the top of the list of the biggest buyers of clean energy.

Data Usage Drives Demand

Surging data usage and the need for more computer processing have been behind tech companies’ push to purchase record amounts of green energy. The tech giants are taking a variety of approaches as they shift to using green energy. Microsoft said it is looking at power grids to determine when and where the most carbon is being emitted. Google, which began matching energy consumptions and renewables in 2017, is now trying to adopt a system through which it can match hourly, rather than just annually.

Tech companies are not likely to slow down their green energy purchases anytime soon. It will be interesting to see what impact their initiatives have on the environment and investors’ pockets.