Square's big bet. And commentary on metaverse stocks.
Today is Tuesday, August 3, 2021.
Square’s Acquisition Shakes Up Financial Biz
Square, Inc. (NYSE: SQ) reached a deal to acquire Afterpay Limited (ASX: APT), which offers a ‘buy now, pay later’ platform.
Definition: Buy now, pay later (BNPL) is a financing option where a customer makes a purchase and pays the majority of the cost in future installments, usually without interest.
Too Hip To Be Square: Shares of Square soared more than 10% on Monday due to the fintech giant’s entrance into BNPL, which seems to be a popular financing mechanism favored by millennials.
Out With The Old: Stocks for most of the big banks and major credit card companies dipped on Monday. Investors viewed these legacy stocks as too slow to implement the popular BNPL loan option that younger consumers like.
The Good: The acquisition positions Square for growth into the emerging BNPL field and the Australian market, which is where Afterpay is located.
The Bad: At some point, all these loans from BNPL purchases could add up into a lot of debt for Square.
Final Thoughts: Max Levchin, the CEO of BNPL company Affirm Holdings (Nasdaq: AFRM), told CNBC on Monday that Square's acquisition of Afterpay is “a giant validation of this entire category.”
Notable Earnings Today: Under Armour (NYSE: UAA), Marriott (Nasdaq: MAR), Amgen (Nasdaq: AMGN), Activision Blizzard (Nasdaq: ATVI), Eli Lilly (NYSE: LLY)
Notable IPOs Today: Paltalk Inc. (Nasdaq: PALT)
Notable Equity Crowdfunding Campaigns Ending Today: Skincare company Skyn by Chi (HoneyComb)
China Stocks Slightly Rebound
There’s renewed hope in Chinese stocks after a regulator from Beijing said it wanted closer cooperation with its U.S. counterpart on Sunday.
Rewind: July was the worst month in years for Chinese stocks after a regulatory crackdown.
Upward: Shares of Chinese stocks both ticked up on Monday and Tuesday.
Opportunity: July’s crackdown caused most Chinese stocks to tumble, which means that the prices are heavily discounted for new investors. Alibaba Group (NYSE: BABA) is down 5% over the last month, and Tencent Holdings (OTCMKTS: TCEHY) is down 10%. Sectors in China to watch include technology, e-commerce and automobiles.
Caveat: There could be future government crackdowns against companies.
Metaverse Investing: Stocks And ETFs
Metaverse, a term that means the sum of all experiences in the digital and virtual, worlds, has taken off in 2021 as a focus area for retail investors.
Facebook (Nasdaq: FB) is one company that has already announced plans to position the company more in the metaverse. But for investors looking for metaverse options outside of FAANG, there are several options.
Big Player: Video game software development company Unity Software Inc. (NYSE: U) has positioned itself as a force in the metaverse. Unity’s technology makes it easier for people to develop video games, but the company is not profitable yet.
Sleeper: Tech company Nvidia Corporation (Nasdaq: NVDA) is aiming to take the metaverse by storm. Nvidia released NVIDIA Omniverse in December, which is like a metaverse for engineers and creators. It’s an open, cloud-native platform that allows users to create workflows.
Big Content: Entertainment companies will play a role in the metaverse. Disney (NYSE: DIS) is reportedly aiming to create a theme park metaverse powered by AI and the internet of things.
Digital Currency: In the metaverse, users will be able to buy things with digital assets, such as cryptocurrency. This is good for crypto stocks such as Coinbase Global (Nasdaq: COIN).
Final Thoughts: If you prefer funds instead of individual stocks, there’s the new Roundhill Ball Metaverse ETF, which was just released last month.
Trends To Watch
Ambitious Prediction: Celsius CEO still sees Bitcoin finishing the year between $140-160K (Yahoo Finance)
Strict Rules In South Korea: South Korean regulator to reportedly shut down 11 crypto exchanges (Cointelegraph)
Simon Says Good Earnings: Simon Property raises full-year guidance as shoppers return to stores (The Real Deal)
Another Bitcoin Dip: Bitcoin price falls ahead of Gensler discussion; IMF warning (Investing.com)