#118 - What Happened to Zillow’s iBuying Flips? $PTON Tanks, Discord, Angelstack, and Toronto's Floatcard Raises $30m Series A for High-Limit Corporate Cards
In this week's episode of Reformed Millennials, Broc and Joel talk about why Zillow's iBuying business failed, why Peloton is struggling right now, some context to the Elon Musk Twitter poll that determined the sale of ~25B in TSLA stock. They also cover news from a few other companies including Discord, Angel List Stack, Medallion, and a Canadian startup that just a $30m USD Series A.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
This week in the markets was a reminder of the two iron laws of business, and therefore of investing:
An idea is worth nothing
Execution is everything
What a time to be alive gambling, speculating, and investing.
The speculative juices are running high. The small-cap index, Russell 2k broke out from its 8-month long base and it hasn’t looked back. Maybe, this explains the resurrection of the so-called meme stocks – CAR, GME, AMC, BBBY, etc.
The Nasdaq 100 keeps making new all-time highs, led by semiconductors (NVDA, AMD, SMH) and mega-caps like TSLA, GOOGL, MSFT, AAPL, FB. Even AMZN and SHOP which missed earnings estimates are rising and acting constructively. All news is good news in a bull market.
The S&P 500 is also moving up. Pfizer’s antiviral pill news fueled a rally in reopening industries – leisure, travel, entertainment. We saw big jumps in ABNB, LYV, JETS, LYFT, UBER, SBUX, DIS, BA., etc. In addition, the infrastructure bill finally passed Friday night and might stir some upside action in steelmakers like X, CLF, NUE, equipment manufacturers like CAT, GE, the entire construction space, and some clean energy stocks like BLNK, CHPT, WBX, FCEL, BE, etc. The question is how big will those names gap up on Monday and will we see an initial “sell the news” event?
To top it off, even the perennial dogs, cannabis stocks woke up on Friday. MSOS, GRWG are two ways to play that move.
The FOMO is palpable. One can make the argument that there’s some element of froth in the current tape and complacency often leads to a rug pull. Don’t rush too much with contrarianism. Remember that bull markets correct through sector rotation. This means the indexes can continue higher or dip very little while select sectors and stocks have a more sizable pullback.
💸Reformed Millennials - Post of The Week
Whenever I'm feeling confused or disoriented about markets and the path forward my mind is always cleared after reading Morgan's work.
Social sciences get a bad rap because so many insights are hard or impossible to reproduce. I think the only solution is paying special attention to the few behaviors that have repeated themselves throughout history.
THE 3 STORY HIGHLIGHTS FROM MORGAN'S ATTACHED ARTICLE:
No one knows how they’ll respond to risk and setback until they’re in the moment of terror.
Declines occur because many people’s entire goal is to become so successful that they can relax, and relaxing leads to complacency that breeds decline.
Innovation is hard to predict and easy to underestimate because so much occurs by accident when several boring discoveries compound into something extraordinary.
Life for an entrepreneur keeps getting better in 2021 and it does not hurt that global warming killed snow and the FED makes it rain US Dollars.
Recently AngelList launched Angel stack to help people effortlessly create a fundraising-ready startup. Angel stack includes -
AngelList stack provides:
– A Delaware C Corporation with founder-friendly docs– An interest-bearing checking account with free wires– Physical and virtual debit cards– An automatically updating cap table– Single link fundraising (direct & RUV)
The total cost is just $500.
For the last three years Zillow, the US home-listing platform, has been building its own business as a market-maker - buying and selling homes directly and hence providing sellers with an instant purchase, basing its pricing on its supposedly superior data. Unfortunately, the model wasn’t good enough, the margins are too tight and it has been overpaying - it will take a $300m write-down on inventory and exit the business, cutting 25% of the headcount.
Peloton boomed in lockdown, and now it hits the other side as people went back to work and to gyms, and (some) competition arrived: a hiring freeze, missed earnings, and a cut to revenue guidance of up to a third. The stock has fallen 65% this year. I haven't been to a gym since 1992, so I'm not the target customer, but I did not understand how this was a $45bn company.
Directional Arrows of Progress - Tweet Thread
🌊 Canadian Companies To Peruse🌊
Floatcard - Toronto ‘high-limit, no personal guarantee corporate cards’ raises $30m Series A from Tiger Global (17 employees)
🔮Best Links of The Week🔮
Minimally Extractive Meta - Packy McCormick
Help Wanted - JPM on the Markets
STEP FUNCTION and Cannabis - Todd Harrison
Tesla Shares Slide after Elon Musk Proposes Selling 10% of his Stock in a Twitter Poll - From CNBC
Uber inches towards breakeven - Uber reported positive ‘adjusted EBITDA’ for the first time this quarter. Metrics like this can be a joke (when I was a telecoms analyst in the dot-com bubble we talked about ‘earnings before bad stuff’), but as long as you remember it’s not profit then, like gross margin, it can be useful. So, Uber is just about breaking even before stock compensation, capex, the capital structure… and the $3bn loss (so far) on its Didi China investment. Also worth noting - the restaurant delivery business is now bigger than the car service.