#59 - Investors Guide to 2020 US Election, Snowflake, Unity, and the SPAC.
|Sep 22, 2020||2|
In this week's episode, we're talking about the 2020 US Presidential Election and how it’s going to affect investors. We dive into the tax implications, the monetary and fiscal policy future, and what to do about it. Additionally, we discuss the hot IPO market (Snowflake, Palantir & UNITY). The episode is investing heavy and if you’re at all interested in more information on the new stock issues such as Airbnb, Unity, Palantir, etc, you need to check out our Reformed Millennials Facebook Group for daily updates, discussions, and deep dives into these trends.
For specific investment questions or advice contact Joel @ Gold Investment Management.
2020 US Federal Election: 🤴
Imagine being an investor in 2015/2016 and pulling all your US equity exposure because you felt like a Trump presidency signaled the end of the world… Imagine pulling all your money and sitting in Gold or Bonds at exactly that moment…
Imagine missing this: 📈
📈😍Nasdaq is up ~180% since the end of 2015… You’re never getting those gains back. They’re baked in.
Fast forward to today and you’re probably feeling the same way because uncertainty in markets makes us all feel scared but that feeling we have is the exact feeling you need to embrace to make money. When things get volatile, you need to take risk. That doesn’t mean go all in, but it does mean that you need to understand where and when to take that risk. Volatility is an opportunity. 🤯
What if he doesn’t leave? 🐘
If Donald Trump loses the election does anyone see him actually conceding? Biden may not be so fast to concede either, especially given the nature of a pandemic at the polls. Contested elections have been rare in recent history, but not unheard of. How might the market react, before, during, and after?
In 2000 it took Gore 6 weeks to concede the election to Bush Jr. after the mess in Florida. And during that time the market fell by 8.5%. Investors don’t like uncertainty but if you have a long term horizon, its an opportunity.
Trump Win: 🐘
More of the same - artificially low taxes for longer (2025) when the tax and jobs act sunsets
Rule of law continues to deteriorate
continued ZIRP monetary policy
Big continues to win while the small lose
Biden Win: 🐐
Increased corporate tax rate from 21% up to 28%
try and repeal the tax and jobs act (unlikely to have enough support to so)
Increase top marginal tax rate from 37-39 for people making 400k+
Capital gains tax for people making >1,000,000 in income/year from 23.8 to 37-40% (not based on wealth but income)
Eliminate the step-up basis for inherited wealth/ “death tax”
Choose your fighter…
Everything you need to know from crunchbase
Popped 110% on its first day of trading!
In short, Snowflake is a cloud data platform. Customers can store data, exchange it, use it for data applications, and data engineering, among other things.
Berkshire took at ~600m stake at a 30-35b valuation
Bigger than Goldman Sachs, John Deer, and CVS
1,400 employees (CVS has 300,000)
Lost ~500m LTM
🎥 Unity IPO 🕹️
”The @unity3d S-1 is more than a filing. It's the roadmap for manifesting a Metaverse.”
Founded in 2004 as a game studio, Unity has risen to become a foundational piece of infrastructure in the space. The company's engine — which makes it easier to develop a new game — is used by 53% of the top 1,000 mobile games. Though unprofitable, Unity brought in $541M in revenue in 2019, an annual growth rate of 42%. Big winners of this IPO include Sequoia Capital and Silver Lake Partners.
Important Take-Aways for Investors:
The game studio, founded in a Danish basement, now serves 53% of the top 1,000 mobile games, 50% of games across platforms, and 93 of the 100 largest game studios by revenue. Every month, 1.5M creators use their tool, and 1.5B devices download content built with Unity. From the Oculus to the Hololens, Android to iOS, Xbox to PC to Mac, Unity has developers covered
The revenue from customers that Unity acquired in 2018 increased from $21.4M as of December 31, 2018, to $57.0M a year later. That represented an overall expansion of 266%.
The average expansion for public SaaS companies is around 117%. With Unity's DBNER increasing from 122% to 142% over the past several quarters, they sit comfortably above several public software peers
Unity's revenue grew an impressive 42% in 2019 and has maintained this pace through the first half of 2020
could be the tool used to design cars, buildings, and bridges
Next, investors are expecting Unity to expand the market itself. The company cites its addressable segment of the gaming market at $12B, rising to $16B by 2025. Gaming is assumed to be the fastest-growing media sector, with 2.5B gamers already. Unity is in a position to power and benefits from this market expansion
Fortune and Global 500 companies in industries such as architecture, engineering, construction, automotive, transportation, manufacturing, film, television, and retail are using Unity across many new use cases, including automobile and building design, online and augmented reality product configurators, autonomous driving simulation, and augmented reality workplace safety training. These new forms of content are emerging parts of our business and represent a significant opportunity for growth
Unity estimates the market size for their Create and Operate solutions to be approximately $17B, giving a current TAM of $29B between gaming and other industries.
p.s. If you have been forwarded this newsletter, click the button below to subscribe!
Gold Investment Management Ltd. (“GIM”) is registered as a portfolio manager in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario and Quebec and as an investment adviser with the U.S. Securities and Exchange Commission. This material is provided to you for informational purposes only. For greater certainty, the information contained herein should not be construed as a recommendation of any specific model portfolios or investment actions. Any third-party information contained herein has been compiled from sources believed to be reliable, however, GIM makes no representation or warranty, express or implied, as to its accuracy or completeness. Any market prices and estimates in this report are for informational purposes only. The opinions contained herein are effective as at the date of the report and GIM does not assume any responsibility for advising the reader of any subsequent change of opinion. Any indications of past performance contained herein is not indicative of future results and any information with regard to the performance of GIM’s investment portfolios is presented gross of fees which will vary from mandate to mandate. For additional information please visit our website: https://gold-im.com/legal/.