An e-zine that keeps you informed on the hottest trends on Wall Street, provides you with the key information to make you filthy rich (*your results may vary)
by Joseph Hargett | September 23, 2021
Nobody carries wallets anymore. I mean, they went out with powdered wigs. See, here’s what you need: A couple of cryptos and your bankroll, right? Just don’t get locked out of your Robinhood account now…
Hold up, I’ll have you know there’s bitcoin on my Robinhood right now! I can show you!
Currently, Robinhood offers crypto trading … in theory. But is crypto ownership by any other name just as sweet? No … not really.
When you buy crypto on Robinhood, you don’t really “own” it. You can buy and sell various crypto tokens, but just like we learned with the GameStop (NYSE: GME) incident, Robinhood has a flimsy grasp on what “buy” and “sell” actually mean.
With Robinhood’s new crypto wallets, users can do more than just trade cryptocurrencies.
Now you can do all that other junk you’re supposed to be able to do with cryptocurrencies, like sending and receiving them or even moving your coins out of your wallet. (And Robin forbid you ever want to move something out of your account…)
Never mind the fact that these basic crypto wallet abilities are already industry-standard and that companies like Coinbase have offered this for years…
Robinhood, for its part, loves the rollout-by-phases approach. According to Chief Product Officer Aparna Chennapragada:
What a positive, customer-focused response this is. If only it didn’t come from Robinhood, I might believe it. What this actually means is that crypto traders finally bugged Robinhood enough (or publicly enough) about being exposed to crypto prices without the actual ownership of the tokens.
And Robinhood navigates product development by adjusting the wheel whenever people complain too much, which works about as well as driving by sound. Mind the cyclist, Richaaaard!
But, in a jarring turn of events, I’m putting my pessimism and jadedness about Robinhood aside (just for a second, the real me will be back shortly). Let’s get down to business — what this means for Robinhood crypto hodlers and all you HOOD investors.
Starting a crypto wallet means Robinhood is one step closer to an actually competitive crypto product … and big-time crypto revenue. The brokerage got a taste of that sweet, sweet crypto income ambrosia, and nothing was ever the same.
Robinhood makes money off of crypto the same way it makes revenue from stock and options trades: payment for order flow (PFOF). Robinhood sells your order to a market maker that completes the trade, then it gets a cut of the spread between the bid and ask price.
The only difference here is that with crypto, Robinhood does not report info on its PFOF. Very convenient. And with the SEC moving to regulate both PFOF and the crypto markets, you can see why Robinhood is so eager to cash in its crypto chips while it still can.
More than half of Robinhood’s transaction revenue last quarter came from crypto. A year earlier, that was just 3% of Robinhood’s revenue. And that’s pre-wallet … with people just bidding up and down their favorite coins.
This time next year? Robinhood might just be the consumer crypto market’s heir apparent. If crypto seemed like a mere add-on for its free-stock-trading portfolio beforehand, today it’s Robinhood’s lifeline. (And its lifeblood, too … whichever life-sustaining metaphor you prefer.)
If this all sounds familiar, we predicted this move to divest its interests — to ease the reliance on stock/option PFOF. Robinhood’s plan? It’s simple, really: We’ll just move on to crypto PFOF! At least until the SEC bans ‘em both…
While its main moneymaking business is under the spotlight as Feds mull over PFOF, Robinhood’s crypto revenue is still an unreported back alley (for now) where Robinhood’s real cash will be made going forward.
With my jadedness still slightly out of the way, the crypto wallet move is a net positive for both Robinhood the business and Robinhood the stock.
Not only will this boost the company’s revenue and make it more crypto reliant (a good thing, in this case), but some cynical part of me thinks that part of Robinhood’s motivation is optics.
Offering crypto wallets is an easy way to boost your client-focused reputation, but I don’t expect Robinhood to do anything useful for its customers that isn’t also self-serving. Robinhood’s selling control, but if it really was all about giving control, then we wouldn’t have had that whole GME fiasco, would we?
What do you think, Great Ones? Can Robinhood hammer out some solid crypto revenue before the Feds come in packing heat? Or are the SEC’s two-pronged threats to regulate crypto and PFOF all hot air?
Remember what we said the other day about the U.S.’s ongoing labor shortage and how people simply don’t want to toil for low pay and subpar working conditions anymore?
Well, that problem is affecting shipping behemoth FedEx (NYSE: FDX) in a big way. The company cited rising labor costs and growing supply chain issues as the double-whammy behind its latest $0.54 per-share miss.
According to FedEx, the company lost roughly $450 million last quarter due to labor shortages alone. To make matters worse, FedEx will continue hemorrhaging cash until it’s able to bandage its rapidly declining workforce.
So that FedEx package that’s been stuck in Pensacola for the past three weeks? Yeah … now I know why I haven’t gotten it yet.
With the holiday shopping season right around the corner, FedEx is in for a world of pain if it can’t get a handle on those costly processing delays. Add a dash of inflation fears to this smarmy shipping stew, and you’ve got a recipe for a full-blown sell-off before years’ end.
While FedEx stock has rebounded slightly since Tuesday’s earnings release, FDX investors should brace for more turbulence ahead.
The House of Mouse — aka The Walt Disney Company (NYSE: DIS) — was in hot water earlier this week after CEO Bob Chapek said headwinds could affect Disney+ subscription growth in the company’s fiscal fourth quarter.
The reason? Production delays are set to impact the release of new movies and TV shows on Disney’s streaming service. All because of … you guessed it … COVID-19.
Chapek’s statement wasn’t any big surprise to Disney investors who possess a shred of common sense. After all, production delays have impacted the streaming industry for well over a year now. But that didn’t stop Wall Street from getting all triggered and overreacting to the news.
One Credit Suisse analyst, Douglas Mitchelson, went so far as to release this stinker of a statement: “Disney’s long-term streaming outlook remains highly uncertain and heavily debated, and thus minor shifts in near-term results will continue to have an outsized impact on its stock price.”
Highly uncertain? Heavily debated? Whatcha been smoking there, Dougie?
Look, Disney’s subscriber growth is still going strong at 116 million paying customers — a figure that’s expected to grow by the “low single-digit millions” in the company’s fourth quarter. Furthermore, Disney still anticipates having 260 million paying subs across all streaming platforms by the end of 2024.
In other words: Disney will be perfectly fine. While Wall Street worries over a growing subscriber base that’s not as “growthy” as originally anticipated, Great Stuff Picks readers can rest assured that Disney remains a solid investment choice. So, keep holding those DIS shares.
When I think back to how many of those glistening Olive Garden breadsticks I’ve eaten over the past few months, I feel somewhat responsible for Darden Restaurants’ (NYSE: DRI) latest earnings beat.
The purveyor of shopping-center cuisine reported earnings of $1.76 per share, which came in higher than analysts’ $1.64 per-share forecast. Meanwhile, sales totaled $2.3 billion, up from $1.5 billion this time last year. For those of you with a strong aversion to math, that’s a 53% increase year over year.
Like many other restaurateurs, Darden expects business to continue picking up post pandemic … if that’s what you can even call this COVID-contagion purgatory we’re all still living in. But I digress.
Not only does Darden expect to see full-year earnings of $7.25 to $7.60 per share — up from an earlier outlook of $7.00 to $7.50 per share — but it’s also greenlit a quarterly dividend in addition to a $750 million stock buyback.
So … many … numbers.
Yeah, sometimes it just be like that. But lest you find your eyes starting to glaze over, the main takeaway here is this: Sure, a lot of people could make a mean fettuccine alfredo at home with a little lite Googling and a dash of dedication. But how many really want to?
Lazy people everywhere will keep eating out in favor of dirtying their dishes … and Darden will keep making money from those of us who could’ve cooked at home but honestly just couldn’t be bothered.
Shares of Salesforce.com (NYSE: CRM) rocketed higher this morning after the company boosted its full-year sales outlook amid rising demand for its cloud-based software.
The company raised its fiscal 2022 sales guidance to a range between $26.25 billion and $26.35 billion, which is just ever-so-slightly higher than last month’s forecast of $26.2 billion and $26.3 billion.
Now, all of that is just fine and dandy … and CRM investors should be pleased with the latest report. But what really stood out to me is Salesforce’s continued confidence in the ever-shifting work-from-home landscape.
While some companies let their employees stay home amid rising delta variant concerns, others requested a full return to the office (or, at the very least, a blended work environment).
Now, I know that Salesforce’s cloud operations are perfectly suited to these hybrid operations … but what happens to the company’s growth prospects when the U.S. finally gets its &*%^ together and COVID’s a mere blast from the past?
Not to be a Negative Nancy … but I still think celebration from CRM investors is a bit premature, at least over the long term. Do you agree? Or do you think I’m full of hot air and need to go eat a Snickers?
Let me know! GreatStuffToday@BanyanHill.com is where you can reach us best.
In the meantime, here’s where you can find our other junk — erm, I mean where you can check out some more Greatness:
Until next time, stay Great!