Robinhood’s Wild Ride – Closing Bull Jan. 28th, 2022
Quick Summary:
In this week’s Closing Bull, we’ll be doing a quick update on the system, then we will be discussing the Feds press conference, Russia has amassed a significant force on the borders of Ukraine, Apple had its best quarterly sales ever, Robinhood’s stock has cratered over 80% from its high last August, Tesla announced that profits were up 9 times last quarter, and last but not least, an interesting fact.
Let’s get into the news!
Key News This Week:
System update
Feds press conference
Russia amasses significant forces on the borders of Ukraine
Apple had its best quarterly sales ever
Robinhood’s stock craters over 80%
Tesla announces profits were up 9 times last quarter
Interesting fact
Read the Transcript
Hi and welcome to my financial markets’ re-cap for the week.
Before we get to the news, a quick update on the system. It’s been a little bit boring around here as we last exited a trade on Jan 4th, which so happened to be the very top of the market for the S&P 500.
Obviously, we are very happy to have gotten out at the top and merely observe the carnage. Normally, I would prefer to be in making money, but sometimes it sure pays when you can wait till it craters and buy back in. It’s been picture-perfect so far and we are finally back in what could well be the low for a while.
So, things are going very well for us in this new year, everything became very cheap without us and now we hope to ride it back up again. I will, of course, have another update next week.
So that was the system update, now what happened in the news this week?
The biggest news this week was the Feds having its press conference at the conclusion of its 2-day rate meeting on Wednesday. while no changes were made from the obvious plan to raise rates in March and stop easing purchases around the same time, the market got pretty spooked once the Fed Chair started talking and taking questions.
Personally, I didn’t hear anything controversial, but with the market being so jittery right now, it’s not surprising it dropped as investors latched onto every word for clues of how aggressive the fed will be this year in trying to tackle inflation.
And the other main news for the markets is the geopolitical risks going on between the US and European partners and Russia. As, unless you have not been paying attention to the news, you will already know that Russia has amassed a significant force on the borders of Ukraine, and the markets never like the prospect of warring nations, especially the big boys that have all the big toys. Let’s hope for a peaceful resolution, where every side gets to claim victory and no needless loss of life is realized. That is certainly my hope.
On the earnings front this week, Apple had its best quarterly sales ever in the three months leading up to Christmas. This latest report, despite supply challenges, showed sales last quarter jumped 11% to an expectation-beating $124B.
Sales grew across every product line except iPads. CEO Tim Cook also reassured investors by saying supply issues were easing. And on this news, Apple shares spiked 5%.
In other earnings, Robinhood stock fell 12% after hours Thursday, before recovering in a wild day of trading, when it revealed a wider loss than expected and projected Q1 revenue that left investors asking, “…that’s it?”
Investors have been asking lots of tough questions about the company recently. Robinhood’s stock has cratered over 80% from its high last August. It was once valued at $60 billion; now, it’s worth less than $10 billion.
A lot of this may have come out of their trading restrictions on the meme stocks like GameStop last year, causing multiple lawsuits and damaging their “champion of the little guy” reputation.
And lastly, on the notable earnings front, Tesla announced that profits were up 9 times last quarter compared to a year earlier.
The company had reported earlier this month that its car deliveries nearly doubled in 2021 to almost 1M vehicles. But, despite this good news, the stock dipped after Tesla warned of ongoing production challenges.
And of course, investors also have their eye on the competition, which is heating up in this space dramatically.
Lastly, an interesting fact:
The US housing market gained nearly $10 trillion in value during the pandemic, that’s about a 25% increase in value, incredible!
That’s it from me, It’s Friday, time to down tools, thanks for watching, and bye for now.