Robinhood Investing App Gets 1.3 Billion Valuation, Plus It’s A Big Week For IPOs

by 2 years ago

morning brew

Happy Monday! This weekend, we were informed that there is a coffee three times stronger than that of Starbucks’ dark roast (that may or may not be called Morning Brew). Here’s your Brew for April 3rd, please consume responsibly…

QUOTE OF THE DAY

“If I was directly told to do so, I will withdraw from the United States”—Tadashi Yanai chairman of Uniqlo’s parent company, on his plans for if the White House forces his Japanese clothing chain to manufacture in the United States.

Market Corner

It’s a Big Week for IPO’s:

  • Cloudera filed its S-1 on Friday, seeking up to $200 million. The Palo Alto-based open source powerhouse showed impressive revenue growth last year, but still lost $187.3 million. Let’s hope going public helps with that
  • Frontier Airlines also filed paperwork Friday, making it the first U.S. carrier to go public in three years. No word yet from the Denver-based airline on pricing or date
  • Both offerings follow Snap Inc’s debut last month, and similar headline-making announcements by Buzzfeed and BlueApron

They Say The Best Things In Life Are Free

…but in Robinhood’s case, they are valued at $1.3 billion. The stock trading app that’s known for offering no-fee trading to investors has been making waves in the brokerage industry by stealing customers from traditional brokerage powerhouses like Charles Schwab and Scottrade. Over the weekend, investment fund DST Global valued the app at $1.3 billion. This isn’t DST’s first rodeo with tech, either—some of its prior portfolio investments include Facebook, Twitter, and Groupon—heard of ‘em?

One point to GitHub….

…as Microsoft shuts down its in-house service, CodePlex. This is a huge boost for GitHub, which has been valued as highly as $2 billion as of late. For those not hip with GitHub, it’s a code management platform for software developers, and with its main competitor out of the way, its future is looking even more lucrative. But GitHub’s rapid growth didn’t come without speed bumps: In 2014, CEO Tom Preston-Werner resigned following harassment claims from an engineer. He was cleared of any legal wrongdoing.

Market Snapshot

  • Stock indexes across the world closed out a solid first quarter on Friday, among widespread uncertainty surrounding Brexit, and pending Trump trade deals
  • This week, a visit from Chinese President Xi Jinping to Mar-a-Lago, and strong jobs numbers could provide investors the confidence they need for market

What else is happening…

  • Reporters from multiple outlets worked overtime this weekend after the White House released financial disclosures of 180 staff members late Friday. Can you guess which staffer owns shares of Wal-Mart, CVS and Coca-Cola?
  • Snapchat announced its first major product change since going public—and it looks a lot like Facebook
  • Fannie Mae and Freddie Mac could write down as much as $21 billion in debt, a new analyst report says
  • “Boss Baby,” starring Alec Baldwin as an infant executive, won the weekend box office with $49 million in ticket sales

Economic Calendar

  • Monday: PMI Manufacturing Index, Gallup US Consumer Spending Measure
  • Tuesday: Motor Vehicle Sales, Redbook; Earnings: Jamba Inc.
  • Wednesday: FOMC Minutes; Earnings: Bed Bath & Beyond, Monsanto, Walgreens Boots Alliance
  • Thursday: Fed Balance Sheet, Money Supply; Earnings: Neiman Marcus
  • Friday: Employment, Baker Hughes Rig Count, Consumer Credit; Earnings: Cargill

Water Cooler

The Chinese Cash Well is Drying Up…

…for U.S. real estate, that is. Coming out of the recession, Chinese investors were some of the most popular buyers for American real estate. It was a great relationship: real estate sellers got mostly all-cash deals and the Chinese buyers got stable investments in the U.S. But it looks like that trend might be ending soon:

  • Between 2010 and 2015, Chinese investment in U.S. commercial and residential property totaled over $110 billion. In 2016 alone, Chinese investment in real estate was $33 billion, a 53% increase from 2015.
  • Not only are they investing a lot of money, these investors are also using mostly cash: Chinese buyers paid with all cash in 71% of their U.S. real estate deals last year.
  • And now? Chinese regulators are doing their best to curb this capital outflow: recent regulations include requiring approval for all foreign acquisitions over $10 billion and requiring Chinese citizens disclose the purpose of all foreign investments.
  • So what will these regulations mean? Real estate giants like Blackstone and KKR might start having to look elsewhere for potential buyers of their properties.

The Breakroom

Interview Question

Find a five digit number which has no zeros or ones in it and no digit is repeated, where:

  • The fourth digit is a quarter of the total of all of the digits
  • The second digit is twice the first digit
  • The third digit is the largest
  • The last digit is the sum of the first two digits

(Answer)

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