Robinhood business fundamentals under attack. Green investment can be made profitable by force. GlobalFoundries turns a profit.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
Collect money from the poor and take it for yourself: the pros and cons of Robinhood's core business
Debate has intensified in the United States over the acceptability of order flow fees, the main source of income for the Robinhood brokerage app. (NASDAQ: HOOD). Online brokerage platform Public recently released the results of its research: how much do share prices of online brokers, who have no order flow fees, turn out to be beneficial for users.
Actually, Public compared itself to Robinhood, since Public has waived order flow fees, and Robinhood is the basis of business. As it turned out, share prices were significantly more profitable for clients on the platforms, where there is no order flow fee: Robinhood price difference, the consumer was looking for, and He, what is on the market, was 44,79%, while Public has 32,88%. Simply put, users get the best prices on the platforms of those brokers, who don't make money, selling data flow data.
Understandably, that the Public study came out in the context of this company's competition with Robinhood, and therefore Public cannot be considered impassive judges. But the confrontation between the two companies comes amid discussions in the United States about the possibility of a ban on this practice..
If order flow fees are banned, then the Robinhood business will be seriously affected - even if it does not die completely. Paying for the flow of orders gives ¾ of the company's revenue, but in the order flow fee structure, promotions only give 31,72%, the rest are options, cryptocurrencies and more. On the other hand, the ban on receiving payment for the flow of orders can become comprehensive and affect all types of instruments, and not just stocks - and then the Robinhood business will really reel.
More ESG to God ESG: news from the world of ethical investing
The International Energy Agency just released a report on the state of affairs with renewable energy sources. To carry on truly disturbing: with the current pace of launching projects in this area, it is not possible to achieve the goals of the Paris agreements to reduce emissions. Need to understand, The ESG lobby will use this as an argument to increase investment in green businesses., what will be used as whips, so are gingerbread.
Gingerbread. The non-profit organization Schmidt Futures released a report on, how a biology-based economy will help develop the American economy. According to experts of the organization, R&D and just a set of activities, allowing to improve the environmental friendliness of economic activities, e.g. reducing emissions and focusing on recycling, have already given a total of approximately 5% US GDP in 2016 - $960 billion. And what is especially important, for the most part, all this economic activity is concentrated within the United States, and not in the form of factories of American companies in China and Mexico. This means, that the green economy will develop, creating jobs in America.
These kinds of reports are designed to spur investment in green projects., showing, that the transition to a clean economy, as it were, does not bring anything bad for society as a whole. Understandably, that the truth is "in the eyes of the beholder": can you do research, who will show, that a non-green economy is beneficial for society, - but I think, that in the future the argument about "a clean economy is equal to a developing economy" will be used more and more often, which will help attract even more investment in this area.
Whips. The financial company Lazard shared with the “city and the world” the results of its study on the relationship between quotes and the climate policy of companies. Lazard analyzed quotes of 16 thousand companies during 2016-2020.
It revealed, that the issuer's reduction of emissions by 10% promotes an increase in P / E companies - and in Europe the effect is even more significant, than in the USA: in the Old World P / E increases by 8,7 against 3,9% in America. But the increase in emissions by 10% contributes to the reduction of P / E: on 0,39% in the USA and on 0,62% in Europe.
This is related to, that investors encourage companies to reduce emissions, buying their shares, and punished for increasing emissions, by ignoring these stocks or shorting them. So the shares of non-environmentally friendly businesses run the risk of remaining undervalued for a long time - while the quotes of environmentally friendly businesses can count on an "environmental" bonus and will be more expensive.
For investors, this information means the following: the “green energy” bubble does not think of bursting and it will take a long time to pump it up. And this makes it possible to make money on even the most deceitful startups in this area..
“Today is a holiday for the guys, the pioneers rejoice ": GlobalFoundries suddenly turned a profit
Dubai semiconductor manufacturer GlobalFoundries (NASDAQ: GFS) a little over a month after its IPO, published its first quarterly report as a public company. Revenue increased by 56%. However, gross profit increased by 325%.
As it turned out, high prices and insane demand for chips positively affect GFS business, which went public, being unprofitable: last year's loss of 293 million for the company was replaced by a profit of 5 million. Certainly, it's not very much: the final margin of the last quarter was only 0,29% from proceeds. Yes, and should be taken into account., what 40% from the final profit the company received due to non-core operations. But it's still great progress., because the operating activities of the company turned out to be profitable: 3,05% from revenue in 3 quarter 2021 vs. -32.08% in 3 quarter 2020.
This is a good result., showing, that the current situation with the shortage of chips allows even such unprofitable companies to make a profit. So,, it makes sense to look at more marginal semiconductor companies.
