A New Corner of the Stock Market to Watch

Aug 31, 2021

Dow: -0.11% | Nasdaq: -0.04% | S&P: -0.13%

Catch Up Quick

Zoom Video shares (ZM) plunged 17% today despite reporting higher-than-expected revenue and earnings → sell off likely driven by slowing growth
China’s new law will limit online video games to 3 hours a week for minors
PayPal is exploring a stock-trading platform for U.S. customers
The SEC Chairman said banning payment for order flow (how Robinhood makes money) is “on the table” → HOOD shares have sunk 10% in 5 days
750K households in the U.S. could be evicted by the end of 2021, per Goldman Sachs → up to 3.5M households collectively owe landlords as much as $17B
Bernstein predicts Apple could sell 1.5M electric cars by 2030 if it launches a vehicle by 2025
Jefferies cited Virgin Galactic as a buying opportunity amid shares tanking 30% in the past 6 months despite a $120B space travel market
Whoop raised $200M from SoftBank at a $3.6B valuation → now the most valuable (standalone) fitness wearable company in the world
South Korea passed a bill limiting Apple and Google app store payment control
Novavax shares (NVAX) rose over 2% after the CDC says U.S. vaccine trial participants count as fully vaccinated just 2 weeks after dosing
UBS believes the S&P 500 can still rally 10% to reach 5K

Last Wednesday, cloud communications platform Twilio (TWLO) and project management platform Asana (ASAN) became the first companies to list shares on U.S. based Long-Term Stock Exchange (“LTSE”)
Headquartered in San Francisco and founded in 2012, the LTSE is a securities exchange (similar to the NYSE or Nasdaq) grounded in incentivizing companies to commit to policies around sustainability, diversity, and longer-term planning
What really makes the LTSE unique is that the exchange generates revenue by selling software designed to help companies manage equity (cap table management software)
Traditional exchanges that make money via trading fees and data sales are inherently incentivized to foster volatility given they generate more revenue the more times a stock changes ownership
However, companies are often looking to minimize volatility, creating a layer of misalignment between management team objectives and the very exchanges on which shares are listed
The LTSE is looking to fix that, which is why we recommend keeping a close eye on both the new exchange and companies who chose to list (or dual list), given the massive opportunity for the entire structure currently underpinning equity markets to be disrupted
Also, (as our finance buffs may know), companies with less volatile stock prices tend to increase the Sharpe ratios of portfolio where they are held, which could serve as a powerful buying incentive for (mostly) institutional investors!

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Afternoon Audit