Equities Rise While U.S. GDP Falls Short of Expectations

Dow: +0.44% | Nasdaq: +0.11% | S&P: +0.42%

Catch Up Quick

• Varda, a start-up founded less than a year ago by SpaceX and Founders Fund veterans, has now raised more than $50M to build industrial factories that will orbit the Earth

• Renewables became the 2nd most prevalent energy source in the US last year, behind only natural gas → accounted for 21% of all electricity generation, topping nuclear and coal for the 1st time

• There are currently just $300B of assets in sustainable investment funds in the U.S. → in Europe, there are $1.8T (Morningstar)

• Robinhood raised $1.9B in its IPO (valued at nearly $32B) despite falling 8% in its Nasdaq trading debut → Atlantic Equities still sees a potential 71% upside

• Guggenheim upgraded Spotify (SPOT), recommending investors to buy the dip and bet on a rebound → read why we agree here

• Zoom (ZM) was upgraded to overweight, as Keybanc (among others) claim that hybrid work is here to stay

• Home purchases by investors accounted for nearly 6% of houses sold in April → individuals and families have been struggling to buy amid the constrained supply

• The first U.S. Q2 2021 GDP reading was 6.5%, compared to the expected 8.5%

• Venture capital investment in mental health startups rose 72.6% in Q1 2021 from the previous 12 months

• Facebook (FB) warns of slowing growth → shares slide over 4%

  “Never in the history of capitalism have the world's biggest companies grown as fast as the tech giants in recent years” → Felix Salmon (Axios Capital)

Thought of the Day

• Amid the technological wave that has defined the past couple decades, many entrepreneurs and investors have strategized by noting successful endeavors in developed countries (eCommerce, food delivery, fintech, etc) and “replicating” these trends in emerging markets

• However, some attempts have been met with certain unforeseen obstacles that inhibit diffusion, exemplified by Uber’s struggle to gain real market share in India

• As it turns out, in countries with underdeveloped infrastructure, local services (such as taxi drivers) can quickly navigate dirt roads that may not appear on digital navigation applications developed in the West

• Thus, often times, Uber fails to deliver the most efficient route and its convenience preposition plunges

• Additionally, many of these narrow yet chaotic roads are far better suited for scooters, mopeds, and small motorcycles

• This explains why in 2015, when India’s population was ~100M less than it is now, there were reportedly 37M scooters in the country alone

• Having in mind the above insights on why car-based ride hailing isn’t on track for universal adoption, in the past couple years, many ride hailing apps have focused on offering an Uber-like platform for motorbikes to transport passengers

• And while the pandemic of course slowed down the trend, this more localized ride hailing approach could certainly become a highly efficient emerging market transportation option

• Not only are motorbikes far cheaper for drivers and thus for customers, but since walking at night is especially dangerous in populous yet underdeveloped cities, there may be more use cases on the customer side to summon a scooter ride, even for a very short distance

• The increasing availability of software enabled services in developing countries driven by expanding access to both the internet and electronic devices (as we’ve previously discussed) is a sustainable tailwind as well!

Afternoon Audit Home

What Can You Expect in the Stock Market Moving Forward?

• Did you know…after the stock market moves up 50% in a year, the S&P 500 tends to be down 1.5% the year after…3 years later, the market moves up 42.4%.

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