Nancy Pelosi's Trading Strat
Wade through the sea of negative PnL to find your favorite survivors - long term investing for dummies.
In an attempt to document my investment decisions I have turned to creating this article. This will go over some companies that I believe will not only succeed and grow in the future but give decent returns to their investors. This is NOT financial advise as I am NOT a financial advisor.
Meta ($META) - The Metaverse is not DOA
Meta (the artist previously known as Facebook) is host to a variety of social media platforms such as; Facebook, Instagram, WhatsApp, Oculus VR and more. The company is closely associated with its founder Mark Zuckerberg and has taken a beating from its ATH in September of 2021 with its 52 Week Low now breaking into the double digits. Meta’s daily users is floating slightly over 28B people everyday which has been gradually increasing since 2018. Total revenue has jumped from $86B in 2020 to $117B in 2021 with their primary source of revenue coming from digital marketing. Recent events regarding Apple’s privacy policy has made a noticeable impact on the success of Meta’s ad revenue since there are now additional restrictions to customer tracking.
Mark Zuckerberg has also been one of the more vocal pioneers of the ‘Metaverse’ touting products such as Oculus VR and Facebook Horizons. This has been not only largely ignored, but openly mocked by active investors stating that the Metaverse is DOA (dead on arrival) with Meta’s Reality Labs booking a $2.8B lose in Q2 of 2022. Since their acquisition of Oculus VR, Meta has been shoveling money Scrooge McDuck style into Reality Labs in addition to increase the Quest 2 headset price from $299 to $399. Just recently Meta has released their Quest Pro which is the newest VR headset in their lineup coming in at $1,499.99USD, significantly higher than the Quest 2. This upgrade also made available a new catalog of hardware accessories both the Quest 2 and the new Quest Pro can take advantage of. This updated hardware allows better hand tracking and haptics in addition to a lightweight and more agile AR/VR experience. The Oculus Pro is targeted at power users who seek one of the most advanced VR experiences available and workspace creators who want to utilize its mobile workstation abilities.
Opinion:
Facebook and Instagram have both instilled themselves as a massive part of today’s society, not only in the US but worldwide. While younger generations such a millennials and zoomers gravitate more toward Instagram, Facebook is still widely used and favors older demographics. I have personal experience with Oculus as a long time Quest and Quest 2 user and think that as this technology becomes lighter and cheaper it will become massively profitable to Meta. Previous knowledge in crypto and other tech sectors might make you more bullish on the idea of a ‘Metaverse’ and I’m not saying that Meta’s current products are anything close to this. However, anyone who is WFH knows the expeditated use of MS Teams, Zoom, WebEx, and etc which only strengthens my thesis that Meta will be the first company to properly elevate virtual meetings to the next level. Software such as Immersed VR and other AR apps for the Oculus allow you to take your basic one-screen laptop setup and turn it into a multiscreen workspace. I believe that lightweight and discreet AR/VR products will pave a new wave of productivity and minimalistic desktop gear in the future.
Fast Facts
52 Week High: $353.85
52 Week Low: $92.48
Market Cap: $246.2B
Current Price: $92.85
Chargepoint Holdings (CHPT)
The runup of Tesla over the last few years has made certain that the US EV market will continue to grow with other competitors such as Rivian and Lucid entering the space to compete for existing market share. Even traditional car manufactures such as GM, Ford, Audi, BMW, and Hyuandi have pivoted toward a pro-EV stance releasing their own line of EVs. Those that have ever owner or tested an EV are familiar with the charging infrastructure and how it works, for those that don’t - here is a quick rundown. Most EVs plot your destination and route your travel along existing charging stations giving you plenty of options in regards to where you can stop and replenish your battery. The current charging infrastructures with exceptions of highly populated areas such as LA and NYC are fairly reasonable with little to no waits and a full charge requiring only about 30 minutes. You are encouraged not to fully charge however, and just stay long enough to make it to your next station with some to spair. ChargePoint Holdings is an EV charging network provider which develops and markets networks of charging stations which it bundles with a cloud service package. Their cloud services let uses find, reserve, and approve charging sessions for their EV. They are the worlds largest EV charging network with more than 100,000 public charging stations in North America alone. In addition to being the leading infrastructure provided they have even partnered with certain vehicle manufactures such as Volvo to be their recommend charging service. The main benefit being their easy and free to use app that allows customers all the aforementioned benefits all from the ease of their phone.
During the COVID runup on equities CHPT topped out at $49 a share in December of 2020, however, currently the stock is down more than 70%. The increasing pressure in the automotive industry to take a pro-EV stance has resulted in nearly every manufacturer promising an electric alternative in the coming years with many already being released. The ratio of traditional petrol fueling stations to EV charging stations is a landslide due to the current small percentage of electrically powered vehicles on the road. Large corporations such as Disney has identified these trends and have begin adding EV infrastructure to their parking facilities, choosing ChargePoint as their main service provider. Future charging stations at locations such as shopping centers, malls, existing cities, parks, and more will choose a reliable industry trusted charging provider such as ChargePoint who have proven themselves as effective and a user friendly choice.
Fast Facts
52 Week High: $28.72
52 Week Low: $8.50
Market Cap: $4.65B
Current Price: $13.68
SoFi Technologies (SOFI)
The progression of banking has seen some steady progression just in the last decade alone as we progress to a more and more digital age. Originally the only way to exchange money P2P would be using cash, however now using CashApp or Venmo is the most popular way to pay your friends. In-person banks who provided critical teller services are now just another app or website clients use to login in order to manage, move, and track their funds. Our parents would have to call trading desks and order stocks over the phone , now highschoolers are buying call options using Robinhood and WeBull. The progression of tech leads to market disruption in addition to lowering the barrier of entry for retails participants. The national average APY for US savings accounts is 0.16%. In order to paint a picture, US customers get $160 of interest a year for keeping $100,000 with the average bank. SoFi gives their customers the ability act as a primary checking/savings account granting their users an astonishing 2.5% APY (Edit: as of Nov 4, 2022 the new rate will be 3.0% APY).
However, SoFi does much more than just act as a tastefully high yield savings account. They offer many services such as personal loans, student loan refinancing, mortgages, credit cards, and the ability to buy/sell equities in addition to crypto. They continue to beat earnings forecasts and their ease of use platform accompanied with a handsome referral program has me bullish. The incentives for millennials and zoomers to stick with their traditional local banks simply are not their and I believe people will transfer to more beneficial institutions with easy on-boarding processes.
Fast Facts
52 Week High: $24.65
52 Week Low: $4.77
Market Cap: $4.85B
Current Price: $5.70
Affirm (AFRM) - Layaway Meets Compoundable Interest
Some might adhere to the sage advice of “don’t purchase anything you cannot pay for out right” in which some neglect this advice and use their credit card to finance out their purchases in exchange for a bit of extra cost via APR. In the modern century millennials and zoomers have doubled down on this decision and are the largest users for BNPL (buy-now-pay-later) products such as Affirm, Klarna, and AfterPay. These services let you break down a purchase via different payment options; 3 installments, 4 installments, 12 monthly installments, etc each with ranging APR percentages which can be paid via a debit or credit card. Affirm lets users apply for low-interest micro-financing options for large purchases through certain merchants, giving users a straight forward way to make larger purchases and pay over a selected period of time with no hidden fees. These loan queries do not effect users’ credit and gives Affirm the availability to provide people with loans who typically would not qualify for them previously. Since the payments include APR and are stated at the time of purchasing it is easier for the customer to pay off the total and not get in a revolving door of interest hits which happens to some credit card users. Affirm is far from its IPO and ATH price but has made steady progress in its industry and continues to be a fundamental company in this growing micro-financing niche.
Opinion
I think the idea of BNPL and microfinancing is a horrible idea for the long-term health and habit creation of consumers. However, many times in the past we have turned a blind eye to overall financial caution and I personally have seen a rapid use of BNPL services like Affirm an others. When faced with the options of A) savings $1500 for a laptop, B) Spending $1500 on a credit card and paying 28% APR, or C) breaking your laptop up into 4 manageable $375 low interest payments. Most modern day consumers are picking option C, the question is will consumers become wiser on spending? (at the time of writing US household savings are the lowest they have been in 30 years and credit card debt is hitting ATHs) Probably not, but there is money to be made in this financing niche and Affirm seems to be a leader in its industry.
Fast Facts
52 Week High: $176.65
52 Week Low: $13.64
Market Cap: $5.44B
Current Price: $18.74