Tech Giants Crush Earnings Report Expectations

This was a huge week for giant tech companies including Apple, Google, Microsoft, Facebook, and Amazon just to name a few. They all released their quarterly earnings statements, and they all beat expectations. Many of the companies reported huge double digit growth. A full list of the different companies that reported their earnings this week can be found online.

Amazon (AMZN) for example performed better than expected and just reported a 44% increase in their revenue. The bar was set high for them this year with expectations for their Q1 revenue to be $104.57 billion. Amazon had first-quarter revenues of $75.5 billion last year and they absolutely demolished expectations when they reported $108.5 billion for Q1 this year. Their earnings per share (EPS) are $15.79 versus the $9.69 that was expected.

Alphabet Inc (GOOG), which is Google’s technical corporate name, also reported fantastic numbers. They were expected to have an EPS of $15.82 and they almost doubled it by reporting and EPS of $26.29. Alphabet’s revenue for Q1 was $55.31 billion vs. $51.70 billion expected. Google’s revenue rose 34% from the same period last year. The good financial news caused their stock price to skyrocket overnight from around $2,300 per share up to above $2,400 per share.

Tesla (TSLA) was another company to beat Wall Street expectations this week. Estimates for their EPS were expected to be 0.79 and they actually reported 0.93 this quarter. Tesla’s revenue was $10.39 billion vs. $10.29 billion expected. This is up 74% from a year ago. Unlike Alphabet and Amazon that experienced a sharp rise in their stock price, Tesla has been on a downward slope ever since reporting their earnings.

Some analysts are skeptical about Tesla because they had some other ways of generating revenue besides normal car and solar panel sales. Tesla made a profit of $101 million this quarter from selling some of the Bitcoin it had previously invested in. Tesla also recorded $518 million in revenue from sales of regulatory credits during the period. The company did this while also delivering a record 184,800 Model 3 and Model Y cars.

The tech sector all had an amazing quarter, including Tesla. They beat their record of vehicles delivered in a quarter while making some smart business decisions to generate extra capital. What are your thoughts on Tesla and all the other earnings reports that were released this week? Leave me a comment and let me know.

Photo by Chris Ried on Unsplash

What Exactly is Payment for Order Flow?

Ever since Robinhood was in the news back in January for their involvement in the GameStop controversy, the way brokerage firms get paid has come into question. Popular stockbrokerage companies such as Robinhood, Webull, E*Trade, and TD Ameritrade all utilize a practice that is known as “payment for order flow”. Payment for order flow is the process where the stockbrokers receive payments from the market makers (dealers) for routing trades to them. The brokerage firm is essentially acting as the middleman between you (the retail investor) and the market makers.

Who are the market makers? The bigger market makers are Citadel Securities, Susquehanna, Virtu, Two Sigma and UBS. The SEC defines a “market maker” as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. Market makers are essentially companies or individuals that buy up large quantities of stocks to sell hoping to make a profit on the bid–ask spread, or turn.

The market makers profit from buying shares for cheap and selling them for more expensive. The brokers on the other hand profit through making the trades actually happen by acting as the wholesaler between retail investors and market makers. The broker basically directs traffic to the market maker that can best fulfill the order. The stockbrokers will generally have prearranged agreements with market makers who will compete for the order flow.

The controversy with the payment for order flow process comes into play here. While the brokers should choose the market maker that will quickly and efficiently fill the order at the lowest market price, this isn’t always the case. An order flow agreement might make brokers direct traffic to a prearranged third-party. The third party compensates the broker for sending traffic their way, often at the expense of the retail investor.

One of the biggest worries with payment for order flow is that the brokerage firms might be routing orders to a particular market maker for their own benefit and not in the best interest of the the investors. Other concerns are that order flow arrangements empower market makers with the additional liquidity to bundle large orders, deal from inventory, and take the opposite sides of trades to buffer exposure risk.

Payment for order flow has been considered revolutionary for retail investors because it has all but eliminated the commissions and fees associated with trading stocks. But some argue that the negative consequences caused by the payment for order flow process outweigh the benefits of not paying commissions and fees. What are your thoughts about payment for order flow? Leave me a comment and let me know.

Photo by Vance Alm

How to Buy Bitcoin and Use Coinbase

In my last blog, “Coinbase, Bitcoin, and Crypto are All Going Crazy“, I discussed Coinbase’s DPO that was released on Wednesday, 4/14, and all the hype around its launch and the cryptocurrency market in general. I mentioned that I’ve been keeping a close eye on the cryptocurrency market but I was still skeptical (mainly for not investing sooner). But I finally jumped on the bandwagon and downloaded Coinbase and bought some Bitcoin. I also bought a share of Coinbase (COIN) while I was caught up in the excitement of finally joining the crypto craze.

I’ve used a few different stock trading apps but this the first time I’ve used a cryptocurrency exchange and the process to get started was super simple. First, download Coinbase from your app store and enter your name, email address, and create a password. Then, you enter your bank information or debit card information, this is different than most brokerage apps that require your bank account and routing number. Although, you’re only allowed to buy cryptocurrency when you enter your debit card. You need to enter your bank account information in order to sell, that way the money can be transferred into your bank account if you choose to cash out.

Once you have a form of payment linked to your account, you’re all ready to join the crypto craze! Coinbase’s homepage shows you your portfolio balance, your watchlist, top movers, and some news articles related to cryptocurrency. The tab to the right of the homepage is the Portfolio page, which shows the number of coins, fractions up to eight decimal points over, of Bitcoin or whichever cryptocurrencies you own. This page also shows a line graph displaying the your portfolios performance. The middle blue button is like a quick buy/sell button. The tab to the right of the middle button is the Prices page and displays prices for a huge variety of different cryptocurrencies. This page has tabs towards the top where you can choose to see the top gainers and losers for the day. The last tab on the bottom right is the Settings page that contains your account information, settings, and a help/support section.

I’ve kept a close eye on Coinbase’s share price all day and it was hovering around $333 this morning but then dipped down to around $324 in the later afternoon. I jumped in and bought the dip, so hopefully the price doesn’t drop anymore. I been hearing analysts talk about this stock price possibly going up to $500 in the future. If people are literally buying into the crypto craze like I am, I’m hopeful Coinbase continues its strong growth which will fuel their stock price’s rise.

What are your thoughts on Bitcoin, Coinbase, and cryptocurrencies? Leave me a comment and let me know. Don’t forget to follow my Twitter where I’m constantly posting about investing, the stock market, and cryptocurrency.

Photo by Pierre Borthiry on Unsplash

Coinbase, Bitcoin, and Crypto are All Going Crazy

Coinbase, Bitcoin, and cryptocurrency in general has been in the news nonstop lately. Bitcoin is at its all time highs hovering around $63,000. Visa is piloting transaction settlement in stablecoins on the Ethereum blockchain, and Ethereum is now trading at its highest prices ever, trading around $2,400. Big banks like JP Morgan and Morgan Stanley are now offering their customers opportunities to invest in cryptocurrency through ETFs. Huge companies like Tesla and Apple have jumped on the cryptocurrency bandwagon and have invested billions of dollars into purchasing Bitcoin.

Cryptocurrency exchanges, such as BlockFi, Gemini, and Coinbase, allow how retail investors can buy Bitcoin and other cryptocurrencies. Coinbase (COIN) is among the more popular crypto exchanges and it went public today, 4/14/21, in their highly anticipated direct listing IPO. Shares initially had a target price of $250 early this morning but by the time it actually started trading it opened at $381 and quickly rose up to $429, hitting a valuation above $112 billion. Share prices sank throughout the day and ended at $328.28 by the closing bell.

Coinbase (COIN) has been the biggest IPO of the year with many experts valuation of them exceeding $100 billion. The Coinbase direct listing IPO offers investors the opportunity to enter the realm of crypto without actually purchasing any actual cryptocurrency. Personally, I am still hesitant on jumping into Bitcoin (mainly because I regret not purchasing some 6+ months ago). But I like idea of investing in a crypto exchange and with Coinbase being one of the biggest names in the game, I would like to invest in this one. I’m going to keep a close eye on this hot IPO and give it a couple days to cool off to see where the price goes before buying any shares. What do you think about cryptocurrencies and Coinbase’s IPO? Please leave me a comment with your thoughts, and if you like my blog, share it on social media!

Photo by Vance Alm

How to Use Robinhood, Webull and Other Trading Apps

I’ve touched on this topic a little in a previous blog, “How to Invest Your Stimulus: Investing for Beginners“, but I want to go more in detail so you can fully utilize your trading app to get the best experience. There are numerous trading platforms and apps you can use to trade stocks, each has there own unique twist. There’s some older more traditional names like Fidelity and E*Trade and newer names like Robinhood and Webull. I have personally used Robinhood, Webull, and Stash for stock trading and out of those three I prefer Webull.

In my opinion, Webull is the best trading app because it gives you the most options to choose from among graphs, such as a simple line graph, candlestick graphs, and multiple others. It also has a “Community” section where people can ask questions and post comments. Theres also “Top News” area with the “Community” section. One of the biggest features that sets Webull apart from the others is that it lets you set the price that you want to buy or sell at. I haven’t seen this option in any other apps.

Speaking of other apps, I do like how Robinhood and Stash give you the ability to buy partial shares. This essentially makes so you can create your own mini ETFs where you can be better diversified. On the home page for both apps it will show you your portfolio total dollar amount. Robinhood is a little better than Stash here because it shows you how your portfolio performed for the day. In Robinhood, when you scroll down the homepage, it shows you the stocks that make up your portfolio, the number of shares you have in each, and how they performed. Below your portfolio is your watchlists where you can keep an eye on companies you might potentially add to your portfolio, you can add or delete whatever companies you want to your list.

The Wallet tab to the right of the homepage tab shows you your cash balance along with recent history of transactions, whether you deposited money or bought/sold stocks. The Search tab is the magnifying glass icon in the middle. You can search for information on different companies here and this is also where Robinhood shows recent news articles related to investing. The Messages tab is to the right of the Search tab and this is where Robinhood will send messages related to updates, announcements, and your purchases. The last tab on the right is your profile with areas for help, settings, and a history of statements.

Those apps are all nice and simple for when you first start investing but once you’re ready to play with some more features and see some more details, that’s when Webull or Fidelity would be a better choice. The first tab on the left for Webull shows your Watchlist and your positions along with how they performed for the day with a line graph, percentage change, and dollar change. The tab to the right of that shows a ton of information such as the performance of the entire stock market, how many stocks advanced or declined, the top gainers and losers, an IPO center displaying information about upcoming IPOs, and a calendar showing when different companies will release earnings statements, dividends, and splits. The middle icon in Webull shows your portfolio total dollar amount, the companies and number of shares within your portfolio, and how well each stock has performed since your purchase price. The icon to the right of the middle is the Community tab where you can see investing news and where people can ask questions and leave comments. Like the other trading platforms, the very right icon is your personal profile where you can find the help center and settings.

When buying or selling on Webull, you can simply click the stock from your Watchlist and that will open up the stock page. Here is the graph showing the price movement for the day, 5 days, 1 month, 3 month, 1 year, 5 year, or Max. Next to the time range is the graph options where you have a variety of different graphs to choose from. Under the chart is the Order Book section where you can see both the dollar price and quantity of shares being asked or bid on. I love this section because it can give you a sense of which direction the price will go before it actually does it, like when you see a bid for 1,000+ shares at a certain price, it will probably move the price in that direction.

When you’re ready to initiate the trade, you can select the price you want to buy or sell at along with the number of shares you want to buy/sell. This feature is HUGE for me because I get frustrated when I try buying during the intraday dip and then the purchase doesn’t go through until the price has gone back up. Let me know what trading platform you use or prefer in the comments below.

Photo by Tech Daily on Unsplash