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

Friday’s Market Update

This week was full of ups and downs in the stock market and especially in the cryptocurrency market. This week’s biggest story was Dogecoin. The Dogecoin story started last week on 4/15 when the joke cryptocurrency started rapidly rising in value. I go into detail about Dogecoin’s attempt to shoot for the moon in my previous post, “Dogecoin to the Moon… and Back. Signs of a Crypto Bubble?“.

Dogecoin experienced explosive growth of more than 450% in less than a week, peaking in value around $0.42, with the culmination supposed to happen this past Tuesday, 4/20. The hype train was trying to convince people the price of Dogecoin would go up to $0.69 on 4/20 (clearly a lot of financial analysis went into coming up with that valuation and timeframe…). “Dogeday” as it was being called was an absolute bust and as of 1am on 4/20, the price of Dogecoin (DOGE) was on a downhill rollercoaster and it is currently trading around $0.23.

In other cryptocurrency news prices for almost all cryptos, including Bitcoin and Ethereum, took a plunge in value over the weekend and they still haven’t recovered. Ethereum (ETH) briefly recovered and actually reached a new high when it was trading around $2,600. Bitcoin on the other hand has dropped even more from its weekend dip. Bitcoin slipped under $50,000 for the first time in almost two months, and it’s still hovering around $50,000.

Thursday afternoon, the stock market looked like it jumped off a cliff after news leaked from the White House that President Biden is looking to implement a massive tax hike on companies and wealthy individuals. The leaked report suggested Biden was considering increasing the capital gains tax rate on those earning more than $1 million to 39.6%. The current base capital gains tax rate is 20%. The response on Thursday seems to have been an overreaction because the stock market is doing very well today, Friday.

This has been an exciting week, especially in the cryptocurrency market. Next week should be interesting with mega-cap companies like Apple, Amazon, Google, and Facebook will be releasing their first quarter earnings statements. The earnings from these giants will surely have an impact on the overall markets so I’ll be sure to keep you up to date. Don’t forget to follow my blog so you can stay informed on everything investment related.

Photo by Vance Alm

Investing 101: Dividends

What are dividends? A dividend is the distribution of some of a company’s profits or earnings to its shareholders. Dividends are generally paid out on a regularly scheduled basis, this typically happens quarterly. Not all companies pay dividends though so this is something important to look out for in the stocks your choose to invest in.

Companies that pay dividends are usually the larger, more established companies with more predictable profits. These companies are often in the banking, utilities, or oil and gas industries. Because growth is generally slower in these industries compared to the technology or biotech sectors, they use dividends as a way to attract investors. Dividend payments vary in amount from company to company, they can even vary in the same company but they are usually between 1%-5%.

Choosing a dividend stock can be tricky because you want to balance a good dividend yield with a strong company that has a stock price that could still potentially rise in value. Chevron (CVX) is one of the best value dividend stocks because of it has a long history of dividend growth. Chevron currently offers a dividend yield of 5.11%. The pharmaceutical company AbbVie (ABBV) has 8 successive years of dividend growth with a dividend yield of 4.73%. Verizon (VZ) has a dividend yield of 4.38% and it has raised dividends in the past 8 straight years.

What are your thoughts on dividends? Do they help influence you to choose a certain stock to invest in? Leave me a comment and let me know your thoughts on dividends. Don’t forget to follow my blog so you can stay up to date on the latest investing news.

Photo by Sharon McCutcheon on Unsplash

Cryptocurrency Crash

At 8:30pm Pacific time on Saturday night, the entire cryptocurrency market crashed. Bitcoin (BTC) for example was trading around $61,000-$63,000 the past week, and it dropped by $10,000 per coin to a price of $51,300. This is the lowest price Bitcoin has been at since February. At the same time, Ethereum (ETH) was trading around $2,400-$2,500 this past week and it dropped down to $2,000 at the same time Bitcoin dipped.

Other cryptocurrencies like Cardano (ADA) and Litecoin (LTC) all experienced the same drop in their prices. This left everyone asking why? What caused the crypto market to crash? There are numerous rumors floating around the internet as to what triggered the price of the entire cryptocurrency market to plummet.

The leading answer to this crypto market dip is reports of the US Treasury cracking down on financial institutions for money laundering involving digital assets and cryptocurrencies. I have not seen any hard facts about this, such as which financial institutions were involved, but if the stories are true, that would be a huge step backwards in the movement trying to establish cryptos like Bitcoin as a legitimate form of currency. The drop in cryptocurrency prices has also been linked to a massive blackout in China’s Xinjiang region, which allegedly powers a lot of Bitcoin mining. Bitcoin mining is how the blockchain network operates and how new Bitcoins are entered into circulation. Another factor causing fears is India’s announcement that they were banning cryptocurrencies.

I personally find it suspicious that the cryptocurrency market simultaneously bottomed out at 8:30pm Saturday night. I personally think some financial institutions or big hedge funds were involved in the massive sell-off, driving the price down. This would make sense if they were under investigation and feared news of that would lower crypto prices. Realistically, it was probably a perfect storm and the combination of all of the above. And on top of that, Bitcoin and Ethereum are both coming off of record setting weeks where they hit their highest prices ever so it’s natural that they experience a dip back down.

That’s my thoughts on what caused the crypto crash. Leave me a comment with your thoughts. Don’t forget to follow my blog to stay up to date on the latest news in the investing world.

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Dogecoin to the Moon… and Back. Signs of a Crypto Bubble?

I’ve been writing a lot about cryptocurrency lately because I feel like that is all you hear about in investing news. But Dogecoin showed everyone why when the price of 1 Dogecoin (DOGE) skyrocketed 203% in just 24 hours. Within the past week, Dogecoin has had an insane 452% increase. Its value reached its peak early this morning, and it has been on a downhill slide since then. Besides making people kick themselves for not investing in this earlier, this spike has also raised questions and worries about a potential bubble effect in the crypto market.

Dogecoin was literally created as a joke, and it now has a market value of over $40 billion. This spike has added over $20 billion to Dogecoin’s market value. The fact that Dogecoin doubled in value has people asking why this happened? There are multiple factors that played into this rapid spike in value, but the popularity effect might be one of the biggest reasons.

Cryptocurrency has been all the rage over the past couple weeks with Bitcoin hitting its record of more than $64,000 per coin and Ethereum reaching it new record when it topped $2,500. Part of this crypto craze was Coinbase releasing their DPO on Wednesday. Clearly, there has been a lot of excitement around cryptocurrencies building over the past week. All of this combined with Dogecoin’s biggest supporter, Elon Musk, sending out the tweet pictured below where he said, “Doge Barking at the Moon”, sparked people to go crazy with buying Dogecoin.

Tweet by Elon Musk on Twitter

I unfortunately was jumping on the Dogecoin bandwagon too late and the fact that it had such a dramatic spike which is being immediately followed by a slow crash makes me very wary about buying in at its peak price. In my previous blog post, “How to Buy Bitcoin and Use Coinbase“, I talked about buying Bitcoin (which has been hovering around its peak price) which I view as a more long term investment because it has so much big institutional support, with strong potential to become an actual widely used currency. Dogecoin on the other hand, I view as more of a quick trading asset.

What are your thoughts on Dogecoin? Are you buying some and hoping it keeps shooting to the moon? Leave me a comment with your thoughts on Dogecoin, Bitcoin, and cryptocurrency overall. Is it all a hype bubble that will burst soon?

Photo by Clay Banks on Unsplash

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

Friday’s Bull Market Wrap Up

To say we’re in a bull market is an understatement. The Dow Jones and the S&P 500 both finished the week at record numbers. The S&P 500 made history last week when it surpassed 4,000 for the first time in history and it hasn’t looked back since. On Friday, the S&P 500 closed at a record setting 4,128.80 and the Dow Jones closed at a record 33,800.60.

This record setting week is most likely in response to Federal Reserve Chairman Jerome Powell reassuring investors the central bank won’t raise interest rates, President Biden’s infrastructure plan, and excitement about the first-quarter earnings season starting next week. Analysts expect S&P 500 firms to report their highest earnings growth in more than a decade. Recently, there has been worries about treasury bond rates rising but Mr. Powell has been working diligently to reassure the public that there won’t be any major policy shifts while unemployment is high. Mr. Powell reiterated that the Fed was looking for “actual progress” rather than “forecasts” for progress toward employment and inflation goals.

Giant names like Apple, Amazon, and Tesla have been leading the growth in the stock market. Blue-chip stocks like Microsoft (MSFT), Alphabet (GOOGL) and Facebook (FB) each recorded intraday and closing highs on Thursday. While tech stocks have done outstanding, other sectors have not had the same success. Crude oil and gold are both down along with a number of cyclical and value names.

There has been speculation about how long this bull market will last but it isn’t showing any signs of slowing down. With the market flying high, are you jumping on the bandwagon and buying in or are you waiting on the sidelines for a dip? Leave me a comment on what strategy you’re taking and what companies you’re investing in during this bull market.

Photo by Alec Favale on Unsplash

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
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