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Wednesday, October 30th | Issue No. 126
"I feel the newsletter has assisted in my knowledge of understanding the market exponentially." - PAPERTRAIL reader
S&P 500: 3,036.89 -2.53 (-0.08%)
Dow Jones: 27,071.42 -19.30 (-0.07%)
Nasdaq: 8,276.85 -49.13 (-0.59%)
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WHEN MONEY RUNS FROM YOU...
Catch a ride to it instead of walking or running.
WHY THIS IS HAPPENING...
Uber just can't help itself from getting all in the Kool-Aid without knowing the flavor. The ridesharing company created a new division called Uber Money which is a digital wallet that will also include upgraded debit and credit cards (whatever that means) for those who like nostalgia. But you may need to pump your brakes because it's only going to be for drivers and couriers... at least for now. The goal is to give them access to a mobile bank so that their direct deposits can hit different faster. This is a dope idea considering that 1 out of every 4 people is either unbanked or underbanked, many of which may be Uber drivers and couriers. Since there's hella competition like Lyft (NASDAQ: LYFT), Grubhub (NYSE: GRUB), DoorDash, Postmates, and Amazon (NASDAQ: AMZN) currently in the ridesharing, food delivery, and freight industries, investors are iffy on whether Uber will actually become profitable or not under the current business models.
The long-term plan is to spread the love to customers too, which in turn should encourage drivers, couriers, and riders to stay loyal to the brand. With 100 million monthly active users, owning the banking side of the business could potentially eliminate costs and create new revenue streams, both of which are things any investor would like to see. Uber first spilled the tea that it would be getting into the finance industry back in June just a month after its IPO.
This new service has already gone down in the DMs to some degree since 70% of drivers are paid using "instant pay" which is achieved through a debit card issued by Uber to drivers that allows them to access their coins in real time at no extra cost. Uber even gives its drivers an overdraft allowance of $100 so that they can put snaps on the petro before they start their shifts.
We may be moving towards a cashless society but other places outside of the U.S. aren't. In fact, 40% of Uber trips outside of America are paid with cash and the company hopes to bring those regions into a more cashless economy.
All of this may sound familiar as Robinhood is doing something similar with its new cash management accounts to help offset all the other online brokers going to $0 commissions. Other companies like Apple (NASDAQ: AAPL), Amazon, and Facebook (NASDAQ: FB) have also been moving into finance via credit cards, small business lending, and cryptocurrency so this trend of companies getting into financial services is just the beginning.
Uber stock is down 28% this year since its IPO.
FOR THE NEWB IN YOU...
Unbanked and underbanked refers to people who do not use or are not able to use banks and traditional financial institutions that offer services like savings and checking accounts, loans, and credit cards.
I'M IN MY ZONE...
Looking for opportunities.
Just like the cannabis industry is trying to incorporate social equity to help more black and brown people get in the game, opportunity zones could help more people of color get into real estate and build a legacy but instead, we're stuck waiting on the outside looking in.
WHY THIS IS HAPPENING...
Every state has areas that are considered "depressed" and usually it's people that look like us that live in them. Trump's tax bill was put into effect in 2017 to encourage investors to put their money up and help develop those areas, which should also create jobs, and they are now called opportunity zones. Nipsey Hussle's business partner, David Gross, gives a great explanation of opportunity zones in this video.
So here's the lowdown on how the game is played. Opportunity funds are what are used to invest in these opportunity zones; however, to get your money in an opportunity fund, you have to use capital gains from a previous investment (e.g. stocks, real estate). So one of the easiest ways to participate is if you're investing in stocks and sold some for a profit, that money you made can then be put into an opportunity fund and the money you made now becomes tax-deferred. The key is that the opportunity fund has to be a partnership or corporation (i.e LLC, C-Corp) and the investor doesn't have to live or work in the opportunity zone that it's helping.
Sounds a lot like gentrification right? Yeah, that part.
Now here's the real come up, the investors that thug it out for the long haul get to pay fewer taxes and for those that invest for at least 10 years will not have to pay any taxes at all on the capital gains they've made from the opportunity fund, similar to a Roth IRA.
Nothing to see here.
FOR THE NEWB IN YOU...
An opportunity zone is a designated area within a low-income neighborhood, which happens to be predominantly black and brown, which offers a tax break to those that invest in the community. Just as the Affordable Care Act is deemed "Obamacare" because it was passed during his administration, the Tax Cuts and Jobs Act is called "The Trump Tax Bill" since it was put into effect while he's been in office and includes opportunity zones.
An opportunity fund is an investment vehicle that files either a partnership or corporation federal income tax return and is organized to invest in an opportunity zone property.
A capital gain is an increase in the value of an asset above the purchase price.
A Roth IRA us a tax-advantaged retirement savings account that allows you to invest in assets like stocks, bonds, etc. and not have to pay any taxes on your capital gains.
Follow the money with our stock market newsletter, PAPERTRAIL, your daily dose of Wall Street flavor.
ALL EYEZ ON...
Nothing to see here.
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Sports: NCAA approves for athletes to start getting paid off their names and likenesses starting January 2021... but there's a catch
Hip-Hop: Los Angeles' social equity program has people ready to "burn things down"
DID YOU KNOW...
What percentage of Americans spend less than they earn? (answer below)
WHO'S GOT NEXT...
Companies reporting earnings today about how much paper they're stackin' (or losing) and new things to come:
Molson Coors Brewing (NYSE: TAP) (owns Blue Moon, Coors Light, Miller Lite, Olde English, Steel Reserve, and more)
Brinker International (NYSE: EAT) (owns Chili's and Maggiano's)
Yum! Brands (NYSE: YUM) (owns Pizza Hut, Taco Bell, and KFC)
Dine Brands (NYSE: DIN) (owns Applebee's and IHOP)
Callaway Golf (NYSE: ELY)
General Electric (NYSE: GE)
Hyatt Hotels (NYSE: H)
Royal Caribbean Cruises (NYSE: RCL)
Tanger Factory Outlets (NYSE: SKT)
Starbucks (NASDAQ: SBUX)
Wyndham Destinations (NYSE: WYND)
Etsy (NASDAQ: ETSY)
Facebook (NASDAQ: FB)
Sprouts Farmers Market (NASDAQ: SFM)
Garmin (NASDAQ: GRMN)
MetLife (NYSE: MET)
Lyft (NASDAQ: LYFT)
Wingstop (NASDAQ: WING)
MGM Resorts (NYSE: MGM)
WATCH ME WORK...
Stocks on my watchlist:
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Disclosure: The author of this issue owns stock of Apple, Facebook, Nike, and Starbucks.
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NOW YOU KNOW...
Dr. Eric Patrick
Managing Editor | Cannabis Opportunity Zoner
Disclosure: This editorial is by no means a solicitation to buy or sell any of the above-mentioned securities. It is merely a means for educational purposes. All investors are subject to their own research and due diligence. This post may contain affiliate links and we may receive commissions for purchases made through links in this post.