Correct yourself, before you wreck yourself
Happy International Women's Day! This year’s theme is “Choose to Challenge.” It was created to celebrate women's achievements — and inspire us to continue challenging gender injustices in the world today.
The US economy added an expectation-beating 379K jobs in February, thanks to a sharp rebound in restaurant hiring. On Saturday, the Senate narrowly passed President Biden's $1.9T Covid relief package. Tomorrow, the House votes on approving changes made by the Senate.
Do you remember?... the 21st of December (cue: Earth, Wind, and Fire jam). Back then: the stock market was hitting record highs left and right, and tech stocks were leading the charge. After peaking in mid-February, markets have fallen back to around December levels. Tech stocks got hit especially hard: the tech-heavy Nasdaq index is down 8% from its February 12th peak, and is up less than 2% for the year (after being up 11% at its high).
Why it's going down... Some investors think the tech sector is overvalued. Rising interest rates and inflation fears are also a huge part of it. Some worry that the Fed will raise interest rates to curb potential inflation, despite Jerome Powell saying (multiple times) that it’s unlikely to happen soon. To see why higher interest rates can be bad for stocks, check out our explainer.
Corrections are normal... For long-term investors, a correction can be like a small dip in the hill toward reaching investing goals. Historically, the market has recovered from corrections (though some took longer than others). While they might be painful short-term, corrections can help "correct" the prices of overvalued stocks. Markets were frothy at their peak — a correction is kind of like a barista skimming off foam. In the past, they've been followed by periods of growth. The US stock market has had more than 25 corrections since WWII.
Right in the bullseye... Target nailed it last year. Sales jumped a record 20%, up $15B+ from 2019 — that's more than Target's total sales growth over the last 11 years. Online order pickup and delivery soared, as you grabbed mini waffle makers curbside. Target's 1.9K US stores are key to its success: Tarjay uses stores as fulfillment hubs, and 95% of sales came from stores in 2020. Customers who shop both in-store and digitally spend ~4X more money than those who shop only in-store — and nearly 10X more than online-only shoppers. That's why Target plans to invest $4B into stores each year.
Forgot the cashew pesto... Instacart raised $265M in fresh funding, catapulting it to a $39B valuation — that's more than double its last valuation in October. It's the second time in a year that Instacart's valuation has doubled after bagging venture capital $$$. No shocker there: grocery and delivery have thrived during the pandemic — Instacart has both. In June of last year, Instacart claimed more than half of the online grocery delivery market. Now, it's reportedly considering going public through a direct listing.
Chip-pocalypse Now... The global chip shortage is continuing to hurt car makers, from GM to Ford. The latest to get hit: Tesla's Chinese rival Nio. Nio shares plunged 17% for the week, after it said that chip-pocalypse will hurt its electric car production next quarter. FYI: the average car contains 50 to 150 chips. Nio's production capacity will fall to 7.5K cars per month, down from 10K. But Nio's founder expects they can bump up production again in July.
Call me by your name... Oscar is the Millennial startup that's simplifying health insurance. ICYMI: American health insurance is (in)famously complex. Oscar wants to put a friendly face on it. Oscar's NYSE debut was less friendly: the stock has plunged 14% since Oscar went public on Wednesday. Investors weren't wowed by its 2020 earnings: sales fell 5% from 2019, and it lost $407M. But Oscar could benefit from the growth of the gig economy, since its core customers don't have insurance through employers (think: DoorDash drivers).
Authors of this Snacks own shares of: GM, Apple, Amazon, Tesla, Square, and Microsoft