JPMorgan owns 1/2 of America’s wallets

Wednesday, January 15, 2020 by Robinhood Snacks | Disclosures

"We'll never get through Plaid with this!"

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Thank you, Snackers.

10 Million. Our 15-minute Snacks Daily podcast hit 10M downloads — it's consistently ranked in Spotify's top 10 podcasts and #3 in Apple's Business News category. Oh, and we hired a 3rd Snacker.

10 million 15-minute-long pod downloads are like...

  • 152 Martian years of Snacks (Mars years are 1.88x longer than Earth years)
  • 38,298,524 Spice Girls Wannabe plays on repeat (it's a 3:55 minute jam)
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Thank you for Snacking (with your ears) to our pod on Apple and Spotify. Now let's get to it 🙌.

Pay
1. Plaid, the financial bouncer of fintech apps, gets acquired by Visa for $5.3B

Whip out the corporate card... Visa is swiping $5.3B to treat itself to Plaid. You've used Plaid and didn't even know it — the FinTech unicorn connects your old school Citi, Bank of America, or Wells Fargo bank account to financial apps like Venmo, Robinhood, or Coinbase. Here's how Plaid's more like a financial bouncer (call it "the club analogy"):

  • ID Scan: After downloading Venmo, you enter your bank account login info on Venmo to pay Ashley back for the $15 cocktail — Plaid grabs that username/password.
  • Bouncer: Once Plaid verifies the ID with your bank, your checking account gets in to party in Venmo.
  • Security: Plaid securely holds your bank info so that it can safely travel across the web (like a Chanel purse left at coat-check).
  • Stamp: You're in — Your account is linked to Venmo. That bank account doesn't need to show ID again.

Plaid is a bouncer with connections... It's a low-profile service, but it dominates the fast-growing financial app space:

  • Plaid connects 200M accounts at 11K banks to 2,600 FinTech apps.
  • A whopping 25% of Americans have connected their accounts to a fintech app through Plaid (anyone still use Mint?).
THE TAKEAWAY

Keep your friends close... and your enemies acquired. Think of the financial info Plaid has access to — LendingClub can use your debit card data to learn your spending habits, then decide on a loan for you. With the same info, Plaid could someday offer its own credit card — aka a Visa competitor. So Visa snagged Plaid instead, before its other investors (Citi, Mastercard, Goldman, AmEx) could.

Bank

Big money mood... How JPMorgan Chase is feeling after its biggest year of profit, ever (and best year of any bank in US history, nbd). While you racked up travel points with Chase Sapphire Reserve, JPMorgan pulled in $36B in profits for 2019 (a 12% increase from 2018) — that 1-year profit is more than twice Lyft's entire company valuation, aka Lyft's market capitalization.

More than half of Americans are customers... of JPM's retail bank, Chase. Here's how it got so intimate with so many US wallets:

  1. Lotta acquisitions: JPM merged with Chase (the #3 largest bank at the time) in 2000, bought Bank One in 2004 (#6), and then scooped up Bear Stearns and Washington Mutual during the '08 financial crisis.
  2. Insane branches: In the app age, physical bank branches are still somehow big. JPM Chase's 4,900 branches and 16K ATMs only trail Wells Fargo. It added 400 more branches last year.
  3. Perks on perks: Everyone has that friend obsessed with their Chase Sapphire card — it's so popular, they ran out of the metal to make it.
THE TAKEAWAY

JPM's success reflects Wall Street and Main Street... JPM's stock has risen thanks to the kumbaya good times on stock markets and the broader economy right now. Here's what its record profit screams:

  • Wall Street ...booming. Stocks are at record highs thanks to rising profits, fueling investing banking activity for JPM.
  • Main Street ...booming. The unemployment rate is at a record low, which drives demand for JPM's lending and retail banking biz.
  • Taxes ...cut thanks to Tax Cuts and Jobs Act of 2017. Overnight, companies became way more profitable as they shipped less money to the IRS (JPM's tax rate was 18% last year).
What else we’re Snackin’
  • Pin'd: Pinterest shares spike an aesthetically pleasing 10% on word it now has more users than Snapchat (making it #3 in US social media)
  • Takeoff: Delta posts its 10th straight year of profit (up 21% from 2018) — its biggest strength: being the only US carrier without the 737 Max in its fleet
  • Arrivederci: Domino's plans to expand its 28 pizza stores in Italy to a whopping 880 — Italians are not loving it (neither is Twitter)
  • Zon'd: Amazon lifts its FedEx ground delivery ban for sellers, sending FedEx's shares up
  • InDirect: SmileDirectClub will sell its aligners directly to orthodontists (no longer just straight to your door), tossing it in direct competition with Invisalign
  • Rent-cycle: Rent the Runway is launching a clothing brand made entirely out of recycled materials (plastic bag-chic)
Snacks Daily Podcast

Money talks. And investment giant BlackRock controls $7T of it (in the form of yours and our retirement and investment money).

So it's using its weight to pressure CEOs to be more environmentally sustainable. That could make it easier for you to burn fossil fuels out of your portfolio.

More in our 15-minute Snacks Daily pod.

Wednesday
  • President Trump and China Vice Premier Liu sign the Phase 1 trade deal at the White House (we'll finally see what's in it afterward)
  • Big bank earnings continue with Bank of America, BlackRock, and Goldman Sachs

Disclosure: Authors of this Snacks own shares of JPMorgan Chase and Amazon

ID: 1058896

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