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Market News

Grab Your Popcorn For This Week’s Round-Up Featuring Heavyweights Burry vs Wood

Alpaca Team
Alpaca Team
Michael Burry vs. Cathie Wood

Robinhood (HOOD) traded down in the extended hours Wednesday night and the selloff continued into Thursday morning premarket as investors were disappointed with their soft Q3 guidance and decline in average revenue per user.

Highlights From This Week’s Earnings

HOOD - On Wednesday night Robinhood reported earnings for the first time as a public company. Here are a few notable takeaways:

  • Crypto revenue jumped more than 4500% compared to the same quarter last year
  • Crypto trading was more than half of their overall revenue
  • Monthly active users increased 109% compared to the second quarter of 2020
  • Dogecoin accounted for 62% of crypto revenue in the second quarter

Burry Vs. Wood On The Fundamentals of Explosive Growth

Michael Burry’s Scion Asset Management Fund revealed massive put positions in Cathie Wood’s flagship ETF ARKK and TSLA, according to the firm’s 13F filing. At the end of June, Scion held Put opinions on 235,500 shares of the Ark Innovation ETF (ARKK). Michael Burry is known for betting against mortgage securities before the 2008 financial crisis. Burry is also bearish on Tesla (TSLA) and has 1.1 million put options on Tesla (TSLA) according to the same filing.

On the other hand, Tesla is the top holding in ARKK and Cathie Wood is the most notable investment manager of recent memory. Her flagship fund ARKK had a nearly 150% return in 2020 and saw assets in the fund increase from 1.8 billion at the start of 2020 to just over 21 billion at the time of this article was published. ARKK is an actively managed ETF specializing in thematic investing in disruptive innovation.

Cathie Wood took to Twitter to call out Michael Burry.

On Tuesday Cathie Wood tweeted, “To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.”  

Everyone’s Favorite Megastore Target +200% in Stock Value

Target (TGT) second-quarter results were strong. Comparable store sales grew 8.7%, while digital comparable sales grew 10%. The number of transactions in the second quarter were up 12.7%, but the average transaction amount fell 3.4%. Target also gave guidance for the second half of the year that they expect comparable store sales to be up by high single digits in the second half of the year. People seem to be shopping in stores.

Additionally, Target also announced that it had opened 52 mini Ulta Beauty shops inside of Target stores in the month of August. On Wednesday Target also announced the board approved a new $15 billion dollar stock buyback to commence once the current plan is completed. In 2016, Target began an omni-channel transformation and that transformation seems to be working well for them, considering the stock is up over 200% from the start of 2017!

Agreement From Fed Officials To Slow Bond Buying By EOY

The minutes from the Federal Reserve Meeting in July were released earlier this week. The key takeaway is that a majority of Federal Reserve Officials agree the Fed could begin to slow the pace of bond buying later this year.  

About the Writer

My name is Allen Spence and I have been working in the retail brokerage industry for over 16 years.  I joined Alpaca in March of 2021 as a Brokerage Operations Consultant. Before joining Alpaca I have worked in a retail branch environment, call center for active traders, and spent over seven and a half years as the team lead on an equity trading desk for a large regional broker dealer.  I’m excited to be at Alpaca helping bring the markets to investors worldwide. I live in Florida and enjoy traveling and spending time with my family.

About Alpaca

Alpaca is a globally distributed financial technology company that is democratizing global access to financial markets starting with our API-first stock brokerage. Alpaca offers commission-free stock trading via API, a suite of developer APIs for brokerages, advisors, and startups, as well as a market data API.

This article is solely for informational purposes only and any historical returns, expected returns or projections are hypothetical in nature. Investments in securities involve the risk of losses and past performance does not guarantee future results. Before investing you should carefully consider your investment objectives, time horizon, and overall risk tolerance as well as the information stated in the product offering prospectuses.

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