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Snapchat’s IPO is having a large effect on younger investors, for better or worse

(BUSINESS NEWS) The stock market is a tricky system, especially when you’re new to the system. As Snapchat went public, many younger investors bought in and are now feeling it.

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Young bloods are learning the hard way

Snapchat’s decision to go public in March attracted several thousand new clients to trading platform TD Ameritrade, and the average age of these users is nearly a decade below the overall average age of their users, according to a report from CNBC That’s some proven truth to the fact that people like to invest in companies that they like and trust.

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Unfortunately, that’s not always the best ways to invest your money.

Big loss, big flag

In their first quarter of this year, Snapchat reported a 2.2 billion dollar net loss. In the world of the stock market, where profits win the day, that’s a really big red flag. And the market responded accordingly; shares dropped 23 percent in value.

Furthermore, younger investors are now souring on the stock.

The same CNBC reporter quoted an employee from Robinhood, a trading app that attracts a younger demographic, as saying that “users were selling more Snap shares than buying over the last several weeks.”

History repeating

Snapchat’s stock value drop isn’t new. On average, Facebook and Twitter’s stock lost 14 percent of its value in the days immediately following their IPOs. This is a valuable learning opportunity for new investors.

Buying low and selling high can help you stay ahead.

Case in point: since falling off a cliff on May 11, Snapchat’s stock climbed from almost 18 dollars a share to 20.75 dollars a share at May 15th’s market opening.

Taking advantage of market corrections, combined with a little bit of patience, is the best way to earn a strong ROI on your stock market investments.

In Snapchat’s case, two line items are causing concern from investors and analysts. The first stems from large losses reported due to compensation spending. The clear majority of Snapchat’s reported $2.2 billion loss comes from paying out stock-based compensation. This should be a one-time issue.

Room to grow

The pervading issue going forward will be generating more value from Snapchat users. In the earnings, Snapchat reported $150 million in revenue; however, at 166 million daily active users, the value of each users is less than a dollar.

For comparison, the worldwide average value of a Facebook user was $3.73 per quarter. In a competitive social media landscape, Snapchat has lots of ground to make up in this arena.

#SnapStock

Born in Boston and raised in California, Connor arrived in Texas for college and was (lovingly) ensnared by southern hospitality and copious helpings of queso. As an SEO professional, he lives and breathes online marketing and its impact on businesses. His loves include disc-related sports, a pint of a top-notch craft beer, historical non-fiction novels, and Austin's live music scene.

Business News

School supply retailers are also feeling the effects of COVID-19

(BUSINESS NEWS) As families gear up for more virtual learning, back-to-school retailers anticipate major losses.

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For many, the return to school this fall will mean exchanging pencil boxes and notebooks for an internet connection and virtual learning. This is an incredibly demoralizing process for those involved–including back-to-school retailers, who anticipate substantial uncertainty in the coming weeks.

CNBC’s Melissa Repko details some of the trains of thought put forward by retailers who depend on fall sales, and while nothing is for sure, even the most optimistic of estimates looks bleak with clothing giants such as Gap and American Eagle poised to encounter significant hits to stock value as the pandemic drags on.

And, with families paying closer attention to their spending habits, taking stock of what they have rather than what they want, and generally tightening their belts with no end in sight, it seems reasonable to assume that they won’t be purchasing art supplies that they don’t anticipate using for several months.

Repko mentions that “stimulus checks could put money in [spenders’] pockets”, but even this cautiously optimistic assertion comes with an implied shrug and more uncertainty. Families who find themselves coming out on top with the addition of a few thousand dollars might decide to replenish their kids’ school supplies, but it’s just as likely that they’ll put that money away for future hardships.

One detail to which back-to-school retailers are clinging onto is that of clothing needs. The pandemic has hampered many aspects of daily life, but children growing isn’t one of them; retailers are hopeful that families will still find value in buying new clothes for the school year–if for no other reason than necessity.

Similarly enough, some retailers hope that families will opt to buy smaller quantities of pricier items like laptops, tablets, and other virtual learning gear; others may decide to upgrade their existing modems or routers, making the back-to-school rush a comparable–if slightly anticlimactic–experience.

Whatever the end result for retailers, it’s no secret that the coming year will weigh heavily on everyone–retailers, parents, children, and school staff–and with discernible end to the daily positive rates for the virus, each of these members of the chain stand to be affected differently, yet equally as tragically.

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Business News

The second stimulus check may be on its way…to some

(BUSINESS NEWS) A second round of stimulus payments seems to be on the horizon for Americans, but remains held up by debates in the Senate about eligibility.

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Counting on a little extra stimulus money coming your way? You might be in luck soon!

Keyword: Might.

The Senate recently confirmed plans to include a second round of Economic Impact Payments in the HEROES Act, but the details on who will be eligible, and for how much, are still fuzzy.

They are poised to approve the act by the end of the month, and for the sake of those on unemployment, it had better go through on time. The $600 boost to weekly benefits bestowed by the CARES Act is due to expire on July 31st. After that, 31 million unemployment recipients will see their income plummet by at least 61%.

Another EIP would really come in handy for these folks, and many others. But if you made over $40,000 last year, don’t count on getting a check this time around (and if you’re also on unemployment right now, at least take comfort that the HEROES Act would extend that $600 benefit bonus until February 2020, too).

While the act has bipartisan support, both factions of the Senate have different ideas about exactly who deserves another payment. Currently, the text of HEROES has the same criteria that CARES did: individuals earning up to $75,000 will be eligible for a one-time payment of $1,200, and married couples earning up to $150,000 will receive $2,400.

Senate Majority Leader Mitch McConnell, who just announced his support for another payment on Tuesday, has proposed setting an upper income limit for the next EIP at $40,000 per year. He has emphasized that if the act passes, the scope of the payments will be small.

Admittedly, it’s a little weird to see such a kerfuffle being made about setting more strict limits on the financial relief for individuals and families (regardless of what number was printed on their W-2) who are clearly still struggling , when $500 billion in corporate bailouts were eagerly baked into the first stimulus bill.

This debate represents tension with a legislative mindset that often hits middle class families and small business owners hard, as well as residents of exceptionally expensive areas like New York and San Francisco. Seeming not-poor on paper doesn’t necessarily equate to living comfortably when taking into account factors like debt, bills, taxation, and cost of living differences across the country – especially during a pandemic and an unprecedented economic downturn.

The first round of stimulus checks was arguably disastrous: Millions of dollars in stimulus money ended up in the hands of dead people; many payments were mistaken for junk mail and recipients threw them away; confusion about how to appeal one’s ineligibility ran rampant; and plenty of people still haven’t gotten their first one – months after they were meant to be sent out. If HEROES does pass, and does contain EIPs, then hopefully the IRS has ironed out the worst kinks in their system. All this back-and-forth about income limits in Congress is stressful enough without a complete repeat of the last payment debacle.

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Business News

To infinity and beyond…or NOT: COVID forces Bed Bath & Beyond closures

(BUSINESS NEWS) Bed Bath & Beyond will be closing 200 stores due to coronavirus. Honestly, they might’ve had it coming.

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Yet another company is having issues with their old practices. Will they pull their tails out of the fire?

As this pandemic enters the fifth official month, we have yet another company closing down at least some of its doors. Bed Bath & Beyond announced last week that approximately 200 stores, about 20% of their total store count, will be closed down over the next two years.

The President and CEO announced that “the impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital” shopping. By impact he’s referring to a $1.3 billion fall in sales.

According to the CEO, the company has attempted to take measures to keep their people safe while also servicing their customers. This is a completely different approach than what a number of customers have noticed in the last few years. From merchandise that makes flea market chattel look new and shiny to misinformation about product availability, this company has been floundering for a number of years.

The latest shift that the CEO is masquerading as an ‘online shopping’ shift is yet another attempt to dredge sales and lower cost. Maybe they’ll do it better this time though. Over the past few years, they have been doing this while not effectively communicating that to their clientele.

A customer might know that Bed Bath & Beyond carries an exclusive item but what they don’t know is that it’s only carried online and can’t be found in stores. It isn’t communicated to a customer until they’ve gone to a store and searched for it. One would hope that this is an easy fix that should have been made by now after customer complaints, but it hasn’t. And with their demonstrated history thus far, I won’t be holding my breath.

At this point the company has positioned itself to quickly liquidate millions of dollars in merchandise at all 955 locations that they currently have reopened across the country. Maybe this will spark a new age in this corporate cash cow that will push it forward. On a personal note, I don’t foresee that either unless a great amount of change happens. Instead, we’ll most likely be seeing a ton of “going out of business” signs in no time.

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