Daily Brief: Walmart Is Launching A Fintech Startup, And It Might Not Be Alone

Daily Brief: Walmart Is Launching A Fintech Startup, And It Might Not Be Alone

about 3 years ago3 mins

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Walmart pulled on a hoody and started using the word “ideate” earlier in the week, because the retailer announced it’s launching its very own fintech startup.

What does this mean?

Walmart has struck up a partnership with Ribbit Capital – the venture capital firm behind fintech all-stars Robinhood, Affirm, and Credit Karma – to roll out some new, as-yet-unspecified fintech products. Then again, this isn’t entirely new ground for the retail giant, which already offers a variety of financial services like credit and debit cards. In fact, that might be why it’s edging into the space: it already has a treasure trove of data on how its millions of customers manage their money.

Walmart stock
Source: Google Finance

Why should I care?

The bigger picture: Bank to the future.

Walmart’s been expanding beyond its retail business for a while now: it’s ventured into both the health and insurance markets, as well as teamed up with Microsoft to bid on social media giant TikTok. The retailer’s fintech flirtation, more specifically, comes after new US regulations made it easier for non-banks to get into the lending business. It might not be the only company limbering up to give traditional banks a run for their money, either: Big Tech reportedly has its eye on the sector too.

Zooming out: Tech, tech, tech, boom.

Fintech isn’t just big in America: online payments firm Checkout.com has just been crowned Europe’s most valuable private company. It was valued at $15 billion in its latest financing round – almost three times as much as it was worth seven months ago. The firm – together with America’s Stripe and the Netherlands’ Adyen – dominates a digital payments industry that’s been booming amid the recent online shopping craze. And you might be able to benefit from its astronomic rise soon too: the company has said it’s eventually planning to list on the stock market.

Keep reading for our next story...

US Companies Expected To Report A 9% Drop In Earnings

US earnings image

US companies are about to start reporting on how they performed last quarter, and investors might find the situation pretty familiar...

What does this mean?

Analysts are expecting American companies to reveal a 9% fall in average profits compared to the same time the year before. That would make it the third-biggest quarterly drop in the last ten years – trailing only behind the first and second quarters of 2020.

But here’s the thing: analysts previously argued that profits in the third quarter of 2020 would collapse by 21% on average. And in reality, they only slipped by 6%. So while a 9% drop might not sound ideal, the experts’ outlook could’ve been a lot bleaker – and as recently as a couple of months ago, it was.

Return of earnings growth may be just one quarter away

Why should I care?

For markets: Sorry, not sorry.

There are three sectors in particular where company earnings are expected to see a bump: consumer staples and healthcare companies – whose products and services are invaluable come rain or shine – and tech firms, which have benefited from pandemic-driven trends. If only the energy sector were in the same boat: a slew of new stay-at-home orders wrecked demand for oil all over again, and it’s expected to show on its companies’ bottom lines.

The bigger picture: Stay positive.

At least analysts are feeling pretty chipper about 2021: they reckon US company earnings will grow by 22% on average this year – the biggest jump in a decade. And given that they’re expected to have fallen by around 13% in 2020, companies should on average recoup their losses by the end of this year. As for which of them will boost earnings the most: analysts are backing this year’s hardest-hit companies – think industrials and, yep, energy companies – to come out on top.

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