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The Stimulus is in Check, not Checkmate

Vijar Kohli

The Financier

发布日期: 2020年12月11日

The IPO market is red hot

SPACs sparked the IPO markets this year. Before 2020, venture backed companies were holding off on going public. The private markets had enough capital to deliver liquidity with premium valuations. But now the tables haven’t turned.

Dashing pass mispriced IPOs

This week DoorDash and AirBnB more than doubled on opening day. Strong demand and limited supply will do this to any hot product. But these two are the hottest IPOs of the month and everyone wants in.

But fast delivery is not profitable

Venture backed investments have one thing in common...losses. In the first nine months of 2020, AirBnB lost $697m with 32% lower revenues. The food delivery business is no exception. DoorDash and Grubhub have been competing aggressively for every restaurant dollar. Both companies lost $149 million and $183 million in the first nine months, respectively.

Food delivery costs were overlooked before the pandemic but not anymore. With limited indoor dining available, restaurants rely on deliveries for a bulk of their revenue. And high delivery fees eat into their gross margins. This is why restaurants offer +10% discounts if you order directly from them. Every dollar counts when foot traffic is 50% less, year over year.

...Elon took my advice

Between his Starlink rocket ship blowing up and WSJ interview, Elon’s Tesla sold $5 billion or less than 1% of the stock in a secondary offering. This is the second time the company took advantage of its overvalued stock price this year. The first time was in August.

This will not be the last time either. Tesla can sell up to 3% of the business or $15 billion within the next 12 months again. This will give the company enough cash to work on on its current ventures without raising additional money for the next several years. Elon is only getting started with his second act.

Stimulus money is back on the table

We’re preparing for a massive bull run for the first six months of 2021. Between a stimulus plan, Biden transition and new Covid vaccines, we’ll see a massive boost to the economy. Why? The roaring 20s will repeat when we recover from the massive unemployment.

But, Vijar, the market has only gone up this year, does it really have more upside? Fundamentals will tell you to be cautious but we're still in a low-interest-rate environment. Equities continue to be a better investment than fixed income. This is why companies are going public and more investors are buying stocks.

What will the next stimulus plan do?

There's no definitive plan yet. But expect local governments and the unemployed to receive the most benefits. I don't think small businesses will get much from the next round.

It seems that unemployment benefits, eviction moratorium, and rental assistance will be in the Biden stimulus.

However, this new stimulus plan will not be enough. We can’t discount the massive layoffs and business closures across the board. Companies in the government have been laying off whole divisions for the last 6 months. Commercial real estate is not the only area to be impacted by remote work. I think a lot more companies will restructure in 2021 to reduce their fixed costs. Therefore, more restructuring will result in high unemployment for the time being.

December Virtual Events

New trends in online shopping

Over 300 people watched my live stream event this week. I moderated the event with three industry experts to discuss the future of e-commerce. covered a wide range of topics from shop fatigue to online grocery sales.

The biggest takeaway was the future of social commerce. This is a blue ocean for retailers right now. Asian countries are selling tens of millions of dollars with interactive experiences on social media. Think QVC on your phone but by your favorite celebrity.

Speaking at LD micro

On Monday, December 14th, I'll be speaking during several panels for an online small cap conference. The keynote speaker will be Shaquille O'Neal. Over two million small cap investors have been invited. Feel free to register to attend on Monday and Tuesday.

My Holiday Book Recommendations

Every 6 months I do a think week like Bill Gates. I get away for a week and catch up on all my reading. Every December I also check Bill Gates latest book list. This week he released his top five books for a lousy year. If you don’t know what to get your mom, gifting books can be the perfect holiday stocking stuffer.

I have two books I recommend to everyone: The Art of Learning and Love Yourself Like Your Life Depends on It. The latter is a short book on internal reflection and finding one’s truth. The author discusses his own fears and why he almost didn’t publish this book. It is a great reminder of how meaningful your life can be.

The Art of Learning is an exceptional book for life-long learners. Author and grandmaster chess player, Josh Waitzkin, breaks down his techniques on how to master new skills. I love rereading this book to understand his journey. I'll mention a few of the key takeaways without giving away his entire process.

Josh begins with the end in mind. He works backwards from the goal he wants to achieve. For example, in chess he begins each game with the end game in mind. Most chess players focus on the opening moves instead. He also breaks down daily routines and how to push yourself to create new ideas.

P.S. Josh is the main character for the book and movie, Searching for Bobby Fischer. An exceptional story written by Josh’s dad about journey to becoming a chess champion.

Advice: Buy this book and give this other to a friend.