If you think these trading apps that are free can only draw speculators to the most risky stocks, think again. Two well known holdings among investors on Robinhood happen to be solid longer-term picks. Let us look a little closer at these two Robinhood stocks.
The company is called Snap, Better known as Snapchat. While the instant messaging and social networking platform hasn’t come close to upending the more established platforms like Meta Platform’s Facebook or Twitter, Snap reported 306 million daily users in Sept. That number was 23% better than Snap’s headcount at the same time period in 2020, marking the fourth consecutive quarter the service has generated yearly user growth of over 20%.
As good as Snap is at bringing in new users, however, it is even better at upgrading its ad-supported product. Earnings is up 77% through the first few quarters of FY2021, and while Snap continues to be in the red, it is making excellent progress. It is even thought to swing to an entire-year operating profits of $0.36 a share for 2021 after having lost $0.06 in 2020, on its way to earnings of $0.57 a share in 2022. It all points to the ongoing upgrades put in place that make Snap more engaging, like paying developers a total of more than $250 million this past year to generate and release content that draws digital crowds.
And yet, somehow, traders as a group are not stoked about the Snap stock. Snap’s Shares are currently trading at $46 apiece, down almost 40% from its Oct. high and close to new lows. However, its weakness is rooted deep in shorter-term difficulties related to some changes in operating systems to provide users with a little more privacy over ads. The analyst community that is looking further into the future feels the stock is actually worth about $73 a share.
Tesla might be the biggest name in the electric vehicle (EV) industry. But it is not the only name. China’s NIO is also a contender as well, delivering a record-shattering 25,034 electric vehicles in the last quarter of 2021. For the whole year, it shipped out 91,429 EVs. Although that is less than one tenth of the 936,172 electric vehicles Tesla shipped out in 2021, NIO is younger and is only about a tenth as old as Tesla is. Given 2018’s more modest deliveries of about 11,348 EVs, the car manufacturer is actually expanding quite nicely.
Regardless, the entire electric vehicle industry has only touched the surface of its future potential. The U.S. Energy Information Administration predicts the total number of electric vehicles that will be on the roads around the world will increase from less than 10 million currently to over 672 million by 2050. That is a huge amount of potential for Tesla, and NIO, and a lot of other auto makers that plan on diving all the way into EV waters.
It seems Investors do not see it. After an amazing year in 2020, NIO shares have lost half their value from the high it last saw in Jan. The global chip shortage has not helped, and might in fact be the largest driver of its profit-taking. Think about the bigger picture, and longer-term. The supply shortage will end eventually. The need for EVs won’t.
Author: Scott Dowdy