May News Round-up
Posted on June 10, 2021
- Wealthsimple Raises $610 Million
- Robinhood Snaps Up Financial Advisors
- Acorns Going Public – Another SPAC
1. Wealthsimple Raises $610 Million – Eyes Acquisitions
In May, Wealthsimple announced a raise of $610 million in new funding – bringing the Canadian-based robo advisor to a $4 billion valuation. Interestingly, according to reports from Bloomberg, CEO Michael Katchen credits the acquisition of ShareOwner Investments Inc., an acquisition announced in 2015, with “transforming the company by providing it with the back-office infrastructure” to become what Wealthsimple is today. With this new cash, Katchen expects to focus on infrastructure companies across the financial industry. This is not surprising as Wealthsimple already offers a breadth of financial services including investing, cash management, insurance, and even mortgages.
2. Robinhood Snaps Up Financial Advisors
According to reports from InvestmentNews, Robinhood Financial hired nearly 40 experienced, licensed advisors from competing firms – including Fidelity, TD Ameritrade, and Charles Schwab. According to a company spokesperson, Robinhood plans to double the number of advisors in 2021. These are not intended to be traditional financial advisors that give advice, however. Instead, these reps are being hired to answer phone calls where customers can inquire about options-trading, transfers, and security – not how to allocate a stock and bond allocation or what stocks to pick.
After the fiasco involving GameStop, in which Robinhood restricted buys on shares of GME, this is an attempt for the firm to bolster its client-support capabilities – especially ahead of an IPO.
3. Acorns Going Public – Another SPAC
Acorns announced that it will go public via a $2.2 billion SPAC – which nearly triples the last valuation of $860 million in 2019. During the age of the pandemic, investors had no problem adapting their money-management activities to the situation – they invested online. Firms like Schwab Intelligent Portfolios, Betterment, and Acorns all reported some of the highest growth numbers in terms of new account openings and usage. As part of the SPAC deal, Acorns will receive $400 million which can be utilized to create new features.
4. SoFi Goes Public via SPAC
The Acorns announcement arrived on the heels of SoFi closing its SPAC deal on June 1st. The new company is called SoFi Technologies (SOFI), which trades on the NASDAQ. According to reports from PYMTS.com, SoFi raised upwards of $2.4 billion in cash proceeds from the transaction. Anthony Noto, SoFi’s CEO, explained that these funds would support new products and fund customer growth.
5. Titan Announces Crypto Offering
Titan announced that it will offer an actively managed cryptocurrency portfolio available to most U.S. investors. The investment thesis is straightforward: find crypto assets the Titan team believes are positioned for growth – while having “minimal correlation to U.S. equities”, according to Titan’s website. The crypto market is highly volatile, highly speculative, and filled with uncertainty – whether regulatory concerns or questions of viability. It has yet to be seen if Titan’s move is ahead of its time or if it puts its growing brand in potential jeopardy.
6. Fidelity Positions No-Fee Stock Investing to Teenagers
According to reports from the Wall Street Journal, “Fidelity said it will issue debit cards and offer investing and savings accounts to 13- to 17-year-olds whose parents or guardians also invest with the firm…” Alongside Fidelity’s recent launch of the Spire app, a financial planning tool that pairs with Fidelity Go, the brand is clearly positioning itself to a new generation of investors. Already, the financial industry has dramatically lowered its costs and barriers to investing with the rise of no-fee trading and digital investing. The Wall Street Journal reports that in the first 3 months of 2021 it reported 1.6 million new accounts from younger investors (under 35), the trend of starting young is here to stay, and for the most part, it’s probably a great thing.
Tagged Acorns, Fidelity, Robinhood, SoFi, Titan Invest, Wealthsimple