Happy Thursday, y'all.
The weekend is almost here, and that means Fourth of July is just around the corner.
I have two news stories and a stock that have caught my attention today.
Obviously, I have to follow up on Robinhood with the release of the S-1.
Yesterday, I dug into the FINRA penalty that Robinhood will have to pay--costing them a total sum of around $70 million. But today, the company is apparently back on track to IPO.
But then there's also oil, which is painting an interesting story as a sector though there's one specific stock I want to dig into today.
And, finally, the hot donuts sign in my brain has clicked on with the debut of Krispy Kreme on the public markets. Although, unlike the Krispy Kreme (DNUT) - Get Report near me, I'm not seeing much of a line out the door for this stock.
Let's dive in, shall we?
Starting With Robinhood
The company dropped its S-1 today.
And, look, I can basically feel the eyes rolling as I'm writing this but it's still a key player when looking to gauge consumer interest in stocks.
So, here are some numbers from the S-1 that the company touted.
Robinhood has 18 million net cumulative funded accounts, according to the filing. It has 17.7 million monthly active users as well as $81 billion of assets under its custody. Robinhood said that more than half of its clients are first-time investors.
This announcement, however, did come one day after Robinhood was ordered to pay about $70 million in penalties for systemwide outages and misleading communication and trading practices by the Financial Industry Regulatory Authority.
Psst. In case you missed it, I discussed the FINRA penalty in depth yesterday.
But it seems that the announcement of this penalty was just what Robinhood needed to clean up shop and get everything in order to make its public debut.
So, looking past the numbers that Robinhood put in a very large font, there were two things that stood out to me and I'm backing my personal curiosity up by showing two tweets from people I both respect. The first was the mention of Dogecoin, which Bloomberg's Matt Levine points out in the below tweet and the second was the stock incentives for CEO Vlad Tenev, which Yahoo Finance's Zach Guzman screen-shotted.
When looking through the S-1, I was particularly curious about the above section because it's in the cryptocurrency risk section of the S-1. If you're not that familiar with S-1's, a risk section is exactly what it sounds like and is where companies have to warn about the potential issues that they could face.
So, 34% of transactions in Dogecoin?! Yikes.
And not only just looking at Dogecoin but cryptocurrencies--which the Securities and Exchange Commission has been closely reviewing and even caused the agency to delay Robinhood's initial IPO plans--get their own risk section.
However, I'm not here to opine or scare anyone off. Any risk section is par for the course as companies have to let investors know what they're going to get into before the IPO makes its first trade.
But I will mention that Robinhood--by my count--mentioned cryptocurrency around 147 times in the S-1.
So, let's move on, shall we?
A stock incentive structure makes sense in an S-1, but, as Guzman points out, it's interesting to see how much Tenev is slated to make based on the stock performance.
And to put this in perspective, let's take it back for a moment to when we were all discussing Tesla CEO Elon Musks' compensation package, which as this Business Insider article from May points out, is worth around $30 billion.
Bear With Me As We Talk Oil
Don't fall asleep, yet.
Oil has been, for me at least this year, fascinating to watch.
Here's the news: My colleague Martin Baccardax wrote, "U.S. oil prices traded at the highest levels in nearly seven years Thursday amid reports that OPEC cartel leaders will only make modest changes to their agreed output cuts, adding further upward pressure on crude markets as demand continues to surge."
"OPEC leaders, as well as non-member allies such as Russia, agreed to sweeping production cuts in 2016 -- when oil was trading at around $30 a barrel -- that have taken millions of barrels from the market each day and spark a run on prices this year that's coincided with a post-pandemic rebound in industrial demand," he continued. "Reports from today's meeting, held virtually from its headquarters in Vienna, suggest the so-called OPEC+ group will only pare its current holdback of 5.8 million barrels per day by around 500,000 barrels per day, each month, between now and the end of the year."
Now, the reason that my attention is drawn to this sector was summed up pretty nicely by Real Money's Bob Ciura.
The energy sector was one of the worst performers last year due to the coronavirus pandemic, which put a huge dent into demand for oil. However, thanks to the massive distribution of vaccines and the aggressive production cuts of OPEC and Russia, the price of oil has rallied to a three-year high this year.
If you want to take this a step further and actually look for some names in the space that have some high dividends, check out Ciura's full column here on Real Money.
Channel 4 News in the United Kingdom obtained footage from Unearthed, which is Greenpeace UK's investigative platform, of an ExxonMobil lobbyist on camera "revealing how the oil giant is using its power and influence to water down US climate legislation."
This story will probably die down with little to no overall impact on the stock, but it's still something I'll keep an eye on solely based on the fact that activist investor Engine No. 1 was able to place not one, not two but three directors on the board of the giant oil company.
And if you're looking to better understand Engine No. 1, may I suggest reading this New York Times piece?
And, Finally, Where's Your Appetite?
Investing appetite, I mean.
Although, quite frankly, it could be your actual appetite with our next company.
I'm talking Krispy Kreme, which came public on the Nasdaq Thursday, July 1.
The company did sell over 29 million shares, and it closed at $21, which was higher than its opening price of $16.30.
However, I haven't seen much bullishness for this company. At least not in the spaces. Twitter, Instagram, TikTok, and Discord that I follow.
It did open below its pricing point, which was $17. However, when you google Krispy Kreme IPO, there are a handful of negative articles on the company.
Real Money's Doug Kass hit on the donut company in his Daily Diary today, quoting analyst Roger Lipton on the IPO.
"DNUT started trading around noon today, slipped a few percent from the $17 issue price at first and is trading now at about $18.75/share. Almost 25 million shares have traded as this written (2pm), so that's a lot of "interest" in a 26.7M share offering. We will read with interest, and report the highlights to our readers, as the analysts at the many underwriting firms help DNUT put its best foot forward. To be clear: we have no doubt that DNUT is here to stay, as a company and as a stock. The only question is one of valuation, depending on the fundamentals as they develop from here. On that we are open-minded," said Lipton.
So, I'm curious to hear from y'all about DNUT's public debut: What did you think. of the company? Bull or bear here? Tweet me @byKatherineRoss.