Hi! Time just announced that its Person of the Year award for 2022 will go to Volodymyr Zelensky & The Spirit Of Ukraine following the response to the Russian invasion. Today we’re exploring:
Robinhood retirin’
Robinhood, the retail trading app, now wants your retirement savings too — inviting a small number of existing users to open an IRA account on the platform on Tuesday.
Robinhood Retirement builds on their goal to “democratize finance”, a lofty mission for the company that has been somewhat derailed over the last 18 months.
Robinhood, founded in 2013, truly exploded during the meme-stock-mania of early 2021, offering an easy way for everyday folks to take — sometimes highly leveraged — trading positions. Since then, Robinhood has struggled to maintain its momentum — monthly active users have fallen 42% from their highs, to 12.3m in its latest quarter, and quarterly revenues have fallen by more than $200m since 2021. The company has adapted to slower volumes with cutbacks, slashing their workforce by 23%back in August.
Grow old together?
Introducing a retirement offering gives Robinhood a chance to get back to growth. With a majority of Gen-Z and Millennial users — who may not have started amassing large amounts of retirement savings — the Robinhood retirement product is a clever way of building a “stickier” product. The only problem is that it's expensive — the account offers a 1% contribution match for up to $6.5k of savings next year, meaning the brokerage could fork out $65 per user. Robinhood’s average annual revenue per-user? $63.
Retirement products may be a good idea long-term, but it's unlikely to get Robinhood's bottom line out of the red any time soon.
Here comes the sun
Renewables are set to become the world’s leading source of electricity generation by 2025, with solar power leading the charge, according to a new report from the International Energy Agency.
The global energy crisis, exacerbated by Russia’s invasion of Ukraine, has hastened the need for countries to look beyond fossil fuels, with the IEA expecting the world to add twice as much renewable capacity from 2022-2027 than we managed in the 5 years previous.
Power shift
As we've recreated in the chart above (which omits nuclear energy), the IEA report estimates that by 2025, renewable resources' share of the world’s power capacity is projected to hit 48%, overtaking coal and natural gas. By 2027 the growth means an extra 2,400 gigawatts of renewable power capacity — a figure that's ~30% higher than what the IEA forecast last year.
Arguably the most important narrative shift is that the move to renewables is increasingly becoming less about environmental incentives. Indeed, in many cases renewables can be the most economical choice — the IEA report states that "despite elevated commodity prices, utility-scale solar PV is the least costly option for new electricity generation in a significant majority of countries worldwide". The profit motive can be an ugly one, but when it starts to align with wider societal-goals, change can happen quickly.
Go deeper: read an executive summary of the IEA’s findings here, or dive into the full report.
Blank check bust
If 2021 was the year of the SPAC, 2022 is the year of terminating the SPAC. This week alone saw $11 billion in SPAC deals called off within a single hour. That puts the total number terminated for 2022 at 54, twelve more than all SPACs terminated over the last five years.
For those needing a quick reminder, SPACs are special purpose acquisition companies — essentially a company with a big blank check that buys private companies. They offer a quicker route to public markets, skipping long roadshows, negotiations and some of the due diligence of a traditional IPO process.
When stock markets were near all-time highs, SPACs were an attractive option for private companies looking to go public — the total number of SPAC deals hit 613 last year. That euphoria is now long gone. So far this year, only 83 companies have gone public through a merger with a SPAC.
As investors become more cautious, traditional IPO processes — which often involve deep scrutiny of the company and its financials — are looking a safer bet. Indeed, recent research by Bedrock found that 49% of the quarterly financial filings by de-SPACs since 2020 contained an admission of ineffective internal controls, accounting speak for “this is a bit dicier than it should be”.
• Hello darkness, our old friend: yesterday 86% of the world’s population experienced a moment of shared global darkness.
• Music streams just crossed the 1 trillion milestone in the US for the first time in a single year.
• China is introducing 10 new guidelines rolling back some of its zero-Covid restrictions after protests have rocked the nation in recent weeks.
• “No smell!”: Great article from The Economist exploring Covid’s effect on Yankee Candle reviews.
• A deep dive on how far the FTX contagion has spread.
• Assessing the F word’s prevalence in movies through the years.
Trendlines: Which 1980’s song soared back into the charts this year, becoming Spotify’s most-streamed throwback song of 2022? [Answer below].
