This week’s stories look at the launch of Apple Card, Amazon’s impact on Australian retail and Mark Zuckerberg’s call for more regulation. (2:52 min read)

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1. The Apple Card

Apple is launching its own credit card called the Apple Card.

Users can see and manage the credit card spending all via their iPhone.


What does it mean if you’re invested in Apple?

This is Apple’s first foray into the credit card market – it’s a logical extension of its Apple Pay service where consumers can already use their iPhones as means of payment.

The Apple Card alone doesn’t appear to be distinctly different from other credit cards on the market.

From a feature perspective, some financial institutions already offer similar transactional tracking the Apple Card is set to provide.

However, we believe Apple Card still has a reasonable chance of success given the huge number of people who are loyal members of the Apple ecosystem.


What does it mean if you’re invested with AtlasTrend?

Two of AtlasTrend’s funds are invested in Apple.

We believe it makes sense for Apple to move into financial services.

What Apple has in abundance with its customers is trust and brand strength. We believe this can be a useful advantage, particularly in core financial services such as credit cards where it is difficult to have truly differentiated product features.


2. Is Amazon having an impact on Australia’s retail sector?

Amazon’s operations in Australia recently reported on 2018 financial results. Its e-commerce division generated $292 million in revenue and made an after-tax loss of $5 million.

The company’s web hosting business (AWS) made revenues of $306 million and suffered an even larger loss of nearly $16 million.


What does this mean if you’re invested in Amazon?

Naysayers and competitors might point to the losses as evidence the Amazon is struggling in Australia. However, it pays to understand Amazon’s business model.

In other regions, including its original base in the US, Amazon takes a longer term view and typically focuses on winning market share during the initial years of operation.

The reason is due to the enormous market opportunity; Amazon believes in reinvesting to grow the business rather than simply focusing on maximising short-term profits.


What does this mean if you’re invested with AtlasTrend?

Some of AtlasTrend’s managed funds are invested in Amazon.

Amazon is a great example of how Australian and American stock market investors differ in their expectations.

The Australian stock market tends to prefer businesses that are consistently profitable and can deliver predictable dividends, despite having less favourable long-term growth prospects.

In the US, stock markets are more capital growth focused, allowing companies like Amazon to flourish and grow market share quickly despite not being highly profitable or paying any dividends.


3. The Zuck wants more (not less) regulation

Mark Zuckerberg released a statement calling for governments around the world to help regulate the internet.

In particular, he called for new regulations in 4 specific areas – harmful content, election integrity, privacy and data portability.


What does this mean if you’re invested in the stock market?

Facebook openly acknowledging and leading the change is important to shareholders because these issues aren’t going away any time soon.

Governments around the world are grappling with how to properly regulate internet companies. If Facebook can actively work with them, they could be part of the solution to protect users while still providing a valuable service.

There is no doubt regulatory risk is one of the key obstacles the company faces over the next decade.


What does this mean if you’re invested with AtlasTrend?

One of AtlasTrend’s managed funds is invested in Facebook.

On balance, we believe Zuckerberg’s statement is a smart move to keep on the front foot of managing regulatory risk.


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About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Kent has over 17 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.