This week’s stories look at Uber’s recent IPO filing, the renter advantage in Sydney, and a highlight from Amazon’s shareholder letter. (2:45 min read)

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

1. Uber’s going public

Uber has started the process of what is likely to become one of the largest initial public offerings (IPOs) in recent years.

Media reports suggest the company will be valued at around US$100 billion.

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

Uber’s IPO will undoubtedly generate huge discussions around the world as to whether the ride sharing company is overvalued.

After losing US$1.8 billion in 2018, some market participants are questioning the company’s ability to generate sustained profit.

The success of Uber’s IPO or business more broadly will be a strong indicator of whether the stock market will continue to support relatively fast-growing technology companies which generate little to no profit.

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

None of AtlasTrend’s managed funds are invested in Uber.

While we believe Uber can continue to be a truly disruptive company across multiple transportation industries, we do have some concerns around Uber’s supposed IPO valuation.

In particular, Uber’s rival Lyft is trading below its IPO price (after listing recently) partly due to concerns around the increasing competition between the two companies.

 

2. Renters have the upper hand in Sydney

Ernst & Young (EY) recently released a research report trying to answer the age-old question of whether renting is indeed “dead money”.

Specifically, EY analysed how the Sydney property market compared to the 10-year returns from buying versus renting while investing in the stock market.

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

EY found 62% of cases over a 10-year comparison, people were better off renting compared to buying a property. The finding applied to 43 local government areas in Sydney between 1994 and 2017.

In their analysis, EY assumed renters would invest any money saved from not buying a property into a leveraged stock market investment.

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

AtlasTrend’s managed funds do not have any direct investment exposure to Australian residential property.

While it only applied to the Sydney property market, EY’s analysis does suggest it is right to question the popular adage that renting is a waste of money.

We agree that generating long-term wealth doesn’t have to be restricted to simply buying property.

 

3. Amazon’s modest shareholder letter

Amazon’s CEO Jeff Bezos released his latest annual letter to shareholders.

In the letter, he referenced Amazon as a small player in the global retail market.

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

With a market value exceeding AUD$1 trillion, Amazon’s size is anything but small.

To put its size into perspective, Amazon is approximately 10 times the market value of Commonwealth Bank.

However, Jeff Bezos is correct in writing that Amazon represents only a low single-digit percentage of the retail market, and nearly 90% of retail remains offline in brick and mortar stores.

If you’re an Amazon investor, there should still be plenty of room for growth over the next decade as even more retail spend moves online.

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

Some of AtlasTrend’s funds are invested in Amazon.

We tend to invest in long-term growth themes – particularly ones that are having a widespread impact around the world.

Amazon is a prime example of a company contributing to a long-term, structural theme with global impact; its retail business is set to continue changing the way the world shops for many years to come.

 

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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.