Fintech vs. Big Banks — Why You’re the Winner
In today’s Market Talk, Amber Lancaster, Hudson Cashdan and I discuss:
- Why old-world banks are losing their grip on younger generations and how fintech’s innovations are making banks scramble to keep up.
- How the U.S. total June retail sales surpassed expectations and what that means for economic growth in the coming months.
- Why cryptocurrency is the industry to watch as Facebook, Uber and Fidelity join the game.
This is Ian for Bold Profits and welcome to your weekly video. This week I am going to be talking about Tesla. I was planning on doing this and then they reported their earnings. I’m glad they did because it gives me a lot more ammunition to talk about all the negative headlines that have come out since then.You probably saw this all over the mainstream media if you were watching CNBC yesterday or you were on MarketWatch or Bloomberg. There was most likely a headline that talked about some bad thing at Tesla. A couple that stuck out to me were even before they reported their earnings.
One of them was on Forbes and it was portrayed to be about how Ford is beating Tesla. This doesn’t exist. It’s not a real thing, except if you look at their share prices, which is of course what the article was arguing. If you take a stock like Ford that’s attracting people because of the dividend and compare it to a stock like Tesla where Wall Street bashes it relentlessly and it sold off last year and this year, of course Ford is going to be higher for the time being.
They said something like over the past 12 months Ford has been higher. One year in the big scheme of things isn’t relevant at all. The point is, Tesla is dominating the electric vehicle market. They are doing so at a rate no one else is even coming close to. Actually, they sold about 84,000 cars in the first half of this year in the United States alone.
That makes up about 56% of all electric cars sold in the United States for the first half of the year. They are dominating the U.S. market. They also outsold all their gas-powered competitor cars combined. The Tesla Model 3 is extremely impressive with how much demand there is for it and how much they are able to sell it.
They’re also expanding into Europe, they are in at least 10 countries over there. Last year in Europe they sold about 29,000 cars in total. They passed that this year in May. They were at 31,000 through May, which is incredible. The growth they are seeing overseas — they don’t even have a factory in Europe and they are still more than doubling their sales year over year.
They are also in China, where they are planning on building a factory. They haven’t done that yet, but their sales have almost tripled there year over year for the first half. Once they have that factory done, it’s projected they are going to be able to make 500,000 cars their first year in that factory.
This is incredible because China is one of the biggest demand spots for electric cars in the world. More electric cars are sold in China than the U.S. This isn’t too surprising because of the population difference, but still. It’s a great market for them to get into. The fact they don’t have a factory there and they are still tripling sales each year is promising.
Another headline I saw was from the Wall Street Journal, which is usually pretty respectable. They usually have a lot of good stuff to read. This article was talking about the one area of Tesla’s business that is in decline, which is the sale of their more expensive cars — Model S and Model X.
The fact is, nobody buys Tesla stock because of the sales of the Model S or Model X. They hardly promote these cars anymore. The Model 3 is their biggest product. Model 3, in June, made up 56% of the total electric car sales in the United States. For that whole month more than half the electric cars sold were a Model 3.
The importance of the Model S and Model X is diminishing. These cars are way more expensive than the Model 3. The Model 3 is $35,000 to $40,000, which is not bad when you consider it’s fully electric and it’s a luxury car. Why would you buy something twice as expensive when you can get a really good car for that?
What they are losing in Model S and Model X they are more than making up for in Model 3. You can see that by the year-over-year growth in their sales. They just set a record for the most cars they’ve sold in any quarter in the second quarter of this year.
When you see stuff about this, like the Model X and Model S sales going down and how Ford is doing better than Tesla, it’s ridiculous. It comes off as desperate. We do really like Tesla. This is something that’s going to happen with any company that’s this influential, different, creating their own market and completely changing the auto market.
This same kind of thing happened with Amazon in the 90s. People said, “We are never going to stop going to brick and mortar stores. We’re always going to buy things in a physical store. Online shopping is stupid.” They said the same thing with Netflix in the early 2000s. “Why would you order a DVD when you could go down to Blockbuster and rent one?”
Look how that turned out for both of these. They are two of the biggest companies in the world right now. They are taking off and growing like crazy. Tesla is in the same situation. Wall Street hates them. You are going to see a lot of negativity about them. Just remember, they are transforming an entire industry.
The fact this company started in the middle of a recession with an electric car — a super niche product — that nobody thought would work and yet they are one of two companies in the United States out of all the car companies that has not gone bankrupt. It’s them and Ford. I guess that’s another thing you can say that Ford is on the same level as Tesla from, but we believe that Tesla is an amazing company.
They are doing things that nobody thought was possible. We are still positive on them even though the stock went down after earnings and all this negative publicity came out.
For my millennial topic this week I want to talk about how we communicate and how we are changing the entire industry in all kinds of way. How we communicate socially is changing from phone calls to texting. There was a survey done by a company called OpenMarket. It was a worldwide survey that found that 75% of millennials would rather text than call.
There’s a number of reasons for this. Number one, it’s faster and more convenient. We can still multitask, which is one of our favorite things to do. We grew up with the internet and we like to be able to do more than one thing at a time. Number two, there’s a written log of texts. You can’t get that with a phone call.
If you forget something with a phone call you have to call that person back and it’s annoying. Or you could write stuff down while you’re on the phone, but this is also inconvenient and annoying. You have a written log, if you forget something you just go back and look at your messages. It’s really easy.
Third, we would rather just text because it gives us time to come up with an answer. If we’d rather not be put on the spot to answer some questions on the phone where you don’t have much time to think, you can come up with an answer. You might be able to look into it on the internet and come up with an answer that’s better thought out.
This is something that’s also transformed the way we do customer service. If I am on a website and I need to get ahold of customer service, if I see there’s no live chat option I am kinda disappointed. I’m sure that I speak for a lot of millennials when I say that and a lot of people in general. It’s so convenient. It’s really fast.
You don’t have to tie up all your attention on a phone call where you’re listening to weird music on hold. You don’t have to listen to some slow robotic voice talking, giving you options and then saying to press a number. You don’t have to be put on hold because someone sent you to the wrong department.
It’s either this or email where you have to wait eight hours. Calling in tops email. Email is the most archaic and then phone calls and then messaging. Live chat is the way to go. If you are a company that wants to appeal to millennials and people in general, please do live chat. You can have a conversation quickly — 15 minutes and you’re done.
That is the way we would prefer to do things. This popped up because millennials started dominating the workforce and this is the way we like to communicate. Also for talking to coworkers for work interactions. Companies like Slack, which just went public. You can buy their stock now, the ticker is WORK.
As of last month, they are a publically traded company. This is the company we actually use at Bold Profits. It’s way better than email. Email is for things that aren’t important and you don’t expect a fast response for. Maybe not even a response that day. With Slack you can talk in groups, you can sort it by topic, it’s great.
This is something that we use for every discussion we have that we are not doing video chats for, which we do a couple times a week. Slack is really the dominate communication tool we use. They now have 10 million companies all over the world. It’s catching on very quickly. This is mostly because of the way millennials are influencing the communication industry and how we would rather interact with one another.
It’s through text and things like IM. We grew up with AOL Instant Messenger, that caught on and it never died down. This is the way we like to interact and these are the companies that are going to be experiencing huge growth for an entire generation as we make our way through the workforce.
In 2016, millennials became the number one largest generation in the workforce. This way of communicating is going to get more and more efficient. We’re going to see improvement in all areas in communication. We are looking at ways to invest in that. We will keep you posted.
That is my millennial topic this week and that wraps up my video. Happy Friday everyone and enjoy your weekend.
We’ve talked a lot about the new world swallowing the old world, and finance is no exception.
The fintech industry is making a ton of amazing advancements, to the point that millennials and Gen Z are turning to fintech apps and services over traditional banks for their financial needs.
Because of this shift, old-world banks are trying to find ways to keep up with these new fintech companies.
While this will delay banks’ inevitable downfall for a little while longer, my team and I believe that the hold fintech companies have over innovation in the financial world will only grow. This will mean old-world banks have to either make some big changes fast, or become a thing of the past.
In the coming months, I’ll be talking more and more about fintech, insurance tech and crypto stocks in my Profits Unlimited newsletters. If you want to be one of the first to read my thoughts on these upcoming opportunities, be sure to click here.
We also discuss:
- If you’re looking for Ian Dyer’s market update, look no further than the Paul Mampilly YouTube channel. Ian’s bringing you his own Bold Profits Daily video every Friday! Click here to see last Friday’s update on bitcoin and other cryptocurrencies.
- Tesla’s about to make it even more convenient to charge up its cars. The company recently released a map of brand-new locations for its supercharger stations around the world, making a worldwide reach for its products even more desirable.
Editor, Profits Unlimited
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