Stock markets staged a comeback. Roblox is set to go public. And the Covid-19 relief package includes help with health insurance for workers who lose their jobs. Here's how the headlines affect your money.
After a tough Monday, stock indexes staged a comeback Tuesday, led by Tesla, which climbed nearly 20% on the day and snapped a five-day losing streak. The tech-heavy Nasdaq Composite returned 3.7% for its best single-day return since November. The S&P 500 logged a 1.4% gain and the Dow Jones Industrial Average gained 0.1%.
Investor worries about rising long-term interest rates (which make firms' future profits look less valuable today) dissipated as the 10-year Treasury rate fell by 0.05 percentage points. Major tech names reaped the biggest rewards. Facebook and Apple popped more than 4% each.
The major indexes continued to climb Wednesday morning, with the Dow hitting a new intraday high.
Roblox, an online gaming platform that boasts more than 36 million users who develop and play its games, is set to go public on Wednesday via direct listing after its latest round of funding in January valued the company at nearly $30 billion.
The gaming firm, which allows users to easily develop their own games on the platform using building blocks akin to virtual LEGO, enjoyed remarkable growth in 2020. Sales grew by 82% in 2020, to $924 million. Daily active users jumped 85% to 32.6 million.
Video by Stephen Parkhurst
Investors will have to weigh if Roblox's developer-forward approach is ultimately friendly to shareholders. The firm shares 30% of revenues from virtual purchases with the developers of its games. More than 1,250 developers made at least $10,000 from their Roblox games in 2020.
Before investing in any initial public offering, be sure to vet the company's financials closely, experts say. And don't assign too big a portfolio weighting to any newly public company. Those tend to trade with more volatility than more established firms.
The $1.9 trillion stimulus package Congress hopes to pass on Wednesday includes a provision that would make it more affordable for laid-off workers to stay on their workplace insurance. Should the bill pass, the government would pay for qualifying former employees to keep their coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The move would eliminate a huge obstacle for workers who find themselves suddenly without health coverage through their work: cost. Currently, workers can stay on their insurance through COBRA but must shoulder the entire cost. The average annual premium for job-based coverage in 2020 was $7,470 for individuals and $21,342 for families, according to the Kaiser Family Foundation.
Traditionally, a company seeking to go public hires an underwriter, like an investment bank, to drum up investor interest and bring its shares to the market. With a direct listing, a company lists its own shares on an exchange. That saves the cost of hiring bankers, who not only charge for the service but typically list shares at an artificially low price to attract institutional investors.
Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.
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