What Are LUPA Stocks?

Finance

You may have heard stock traders discussing “LUPA” stocks. But what are they?

LUPA is a relatively new acronym that refers to four high-profile tech companies that have made their public debuts in recent years:

  • Lyft Inc
  • Uber Technologies Inc
  • Pinterest Inc
  • Airbnb Inc

Take the first letter of each stock and you get LUPA. These stocks are also referred to as “PAUL” stocks.

In this article, we will first look at LUPA stocks as a whole then drill down into each stock.

LUPA Stocks

LUPA stocks are often grouped together for a number of reasons. First, they are all tech companies, meaning that they all generally operate within the same market sector.

For example, Lyft and Uber both operate online ride-hailing services, Pinterest runs an image-based social media network, while Airbnb is an online home-sharing giant.

Second, before they went public, these companies were “unicorns,” which meant that private equity investors had valued each company at more than $1 billion. Lastly, they are all recent IPOs that hit public markets with a mix of copious red ink and heady growth.

Here is a deeper look at each of the LUPA stocks to help you understand their business model and growth potential.

Lyft (NASDAQ: LYFT)

Lyft began trading on the NASDAQ on March 29, 2019 and became the first ride-hailing company to become publicly traded in an eagerly-awaited market debut that netted it a valuation of about $18 billion.

Lyft and rival Uber have been challenging each other for dominance in the ride-hailing industry for years.

However, Lyft is only available in is only available in Canada and United States unlike the world-spanning Uber. Lyft boasts a market share of about a 35% in the United States.

But like Uber, Lyft is also deeply unprofitable. Both companies provide basically the same basic services so the competition boils down to market share, driver pay, and other factors that can help get them to positive cash flow.

Shares of Lyft soared 8.7% in its first day of trading after opening at $87.24, well ahead of its initial public offering price of $72 per share. But the stock has taken quite a hit since completing the IPO. It is currently changing hands at $57.06 per share with a market cap of about 18.79 billion.

Uber (NYSE: UBER)

Uber went public in May 2019, ten years after Garrett Camp and Travis Kalanick launched the company. The Lyft competitor priced its public offering at $45 a share valuing it at about $82.4 billion. It raised $8.1 billion from the offering.

But the stock began a downward trajectory as soon as it went public. At the time of this writing, shares of Uber are currently trading at $49.80 apiece.

There have been concerns from investor about the company’s business model and workplace culture. Uber has previously been rocked by a series of scandals, including sexual harassment, embarrassing leaks about the conduct of top executives, and questionable spy programs. Kalanick was ousted as CEO of ride-hailing behemoth after a shareholder revolt in 2017.

The company also faces stiff competition both in its ride-sharing and food delivery services, and price wars with Lyft and other rivals in each market are projected to continue.

While CEO Dara Khosrowshahi described Q1 2021 as the “best quarter ever” for Uber as gross bookings hit an all-time high, the company still posted a net loss of $108 million.

However, that was a drastic improvement from the $968 million net loss the company recorded in the fourth-quarter of 2020.

Pinterest (NYSE: PINS)

Pinterest is a social media site that allows users to visually share, and discover new interests by “pinning” videos or images to their own or other’s board and browsing what users have pinned.

People use it to get inspired across a variety of subjects like interior design, cooking, clothing and travel. Simply put, it is a visual platform optimized to inspire users with new ideas and understand one’s tastes.

Shares of Pinterest began trading in April 2019, giving the company a valuation of $10 billion.

Pinterest has been able to put together a solid business since it was founded in 2010. As of Jan. 2021, the company ranks as the 14th biggest social media network in the world in terms of global active users. It ranks below social sites such as Facebook, Snapchat, Instagram and TikTok — but above Twitter.

In 2020, Pinterest added more than 100 million monthly active users, its biggest ever increase. While the company does not pose much of a threat to social media titans Google and Facebook, some analysts believe there is still room for it to grow.

The core of its philosophy is that by inspiring its users with products, ideas, etc., it creates value for both its shareholders and its users. Over the last year, the company has raised its average revenue per user (ARPU) substantially in all markets, while user growth was reasonable.

Airbnb (NASDAQ: ABNB)

Airbnb finally hit Wall Street in December 2020 after years of toying with the idea of whether to become a public company or not.

The IPO capped a meteoric rise in valuation for the company. According to PitchBook, Airbnb’s Series A fund-raising round in 2010 gave it a valuation of $60 million.

A decade later, during a pandemic that has battered the travel industry, the company is worth more than $100 billion, or more than Marriott and Expedia combined.

Airbnb has already rapidly grown since it was founded in 2008, but it is expected to expand even further now that it has gone public.

The home-rental company has also made several acquisitions in the last few years to expand its offerings. The most notable acquisition is HotelTonight, an app that allows users to book their stays last minute. Airbnb completed the acquisition of HotelTonight in 2019.

Airbnb has a network of more than 4 million hosts spread across 220 countries and more than 100,000 cities. The company derives just over 50% of its revenues in North America, another 30% in EMEA, and the rest in Latin America and Asia-Pacific.

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Stock Broker Essential Guide

Finance

When you want to day trade stocks, options, currencies, futures, or other financial instruments, you need a broker who will execute the trades in the market on your behalf.

The broker you choose is a very important decision. They will play a key role in helping you to trade in the market day in and day out.

We have prepared this stock broker guide to help both beginner and experienced traders to understand the role of brokers, what they are, how to choose them, what to look for, and the importance of choosing the right one for your trading.

We are also going to provide a list of the best brokers that you can rely on in your trading journey.

All About Brokers

A broker is an intermediary between buyers and sellers of financial instruments. Their role of is to facilitate the buying or selling of these instruments for a commission or fee.

There are many well-known brokerage firms in the U.S. through which you can use to trade in financial markets.

In addition to facilitating the purchase and sale of various instruments, some brokers also offer an array of services to their clients such as financial advisory services, portfolio management, retirement planning, depository services, and mutual funds services.

You have probably seen brokers showcased in movies as guys wearing suits, picking up their telephone and calling their clients to inform them about hot stock tips.

While these on-screen portrayals of brokers are accurate, the financial industry is transforming rapidly, and the traditional brokers as we know them are slowly becoming extinct.

With the advancement of technology, it is now easier for traders and investors alike to transact online, thanks to the emergence of online brokers.

Online brokers are convenient, as traders can place orders, make changes and check quotes from anywhere. These brokers also facilitate faster execution of trades, enabling traders to take advantage of market volatility in a better manner.

Importance Of Choosing The Right Broker For Your Trading

Choosing a day trading brokerage firm is the imperfect storm of science and art.

The art, of course, is the cosmic connection that has to be there between you and the broker you are counting on to execute your trades. The science is all the research that you put into it. You require both.

Your decision on whether to stick with the broker, though, should not be based on science or art — but on your individual priorities.

How To Choose Brokers

The basic things to remember when picking a broker are simple and few. Undoubtedly, your first priority should be to make sure that your funds are in safe hands.

The best way to take care of this by ensuring that you only use a brokerage firm based in and regulated by a financial regulator in a respected financial center.

Once you have taken this precaution, look at what the broker offers in terms of:

  • Commissions, ECN fees, data fees, margin fees and fees for phone order executions.
  • Speed of trade execution and platform stability.
  • Range of available financial instruments to trade (stocks, options, commodities, OTC, forex, futures, and eve access to international markets).
  • Customer service.
  • Customer incentives for new traders.

It doesn’t really matter which broker you choose, so long as you feel like your hard earned money is safe and the broker provides the necessary tools for you trading style.

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Can A Broker Sell Your Position Without Permission?

Finance

Robinhood was at the center of the unprecedented and monumental Reddit trading mania that saw shares of GameStop (GME) and other companies, including headphone maker Koss (KOSS) and cinema operator AMC (AMC) soar to extreme levels as amateur traders piled into the stocks earlier this year.

However, the popular trading app was accused of selling off the Reddit stocks without customers’ permission.

Selling stocks out of a client’s brokerage account without authorization in order to maximize the broker’s commissions is generally considered unauthorized and illegal trading.

The circumstances under which a broker is authorized or unauthorized to sell your position depends on the broker agreement the trader has signed and the type of brokerage account.

However, unauthorized selling of positions is very rare in an online discount stock brokerage account.

That said, your first resource should be your client agreement that you signed when the brokerage account was established. This document outlines all of the permissions and authority given to your broker to execute on your behalf.

Discretionary vs non-discretionary accounts

According to the Financial Industry Regulatory Authority (FINRA) unauthorized trading is one of the most common problems that traders and investors should watch out for.

Generally, if a broker sells your position without your consent and knowledge, they could be liable for unauthorized trading. In situations like these, the main issue is determining what kind of account you had with that broker.

There are various types of brokerage accounts and some of them are subject to unauthorized trading rules while some are not. In this blog post, we’re going to focus on discretionary and non-discretionary accounts, as well as margin accounts.

Discretionary accounts

A discretionary account is an account that gives a brokerage firm the right to make individual trades without the permission of their client.

If the terms of the client agreement you signed with the broker give the firm the right to use its own discretion to make trades in your account, you have given prior consent and the broker will probably not be liable for unauthorized trading.

Non-discretionary accounts

A non-discretionary account, on the other hand, is an account that gives the client the authority to always decide whether or not to make a trade.

Therefore, an account must have to be non-discretionary in order to qualify as an unauthorized trade. Basically, a non-discretionary account means that the broker must get prior consent before carrying out any transactions in securities.

If your account was non-discretionary and the broker sold some securities without your consent, he likely broke several securities laws.

What if you have a margin account?

While the laws regarding unauthorized trading vary from state to state, there is an exception when a broker may make a trade in a non-discretionary without the broker getting prior permission from the client for the said position.

For instance, if you have a margin account and the value of the account drops below the broker’s requirements, they may be able to sell your positions without seeking your approval beforehand.

Basically, a margin account is a type of brokerage account that allows you to buy securities on margin by borrowing money through your broker.

Buying on margin allows you to buy more shares than what you could otherwise be able to buy with just the money in your cash account (buying power).

There is a $2,000 minimum requirement for margin accounts, but you will be given 2:1 leverage, which means if you have $2,500 in the account you will have up to $5,000 in buying power.

Consider a scenario where you buy a stock for $200, and the stock price goes up to $250. If you purchased the stock using a cash account, then you will receive a 25% return on your trade.

But if you purchased the stock on margin, paying $100 in cash and borrowing $100 from your brokerage firm, then you will earn a 50% return on the money that you used.

However, not all stocks bought on margin will rise in value. If the price of the stock goes down, then your loss will be amplified in the same way.

Using our example, a $200 stock that falls to $100 represents a 50% loss in a cash account, as well as a 100% loss in a margin account (plus interest on the $100 loan).

If the value of the collateral in your trading account dips below the required margin threshold, then the broker may issue a margin call.

Basically, this is a request by your broker to repay the money you borrowed by immediately depositing additional securities or cash to raise the account value above the maintenance margin.

If you fail to pay the margin call, the broker has the right to seize your positions and begin liquidating them to recover them loan.

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