Is this the Green life? Is this just Fantasy?
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Thanks for opening this email! This is the 33rd edition of FWIW and we are happy that you have joined us this week. The most clicked story from last week’s edition was “Corrections triggers and bears, oh my!” and the resource that is getting the most clicks this month is “How to Research ESG Stocks and Funds”.
It’s the season of love, sports, and interest rate hikes as inflation reaches a 40-year high. Athletes are performing spectacular feats in Beijing, and millions of Americans are expected to gather around the TV on Sunday for Super Bowl LVI. The commercials, halftime show, and snacks are all big parts of football’s biggest night, and there’s another phenomenon that may soon join that list — online sports betting.
Ever since a federal ban was lifted in 2018, placing wagers on sports has exploded in popularity, and it’s mainly because 18 states allow you to do it on an app on your phone. Analyst projections vary, but there is a consensus that the US online sports betting market is already large, and growing into the $30-50 billion range rapidly. No wonder DraftKings was one of the hottest SPACs in 2020... However, since it’s now possible to bet on every play during every game with a few taps (we are still waiting for reports of bets around Bing Dwen Dwen sightings), public health advocates worry about a potential gambling addiction crisis. There’s also concern about match-fixing.
Even if gambling isn’t your cup of tea and sports stats bore you to tears, the evolution of this industry, and any negative impact or regulations that follow, may be relevant to you, the values-aligned investor because it’s possible you already own a part of it.
Gambling companies, like the ones with casinos in Vegas, have traditionally been part of the “sin stocks” category, and it’s common for broad ESG funds to avoid them. But online gambling can turn up in portfolios in unexpected ways. Media giant Fox has started its own betting app and others could follow. Major platform DraftKings is held in 86 ETFs, including some focused on growth, technology, millennials, and low-carbon tech. Notably it’s a part of three of Cathie Wood’s ARK Funds products, including the flagship ARK Innovation ETF. It’s also in the Vanguard Growth ETF, Invesco NASDAQ Next Gen 100 ETF, Invesco NASDAQ Internet ETF, and MSCI ACWI Low Carbon Target ETF.
For those who want to avoid finding these stocks in their ETFs, it can feel like picking the salty small fish, tropical fruit, or Mexican chilis no one wants off their Super Bowl pizza. (Don’t @ us, but we’re team pineapple on pizza over here.)
News you can use
- And speaking of sports and fitness… Peloton stock is on an endorphin-releasing climb ride this week after announcing that their CEO is stepping down and that they are cutting 2,800 jobs. The fitness tech firm is being forced to get leaner amid orders slowing down and activist investor pressure.
- Revenues in the cloud infrastructure market reached $178 billion last year, up from $129 billion in 2020. As data centers grow more crucial to how we work, play, and socialize, market leaders like Amazon, Microsoft, and Google are under pressure to use renewable energy to power them. Read our take on green clouds here.
- Apple is making history at the Oscars this year. CODA, an indie comedic drama it acquired for $25 million in January, is the first film led by a predominantly deaf cast to get a Best Picture nomination. The feature’s Troy Kotsur is also the first deaf male actor to land a nomination.