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Daily Scoop

$37.63 Extra Money

By Tue, Apr 21, 2020

Hey Scoopers,

On Monday, a few forces came together and dragged the stock market indices lower than where they started the week. — More on that in the “Overall Market” section.

Beyond the overall market, our collective transition to a new digital life has sent one e-commerce platform stock to the moon and plunged another e-learning platform to the ground. — More on that in the “What’s Up?” and “What’s Down?” sections.

Oh, by the way, there was an opportunity to make $37.63 extra money on Monday from oil futures contracts. Let us tell you how. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

  • U.S. markets: All three indices started the week in the red zone. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin’s price is back under the $7,000 mark.

 

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The Three Forces

All three indices started the week with a reversal of direction and finished Monday in the red. However, when the futures market started trading in the early evening hours, the direction had already reversed. We have been talking about volatility in this market for a while. The ups and downs of the market from one day to the next shouldn’t be surprising to anyone at this point. Therefore, let’s move away from discussing the fact that there was volatility on Monday and dig into the three forces that drove it:

Put all those forces together with the fact that the market just had a fantastic 5-day return in the previous week, and the negative sentiment and sell-offs shouldn’t be too surprising to anyone.

 

Can’t Stop Buying Things Online.

So, what happened?

Shares of Shopify (Ticker: SHOP) jumped another 6% on Monday. With the recent stock price jump, the stock has already gained nearly 60% since the start of 2020. The stock price surge is partially attributed to the tweet by the company’s CTO about the rapid growth of online traffic on Shopify-powered websites. All would get clear on May 6th when the company’s earnings report is due. One thing for sure is that people can’t stop buying things online, and investors are expecting a massively successful quarter fueled by the transition of the world to the digital economy.

 


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Online Education Should Be Up.

So, what happened?

Shares of 2U Inc (Ticker: TWOU) were down by more than 7% on Monday. The stock price decline is surprising because 2U is a provider of online education platforms and should have been enjoying a massive surge due to the transition of education to online channels during the COVID-19. In contrast, the company has pulled its full-year guidance, sighting extreme uncertainties as the reason. The company’s next quarterly earnings report is due on May 7th, and everyone is waiting to see what’s going on behind closed doors…

 

Extra $37.63 On Monday

So what happened here?

Before we start this section, let us preface by saying that the purpose of this section is to both make you laugh and understand what happened to the oil future contracts on Monday. You couldn’t actually follow these instructions and make $37.63 on Monday, at least, as far as we know. But, hey, we all need to laugh, so let’s go with it.

Here are three steps you could have followed to make $37.63 extra money on Monday:

Step one – Lookup a future contract for U.S. oil for May delivery date.
Step two – Put in your credit card information.
Step three – Get paid $37.63 per barrel for ordering and storing that oil.

Wait, what?

You heard it. On Monday, U.S. oil futures contract prices plunged below $0 to $-37.63 per barrel on the NYMEX, one of the largest commodity exchange markets.

The price plunge was for May futures contracts, and happened for a few reasons:

  • Most investors are already focusing on June contracts.
  • The consumption of oil has been drastically reduced in May, as airlines and factories don’t need much oil during the month.
  • The trading volume for May oil contracts reduced to one of the lowest levels in history. Consecutively, Economics 101 rules took over as demand plunged below supply, and the price entered the negative territory.

Now you know. That’s why we got all the crazy, oil-related headlines and chatter on Monday.

Disclosure: Authors of this Scoop own shares of 2U (Ticker: TWOU).
About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card