The Next Big Theme: March 2021
Fintech & E-commerce
Buy Now Pay Later Expands with Stripe
Two large names at the intersection of FinTech and E-commerce, Afterpay and Stripe, are teaming up to launch a potentially powerful partnership. Teaming together will allow merchants to offer their customers Afterpay’s “buy now pay later” (BNPL) option through Stripe’s digital payments platform. This collaboration could be beneficial to all parties by expanding the reach of the BNPL option across thousands of merchants and millions of customers. Afterpay will offer Stripe users the option to pay for an online order in four installments without the liability of loans, interest, or upfront fees.1 Merchants will be able to accept Afterpay transactions without consumers having to meet any prerequisites. The partnership extends further by allowing any e-commerce platforms integrating Squarespace to offer a BNPL option as well.2
Beyond the Clouds
The Mars Rover team at NASA has enlisted the help of Amazon Web Services (AWS) in processing data retrieved from their Perseverance Rover’s trip to Mars. Having AWS as an asset in the NASA Jet Propulsion Lab (JPL) allows them to store, process, and distribute large quantities of data and the thousands of images taken from Perseverance’s stay on Mars. One of the main highlights of having AWS as a cloud computing server is alleviating the time constraint NASA faces when sending instructions to the rover and giving it visibility when driving. AWS additionally provides a 3D view of Mars from the perspective of the Perseverance Rover. With the integration of cloud computing technology, increased efficiency has permitted Perseverance to travel longer distances and gather more data than previously possible.3
Health & Wellness
At-Home Workouts, Elevated
The stay-at-home economy has been beneficial for companies such as Lululemon who provide the resources for consumers to stay fit at a time when many cannot or will not step foot in gyms. Since the holiday season, Lululemon began advertising their recently acquired Mirror, which is an at-home exercise equipment tool incorporating a mirror and TV screen. Mirror costs $1,500 up front, with additional monthly fees for classes. Traditionally Lululemon has been an athleticwear brand, but its move into equipment places it alongside Peloton as an at-home fitness solution. Although the purchase of Mirror cost the company $500 million, Lululemon reports that the expected $150 million in revenue has already been exceeded.4 While the pandemic may be coming to a close with greater vaccine distribution, recent inroads by at-home fitness equipment could prove to be an irreversible trend.
New Approaches to Monetization
Twitter and Snapchat revealed many upcoming features to be rolled out within their respective platforms following Investor Day. “Super Follows” announced by Twitter will offer users the alternative to charge followers for access to additional content. The content may include bonus tweets, exclusive groups, newsletters, or badges for support. It is being advertised as a package deal for followers to receive monthly perks. This announcement comes following the success of Patreon, Facebook, YouTube, and other direct payment platforms.5 Snapchat’s announcements circulated around prospective major ad revenue gains which can already be seen through Stories, Snap Maps, and Spotlight. Snap Maps is starting to add small businesses in a bid to increase ad revenue. Snapchat’s monetization potential was stressed when mentioning that despite having less than 2% of the U.S. digital ad market, the app is reaching almost half of U.S. smartphone users.6
Electric Vehicles & Cleantech
Green Act Boosts EV Car Tax Credit
Top selling electric vehicle (EV) manufacturers such as Tesla and GM, previously faced competitive headwinds by exceeding the sales limits that qualify for federal tax credits. Introduced in the GREEN Act of 2021, the new bill proposes to provide U.S. consumers $7,000 in tax credits for buying a car from manufacturers that already exceeded the 200,000 unit limit.7 Tesla buyers stopped receiving tax credits after 2019 as the auto manufacturer entered a two year “phase-out” period due to high sales volumes. The GREEN Act would renew EV tax credits in a bid to reward early adoption of EVs. The credit limit for manufacturers would be raised to 600,000 vehicles, and likely spur faster adoption of EVs in the US.8
2020 E-commerce Wrap-Up
Q4 2020 U.S. retail e-commerce sales totaled $206.7 billion, up 23.56% year-over-year (YoY). Total e-commerce sales for 2020 were estimated at $791.7 billion, up 32.4% YoY. Comparatively, total retail sales (e-commerce and brick-and-mortar) in 2020 were up 3.4% YoY.9 The fastest growing categories for e-commerce expenditure included: groceries, items for leisure activities such as sporting goods and musical instruments, and home improvement tools.10 The rapid growth of e-commerce is representative of consumers’ embrace of digital technologies amid the pandemic. While it is likely the huge growth in e-commerce seen in 2020 will not remain at such elevated levels as Covid-19 regulations ease, some changes in behavior may be lasting, including curbside pickup and online grocery delivery. Groceries were formerly a niche industry for the online market, making up just 2% of total food and beverage sales in 2019. But with the pandemic, online grocery adoption is expected to reach 55% of US consumers by the end of 2024.11
The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.
INTRO TO THEMATIC INVESTING COURSE – ELIGIBLE FOR CE CREDIT
Global X has developed an interactive, self-guided Intro to Thematic Investing course, that is designed to share the latest ideas and best practices for incorporating thematic investing into a portfolio.
This program has been accepted for 1.0 hour of CE credit towards the CFP®, CIMA®, CIMC®, CPWA® or RMA certifications. To receive credit, course takers must submit accurate and complete information on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.
For Canadian course takers: This program has been reviewed by FP Canada and qualifies for 1 FP Canada-Approved CE Credit, in the category of Product Knowledge, towards the CFP® certification or QAFP™ certification. To receive credit, course takers must submit accurate and complete information (including Job Title) on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.
Questions on receiving CE credit may be sent to: Education@globalxetfs.com
KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X
To learn more about the disruptive themes changing our world, read the latest research from Global X, including:
- Fintech Trends Beyond Digital Payments
- Introducing the Global X China Disruption ETF (KEJI)
- Myth-Busting Six Misconceptions About Thematic Investing
- The Global X Thematic Growth ETF (GXTG): A Multi-Theme Solution
- The Digital Gap and Inequality
ETF HOLDINGS AND PERFORMANCE:
To see individual ETF holdings and current performance across the Global X Thematic Growth Suite, click the below links:
- Disruptive Technology: Future Analytics Tech ETF (AIQ), Robotics & Artificial Intelligence ETF (BOTZ), Cybersecurity ETF (BUG), Cloud Computing ETF (CLOU), Autonomous & Electric Vehicles ETF (DRIV), FinTech ETF (FINX), Video Games & Esports ETF (HERO), Lithium and Battery Tech ETF (LIT), Internet of Things ETF (SNSR), Social Media ETF (SOCL), China Biotech Innovation ETF (CHB), Data Center REITs & Digital Infrastructure ETF (VPN), Emerging Markets Internet & E-Commerce ETF (EWEB), China Disruption ETF (KEJI)
- People and Demographics: Cannabis ETF (POTX), Millennials Thematic ETF (MILN), Health & Wellness Thematic ETF (BFIT), E-Commerce ETF (EBIZ), Genomics & Biotechnology ETF (GNOM), Longevity Thematic ETF (LNGR), Telemedicine & Digital Health ETF (EDOC), Education ETF (EDUT)
- Physical Environment: U.S. Infrastructure Development ETF (PAVE), CleanTech ETF (CTEC), Renewable Energy Producers (RNRG)
- Multi-Theme: Thematic Growth ETF (GXTG)