Reddit Faces Wall Street as Nubank Hits New HeightsBy Peter Appleby | Thu, 02/04/2021 - 18:04
The attention of the world media has been on the stock markets as Wall Street and WallStreetBets, a forum on the website Reddit, faced off in a battle over GameStop. Meanwhile, fintech Nubank became a US$25 billion company and INEGI released figures on the economic aftermath of 2020’s COVID-19 crisis.
All this and more in the Week in Finance.
Brazilian fintech Nubank has reached a valuation of US$25 billion after attracting an additional US$400 million in Series G funding round success. On the company’s milestone, Nubank Executive Director David Vélez wrote: “Nubank was born out of the conviction that people deserved better financial services. The pain caused by bureaucracy and the complexity within financial services is shared among all Latin Americans. With this new round of funding, we will be able to strengthen our operations in Brazil, and mainly Mexico and Colombia, to free more and more people from complexity.”
The company, which arrived to Mexico in 2019, said at the time that it had listened to criticism of Mexico’s traditional banks which “did not put the consumer at the center of their strategy and product.” The 36 million Mexicans that are without a bank account offered a strong market opportunity.
INEGI has reported that during 2020, Mexico’s economy shrank by 8.5 percent. Though this is a massive drop in GDP, it was not as strong as some experts were suggesting.
The primary sector grew 2 percent over the year in comparison to the secondary sector and tertiary sector, which plummeted 10.2 percent and 7.9 percent, respectively. INEGI’s figures show that the impact of the COVID-19 virus was felt worse in the first half of the year, while the second half showed some recovery.
For the last two weeks, the financial world’s eyes have been fixed firmly on the battle between users of one of the internet’s most popular websites, Reddit, and Wall Street traders.
The “WallStreetBets” forum turned the tables on the Wall Street traders they regard as financial elites by purchasing GameStop stocks and therefore driving up the price that Wall Street traders had shorted to the tune of millions of dollars. This opened the possibility for Wall Street to lose billions.
Though the action took place outside of Latin America, global markets have global impact. Volatility could impact Mexico’s stock markets, Luis Gonzalí, Co-Director of Investments at Franklin Templeton Mexico, warned.