Finance

For customers, fintech promised the best of both worlds: The innovation, ease of use and fun of the newest apps combined with the safety of government-backed accounts held at real banks.
The collapse of middleman Synapse has revealed fintech’s promise of safety as a mirage. More than 100,000 Americans with $265 million in deposits have been locked out of their accounts.
The implications of this disaster may be far-reaching. The most popular banking apps in the country, including Block’s Cash App, PayPal and Chime, partner with banks instead of owning them.
CNBC reached out to fintech customers whose lives have been upended by the Synapse debacle. They all believed their money was protected by an FDIC safety net.

Natasha Craft, a 25-year-old FedEx driver from Mishawaka, Indiana. She has been locked out of her Yotta banking account since May 11.
Courtesy: Natasha Craft

When Natasha Craft first got a Yotta banking account in 2021, she loved using it so much she told her friends to sign up.
The app made saving money fun and easy, and Craft, a now 25-year-old FedEx driver from Mishawaka, Indiana, was busy getting her financial life in order and planning a wedding. Craft had her wages deposited directly into a Yotta account and used the startup’s debit card to pay for all her expenses.

The app — which gamifies personal finance with weekly sweepstakes and other flashy features — even occasionally covered some of her transactions.
“There were times I would go buy something and get that purchase for free,” Craft told CNBC.
Today, her entire life savings — $7,006 — is locked up in a complicated dispute playing out in bankruptcy court, online forums like Reddit and regulatory channels. And Yotta, an array of other startups and their banks have been caught in a moment of reckoning for the fintech industry.
For customers, fintech promised the best of both worlds: The innovation, ease of use and fun of the newest apps combined with the safety of government-backed accounts held at real banks.
The startups prominently displayed protections afforded by the Federal Deposit Insurance Corp., lending credibility to their novel offerings. After all, since its 1934 inception, no depositor “has ever lost a penny of FDIC-insured deposits,” according to the agency’s website.

But the widening fallout over the collapse of a fintech middleman called Synapse has revealed that promise of safety as a mirage.
Starting May 11, more than 100,000 Americans with $265 million in deposits were locked out of their accounts. Roughly 85,000 of those customers were at Yotta alone, according to the startup’s co-founder, Adam Moelis.
CNBC reached out to fintech customers whose lives have been upended by the Synapse debacle.
They come from all walks and stages of life, from Craft, the Indiana FedEx driver; to the owner of a chain of preschools in Oakland, California; a talent analyst for Disney living in New York City; and a computer engineer in Santa Barbara, California. A high school teacher in Maryland. A parent in Bristol, Connecticut, who opened an account for his daughter. A social worker in Seattle saving up for dental work after Adderall abuse ruined her teeth.

‘A reckoning underway’

Since Yotta, like most popular fintech apps, wasn’t itself a bank, it relied on partner institutions including Tennessee-based Evolve Bank & Trust to offer checking accounts and debit cards. In between Yotta and Evolve was a crucial middleman, Synapse, keeping track of balances and monitoring fraud.
Founded in 2014 by a first-time entrepreneur named Sankaet Pathak, Synapse was a player in the “banking-as-a-service” segment alongside companies like Unit and Synctera. Synapse helped customer-facing startups like Yotta quickly access the rails of the regulated banking industry.
It had contracts with 100 fintech companies and 10 million end users, according to an April court filing.
Until recently, the BaaS model was a growth engine that seemed to benefit everybody. Instead of spending years and millions of dollars trying to acquire or become banks, startups got quick access to essential services they needed to offer. The small banks that catered to them got a source of deposits in a time dominated by giants like JPMorgan Chase.
But in May, Synapse, in the throes of bankruptcy, turned off a critical system that Yotta’s bank used to process transactions. In doing so, it threw thousands of Americans into financial limbo, and a growing segment of the fintech industry into turmoil.
“There is a reckoning underway that involves questions about the banking-as-a-service model,” said Michele Alt, a former lawyer for the Office of the Comptroller of the Currency and a current partner at consulting firm Klaros Group. She believes the Synapse failure will prove to be an “aberration,” she added.
The most popular finance apps in the country, including Block’s Cash App, PayPal and Chime, partner with banks instead of owning them. They account for 60% of all new fintech account openings, according to data provider Curinos. Block and PayPal are publicly traded; Chime is expected to launch an IPO next year.
Block, PayPal and Chime didn’t provide comment for this article.

‘Deal directly with a bank’

While industry experts say those firms have far more robust ledgering and daily reconciliation abilities than Synapse, they may still be riskier than direct bank relationships, especially for those relying on them as a primary account.
“If it’s your spending money, you need to be dealing directly with a bank,” Scott Sanborn, CEO of LendingClub, told CNBC. “Otherwise, how do you, as a consumer, know if the conditions are met to get FDIC coverage?”
Sanborn knows both sides of the fintech divide: LendingClub started as a fintech lender that partnered with banks until it bought Boston-based Radius in early 2020 for $185 million, eventually becoming a fully regulated bank.

Scott Sanborn, LendingClub CEO
Getty Images

Sanborn said acquiring Radius Bank opened his eyes to the risks of the “banking-as-a-service” space. Regulators focus not on Synapse and other middlemen, but on the banks they partner with, expecting them to monitor risks and prevent fraud and money laundering, he said.
But many of the tiny banks running BaaS businesses like Radius simply don’t have the personnel or resources to do the job properly, Sanborn said. He shuttered most of the lender’s fintech business as soon as he could, he says.
“We are one of those people who said, ‘Something bad is going to happen,'” Sanborn said.
A spokeswoman for the Financial Technology Association, a Washington, D.C.-based trade group representing large players including Block, PayPal and Chime, said in a statement that it is “inaccurate to claim that banks are the only trusted actors in financial services.”
“Consumers and small businesses trust fintech companies to better meet their needs and provide more accessible, affordable, and secure services than incumbent providers,” the spokeswoman said.
“Established fintech companies are well-regulated and work with partner banks to build strong compliance programs that protect consumer funds,” she said. Furthermore, regulators ought to take a “risk-based approach” to supervising fintech-bank partnerships, she added.
The implications of the Synapse disaster may be far-reaching. Regulators have already been moving to punish the banks that provide services to fintechs, and that will undoubtedly continue. Evolve itself was reprimanded by the Federal Reserve last month for failing to properly manage its fintech partnerships.

In a post-Synapse update, the FDIC made it clear that the failure of nonbanks won’t trigger FDIC insurance, and that even when fintechs partner with banks, customers may not have their deposits covered.
The FDIC’s exact language about whether fintech customers are eligible for coverage: “The short answer is: it depends.”

FDIC safety net

While their circumstances all differed vastly, each of the customers CNBC spoke to for this story had one thing in common: They thought the FDIC backing of Evolve meant that their funds were safe.
“For us, it just felt like they were a bank,” the Oakland preschool owner said of her fintech provider, a tuition processor called Curacubby. “You’d tell them what to bill, they bill it. They’d communicate with parents, and we get the money.”
The 62-year-old business owner, who asked CNBC to withhold her name because she didn’t want to alarm employees and parents of her schools, said she’s taken out loans and tapped credit lines after $236,287 in tuition was frozen in May.
Now, the prospect of selling her business and retiring in a few years seems much further out.
“I’m assuming I probably won’t see that money,” she said, “And if I do, how long is it going to take?”
When Rick Davies, a 46-year-old lead engineer for a men’s clothing company that owns online brands including Taylor Stitch, signed up for an account with crypto app Juno, he says he “distinctly remembers” being comforted by seeing the FDIC logo of Evolve.
“It was front and center on their website,” Davies said. “They made it clear that it was Evolve doing the banking, which I knew as a fintech provider. The whole package seemed legit to me.”
He’s now had roughly $10,000 frozen for weeks, and says he’s become enraged that the FDIC hasn’t helped customers yet.
For Davies, the situation is even more baffling after regulators swiftly took action to seize Silicon Valley Bank last year, protecting uninsured depositors including tech investors and wealthy families in the process. His employer banked with SVB, which collapsed after clients withdrew deposits en masse, so he saw how fast action by regulators can head off distress.
“The dichotomy between the FDIC stepping in extremely quickly for San Francisco-based tech companies and their impotence in the face of this similar, more consumer-oriented situation is infuriating,” Davies said.
The key difference with SVB is that none of the banks linked with Synapse have failed, and because of that, the regulator hasn’t moved to help impacted users.
Consumers can be forgiven for not understanding the nuance of FDIC protection, said Alt, the former OCC lawyer.
“What consumers understood was, ‘This is as safe as money in the bank,'” Alt said. “But the FDIC insurance isn’t a pot of money to generally make people whole, it is there to make depositors of a failed bank whole.”

Waiting for their money

For the customers involved in the Synapse mess, the worst-case scenario is playing out.
While some customers have had funds released in recent weeks, most are still waiting. Those later in line may never see a full payout: There is a shortfall of up to $96 million in funds that are owed to customers, according to the court-appointed bankruptcy trustee.
That’s because of Synapse’s shoddy ledgers and its system of pooling users’ money across a network of banks in ways that make it difficult to reconstruct who is owed what, according to court filings.
The situation is so tangled that Jelena McWilliams, a former FDIC chairman now acting as trustee over the Synapse bankruptcy, has said that finding all the customer money may be impossible.
Despite weeks of work, there appears to be little progress toward fixing the hardest part of the Synapse mess: Users whose funds were pooled in “for benefit of,” or FBO, accounts. The technique has been used by brokerages for decades to give wealth management customers FDIC coverage on their cash, but its use in fintech is more novel.
“If it’s in an FBO account, you don’t even know who the end customer is, you just have this giant account,” said LendingClub’s Sanborn. “You’re trusting the fintech to do the work.”
While McWilliams has floated a partial payment to end users weeks ago, an idea that has support from Yotta co-founder Moelis and others, that hasn’t happened yet. Getting consensus from the banks has proven difficult, and the bankruptcy judge has openly mused about which regulator or body of government can force them to act.
The case is “uncharted territory,” Judge Martin Barash said, and because depositors’ funds aren’t the property of the Synapse estate, Barash said it wasn’t clear what his court could do.
Evolve has said in filings that it has “great pause” about making any payments until a full reconciliation happens. It has further said that Synapse ledgers show that nearly all of the deposits held for Yotta were missing, while Synapse has said that Evolve holds the funds.
“I don’t know who’s right or who’s wrong,” Moelis told CNBC. “We know how much money came into the system, and we are certain that that’s the correct number. The money doesn’t just disappear; it has to be somewhere.”
In the meantime, the former Synapse CEO and Evolve have had an eventful few weeks.
Pathak, who dialed into early bankruptcy hearings while in Santorini, Greece, has since been attempting to raise funds for a new robotics startup, using marketing materials with misleading claims about its ties with automaker General Motors.
And only days after being censured by the Federal Reserve about its management of technology partners, Evolve was attacked by Russian hackers who posted user data from an array of fintech firms, including Social Security numbers, to a dark web forum for criminals.
For customers, it’s mostly been a waiting game.
Craft, the Indiana FexEx driver, said she had to borrow money from her mother and grandmother for expenses. She worries about how she’ll pay for catering at her upcoming wedding.
“We were led to believe that our money was FDIC-insured at Yotta, as it was plastered all over the website,” Craft said. “Finding out that what FDIC really means, that was the biggest punch to the gut.”
She now has an account at Chase, the largest and most profitable American bank in history.
— With contributions from CNBC’s Gabriel Cortes. More

Move to San Francisco and it is hard not to be swept up by mania over artificial intelligence (AI). Advertisements tell you about how the tech will revolutionise your workplace. In bars people speculate about when the world will “get AGI”, or when machines will become more advanced than humans. The five big tech firms—Alphabet, Amazon, Apple, Meta and Microsoft, all of which have either headquarters or outposts nearby—are investing vast sums. This year they are budgeting an estimated $400bn for capital expenditures, mostly on AI-related hardware, and for research and development.In the world’s tech capital it is taken as read that AI will transform the global economy. But for ai to fulfil its potential, firms everywhere need to buy big tech’s AI, shape it to their needs and become more productive as a result. Investors have added $2trn to the market value of the five big tech firms in the past year—in effect projecting an additional $300bn-400bn in annual revenues according to our rough estimates, about the same as another Apple’s worth of annual sales. For now, though, the tech titans are miles from such results. Even bullish analysts think Microsoft will only make about $10bn from generative-AI-related sales this year. Beyond America’s west coast, there is little sign AI is having much of an effect on anything. More

Nikolay Storonsky, Revolut’s CEO and co-founder, said the company is feeling confident about securing its British bank license “soon”, after overcoming some key hurdles.
Revolut first applied for a U.K. banking license in 2021, but it has faced lengthy delays.
Revolut released annual accounts Tuesday showing its full-year pre-tax profit rose to $545 million in 2023; the company cited strong user growth and revenue diversification.

Nikolay Storonsky, founder and CEO of Revolut.
Harry Murphy | Sportsfile for Web Summit via Getty Images

LONDON — The boss of British financial technology giant Revolut told CNBC he is optimistic about the company’s chances of being granted a U.K. banking license, as a jump in users saw the firm report record full-year pre-tax profits.
In an exclusive interview with CNBC, Nikolay Storonsky, Revolut’s CEO and co-founder, said that the company is feeling confident about securing its British bank license, after overcoming some key hurdles in its more than three-year-long journey toward gaining approval from regulators.

“Hopefully, sooner or later, we’ll get it,” Storonsky told CNBC via video call. Regulators are “still working on it,” he added, but so far haven’t raised any outstanding concerns with the fintech.
Storonsky noted that Revolut’s huge size has meant that it’s taken longer for the company to get its banking license approved than would have been the case for smaller companies. Several small financial institutions have been able to win approval for a banking license with few customers, he added.
“U.K. banking licenses are being approved for smaller companies,” Storonsky said. “They usually approve someone twice every year,” and they typically tend to be smaller institutions. “Of course, we are very large, so it takes extra time.”
Revolut is a licensed electronic money institution, or EMI, in the U.K. But it can’t yet offer lending products such as credit cards, personal loans, or mortgages. A bank license would enable it to offer loans in the U.K. The firm has faced lengthy delays to its application, which it filed in 2021.
One key issue the company faced was with its share structure being inconsistent with the rulebook of the Prudential Regulation Authority, which is the regulatory body for the financial services industry that sits under the Bank of England.

Revolut has multiple classes of shares and some of those share classes previously had preferential rights attached. One conditions set by the Bank of England for granting Revolut its U.K. banking license, was to collapse its six classes of shares into ordinary shares.
Revolut has since resolved this, with the company striking a deal with Japanese tech investor SoftBank to transfer its shares in the firm to a unified class, relinquishing preferential rights, according to a person familiar with the matter. News of the resolution with SoftBank was first reported by the Financial Times.

2023 a ‘breakout year’

The fintech giant on Tuesday released financial results showing full-year pre-tax profit rose to £438 million ($545 million) in 2023, swinging to the black from a pre-tax loss of £25.4 million in 2022. Group revenues rose by 95% to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.
Victor Stinga, Revolut’s chief financial officer, said the company’s growth stemmed from a record jump in user numbers — Revolut added 12 million customers in 2023 — as well as strong performance across all its key business lines, including card fees, foreign exchange and wealth, and subscriptions.
“We consider 2023 to be what we would call a breakout year from the point of view of growth and profitability,” Stinga said in an interview this week.
Revenue growth was driven by three main factors, Stinga said, including customer growth, strong performance across its key revenue lines, and a significant jump in interest income, which he said now accounts for about 28% of Revolut’s revenues.
He added that Revolut made exercising financial discipline a key priority in 2023, keeping a lid on operating expenses and adopting a “zero-based budgeting” philosophy, where every new expense has to be justified and accounted for before it’s considered acceptable.
This translated to administrative expenses growing far less than revenues did, Stinga said, with admin costs growing by 49% while revenues nearly doubled year-on-year.
Revolut has been investing more aggressively in advertising and marketing, he added, with the firm having deployed $300 million in advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut devoting about 900 employees toward business-to-business sales. More

Ken Griffin speaks to Citadel and Citadel Securities interns during a discussion moderated by Citadel software engineer, and former intern, Bharath Jaladi.
Courtesy: Citadel

Ken Griffin, founder and CEO of Citadel, said he remains skeptical that artificial intelligence could soon make human jobs obsolete as he sees flaws in machine learning models applied in certain scenarios.
“We are at what is widely viewed as a real inflection point in the evolution of technology, with the rise of large language models. Some are convinced that within three years almost everything we do as humans will be done in one form or another by LLMs and other AI tools,” Griffin said Friday during an event for Citadel’s new class of interns in New York. “For a number of reasons, I am not convinced that these models will achieve that type of breakthrough in the near future.”

The rapid rise of AI has had the world pondering its far-reaching impact on society, including technology-induced job cuts. Elon Musk, CEO of Tesla, is among many who have repeatedly warned of the threats that AI poses to humanity. He has called AI “more dangerous” than nuclear weapons, saying there will come a point where “no job is needed.”
Griffin, whose hedge fund and electronic market maker have been at the forefront of automation, said machine-learning tools do have their limits when it comes to adapting to changes.
“Machine learning models do not do well in a world where regimes shift. Self-driving cars don’t work very well in the North due to snow. When the terrain changes, they have no idea what to do,” Griffin said. “Machine learning models do much better when there’s consistency.” 
Still, the billionaire investor thinks the power of advanced technology can’t be dismissed in the long term, and he even sees cancer being eradicated one day because of it.
“The rise of computing power is allowing us to solve all kinds of problems that were just simply not solvable five, 10, 15 years ago,” Griffin said. “This is going to radically transform healthcare. We will end cancer as you know it in your lifetime.” 

Citadel has long placed a great emphasis on hiring, not hesitant about putting responsibility into the hands of young employees and even interns, the CEO said.
The firm’s internship program has become one of the most competitive in the country. More than 85,000 students applied for about 300 positions this year, reflecting an acceptance rate of less than 0.5%, which is lower than that of Harvard University and the Massachusetts Institute of Technology.
“The people we hire today are going to be the leaders of Citadel not in 30 or 40 years, but in just a few years,” Griffin said. More

The 10 largest U.S. companies accounted for 14% of the S&P 500 stock index a decade ago. Today, they account for more than a third.
Tech euphoria has helped drive up the “Magnificent Seven” stocks: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.
Some experts fear that such concentration may put investors at risk. Others think it’s not a big deal.

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., displays the new Blackwell GPU chip during the Nvidia GPU Technology Conference on March 18, 2024. 
David Paul Morris/Bloomberg via Getty Images

The U.S. stock market has become dominated by about a handful of companies in recent years. Some experts question whether that “concentrated” market puts investors at risk, though others think such fears are likely overblown.
Let’s look at the S&P 500, the most popular benchmark for U.S. stocks, as an illustration of the dynamics at play.

The top 10 stocks in the S&P 500, the largest by market capitalization, accounted for 27% of the index at the end of 2023, nearly double the 14% share a decade earlier, according to a recent Morgan Stanley analysis.

In other words, for every $100 invested in the index, about $27 was funneled to the stocks of just 10 companies, up from $14 a decade ago.
That rate of increase in concentration is the most rapid since 1950, according to Morgan Stanley.
It has increased more in 2024: The top 10 stocks accounted for 37% of the index as of June 24, according to FactSet data.
The so-called “Magnificent Seven” — Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla — make up about 31% of the index, it said.

‘A bit riskier than people realize’

Some experts fear the largest U.S. companies are having an outsized influence on investors’ portfolios.
For example, the Magnificent Seven stocks accounted for more than half the S&P 500’s gain in 2023, according to Morgan Stanley.
Just as those stocks helped push up overall returns, a downturn in one or many of them could put a lot of investor money in jeopardy, some said. For example, Nvidia shed more than $500 billion in market value after a recent three-day sell-off in June, dragging down the S&P 500 into a multiday losing streak. (The stock has since recovered a bit.)
The S&P 500’s concentration “is a bit riskier than people realize,” said Charlie Fitzgerald III, a certified financial planner based in Orlando, Florida.
“Nearly a third of [the S&P 500] is sitting in seven stocks,” he said. “You’re not diversifying when you’re concentrating like this.”

Why stock concentration may not be a concern

The S&P 500 tracks stock prices of the 500 largest publicly traded companies. It does so by market capitalization: The larger a firm’s stock valuation, the larger its weighting in the index.
Tech-stock euphoria has helped drive higher concentration at the top, particularly among the Magnificent Seven.
Collectively, Magnificent Seven stocks are up about 57% in the past year, as of market close on June 27 — more than double the 25% return of the whole S&P 500. Chip maker Nvidia’s stock alone has tripled in that time.
More from Personal Finance:Americans struggle to shake off a ‘vibecession’Retirement ‘super savers’ have the biggest 401(k) balancesHouseholds have seen their buying power grow
Despite the sharp increase in stock concentration, some market experts believe the concern may be overblown.
For one, many investors are diversified beyond the U.S. stock market.
It’s “rare” for 401(k) investors to own just a U.S. stock fund, for example, according to a recent analysis by John Rekenthaler, vice president of research at Morningstar.
Many invest in target-date funds.
A Vanguard TDF for near-retirees has a roughly 8% weighting to the Magnificent Seven, while one for younger investors who aim to retire in about three decades has a 13.5% weighting, Rekenthaler wrote in May.

There’s precedent for this market concentration

Additionally, the current concentration isn’t unprecedented by historical or global standards, according to the Morgan Stanley analysis.
Research by finance professors Elroy Dimson, Paul Marsh and Mike Staunton shows that the top 10 stocks made up about 30% of the U.S. stock market in the 1930s and early 1960s, and about 38% in 1900.

The stock market was as concentrated (or more) around the late 1950s and early ’60s, for example, a period when “stocks did just fine,” said Rekenthaler, whose research examines markets since 1958.
“We’ve been here before,” he said. “And when we were here before, it wasn’t particularly bad news.”
When there were big market crashes, they generally don’t appear to have been associated with stock concentration, he added.
When compared with the world’s dozen largest stock markets, the U.S. market was the fourth-most-diversified at the end of 2023 — better than that of Switzerland, France, Australia, Germany, South Korea, the United Kingdom, Taiwan and Canada, Morgan Stanley said.

‘Sometimes you can be surprised’

Big U.S. companies also generally seem to have the profits to back up their current lofty valuations, unlike during the peak of the dot-com bubble of the late 1990s and early 2000s, experts said.
Present-day market leaders “generally have higher profit margins and returns on equity” than those in 2000, according to a recent Goldman Sachs Research report.
The Magnificent Seven “are not pie-in-the-sky” companies: They’re generating “tremendous” revenue for investors, said Fitzgerald, principal and founding member of Moisand Fitzgerald Tamayo.
“How much more gain can be made is the question,” he added.

You’re not diversifying when you’re concentrating like this.

Charlie Fitzgerald III
certified financial planner based in Orlando, Florida

Concentration would be a problem for investors if the largest companies had related businesses that could be negatively impacted simultaneously, at which point their stocks might fall in tandem, Rekenthaler said.
“I’m having trouble envisioning what would hurt Microsoft, Apple and Nvidia at the same time,” he said. “They’re in different aspects of the tech marketplace.”
“In fairness, sometimes you can be surprised: ‘I didn’t see that type of danger coming,'” he added.
A well-diversified equity portfolio will include the stock of large companies, such as those in the S&P 500, as well as that of middle-sized and small U.S. companies and foreign companies, Fitzgerald said. Some investors might even include real estate, too, he said.
A good, simple approach for the average investor would be to buy a target-date fund, he said. These are well-diversified funds that automatically toggle asset allocation based on an investor’s age.
His firm’s average 60-40 stock-bond portfolio currently allocates about 11.5% of its total holdings to the S&P 500 index, Fitzgerald said.

Don’t miss these insights from CNBC PRO More

Keith Gill, aka Roaring Kitty, hosting a YouTube livestream on June 7th, 2024.
Source: Roaring Kitty | YouTube

Shares of Chewy popped in premarket trading Monday after a Securities and Exchange Commission filing showed meme stock trader “Roaring Kitty” took a stake in the pet food e-commerce retailer.
The filing showed Roaring Kitty, whose legal name is Keith Gill, bought just over 9 million shares — amounting to a 6.6% stake in the company. That makes him the third-biggest Chewy shareholder, according to FactSet. Based on Friday’s close, that stake is valued at more than $245 million.

Stock chart icon

CHWY rallies

The stock was up more than 10% before the bell.
The SEC filing also included a section that read: “Check the appropriate box to designate whether you are a cat.” There was an “x” next to a response that read: “I am not a cat.” This line was included in Gill’s statement in a series of congressional hearings about 2021’s GameStop trading mania.

Arrows pointing outwards

SEC filing

Chewy shares took a wild ride last week after Gill posted a picture on social media platform X of a cartoon dog that resembled Chewy’s logo. Shares were up as much as 34% on Thursday but ended the day down slightly.
CNBC emailed Chewy PR seeking comment on the new shareholder.
Gill is known to be a champion of GameStop and has been stirring up trading in the video game company in the last few months. In mid-June, he disclosed a stake of 9.001 million GameStop shares after exiting his massive call options position. It’s unclear if he sold his GameStop bet to fund the purchase of Chewy.

GameStop shares fell over 7% in premarket Monday following the news.There’s a big connection between GameStop and Chewy. GameStop CEO Ryan Cohen was the founder and CEO of Chewy, who was instrumental in PetSmart’s takeover of Chewy in 2017 and its subsequent initial public offering in 2019.
Cohen joined the GameStop board of directors along with two other Chewy executives in January 2021, partly helping fuel the initial GameStop rally. He later took over as GameStop CEO in 2023, leading a turnaround in the brick-and-mortar video game retailer.
In a recent YouTube livestream, Gill said GameStop is in the second stage of a reinvention, and it has become a bet on Cohen himself, who’s been leading a turnaround and pivot to e-commerce.
Gill is a former marketer for Massachusetts Mutual Life Insurance. He came into the limelight after successfully encouraging retail investors to buy GameStop shares and call options in 2021 to squeeze out short-selling hedge funds. More

War is still exacting a heavy toll on Ukraine’s economy. The country’s GDP is a quarter smaller than on the eve of Vladimir Putin’s invasion, the central bank is tearing through foreign reserves and Russia’s recent attacks on critical infrastructure have depressed growth forecasts. “Strong armies,” warned Sergii Marchenko, Ukraine’s finance minister, on June 17th, “must be underpinned by strong economies.”Following American lawmakers’ decision in April to belatedly approve a funding package worth $60bn, Ukraine is not about to run out of weapons. In time, the state’s finances will also be bolstered by G7 plans, announced on June 13th, to use Russian central-bank assets frozen in Western financial institutions to lend another $50bn. The problem is that Ukraine faces a cash crunch—and soon. More

A bullish move may be ahead for both value and growth in the year’s second half.
VettaFi’s Todd Rosenbluth thinks value stocks, which have been market laggards, could get a lift from one of the biggest Wall Street events of the year: the FTSE Russell’s annual rebalancing.

“It’s worth paying attention to value,” the firm’s head of research told CNBC’s “ETF Edge” this week. “It feels like … [for a] long time that growth has outperformed value.”
On Friday, the Russell indexes underwent their annual reconstitution to reflect changes in the market as companies grow and shift. The iShares Russell 1000 Growth ETF is up 20% so far this year, while the iShares Russell 1000 Value ETF is up almost 6%.
“We do think there’s a place for both growth and value within a broader portfolio — just people are skewed more toward growth heading into the second half of the year,” he added. “There have been periods when the pendulum has swung back in favor of value.”
FTSE Russell CEO Fiona Bassett said on “ETF Edge” the indices are built to reflect the nature of the market.
“One of the benefits of the Russell franchise generally is our ability to provide different sleeves of exposure,” she said. “So, for those people who want to get concentrated exposure to value or to growth, we have the indices available to do that.”
As of May 31, FactSet reports the Russell 1000 Growth ETF’s top three holdings are Microsoft, Apple and Nvidia. Meanwhile, the Russell 1000 Value ETF’s top holdings are Berkshire Hathaway, JPMorgan Chase and Exxon Mobil.

Disclaimer More