Dear Reader,
With TikTok potentially getting banned in the U.S., lots of people are looking for a new social media fix. One app that's blowing up is RedNote, another Chinese app that's still available here in the States.
It’s become so popular that it recently surged to No. 1 on the Apple App Store. And that’s got investors wondering how they can capitalize on the surge by investing in RedNote stocks…
But before we talk about how you can get some skin in the game on those RedNote stocks, it might be good to get at least a little familiar with RedNote itself…
What Is RedNote?
You can think of RedNote as sort of a blend of both Instagram and TikTok. It's got pictures, short videos, and text posts all in one place.
People can scroll through different feeds like "follow," "explore," and "nearby" to find all sorts of interesting stuff.
The app started in 2013 as a place to share shopping tips, but now it's a full-blown social media giant with over 300 million users checking it out every month.
And now tons of new American users are swamping the platform, calling themselves "TikTok refugees," and showing just how worried they are about losing their favorite app.
In fact, so many Americans are flooding the app, legacy users have created a trending hashtag to greet the American newbies!
And here’s the thing, even before Americans suddenly discovered RedNote en masse, the company was already raking in over a billion dollars a year from its existing users! 🤯
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What Are the RedNote Stocks?
So, now that you know a little more about the company and why you should care about some Chinese social media app, let’s talk about how you can invest in RedNote stocks.
Just bear with me, because there’s a catch here…
You see, RedNote is owned by a private company called Xingyin Information Technology Co. Ltd.
And that means you can't just buy stock in it like Apple or Amazon… or even TikTok. 🤦
Bummer, right?
But don't despair! There's a sneaky way to get in on the action and I’m going to share it with you right here.
Your “Back Door” Into RedNote Stocks
You can think of it as sort of a backdoor into RedNote stocks. Because, while RedNote and its parent company are private, the investors who’ve helped fund RedNote’s growth are not…
And by investing in the companies that have already poured money into RedNote, you can get a share of their share of the profits RedNote’s surging popularity will bring.
Now, not all of the investors who’ve backed RedNote’s ascent are publicly traded. In fact, the majority of them are private hedge funds and institutional investors.
And to get into any of those, you need to be one of those super-high-net-worth investors. You know, the people really running the show behind the scenes at places like Davos.
But two of the biggest investors who’ve helped RedNote grow from practically nothing to the biggest app in America happen to be publicly traded companies anyone with a brokerage account can invest in…
You see, two of RedNote's biggest backers are Tencent and Alibaba — household names in the tech world and easily accessible for everyday investors like you and me.
So let's take a closer look at these two powerhouses...
Backdoor RedNote Stocks: Tencent Holdings Ltd.
Think of Tencent (OTC: TCEHY) as the Chinese version of Google or Amazon — it's got its fingers in everything! We're talking social media, gaming, online payments, cloud computing, you name it.
And because it's a big investor in RedNote’s parent company, it's also one of the few companies that can call themselves RedNote stocks.
And the thing is that even without RedNote’s recent success, Tencent's money machine is churning!
In the second quarter of 2024, its revenue jumped 8% year over year, hitting a whopping $22 MILLION. That's serious cash!
And its social media game is also already strong…
Weixin and WeChat, its flagship apps, boast a combined monthly active user base of 1.38 billion!
QQ, its other social platform, is also back on the rise with 562 million mobile monthly active users.
Add in RedNote’s surging popularity and you’ve got some serious potential for profit growth in the social segment. But that’s not all Tencent has going on. Remember, it's everywhere…
And its gaming division is crushing it too.
Domestic games revenue in the second quarter of 2024 was up 9% thanks to hits like VALORANT and the super successful launch of DnF Mobile.
And internationally, they company is seeing longer deferral periods on revenue, which might seem like a bummer but actually points to stronger and steadier growth in the future.
Its advertising revenue is skyrocketing, too! In the second quarter of 2024, it surged 19% year over year.
It's even cleverly leveraging Weixin Search and Video Accounts to attract advertisers in industries like finance, gaming, automobiles, and even luxury goods.
And it's been one of the few RedNote stocks for a long time…
Tencent hopped on the RedNote bandwagon early, investing alongside Alibaba back in June 2018.
It even doubled down in November 2021, increasing its stake in RedNote during a massive $500 million funding round.
But Tencent isn't the only company you can add to your RedNote stocks list…
Backdoor RedNote Stocks: Alibaba Group Holding Ltd.
Alibaba (NYSE: BABA) is like the Chinese eBay or Amazon, but on steroids!
It completely dominates e-commerce in China, but it also dabbles in cloud computing, digital entertainment, and other cool tech stuff.
Their overall revenue is climbing steadily. In the quarter ending September 30, 2024, it brought in over US$33 billion! That represents a solid 5% increase from the previous year.
Its secret weapon? Cloud computing and AI!
Its Cloud Intelligence Group revenue soared 7% year over year in the same quarter.
But what’s even more impressive is how its AI-related product revenue has been on a triple-digit growth streak for five quarters in a row!
Like Tencent, Alibaba saw the potential in RedNote early on, joining its investment back in June 2018. So it's been one of the RedNote stocks for the long run, too.
And it too upped its stake during that huge $500 million funding round in November 2021.
The Bottom Line on RedNote Stocks
The bottom line here is that while you can’t invest in RedNote, you can invest in RedNote stocks.
And you can share in the surge of new users flooding the platform as the U.S.’s ban on TikTok goes into effect.
Just remember, all investments come with risks. And a big risk with RedNote stocks is that this TikTok ban doesn’t just impact TikTok.
RedNote is also a Chinese-owned social media platform. 🤷
It’s anyone’s guess how long before it runs afoul of the legislation that allowed the U.S. to ban TikTok.
So do your homework, stay informed, and, most importantly, good luck! 🍀
To your wealth,
Jason Williams
@TheReal_JayDubs
Angel Research on Youtube
After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.
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