DNUT In The HOOD

Something important happened on Thursday.

130 nations and jurisdictions signed onto an agreement to set a minimum corporate tax rate.

“The framework updates key elements of the century-old international tax system, which is no longer fit for purpose in a globalized and digitalized 21st century economy,” the OECD said. (In defense of the old system, I’m not sure anyone or anything is truly “fit for purpose in a globalized and digitalized 21st century economy.”)

The package has two pillars, the first of which “will ensure a fairer distribution of profits and taxing rights among countries.” It applies to the largest multinational enterprises, including tech firms, according to the statement, which noted that the plan would “re-allocate some taxing rights… to the markets where [multinationals] have business activities and earn profits, regardless of whether firms have a physical presence there.”

The second pillar aims to end what Janet Yellen has variously described as a “race to the bottom” by establishing a floor — so, by implementing a global minimum corporate tax rate. The groundwork for Thursday’s announcement was laid at the G-7 earlier this month.

Read more: In ‘Historic’ Deal, G7 Endorses Sweeping Global Economic Overhaul

The next step is an agreement in principle, expected next week at the G-20 finance ministers meeting in Venice. Implementation could come by 2023. The global minimum corporate tax would be “at least 15%,” according to the OECD statement. It would generate an estimated $150 billion in additional global tax revenues every year.

Yellen called the deal “a clear sign” that the race to the bottom “is one step closer to coming to an end.” Once the deal is implemented, “America will enter a competition that we can win, one judged on the skill of our workers and the strength of our infrastructure,” she claimed.

Whether that optimistic assessment is true really doesn’t matter. The point is that the world is finally coming to its sense on corporate taxation. Irrespective of your position on the matter, it’s virtually impossible to argue that the current system is optimal.

For his part, Joe Biden called Thursday “an important step,” and reiterated how “imperative” it is that “we” reform corporate tax laws. (Apparently it’s not “imperative” enough to be included in an infrastructure deal, though. Because “bipartisanship,” or something.)

In any case, this historic step towards a more sane world was quickly pushed below the digital fold by a doughnut IPO and Robinhood’s filing, “DNUT” and “HOOD,” respectively. (You really can’t make this up anymore.)

When it comes to Krispy Kreme’s (re)debut, “I got nothin’,” so to speak. Bloomberg ran the usual “Should you invest?” puff piece. “Similar to many meme stocks, Krispy Kreme has a serious, early-2000s nostalgia factor and a loyal fanbase,” Donald Moore and Natasha Abellard wrote — you need two bylines to cover doughnuts.

It’s amusing that we’re now asking “Does it have meme stock potential?” when we evaluate the investment case for a new issue. Moore and Abellard are correct. Krispy Kreme does have nostalgic value. But mostly it’s got the most delicious doughnuts ever created. It wasn’t immediately clear, to me anyway, what more there was to the story. That’s either enough for you or it isn’t.

As for Robinhood, the public filing came a day after Charlie Munger called it a “sleazy gambling parlor masquerading as a respectable business.” “[It’s a] disreputable operation,” he told CNBC. “And the interesting thing about it is that some good people you would be glad to have marry into your family have backed it.”

What was it I said about Munger earlier this week? Oh, right. That he’s “what happens when Warren’s Venom symbiote comes out.”

The company was, of course, at the forefront of the GameStop/AMC mania earlier this year. It came under intense scrutiny for imposing trading limits during the height of the insanity. The attention was unwelcome in many respects, not least of which was the extent to which retail investors learned the meaning of “order flow.”

As it turns out, Robinhood was profitable in 2020. Net income was around $7 million on revenue of $959 million last year. In 2019, it lost more than $100 million on $278 million in revenue, according to the S-1. “Over half of 18-44 year olds in the United States know who Robinhood is,” the company boasted, citing an internal brand study conveniently conducted in March, when GameStop was still making national news. Monthly active users more than doubled in Q1.

Robinhood logged a $1.44 billion loss during Q1, as it rushed to raise capital. Revenue grew more than 300% YoY to $522.2 million for the quarter ended March 31.

The company is targeting a valuation of at least $40 billion, FT reported Thursday afternoon.

The filing also said Robinhood is the subject of an investigation by the California Attorney General’s Office which, in April, sought “documents and answers to interrogatories about [the company’s] trading platform, business and operations, application of California’s commodities regulations and other matters.”

This week, FINRA fined the company $70 million. “The sanctions represent the largest financial penalty ever ordered by FINRA and reflect the scope and seriousness of the violations,” the regulator said, accusing the company of causing “widespread and significant harm [to] customers, including millions who received false or misleading information from the firm, millions affected by the firm’s systems outages in March 2020, and thousands the firm approved to trade options even when it was not appropriate for the customers to do so.”

That’s quite the contrast with how Robinhood described itself Thursday.

The platform is “built for people,” the filing declared. The company seeks “to understand customers and their expectations, ambitions, fears and challenges.” Because many of the app’s customers “are new to investing,” it’s necessary to “replace confusing jargon with simplicity and slang.”

Robinhood described its platform as “delightful and engaging.”