Ever since the COVID-19 pandemic created a panic sell-off in the stock market in March, there have been talks of another crash. The most decorated value investor Warren Buffett, who tells the world to buy in a crash, surprisingly remained inactive in the March sell-off.
Instead of buying stocks, he sold his airline and bank stocks in April. He turned out to be right as airlines reported billions of dollars in losses and failed to recover from their March lows. Many analysts interpreted his inactivity as the calm before the storm, a rally before the crash.
A stock market rally before the crash
The S&P/TSX Composite Index fell 34% in March but rebounded in the last four months by surging 47%. The index is now just 3.5% below the pre-pandemic level. Is this the rally before a crash? It’s hard to say as the stock market is rallying on the back of cash injection by the government.
Unlike the 2009 Financial Crisis, when the government was too late to react and bailout the banks, the government acted fast in the 2020 pandemic crisis. In mid-March, Canada announced a nationwide lockdown and closed its international borders.
Within 15-20 days, the Canada Revenue Agency (CRA) launched a slew of emergency cash benefits, which gave Canadians generous monthly payments of $2,000 for their living expense.
The CRA brought Prime Minister Justin Trudeau’s statement “No Canadian left behind” into fruition with the COVID-19 Economic Response Plan. Everyone from students, working professionals, employers, parents, and retirees received financial aid. This cash injection revived the economy and reduced Canada’s unemployment rate to 10.9% in July from 13.7% in May.
I am skeptical about whether there will be another stock market crash. If there is, you should buy this stock at the dip as it can grow tenfold in the mid-term.
Facedrive – A once-in-a-lifetime opportunity
Did you ever wonder if you had invested in the initial public offering (IPO) of Shopify or Netflix? These stocks have grown by leaps and bounds and made early investors millionaire. Anyone who invested $6,000 in Shopify IPO in May 2015 now has $225,000 in investment income. Those who invested US$6,000 in Netflix IPO in May 2002 have earned US$2.4 million.
Every hedge fund investor from Japanese billionaire Masayoshi Son to Canadian billionaire Prem Watsa is looking for one Shopify or Netflix in their portfolio. Facedrive (TSXV:FD) has the potential to be the next Shopify or Netflix.
Founded in 2016 as a sustainable ride-sharing business, Facedrive has grown its revenue by 4,000% to $599,104 in 2019. It is expanding its business organically and through acquisitions. It acquired long-distance ride-sharing and carpooling company HiRide Share to expand its customer base. In less than five years, it launched its IPO.
Facedrive’s ride-sharing business had just started to pick up this year that the pandemic disrupted the entire market and locked everyone at home. With no one travelling, the ride-sharing stocks collapsed. Facedrive’s stock fell 56% in March to its IPO price of $2. This was the perfect buying opportunity.
If you had invested your $6,000 annual Tax-Free Savings Account (TFSA) contribution in this stock in March, you would have $57,600 in your account by now. It’s hard to believe, but these numbers are real.
You can convert $6,000 to $60,000 in another market crash
If there is another market crash, Facedrive will see a huge drop and that will be a once in a lifetime opportunity to convert your $6,000 to $60,000 in a year or two. You must be wondering why I’m so bullish on Facedrive. Well, its CEO Sayanthan Navaratnam’s business acumen, which converted the pandemic environment from a threat to an opportunity.
He started promoting ride-sharing as a way to travel to your destination while maintaining social distancing. He even ventured into alternate sustainable markets that were booming in the pandemic environment. Facedrive acquired food delivery business Foodora in July. It also launched a Bluetooth-enabled COVID-19 contact tracing app TraceSCAN for wearables.
Facedrive stock has the potential to grow tenfold in the next two to three years. If there are a stock market crash and the stock dips, the tenfold increase can come in a year.
The post Market Crash 2020: A Once-in-a-Lifetime Opportunity to Convert $6,000 Into $60,000 appeared first on The Motley Fool Canada.
Fool contributor Puja Tayal has no position in any of the stocks mentioned. David Gardner owns shares of Netflix. Tom Gardner owns shares of Netflix and Shopify. The Motley Fool owns shares of and recommends Netflix, Shopify, and Shopify.
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