March 2, 2021

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A $7 billion crypto joke

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Here are three of the week’s top pieces of financial insight, gathered from around the web:

Cuts in aid for siblings in college
Changes to the FAFSA form are prompting an outcry from some parents, said Ann Carrns at The New York Times. The legislative package passed by Congress last December “simplified the Free Application for Federal Student Aid,” which was reduced from eight pages to only two. However, it also removed a “break for having multiple students in college at a time,” according to Mark Kantrowitz, an expert on college financing. In one example, a family with $100,000 in income and $50,000 in assets would end up with a total expected contribution, by Department of Education calculations, of about $14,000 a year. Under the old formula, with two kids in college at once, that would be cut in half to $7,000 per child. The coming change removes that break. Supporters of the change say it’s fairer for families with kids far apart in age. “There’s no reason why a family with twins should get more money,” says one.

Another chance for WeWork?
WeWork could end up going public after all, said Maureen Farrell and Konrad Putzier at The Wall Street Journal. Almost 18 months after the very public implosion of the office-space company’s effort “to stage a traditional initial public offering,” WeWork has been weighing merger offers from multiple special purpose acquisition companies, or SPACs. These so-called blank check firms, which have proliferated in this bull market, raise money from investors to buy private companies to take public. “A deal could value WeWork at $10 billion.” That’s still “a far cry from its peak valuation of $47 billion” in 2019, before investors rejected WeWork and “its visionary yet erratic leader, Adam Neumann.” The company has a surprisingly “ample cash cushion” for another run at the public markets, thanks to a $9.5 billion rescue from the Japanese investment firm SoftBank.

A $7 billion crypto joke
“A digital coin originally founded as a joke” became another obsession of retail traders on Reddit last week, said Arjun Kharpal at CNBC. Following the example of “the group WallStreet​Bets, which was behind the GameStop rally,” SatoshiStreetBets forum members started bidding up the cryptocurrency Dogecoin. The frenzy added “about $7.17 billion to its market capitalization or total value,” catching the attention of Tesla CEO Elon Musk, who “tweeted out a picture of a magazine cover of ‘Dogue’ — a play on the popular fashion title Vogue.” The short-lived mania ended, however, when the brokerage app Robinhood limited purchases of cryptocurrencies, citing “extraordinary market conditions.”

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