Autonomy is hard
Creator mess, more Unicorns, and Tesla's amazing quarter
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Market summary: 📊
India maintained momentum for another straight day, but too hard to get too excited just yet. US had an okay day, but tech earnings look good which could kick off another upward run.
US:
S&P 500 - down 0.021%
Nasdaq 100 - down 0.47%
India:
Nifty 50 - up 1.16%
Sensex - up 1.15%
What’s brewing hot? ☕
✅ Apple’s Jupiter-sized expansion plans—couple years ago, Apple made waves by telling the markets it’d invest $350 billion to expand operations in the US, including new campuses, jobs, R&D centers, the whole spread... Last night, Tim Cook bumped the number up by another 20% to $430 billion!! Apples to oranges (no pun intended), but that’s like 15% of all of India’s GDP—coming from the hoses of a single goddamn company.
✅ Creator mess—hiring creators is easy, managing them? Good luck. Spotify paid a gazillion dollars to get podcaster Joe Rogan to do exclusives with it, but Joe gets his high by flirting with controversial topics, which is now biting SPOT in the ass. Yesterday Rogan went live claiming he doesn’t recommend 21 year olds take the COVID-19 vaccine, pouring fuel into conspiracy theory fires that have already begun becoming a nuisance to mass vaccinations. Supporters claim Rogan was within the bounds of expressing his opinions, while others demand takedown. $SPOT is caught in the clumsy crossfire.
Autonomy is hard 💰
Lyft, a ride hailer in the US that competes against Uber, will sell its self-driving unit to Toyota for $550 million, getting out of the game once and for all. Some $200 mill will be paid upfront, while rest will be locked in and released over 5 years.
the shrewd ones kinda saw it coming tho.
All about perfection—Self driving is a cash drain that finds the biggest of giants struggling to keep up—we’ve amply written about this in the past. Hundreds of cars, collecting data, working with authorities—doing all of that for decades! Oof.
Countless startups despite raising billions of dollars, have tried and shuttered. Zoox sold to Amazon for pennies, and even Uber one of the leaders in the game, embarrassingly folded.
What makes matters worse is the regulatory and deployment uncertainty at the end of the tunnel… firstly, achieving that 99.9999999999% of accuracy is so damn hard. Then, say once you’re at a reasonable level of confidence that your AI works, well, where are the rules?
Who gets blamed for the tiny bit of room of error you leave? Regulators are still mum.
Anyway, Lyft tried staying into the game for 4 long years, through painful cash burn, but with the ride hailing business freezing, and even rival Uber having exited autonomy, it was becoming hard to convince shareholders why it's not wise to drop everything else and focus solely on profitability.
Bottomline: so far, it appears that there are two types of players still showing the balls to play in this game 1. Old school car makers with thick cash flows 2. Silicon Valley big-tech companies that make money hand over fist
Everyone in the middle will likely fold, or massively restrict their ambitions.
Unicorns continue to multiply 🌈
no points for guessing, Tiger’s in this one too.
This time its Urban Company, closing on a $190 million round, with Prosus Ventures leading the bid and Tiger Global, Steadview, and others pitching in at a $2 billion valuation.
Previously UrbanClap, and now rebirthed as Urban Company, the startup basically runs a marketplace for services—from haircuts, to house cleaning, to electric installations, to massages. Consumers lounging at home during early lockdowns helped growth considerably accelerate, with revenues nearly doubling to over ₹216 crores in 2020.
Also, in addition to 30 cities in India, the business operates in some exciting international markets including Australia, Singapore, Dubai, and Abu Dhabi.
Bottomline: digitizing access to services is a bit messier and complex, compared to say product-driven ecommerce businesses, but UC seems to have figured it out okay. With no apparent competition in sight, expect growth to keep giving.
Technoking has paper hands... 🔌
Twitter might make you believe everything going on with Tesla is pretty much a joke, with weed on the table, Bitcoin in the pockets, and corporate governance out the window. But despite all the shenanigans Musk engages in, the business performance is right there… surprisingly solid.
The company just reported its 7th straight profitable quarter. Some highlights:
Revenues of $10.4 billion, up a solid 74% YoY!
Sold 185K cars in first quarter, nearly 2x compared to last year
Margins are consistently improving
Management is confident of sustaining 50%+ growth rates in car deliveries
Also, Tesla made big strides on its massive gigafactories in China, and in Europe, all of which when operational will significantly accelerate capacity to deliver vehicles. So far, it looks like the business is limited by nothing but its capacity to make more cars.
Reddit-stonkers and Robinhood-heads were a bit disappointed tho—because Technoking after making a sizable billion dollar entry into Bitcoin, got rid of some of his coins this quarter.
Although Musk claims he wanted to “prove” that Bitcoin is liquid, “selling” is blasphemous in this part of the town… so some blowback was inevitable.
Bottomline: does anyone really care?
Closing out—two Indian CEOs walked into a bar… 🥃
Pichai's Google, and Nadella-led Microsoft, both had their dates with Wall Street late last night. Both got different responses.
Google smashed it out of the park—total revenues for the first quarter up almost 35% YoY to $55 billion, YouTube up 50%, Cloud revenues up 46%... everything up up up. CFO Ruth Porat had been busy cracking the whip on the nerds and their money losing shenanigans, demanding financial discipline in all of Google’s moonshot projects, which has now started to pay big dividends in terms of profitability.
Markets loved it, and stock popped 7%!
Verdict: digital advertising is absolutely unstoppable, as TV, billboards, magazines, newspapers get buried into the legacy filing cabinet. Also, YouTube is pulling in $6 billion a quarter now… watch out for this giant in plain sight.
Microsoft killed it too—revenues for the first quarter growing a solid 19% YoY to $42 billion. Azure cloud grew 50%, LinkedIn was up 25%, Xbox grew 35%, and even Bing ads grew like 17%. In all, Satya’s artful execution continues unhindered, and with big acquisitions in the pocket, stopping that growth wheel will be impossible.
Market’s didn’t seem too pleased though… which is honestly quite unusual. Stock was down 3% for no apparent reason.
What else are we snackin’ 🍿
✈️️ Back to 2020 - Australia has banned all direct passenger flights from India and the suspension will remain in place till May 15. Other countries including Thailand, Netherlands, Iran, Canada, UAE, Hong Kong have also restricted entry of travelers from India in view of the coronavirus crisis.
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