Cars and burgers
More unicorns, Zoom's monster quarter, and Mercedes abandons dealers.
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Market summary: 📊
India had a flat session yesterday, but no complaints given the strong momentum for a couple days now. US inched slightly higher as meme stock frenzy picks up.
US:
S&P 500 - up 0.14%
Nasdaq - up 0.16%
India:
Nifty 50 - up 0.0087%
Sensex - down 0.16%
What’s brewing hot? ☕
✅ When govt. buys the dip—after banning users, payment institutions, and miners from engaging with any crypto currency, China is all set to accelerate the launch of its own “pet project”, the digital version of the Yuan. $6.2 million worth of the currency will be handed to 200K citizens in Beijing, in a pilot project similar to two other projects already running in Chengdu and Shenzhen. About time other nations took notice, and stopped running away from the tech.
✅ Kids are making noise again—first off, Dogecoin caught some momentum off the news that Coinbase will be adding the currency to its Pro offering starting next week, paving the path to bringing it directly to 50 million+ legit users, with $350 billion+ in assets on the platform. Meanwhile, the meme-stocks were spotted flying again, with AMC popping 116% by mid-day yesterday, forcing NYSE to halt trading. BlackBerry was up 22%. GME? Up 10%, all for no reason apparent. Do somethin’ ITC.
2 things from Musk-land you gotta know about 🚗
What happened—the SEC is claiming Elon Musk violated his legal settlement order with the regulators, which demanded Musk contain his erratic behavior on Twitter.
Some backstory—as a public company CEO, you’re not really allowed to say things that may end up manipulating the markets. Following the “funding secured, taking Tesla private” tweet, regulators had finally intervened in 2018, disciplining Musk with a $40 million settlement and a fraud charge, and asking his lawyers to keep a leash on the boss.
Musk followed through with the settlement like a good boy, until the dopamine hit strong once again in 2020…
“Tesla stock price is too high”, tweeted Musk, with the stock price crashing and nearly $13 billion in market value wiped out overnight.
Going forward—the SEC won’t immediately pursue legal action, but will file the events with other evidence built for the past 2 years, and the punishment this time around may not be as soft as a “$40M rounding error”.
Meanwhile, unpacking a grander strategy...
Tesla just filed a new trademark for a freaking restaurant—the weirdest thing imaginable for an electric auto car company!
Musk and execs had been talking about the potential for an exclusive, Tesla club eatery, for a while now—where consumers drive in on their road trips, get a sandwich, all while the car supercharges in 15 mins, and then off you go on your way... But nobody actually imagined the company to literally follow through.
Big picture—this is probably how “gas stations” of the future could evolve. “Time taken to charge” a car could be this great unlocker of additional revenue for charging station companies.
Also, this is the boldest integration an automaker has dreamt perhaps in forever. Cars, power stations, consumer services, to food and drinks. What’s next, Tesla banking?
Zoooooom…. damn what a MONSTER! 🤯
16 months into the pandemic, you’d think the Zoom explosion may slow down for a bit… but no. The company continues to grow engagement AND business at pure-evil rates, blowing past the widest imaginations of Wall Street, even as vaccinations pick pace and people start to step out.
Quick look at numbers:
Revenues of $956.2 million, up 191% YoY
Gross margins improved to 5% to 74%, helped by well-planned optimization of cloud-resources
Paid customer base nearly doubled to 500K
Zoom Phone product users up to 1.5 million, 50% sequential growth
Not just that, Eric Yuan told the markets he expects $990 million in revenues next quarter, much higher than investors were looking for, and we’re pretty sure they’re going to blast through $1 billion easily.
Going forward—with the back to office trend in full swing in the western world, certain quarters of Wall Street are counting on the “Zoom” bubble to burst. But an aggressive push to capture the broader productivity suite—calendars, phones, as well as a video-API is expected to keep the party going.
For now, markets demand more evidence to move the $95 billion stock any further.
Today’s show at the India-unicorn fest 🌈
no pandemic spoils this party…
Urban Company, the services marketplace closed on a $255 million Series F led by Prosus Ventures and Dragoneer, at a sizzling $2.1 billion valuation, becoming the latest to join the unicorn club.
We’d actually mentioned the deal in the works earlier—the company won big from the boom in demand for home services during the late-2020 recovery, managing to expand to nearly 35+ cities, and even foreign geographies, with 35K+ service providers using the platform. Fresh capital should further secure that growth agenda until IPO.
Bottomline: productizing services is HARD, and UC’s success is unlike any other in India. It’s an expensive proposition for a marketplace like this to scale, and once it has, no reason for it to stop growing.
Closing out—Mercedes India abandons dealers 🙄
What happened—in a major shift, Mercedes in India will sell cars directly to the buyers, will stop supplying dealer inventories, and will mostly relegate dealers to facilitating deliveries, and post purchase services.
Car makers never so easily take on their dealer network, because that’s who moves numbers on the streets, defending market share against rivals, convincing consumers to upgrade to a new trim… so it’s a bold call, and perhaps the India tryout is Merc’s way of testing the model before a global roll out.
Guess who else sells cars online like a pair of jeans? Tesla.
Big picture—marketplaces like Carvana (CVNA), Vroom (VRM) are multi-billion dollar corporations who have shown selling cars 100% online can be a legit business, especially when appealing to millennials and GenZ consumers who despise salesmen.
The shift is much less about pricing, and more about controlling the end user experience, and could be a harbinger of the times to come for the broad auto industry.
What else are we snackin’ 🍿
⚰️ Quick death - Uncle Trump has shut his blog barely after a month into launch, because well, not enough traction.
😬 ouch - SEBI is taking two Infosys employees to task after being found guilty of insider trading. Duo traded INFY stock with info that wasn’t public and made about ₹3 crores along with 6 other entities. Game was always rigged.
Hit that 💚 if you liked today’s issue.
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