Electrified BS
INFY on the hook, Airlines bleed bad, and games make money.
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Market summary: 📊
Indian markets resumed the journey upwards, adding a tiny bit yesterday. US turned around, as rising inflation and joblessness data soured mood.
US:
S&P 500 - down 0.20%
Nasdaq - down 0.69%
India:
Nifty 50 - up 0.36%
Sensex - up 0.42%
Quick shot of mid-week espresso ☕
✅ INFY on the hook — 2 years ago, Infosys had won a $600 million project to design a “next generation” tax filing system, but what was delivered was far from what was promised — fraught with technical glitches, long load times, and repeated crashes, unsurprisingly. The Finance Ministry is quite pissed, with the tax filing deadline fast approaching. Not a pretty look for INFY.
✅ Party continues — BTC is back in fashion. Musk has switched sides again, because not flipflopping would be so out of character, promising BTC-enabled Tesla purchases to resume when energy issues are solved. MicroStrategy, the analytics company, which has now become a corporate Bitcoin bank got another $500 million of the currency this week, and trader Paul Tudor Jones offered a lengthy bull case to the currency on CNBC, all of which helped BTC get past $40K to kick off this week on high for crypto bros.
Truckload of electrified BS 💩
What happened — a hot electric vehicle company, Lordstown Motors, which IPO'd amidst EV craze gripping most of 2020, is now telling investors it may not survive until the first sunrise of 2022, as it significantly “overestimated” its tech prowess and cash position.
Several early stage EV companies were trying to catch the post-COVID electric craze, pitching themselves as the Tesla 2.0, building up expectations, doing successful market listings and raising big money from investors. But then, under scrutiny, the picture really isn’t that pretty.
The blow up — specifically in this case, a short seller report by a research firm called Hindenburg claimed Lordstown Motors’ management straight up lied about pre-orders, had no actual commitments, and intermittently used fake info to pitch investors for money. You can read the full report here.
The report brought the house of cards crashing:
Lordstown was forced to clarify it doesn’t have the cash to “actually” produce its first concept vehicle — a much hyped truck called the Endurance
Lordstown CEO and CFO quit over mismanagement last week
Stock gets hammered 20%
SEC, the market regulator, opens an investigation this week
Going forward — Lordstown still claims it can meet its production target by the end of September, but that’s likely a way of giving markets the impression that “all is still under control” and to stop employees from jumping ship.
Big picture — the entire episode, along with the erstwhile blowup of Nikola Motors (a Tesla clone) is a sign of times to come — where EV stocks around the world will come under immense pressure to deliver against lofty promises going forward.
Couple major venture deals... 💰
Softbank continued to aggressively deploy money globally, with 2 more unicorns birthed yesterday:
Singapore based online car marketplace Carro got $350 million, at a billion dollar valuation. While 90% of the company’s business is selling used cars, it also offers a range of other car services including — car leases, servicing, and financial products including car financing and insurance, running a loan book of $200 million. COVID helped revenues 2.5x last year to $300 million!
Next up, GenZ social network IRL raised $170 million from Softbank, at a billion dollar valuation for the company’s Series C raise. It’s not everyday we see social platforms raising big money in the age of FB and Snap’s dominance, but IRL takes the best of Facebook — group chats, social gaming, events and product discovery, and delivers it through a jazzy, 2021-esque interface. The app has 12 million monthly active users.
Turning heads to a non-Softbank deal real quick, 🙌
Key investors into global payments giant Stripe doubled down on their pot, investing another billion by buying out stake from current and former employees. Among the most notable buyers was commerce platform Shopify — who comfortably bets on Stripe despite having an in-house competing payments service.
Airlines are bleeding bad ✈️
The domestic airline industry in India apparently lost between ₹10 to ₹25 crores for each day of operation between April to June, as the 2.0 wave wrecked havoc through the nation.
At the start of 2021, airline traffic had slowly begun to recover to nearly 80% of the pre-COVID levels, only to crash down almost 60% on average by April.
Going forward, although demand is expected to recover, strained balance sheets and screwed up financials will continue to plague airline stocks, turning off investors for a couple years at least.
Big picture — with heavy fixed costs and thin margins associated here, it's imperative a special financial rescue program is structured for the industry. So far, GOI has been mum.
Closing out — games make money, tell mama 🎮
Gaming has been one of the hottest segments in 2020, but the fire continues to spread at lightning speeds even 16 months out since the mess began.
Quick look at the gaming-sector’s Q1 of 2021
Game downloads spiked 30%, to 1 billion/week
Mobile game spending up 40%, to $1.7 billion/week on average, indicating more spending per game and per user
Roblox was the highest-grossing game worldwide, unsurprisingly — dominated by the kids
Mobile expected to grow nearly 3x faster than PC or Console
Big picture —$204 billion will be spent on games in 2021, nearly 5x the global movie industry. With the gradual release of 5G, dropped latencies, and increased bandwidths, things are expected to fire up even more.
What else are we snackin’ 🍿
👏 Media disruptors - business strategy focused magazine Morning Context raised a pre-Series A from Whiteboard Capital, Kunal Shah, and few other angels.
🙌 Remember NFTs? - the OG developer of the internet’s source code, is auctioning it as an NFT titled, “This Changed Everything.”
Hit that 💚 if you liked today’s issue.
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Love your daily reads🔥 Pleaseee keep up this good work❤️