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Market summary: 📊
Decent bounce back in India after a holiday, even as new COVID cases show no sign of receding. US stocks had a respectable day too, with tech continuing to bounce around.
US:
S&P 500 - up 1.11%
Nasdaq 100 - up 1.61%
India:
Nifty 50 - up 0.53%
Sensex - up 0.53%
What’s brewing hot? ☕
✅ Give em what they want—the great Indian bundling of fintech services continues unabated. Latest to expand its wings is PhonePe—attempting a nose-dive into stonks with the launch of a brokerage business. Papers have been submitted and a final stamp from SEBI is all that’s remaining. Giants from Robinhood to PayTM have increasingly looked at bundling of adjacent services as a hook to attract and most importantly retain users worldwide, so there’s little surprise here. The big question remains unaddressed though—how to get more Indians to UNDERSTAND the stock market?
✅ Tryna be a good boi—Facebook signed off on a few leases to pre-emptively buy renewable energy from India, hoping to help cut down on its emissions locally, as well as do its part in helping India make progress on its clean energy goals. Current deal pertains to a 32 MW wind power project that a local company CleanMax will be operating, and FB hopes its pre-commitment helps CleanMax go out and raise money for more investments. The power purchased will be used for FB’s upcoming mega datacenter that’ll power services for a large part of its operations in Asia. Doing all it can to score in the good books!
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It’s where the cool kids hang
Most banks, designed around the needs of the older generations, leave huge gaps that fail to meet the needs of today’s teenagers.
Yodaa’s out to change that. The company’s financial lifestyle app is designed for emerging demands of modern teenagers in India and SeAsia.
Users get their own cool card powered by Mastercard, with complete control over their finances, and a chance to master their money game early-on in life, through practical experience in a safe environment.
Besides, the Yodaa app also ensures parents have complete control and visibility over a teen’s expenses, making it super easy to set budgets, or even contribute to savings plans.
Yodaa’s mission is to raise a generation of financially aware teenagers for the new decade, and the product is part of Singapore-based financial technology company Atlantis.
Bull markets = bankers get their fat checks 🐂
Don’t let the crypto bros fool you into thinking the banks are going down anytime soon.
If anything, banking profits have surged to a record level in 2020, as shown by absolute crackers of quarters from JP Morgan and Goldman Sachs.
Goldman made a killing—GS’ revenues grew more than 100%, thanks to the IPO fever gripping Wall Street, which typically works great for the banking industry because that’s where the bankers make most of their sleazy fees. Profits were up nearly 6x, and everyone’s walking away with a fat bonus this year!
JP Morgan isn’t too far behind—revenues of $32 billion were up 14%, smashing all expectations. Profits ballooned 5x. Although JP Morgan took some hits due to bad loans coming from COVID and the Archegos Capital fiasco, none of the damage looked too stinky.
It’s really intriguing how the banks managed to artfully navigate the broad fiscal crisis this time. Despite record high bankruptcies among small businesses, and substantial unemployment numbers plaguing most part of 2020, banks have been able to limit blowbacks in most cases.
Of course government-stimulus in the western world played a huge role, but gotta give some credit to all the fancy risk management systems put in place after the ‘08 financial crisis.
What’s up on Venture Street? 💰
Unicorn carts keep pullin’ in.
Softbank’s Vision Fund will be leading a $250 million Series D round in fintech startup Zeta, tripling the company’s valuation to a billion, making it the 10th unicorn of the year.
Founded by billionaire Bhavin Turakhia, Zeta offers a banking-as-a-service platform—on one end, helping banks manage their portfolio of retail products, while on the other hand helping upstart fintech’s plug into a bank’s SDK’s and processing infrastructure to issue modern debit, credit, and prepaid products.
If you’ve been keeping a pulse on the fintech arena, BaaS services are a pretty hot game, with APIs for basic financial products flying off the shelves, as fintech use cases finds its way into literally every consumer tech application.
Anyway, the game is still raw in India, with banks harshly reluctant to open up to innovation. But that’s slowly changing and platforms like Zeta are hoping to catch the early wave.
While we’re talking about early innovation 😎
SpaceX finally closed the lid on its equity raise, adding another $350 million to the $850 million the company had raised barely months ago, sealing the cap table at a $74 billion valuation.
There’s a bunch of cash draining initiatives running hot in that camp—first, there’s the audacious Starlink initiative of connecting 10,000+ satellites in the lower-earth orbit to offer large scale high speed internet worldwide. Then there’s the plans of landing Starship rockets on Mars, before 2030. Progress on both fronts has been promising.
Meanwhile, mainstreet buyers are piling into fresh-on-the-block space ETFs, again hoping to catch the early wave on what many believe can be a multi-trillion dollar gambit.
Gonna make some changes around here... 💻
Dell, the hardware-giant, is planning on spinning off software-company VMware from inside its belly, hoping to catch the cloud computing wave to make VMware a standalone business pursuing its own destiny once and for all.
Some backstory—VMware had fallen into Dell’s laps back in 2015 when Dell had acquired a giant datacenter hardware supplier EMC for $58 billion, which at the time was one of the largest tech deals ever!
Dell since then became a behemoth, doing just fine, but often wishing it had some agility to more vigorously pursue the multitude of opportunities at its disposal.
I mean, there’s the consumer hardware business (laptops, PCs, the mice and the keyboards), and then there’s a fledgling storage and datacenter hardware business, and then of course tiny software products here and there.
Anyway, Dell now has a plan in place—the company will offer a $12 billion dividend to VMware shareholders, of which it’ll get about $9.7 billion for itself, because voila it owns 81% of the shares. Using that cash Dell will clear off its debt, and then offload VMware on its own two feet.
Investors couldn’t be happier, with Dell stock popping 9% and VMware up 2% when the news broke out.
Bottomline: Dell's proxy control was becoming an overhang on VMware, stopping the company from making big moves without regular approval from daddy.
Now all they have to do is find a new CEO (lost Pat Gelsinger to Intel a couple months ago), and the ship is ready for battle.
Closing out—your problems, my gain? 👋
Citibank will be folding its India operations after failure to appeal to the masses beyond wealthy urban centers. In addition to India, the bank will be exiting some 13 odd markets it failed to light any fireworks in.
Citi ran about 35 branches across India, and employed about 4,000 people, who’d all end up losing their jobs, which sucks in these times. But the withdrawal may actually be a shrewd bet for Citi in the long run, giving the business a chance to step off the live wire and reassess its options amidst rampant assault from digital financial services, as well as other private banks.
Meanwhile, startup circles are already busy speculating who’s running into the Citi offices right now with a check in hand to buy out India ops.
It's a bunch of RBI licenses and regulator approvals plus a decent consumer base up for grabs, which for a reasonable price could give any disruptive well-funded startup a kick start without jumping a gazillion hoops.
Our money’s on Sachin Bansal’s Navi!
What else are we snackin’ 🍿
🤝 Betting on India - Amazon launched a sizable $250 million venture fund dedicated to India, looking to invest in startups that are digitizing small and medium businesses, as well as those innovating around access to agriculture and healthcare technology. That’s one way of hedging against emerging disruption.
Is that you… Friday?
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