Future is rekkt 👎
Screw privacy, Ola's dreams, and stuff from the week before.
Hi 👋, Tanvi here.
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Market summary: 📊
India hit the brakes on Friday, but net-net the markets ended the week on a high, gaining 2.5%+! US continues to remain volatile, with tech beaten for weak earnings.
US:
S&P 500 - up 0.17%
Nasdaq - down 0.48%
India:
Nifty 50 - down 0.35%
Sensex - down 0.39%
Weekend Caffeine shot ☕
✅ Thought you said Privacy? — Apple is going to constantly run some AI on your images as well as your iCloud stored photos, to check for child abuse pictures, and accordingly report you to authorities. Ummm… we get the sentiment, but something doesn’t fit well, particularly when you’re pitching privacy while simultaneously spying on people without consent.
✅ Game of acquisitions — a well-followed startup media outlet reported that Byju’s is buying Vendantu for $700-$800 million. Moments later Vedantu execs came lashing out, saying no such thing has happened — calling the news “100% inaccurate”. Hard to judge what’s going on, but either a boardroom negotiation was leaked to create some frenzy, or this is some wacky new marketing strategy to grab headlines every morning.
Bezos scores over Ambani 😎
What happened — the Supreme Court ruled to block Reliance’s much celebrated $3.4 billion deal for Future Retail, favoring Amazon’s right to halt the acquisition in line with the Singapore Arbitration court’s rulings.
FYI — couple years ago, Amazon had invested into Future’s Coupons business, and had acquired first rights to invest into Future Retail going forward. Later in the year, Future started having cash-problems, and when RIL came knocking, Future without thinking much to look into its closet, signed the company away to Mota bhai. Now come the ghosts!
Going forward — cash-strapped Future is the real sufferer, who without Reliance’s support, could be on the hook for billions in salaries, bills, rent, and other costs. Meanwhile, Reliance’s aggressive footprint expansion to support its ecommerce dreams hangs from a cliff.
Bottomline — very likely Bezos and Ambani catch up at the country club to cut out a deal that either gets RIL to pay Amazon some, or a joint ownership structure. Money over ego bois!
Ola got ambitions 🚕
What’s popping — ET says Ola now plans on entering the used car business, with the launch of a new portal called Ola Cars, and a scheduled test in BLR.
Details are still scant, but the move makes total sense — Ola already has a car leasing program, which has natural synergies with a marketplace, and can also drive some of its volumes towards drivers on its own platform. Besides, there’s existing relationships with lending companies that can now be directed towards retail customers.
That would be the third major business for the company besides ride-hailing and electric bikes.
Key takeaway — as long as 1. Public transportation scare persists 2. New car prices are up and 3. New car deliveries are delayed by semiconductor shortages, the used car market will continue to be on FIRE!
While we’re on startups, ☝️
Sales training platform MindTickle became the latest unicorn — raising $100 million series E from Softbank, at a $1.2 billion valuation. India’s exploding SaaS market has created a massive demand for skilled salesforce, and the corporate training market has frozen during COVID. MindTickle is playing right into that gap!
Aight, that’s it for today folks! Here’s a quick look at everything else that went down this week 🎉
🥪 Motabhai orders a Sub — Subway is undergoing a global restructuring process and it wants to streamline it’s Indian biz, eliminating multiple regional franchisees to collaborate with ONE BIG local player. Reliance Retail, sniffing an opportunity, is looking to grab the biz for around $200-250 million. QSR isn’t an easy business, scaling up is difficult, cash-demands are heavy, but nobody brings holistic skills to the game than the Reliance bench.
💰 War on Cash intensified — payment processor Square will spend $29B to buy Afterpay, an Australian fintech company which, like the name suggests, offers ecommerce shoppers an option to ‘buy now pay later’ (BNPL). 2% of all global e-commerce volume was processed through BNPL & this segment is expected to grow 3x over the next 3 years, replacing credit cards — which the young shoppers hate. Square threw its competitors sleepless nights with the deal.
✅ Chip wars pick heat — Google has decided to develop its own custom designed chip called the ‘Tensor’ for its Pixel smartphones, which will specifically leverage Google’s class leading AI research to improve video & image processing. As hardware-led performance saturates, custom chips are becoming a norm, with software giants taking matters into their own hands. Recently Apple moved to its own M-Series of chips on the laptops as well, abandoning Intel.
💄 Nykaa’s Blockbuster IPO — IPO markets are busy, but this one’s a bit special — led by a woman founder, profitable, employing an omnichannel growth strategy, with well diversified segments. Nykaa will look to raise $500 million, at a $4B+ valuation, and the business is actively expanding beyond cosmetics, into wellness products, fashion garments & accessories. Revenues last year topped $330M, growing 35%+, with $9M+ in profits. Numbers don't lie!
🧃 Pepsico is out of juice — Pepsi is selling it’s Tropicana & other juice lines to a French PE called PAI Partners, managing to squeeze $3.3B out of the deal. Pepsi & Coca Cola, both have been on a quest to reduce sugar from their portfolios and channelize capital into health focused/performance drinks — such as Gatorade, Powerade.
🤑 Let’s talk some earnings —
Quest for profitability — people are slowly stepping out into the real world, which helped Uber bring in $4 billion in revenue last quarter, up 75% YoY. But… EBITDA loss of $509M, mostly because of higher driver wages, spooked investors.
Gaming — Nazara Technologies, one of the most diversified gaming companies in India & the only listed player in this space, made ₹13.5 Cr in profits, bouncing back from losses last year. Revenues shot up by 45% on the back of a growing eSports business.
Consumer products — Marico, the FMCG giant famous for its Parachute brand, reported revenues up of 31% YoY, however increase in raw material prices impacted overall margins & led to a net profit contraction of 6% YoY.
☝️ Lastly, Neobanking wins — Jupiter, one of India’s top neo-banking startups, raised $45 million from Nubank, the Brazil based $30B-company that’s currently leading the global neobank races. Jupiter’s $300M valuation raised some eyebrows for sure, but the company says it has on-boarded 100K users already, and has a long waitlist. Full public launch is imminent.
Happy weekend folks! 👋
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Bezos Vs Ambani= Any way MotaBhai is BHAI. Always business will make sense.