Long week

Short video boom, and stuff from the previous week.

Apr 24, 2021

Hi 👋, Tanvi here.

Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.

Let’s go ahead and get started:

Market summary: 📊

After a quick mid-week break, Indian markets resumed their journey downwards, likely staying that way until we hear some positive news. US markets had a promising Friday.

US:

S&P 500 - up 1.09%
Nasdaq 100 - up 1.30%

India:

Nifty 50 - down 0.45%
Sensex - down 0.42%

What’s brewing hot? ☕

✅ Kids, grandpa has a surprise—Biden trumped the markets with plans to raise capital gains taxes for folks in the US. Basically, Uncle Sam will now take ~38% of all wealth earned by liquidating assets like stocks, real estate, crypto or anything that has appreciated over the long term (over a year), up from the ~20% taxation levels right now. Moment the news broke, all major indices took a huge dump and an already pressured Bitcoin crashed to under $50K. The stonkers have already started missing Trump.

✅ Bagged them all—its mission-accomplished for the flurry of alternatives that launched in aftermath of the TikTok ban. Moj, Roposo, and Josh have apparently mopped up nearly 97% of all the Indian Tok users, setting the stage for act 2 of the Indian short video contests. This one’s going to be the tougher test though, with major challenges spanning—improving content quality, platform policing, and most importantly—limiting churn.

Hello, old friend Snap 👻

Chances are, you’re probably one of those who had written off Snapchat as a business.

Almost everyone sane did. Evan Spiegel, a 27-something-year-old hot head, selling an app to a bunch of teenagers who couldn’t spare $2 on a coffee…

But times changed fast, and the company stuck to its laser focus execution. Those teenagers are now entering their prime, and surprise surprise, turned off by all the negativity on social platforms like FB and TWTR, are sticking with their 1:1 messaging tools… safe amidst the comfort of their “vanishing” stories sent only to people they trust.

So snap’s engagement is on FIRE, and the advertisers can’t stop pouring money into it.

Quick numbers:

Revenues for first quarter up a massive 66% to $770 million
Active daily users of 280 million, up 22% YoY
125 million people used Snap’s TikTok rival called Spotlight, while “bite-sized” streaming content on its platform is well loved too

There were two more heartwarming details—Snap for the first time since its existence reported positive free cash flows, making big strides towards profitability.

Secondly? It's no longer an app of the “phony elites”. Snap now has more Android users than it has iOS users, which speaks to its rising popularity among teenagers of emerging markets.

Bottomline: a year ago, Snap was valued at $17 billion. Today, it's an $86 billion gorilla. The real question though is that can this become a $800 billion - Facebook sized mammoth, minus all the negativity, but with all the same profitability?

Well, stock popped 7% yesterday, and it seems like investors are liking the odds…

Aight, that’s all there is to it folks. Here’s a quick look at the big stuff that went down this week...

🎧 Bet's on Indian hardware—consumer electronics player boAt got a sweet ₹50 crore check from US chipmaker and 5G legend Qualcomm. boAt, which booked the no. 5 position in the global wearable electronics market last quarter, sitting right next to Google’s fitbit, is quietly building a consumer tech giant in the subcontinent, and it appears Qualcomm wanted to secure some exposure to the emerging opportunity here. Both companies will work closely on R&D too.

🙁 The heartbreaks continue—Dream11 is planning a public IPO, but unfortunately it's going to be a SPAC listing on Wall Street, raising about $1.5 billion at a roughly $6 billion valuation. After Flipkart and Renew Power, this’d be the 3rd major player exposed to a high-growth theme in India that we’re losing to a US bound SPAC so far in 2021. More coming fo sho.

😌Show em how it's done—Razorpay, the Stripe of India, closed a $160 million Series E round, tripling its valuation to $3 billion. Razorpay made bank on India’s COVID enforced digitization with the core payments business growing at 50%+ rates, with nearly 5 million customers using the company’s products. Adjacent businesses in neobanking and lending are shining bright too, and if Stripe is any benchmark, the runway to glory is quite long here.

🐣 Netflix disappointed big time—the darling of the pandemic kicked off Wall Street’s earning season on a rather boring note. Revenues were fine, but Netflix added only 4 million new subscribers, against a promised 6 million. Management said too many people subscribed to the service during the lockdowns, which was making it hard to fish for more subscribers, but investors took the occasion to express displeasure over competition and the particularly shallow quality of original content lately.

💵 IPO fest was going well—India saw a record number of 22 IPOs for the first quarter of 2021, raising a combined $2.5 billion from the street! Indian Railway Finance Corp IPO worth $634 million being the biggest bid. The menu stretched across industries, with consumer retail, industrial products, automotives, as well as tech segments seeing bids. Expect the party to be dented a bit this quarter though, as we fight the war against rising cases.

🙄 End this now, bruh—Credit Suisse is out on the street asking for another $2 billion from investors to help itself insulate from the shameful implosion of Archegos Capital. Rumors suggest that Credit Suisse’s exposure at one point stood at a staggering $20 billion. CS hopes to take another damning loss of $654 million during the next quarter, in addition to a pretty brutal hit last Q, taking the net damages from 1 client to a whopping $5.5 billion.

✋ Nvidia having some problems—regulators in the UK asked NVDA to halt its $40 billion acquisition for low-cost CPU design company ARM, on grounds of concerns of national security. NVDA was counting on the ARM purchase to quickly spin up its own line of CPUs and take on Intel right when Intel is struggling with multiple R&D, organizational, and demand issues. But the UK seems worried that the deal would make NVDA super powerful, which isn’t ideal as world nations get ready to fight a cold tech war.

🔥 Dealing in Media—Jeff Bezos, Drake, and a few others joined hands to invest in sports media company Overtime, putting in a total of $80 million in the business's Series C, valuing it at over $250 million. Overtime basically makes snippets of sports content, including videos, pods, the whole menu, solely for YT, Insta, Snap, having amassed over 50 million followers across platforms, churning out 1.5 billion monthly views!

📈 Closing out, a quick roll up of major earnings—we had quite a few signs from companies reporting this week:

First up is IBM which reported revenues of $17.7 billion, up 1%, displayed solid momentum in the cloud business with growth of 21%, which reads extremely positively for big cloud vendors like Microsoft, Amazon, and Google. Also, new CEO Arvind Krishna seems to be doing a fairly decent clean up job.

Then we had Wipro confirming a solid return to growth in the IT sector, just like TCS and Infosys earlier last week. Revenues were up 6% YoY to $2.2 billion, and profits of $407 million were above what the markets expected.

Dalal Street’s favorite stock, HDFC bank kinda showed the yellow light, given the hazy conditions India is entering right now. Interest income grew a nice 12% YoY to ₹17,120 crores but profits were a tad short of expectations, as HDFC prepares for blowback from COVID 2.0. The bank also cut back on giving out dividends.

Lastly, FMCG player Nestle reported a pretty solid first quarter of 2021, with profits and revenues both rising, signaling respectable progress in domestic consumer spending. Most notable part? Ecommerce sales grew at 60%+ for the company.

What a week though… rest easy folks. Stay indoors, stay safe. Hoping for things to get better!

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