Made in China 🤷
Bollywood hurt, AI winning, and Space race.
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What’s brewing hot? ☕
✅ Pandemic weighs on Bollywood — with movie theaters shut in most major cities and markets, Bollywood’s 2021 losses have topped ₹3,000 crores for the first 9 months, overtaking that for all of 2020. While restrictions are slowly easing, footfalls have been dismal, partly because people no longer care to watch non-blockbuster movies in theaters (thanks streaming) and secondly the roster of quality movies runs shallow — because production was stopped for almost 8-10 months.
✅ Gotta pay up bruh — GOI is asking food delivery platforms and aggregators to collect 5% taxes on all orders processed. Basically, a large portion of restaurants on these platforms are unregistered businesses, which generally charge customers taxes, but never actually pass the $$ on to the government. Now by making delivery platforms responsible to collect (and pay) the taxes, GOI is basically passing the buck on monitoring to the aggregators. Consumers likely won’t have to pay a dime extra, but GOI could get about ~₹2,000 crores in extra tax revenue. Classic govt. hustle!
Another hopelessly slow news Sunday… Let’s do a quick rundown of things important!
Financial crisis, Made in China 🙄
What happened — the financial world is losing its mind as a Chinese real estate developer, Evergrande Group, is going bust, unable to pay nearly $300 billion in money owed, making it the 2008-financial crisis in the making.
Evergrande owns about 1,300 real estate projects around China, managing thousands of more properties, all spread across 300+ cities. High on business success, the company dabbled from electric vehicles to media to healthcare and even theme parks.
So a quick timeline of events leading up to the bust:
Last 10 years, Evergrande swells into the 2nd largest Chinese real estate company (developer + property manager) on the back of the property boom in China
Evergrande rapidly levers up — taking massive loans to fuel its growth
In ~2017, banks and regulators begin to worry a bit…
China's property market cools off in the last 2 years, while Evergrande is sitting on a massive unfinished inventory of high rises
Evergrande starts offering 20-30% discounts to clear homes, pay bills
Meanwhile, banks stop funding projects. And financiers stop giving loans to consumers for Evergrande’s apartments
Evergrande starts to sell off its subsidiaries, but the $$ is not enough to plug cash flow leaks to pay suppliers, banks etc.
Markets dump stock, Evergrande bonds go to zero
August 2021, Rekkt
What now — citizen protests have begun. Evergrande employs about 200K people, but indirectly could cause 2M+ job losses. Meanwhile, the government is still mum on if it wants to help, or let the company fail and be made an example of.
Big picture — Evergrande’s situation is pretty much like the wipeout of the Lehman Brothers empire, which had catalyzed the ‘08 financial crisis. Tremors could quickly reverberate much farther from China.
Enterprise software IPOs are back 🔥
First up, software management platform Gitlab, a rival to Microsoft owned Github, filed its docs for an IPO on the Nasdaq.
If you ain’t much into tech, Gitlab sells a dense suite of tools to help developers manage their codebase, along with other tasks such as bug tracking, task management, wikis etc. Anyway, demand has skyrocketed amidst rising distributed working, with revenues topping $230M.
What do the markets think — Gitlab is eyeing a ~$10-$15 billion valuation, which seems fair in this environment, but it makes the $7.5 billion sale of its rival Github to Microsoft quite the steal!
Meanwhile, Israeli tech clinched a win ☝️
Israel is quickly becoming one of the hottest tech centers worldwide, and the $9 billion IPO of an enterprise fintech company throws some light.
Pagaya tech, which makes AI software that lets banks and credit unions share anonymized data with each other to improve the quality of their lending decisions, is going public via a SPAC deal. Last year, Pagaya made $380 million+ in revenues, and processed loans worth close to $5 billion. If you’re playing on the Nasdaq, worth looking at $EJFA.
Closing out — Mission Complete 👍
SpaceX safely brought back the 4 civilians on the Inspiration4 mission, who took on a 3 day space excursion, writing a new chapter in history.
The flight was chartered from SpaceX by 38-yo billionaire Jared Issacson who made his $$$ on his payments company Shift4 Payments, who then offered the seats for free to 3 other civilians. Quite the story!
What else are we snackin’ 🍿
✈️ Fly more - taking comfort from vaccinations picking pace, and with the holidays looming, regulators will allow airlines to operate domestic flights at 85% capacity.
🤝 For a good cause - Byju's is working with NITI Ayog to provide free access to its learning programmes to children in 112 backward districts. Not bad!
Hit that 💚 if you liked today’s issue.
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