No country for bears
DOGE to the moon, Walmart bets on the future, and stuff from the week before.
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Market summary: 📊
Flat day in India, but the week ends on a low as rising cases and looming lockdowns offer no respite. US had an okayish Friday, as back to normal optimism slowly takes control.
US:
S&P 500 - up 0.36%
Nasdaq 100 - up 0.11%
India:
Nifty 50 - up 0.25%
Sensex - up 0.058%
What’s brewing hot? ☕
✅ Big is better—Apple’s wild shot with tiny smartphones landed flat... Apple will apparently stop producing the iPhone 12 Mini as soon as it announces a new line up of phones, says foremost analyst Ming-Chi Kuo, who’s an expert at reading the company’s supply chains. Sales apparently have been lackluster, mostly overshadowed by the “three-eyed” iPhone 12 Pro Max, but considering Apple just came off reporting its BEST ever annual sales numbers last year, the embarrassment thankfully didn’t hurt the bottom line.
✅ $DOGE to the moon—Redditors were back yesterday, replacing $GME with love for Dogecoin, taking the meme-coin on an epic tear to break through all time highs of over $50B in market cap. Over the past week or so the currency has posted a stupendous 500% return, up over 5,000% for the year of 2021! Good luck to those hung up on modeling free cash flows to deliver any returns…
Walmart’s betting on the future 🧐
Walmart made a splash by leading a $2.75 billion round into General Motors owned self-driving startup Cruise, doubling down on the two companies’ relationship, and revising Cruise’ valuation to a record $30 billion. Microsoft, Honda, and SoftBank are existing backers of the business.
Self driving data is hard to come by, with most companies closely guarding their progress, but statistics released in California’s open road testing rank Cruise as a clear No.2 contender in the global self-driving races, right behind Google’s Waymo. The company’s progress has just been outstanding, with error rates dropping to barely 1 or 2 incidents in millions of miles in live testing in 2020.
Walmart had recognized this progress early on, and had actually been tightly working with Cruise to test out a “delivery project”, wherein users order groceries and other stuff from a Walmart, while Cruise self-driving cars deliver the product without involving a human driver. It was a pretty promising project, and the fresh round is probably a vote of confidence in its success.
Lastly, this marks the sixth investment in a self-driving company for Walmart… with checks into literally every project from Google to Ford’s Argo. Not taking any chances!
Bottomline: one of the most expensive aspects of ecommerce as well as offline retail unit economics is the cost of last mile delivery. Running transportation autonomously, minus the cost of human drivers (especially in the west where labor is expensive), can help drive some serious $$ savings to retailers and online vendors.
Walmart is trying to secure its future, and most importantly, hedge itself against Amazon who is aggressively investing in autonomy left and right.
Weekend reading... 📖
The greatest capitalist of our times, Jeff Bezos, dropped the annual Amazon shareholder letter yesterday, and boy was it a treat for business-nerds.
2020 was a watershed year for the company, which saw its businesses finally come of age on the back of the COVID driven boom in online services, after decades of what many would call mere borderline survival.
This year, revenues grew a solid 37%, while ecommerce marketplace volumes rose 50%+, profits grew like 5x, and all ancillary businesses in cloud, digital ads, streaming video, gaming, won HUGE. Bezos had finally proven his vision!
We tried attempting a quick summary of the highlights, but then our friends at MB had done a phenomenal job that we absolutely didn’t think we’d be able to top.
Meanwhile, if you're looking for a deeper weekend read, here’s the shareholder letter.
And that’s a wrap for today. Quick look at the big things from the week before...
🙄 Autoland drama—two of the largest global EV battery makers, SK Innovations and LG Energy, settled a long time legal tussle, ending a jam that threatened to jeopardize the progress of the EV industry for the US and its allies. SK was accused by LG of stealing essential trade secrets, which led to the US banning the company and threatening to seize its investments. Biden administration forced the two to settle, saved billions in investments, and most importantly saved the US EV industry from going into another logjam.
🦄 Unicorn fest continues—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. Zeta offers a banking-as-a-service platform, 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. BaaS services are a pretty hot game, and are still raw in India, but platforms like Zeta are hoping to catch the early wave.
😇 Prepping for the future—Flipkart bought out travel booking platform Cleartrip, paying a paltry $40 million for the once king of Indian OTA space. Cleartrip was reeling under brutal competition from MakeMyTrip, when eventually COVID forced a dagger through its heart almost killing the business. Flipkart now hopes to use the company’s decently recognized brand to diversify its own portfolio of offerings. Also, as demand slowly starts to crawl back, online platforms are set to win an outsized share of the total travel spending in India.
💰 Banks made a killing last quarter—the epic stock rallies and record number of IPO boosted profits for bankers to all time highs. Goldman Sachs’ revenues grew more than 100%, while profits jumped nearly 6x! JP Morgan isn’t too far behind with revenues of $32 billion, up 14%, with profits ballooning 5x. Bad loans were contained, and banks deserve big points for limiting damages despite record high bankruptcies and unemployment numbers for 2020.
🎮Gaming is the shizz—Epic Games, the developer of the popular game Fortnite, closed on a $1 billion round of capital led by Sony, valuing the business at $28.7 billion! Epic’s gaming engine and rendering technology around the use of mixed reality is getting a lot of positive feedback, and Sony has been working closely with the company’s engineering teams to make it work best on the PS5 platform. Also, the cash in the bank is great news for Epic which is fighting an expensive legal tussle with Apple.
😎 Godzilla of SPACs—Grab, the Uber of SE Asia, will be going public in one of the largest SPAC mergers ever, led by Altimeter Growth, at a record valuation of $40 billion! Grab basically runs a “super app” with services stretching from ride hailing to travel bookings and more, serving 350 cities in over 8 countries, with a total base of 190 million users. Revenues were up 70% YoY with borderline profitability. SE Asia, just like India, offers a promising post-digitization greenfield, with tens of millions still coming online each year—so expect a fist fight on Wall Street tryna grab some stock.
💸Spend yo cash like Satya— MSFT will be acquiring AI & speech processing company Nuance Communications for nearly $19.7 billion, making it MSFT’s second most expensive acquisition so far. Nuance basically uses advanced AI driven processes to simplify data collection, management, and other operational processes and systems for healthcare services. MSFT is hoping to beef up its portfolio of cloud products for the healthcare vertical, pushing hard with Azure Health.
🧓Ma's getting too old to fight— After ruining Ant Group’s IPO party, relentless China went on to slap Alibaba with a record $2.8 billion fine, continuing its assault on the Jack Ma empire. China claims Alibaba’s been forcing merchants to sell exclusively on its platform since 2015, while using data and algorithms to mine merchants' performance and create an unfair competitive advantage for its own products. The country’s attack on its own giants, as it fights a tech-war globally, is kinda weird and baffling.
📈 IT never goes outta style—bunch of IT earnings show the momentum is slowly coming back. TCS' revenues were up 9.4% YoY to ₹43,705 crores, blowing past all expectations. Profits were up 15% YoY! The star highlight was $9.2 billion worth of new deals TCS won during the quarter, hinting at a strong pipeline. Then a couple days later Infosys showed off its own numbers, with revenues of $3.16B, were up 13% YoY, and operating margins of 24.5%, all exceeding investor expectations. Overall, we’re well past the COVID-wrought slump, and likely at the beginning of another bull run in the IT business, this time led by Cloud.
Hit that 💚 if you liked today’s issue.
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