Paper hands
Disney disappoints, Ola to go electric, and airline IPO incoming.
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Market summary: 📊
Another painful day in India, with investors giving away all optimism gained last week. US had a sweet rebound, but technology continues to be out of fashion.
US:
S&P 500 - up 1.22%
Nasdaq 100 - up 0.83%
India:
Nifty 50 - down 1.04%
Sensex - down 0.96%
Quick shot of espresso ☕
✅ Are we good or what—Disney’s earnings report last night sank hearts. The company’s streaming service, Disney+, reported a total of 104 million subscribers, nearly 6 million short of what the markets were eyeing for. Now that would’ve been okay, but a few weeks ago, we saw Netflix report a similarly weak performance, and now the markets are worried if consumers, faced with overconsumption fatigue during lockdowns, are chopping off their screen times.
Elon got paper hands 🙄
printed all over the news already, but Tesla will no longer accept Bitcoin as a payment mechanism for car purchases, barely 49 days after Musk had literally moved the market by opening up the option.
Tesla’s reasoning for the change of heart? “Bitcoin is not environmentally friendly, while Tesla is supposed to be. So we’re looking at a bunch of other crypto currencies.”
Chaos ensues—obviously the already-so-volatile crypto markets took that as a death omen and Bitcoin crashed nearly 15% in the matter of hours. Parik Patel’s and the Hipsters traded exciting memes and all of us had a chuckle.
What real problems tho—we refuse to believe this is about Musk waking up one night and realizing Bitcoin is bad for the environment. Instead, there may be more under the hood.
Elon has been for a while now playing with the fire with regulators, making contradictory statements, “hustling” folks on Twitter, while sitting on the most powerful seat of a $650 billion giant. Such shenanigans are a no go for the market regulator SEC, and honestly, people have been booted for far less in the past.
We’re guessing some serious pulling of strings in the background, with the SNL appearance, combined with ongoing investigations on past behavior finally giving regulators enough meat to stop this madness?
We’ll know soon.
Big picture—the back tracking definitely undermines the legitimacy of Bitcoin in the short term as a viable payment alternative. If any company was remotely thinking about giving it a shot, those plans sure have been shelved. Meanwhile, the other crop of believers who think Ethereum is all set to replace Bitcoin’s dominance just got a boost in the arm.
Electric chalega kya? 🔌
Ola Cabs is doing everything it can to salvage its London operations, including incentivizing drivers and passengers to utilize electric vehicles.
Some backstory—Ola kicked off operations in the UK capital city thinking it’s low overhead led agility can help it displace Uber’s hold in one of the biggest metro-cab markets in the world
Then suddenly London city regulators got stiff, slapping both Ola and Uber with fines and bans for allowing drivers to drive without proper licenses, for overworking, and no compliance with London city cab rules.
Uber managed to get its ban overturned last year. Ola however is still stuck in the courts fighting against its ban. An appeal allows it to ply cabs meanwhile.
Going forward—as the ride hailing business now slowly recovers, Ola is hoping to pacify regulators to maybe take the foot off the brake pedal:
Drivers of Electric Vehicles won’t be charged commissions until August 15. Zero. Keep all you make.
Will add “Ola EV” category, so Londoners can directly only book EVs and help cut down pollution
Big picture—London is so attractive to Bhavish Aggarwal because Ola is likely bleeding cash by the boatloads, especially considering Indian business has frozen right now. Western world is slowly entering recovery though, and focusing on these markets can help some cash through the door.
Quick update from the Chip shortages 🧐
The US and China aren’t the only ones pouring cash to make the most of the ongoing chip shortages. South Korea just disclosed plans of spending upto $450 billion to make the most of the situation.
Korea’s agenda—a national blueprint is being drummed up by President Moon Jae’s office, closely working with Korean pride Samsung, and memory giant SK Hynix, guiding investment of nearly $450 billion across all levels—from R&D, to large fabs, to small vendors, to logistics, to production and export.
Samsung has promised to boost its own spending on self-owned infrastructure by 30% to $151 billion by 2030, Hynix has already announced big capex investments of about $106 billion on four new plants in the Yongin region.
FYI, just earlier this week we had seen major US tech giants get on the first flight from Silicon Valley to Washington DC to cajole the Biden Admin to dole out subsidies and accelerate investments on US soil itself.
Broader picture—the global semi supply chain was held tight by a barrage of tiny vendors and small manufacturers mostly around Asia. That’s history going forward. Every country, including India, will be forced to fish for billions into its pockets to either kick off local production, or secure itself a robust and disruption-proof semiconductor supply chain.
Closing out—Remember Volvo? 🚗
unsexiest of IPOs on the cards—auto giant Volvo is gearing to go public in Europe, hoping to attract at least a $30 billion valuation.
Forgotten giant—Geely, one of China’s leading auto companies, had acquired Volvo back in 2010 for $1.8 billion from Ford. It was one of the largest overseas acquisition by a Chinese company at the time, which literally saved Volvo from the micromanagement and growth hurting operation of its then parent Ford.
Geely instead sat back and offered Volvo an open opportunity to play freely, which boosted sales and propped up valuation 10x over the decade.
Then 2 years ago, Geely decided to finally harvest the fruit via a global IPO, but had to hold back the plans as Trump and Xi Xinping got into a global trade war with their pickle swords.
So here we are… in 2021, where the global auto game has been flipped over by EV companies, and Volvo with a very cogent plan for transformation is looking at a fresh start. And also boatloads of capital, which Geely alone can’t offer.
So, ladies and gentleman, we go to the public.
Bottomline: we’re no fans of the old giants wearing new clothes, but when cars like Tesla are out there ramming into trees on highways, we think a responsible brand like Volvo who’s sole priority is safety, can carve out a unique spot for itself in the EV future. We’ll see.
What else are we snackin’ 🍿
✈️ Flying to Dalal Street - GoAir has been rebranded as GoFirst ahead of its IPO. The low budget airline space has been crazy brutal in India for years, would be interesting to watch investors react to this.
🙄 Reality, disguised as generosity - Oyo rooms rolled out a generous vacation policy with a 4 day week and an “infinite” no-questions-asked paid leave policy until the end of July. Bro… lockdowns, no business, say what it's like. Total chuna!
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