Party's over 👎
Venture deals, and stuff from the week before.
Market summary: 📊
Brutal week in the market finally ends. India lost about 3.5%, while US markets pulled back a brutal 5%+, extending what has so far been a painful new year.
US:
S&P 500 - down 1.81%
Nasdaq - down 1.57%
India:
Nifty 50 - down 0.79%
Sensex - down 0.72%
Weekend shot of Espresso ☕
👊 Parag ain’t fooling — couple of high profile firings at Twitter are getting attention. Twitter’s Chief Security Officer, Peiter Zatko, a very widely regarded cybersecurity expert who has worked for US Defense, was terminated this week. Then Twitter also asked its Chief Information Security Officer, Rinki Sethi, to pack her bags over the next few weeks as well. There’s little clarity on what drove the changes — other than a company wide memo that highlighted a change in data policies and security strategy. Here’s NYT.
No end for Netflix’s pain 🧳
What happened — Netflix once again missed new subscriber numbers for its most recent quarter, raising concerns of stalling growth. For Oct to Dec, NFLX added 8.3 million new paid subs vs. 8.5 million it had projected.
In Wall Street’s world, missing your own guidance is blasphemous. Stock was promptly hit as much as 20%, wiping off $50 billion+ value in 24 hours.
Growth stalling — Netflix finished December with about 220 million subs, paying an average of $14 a month. But then, how many more people could there really be who can afford to pay that much? Which is making people think we’re at the end of the runway.
Meanwhile, content production expenses (almost $20 billion a year now, against 28 billion in revenues) keep rising. Not to mention, rising competition from Disney, Amazon, and others is adding more pressure.
Bottomline — 2022 isn’t looking too good for big tech. Nasdaq is shaking. Companies that may have looked invincible, leading stock market performance for the past 3-4 years, are showing faults as COVID’s growth vaporizes.
Google, Facebook, Amazon, Microsoft — all reporting next week have a tough test to answer.
Quick look down Venture Avenue 💰
What’s poppin’ — payments-infra startup M2P Payments closed a $56 million round from Insight Partners, doubling its valuation to nearly $600 million.
M2P integrates with old-school banks and bundles their tech into a simple API platform, serving it to startups looking to launch fintech products — like neobanking accounts, modern credit cards, and such. Slice, Open Bank are some customers that leverage their APIs.
The mostly-bootstrapped business currently operates in nearly two dozen markets in Asia and North Africa. Fresh funds will be used to expand to new markets and eye any acquisition opportunities.
Aight peeps, that’s all we have for today! Quick look at major stuff that went down this week…
🎮 Microsoft pays $69 billion for Activision — in what would be the tech industry’s largest deal to date, Microsoft will pay a massive $68.9 billion to buy Call of Duty maker Activision. The company was battling allegations of sexual misconduct at the workplace, which had eaten into the stock price and employee morale. Microsoft meanwhile is looking at the 490M+ monthly active users they have, which will help solidify its Xbox ecosystem, as well as plant seeds into a Metaverse future.
📈 Pricing power flex — growth continues to evade Netflix, but the company isn’t scared of raising prices, particularly in mature markets. Prices in the western markets will be bumped up by just under $2 — basically to keep up with inflation and rising content production costs. Fyi, over the last 5 years, Netflix’s most popular plans have risen about 90% in prices.
🍎 Apple’s India business doubled — 2021 was a good year for Apple India. Despite early struggles to crack India’s value-first consumer, Apple managed to sell 5.4 million iPhones here this year — doubling its market share to 4.5%. WFH savings and late-Android converts helped. Also, Apple began assembling phones in India, which allowed the company to save on duties and price the phones much better.
🔋 Tesla walks away from China — global electric vehicles are too dependent on China for key components, which is one of the biggest risks to the industry. Tesla is now showing the way by walking away from Chinese suppliers of graphite (a key material for batteries) to buy the product from Africa. Tesla will work with an Australian company, to source 80%+ of its graphite needs from the African nation of Mozambique, by 2025.
💪 India’s First IPO of 2022 — AGS Transact became the first IPO of this year to open its bids this week. The 2-decade old business operates ATM machines nationwide for private banks, and has recently also expanded into more payment software tech, including mobile wallets and POS terminals. Due to COVID, AGS saw profits down 50% to ₹55 crores last year, but revenues of ₹1,758 crores held strong.
📰 Finally, Zuckerberg made 2 major updates — Facebook will allow users to showcase NFTs they own on their Instagram profile, along with functionalities to trade and mint NFTs. Opening up NFT tech to Instagram’s 2B+ users could truly accelerate consumer adoption. Secondly, FB will allow creators to charge subscriptions from their followers for exclusive content — opening the floodgates on original creator-led shows, interviews, and other exclusive stuff.
Hit that 💚 if you liked today’s issue.
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