Profits, what?
Bully meets bully, Most complicated SPAC deal, and BTC pumping.
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What’s brewing hot? ☕
✅ Gotta get them—big tech companies (Google, Apple, Amazon, Facebook, Netflix) have a bad rep for not paying taxes in the regions they operate in, which has always been a problem for global governments—especially the Europe. So over the weekend, the G7 countries joined hands to mandate a law which enforces a global minimum corporate tax of 15%, in addition to a bunch of other guidelines that allow for tax revenue sharing among countries. You know the tech giants will find a way to game it all, but for now, brace for a rough opening...
✅ Bully meets bully—notorious for its high-handed attitude towards global politicians, Twitter forced deleted a tweet by the Nigerian President citing violation of the platforms policies. Nigeria responded in kind—suspending Twitter from the country indefinitely, cutting off tens of millions of users on the app. Whole mess is blowing up in Dorsey’s face, who is already struggling to make up “engagement” numbers, as investors increasingly demand more or get impatient with TWTR's stock.
Bleeding cash through the nose 🤕
IPO-bound Paytm dropped its annual report over the weekend—and honestly, we wish there were any bright spots to be excited about.
Numbers suggest revenues actually declined during the COVID year, and profitability is a distant ask at this point. Meanwhile, emerging categories such as insurance, gaming are barely getting started, far from carrying the load of the empire.
Quick look:
Revenues dropped 10% YoY to ₹3,186 crores
Total expenses dropped 22% YoY, which is the only good looking stat
Total losses of ₹1,700 crores for the year, which is pretty damning tbh, but losses improved almost ₹1,200 crores vs. last year, largely due to a decreased spending on marketing and promotions
Payments revenues dropped 5% to ₹1,988 crores
Gaming brought in ₹200 crores, while losing ₹150 crores total
Management attributed the 10% revenue decline to the freeze in merchant processing business, with mainstreet mostly shut for business for at least 3 months of 2020. But then, given COVID’s broad boost to the adoption of digital payments, things should’ve looked better. We sense some serious market share declines.
Then there is the fiscally irresponsible cash burn—especially when you stack up the performance to global payments processors and fintech like PagSeguro, Square, PayPal, or even closer to home, traditional banking companies in India, who all operated under the same stress of COVID.
Big picture—we ain’t skeptics, but getting the average investor too excited about that IPO at a $40 billion deal tag will be a tall order for PayTM management, especially as competition in payments explodes, while the “super-app” dream is still far from reality. Up the game fellas.
Quick look at some Key performance indicators 🧐
Two fresh data points coming out over the weekend offer some insight into the state of the India economic machine:
First up, GOI’s GST collections pot went bust for the month of April, with total collections topping ₹1.02 lakh crores, about 27% down from the month of March. May should be even worse considering the broad freeze, and things looking painful for Centre, which is already tight for cash, running the ship with RBI lent $$
Secondly, RBI’s consumer confidence index, basically an indicator of how the average joe is “feeling” about his economic prospects, showed consumer confidence at the lowest it has been for the past few years… worse than it was at the bottom of the 2020 lockdowns. Households expect unemployment to stay high and inflation to keep rising, all of which could show downstream impact on how consumers spend and save their $$
Key takeaway—if the markets were counting on fireworks from a surprise GOI stimulus or a surprise consumer bounceback once the 2.0 wave fades, those hopes could end up in disappointment, as both parties don’t seem too excited as things stand today.
Most complicated SPAC deal ever 🤯
Billionaire hedge fund investor Bill Ackman launched one of the largest SPACs ever last summer, which at one point courted startups like Airbnb, and Grab (the Uber of Southeast Asia) for a public listing.
What happened—after a year on the hunt, that SPAC has finally found a suitor in global music giant Universal Music Group, owning about 10% of Universal, valuing the business at about $42 billion.
The caveat—it is quite an unusual deal, where instead of owning all of a target company, Ackman’s SPAC is owning only 10% of it. To further complicate this, Universal is in the middle of an IPO in Europe. Here’s Reuters on the entire episode if you want to nerd out.
Big picture—Universal, which owns music rights of the world’s top artists including Lady Gaga and Taylor Swift, is apparently thinking of a Spotify competitor, launching its own streaming service, podcasts, and the whole menu.
Also, Chinese tech giant Tencent owns a sizable chunk of the company, which provides Universal a strong tech footing, if at all. Watch out for a credible late horse in the races!
Closing out—El Salvador recognizes Bitcoin 👋
The central American nation (about 7 million people) became one of the firsts to recognize Bitcoin as a legal tender, along with its own currency which is the US Dollar.
In simple terms, this means that the nation promises its citizens that Bitcoin will be considered a mode of payment out on its streets, and that no “service provider” can deny you service saying it isn’t a valid currency.
Moreover, Bitcoin, since it is treated like a currency, won’t be taxed, with all appreciation in value straight into citizens’ pockets.
Anyway, the President disclosed his decision via a video conference during the ongoing Crypto Week in Miami, and also disclosed he is working with Strike to build a crypto-first payment infra for the country.
Why care—70% of people in El Salvador are unbanked, kept out of the incumbent financial system because of heavy fees and other predatory practices by legacy platforms. If the model works, this could unfold a domino effect for other emerging economies to seriously have a look at.
Or the entire thing turns out to be yet another laser-eyes scandal. Check back in a year!
What else are we snackin’ 🍿
🚫 Stay out - Facebook decides to keep Donald Trump’s account suspended for two years after evidence proves he incited the Capitol rights. 2024 election bid looks hard.
🤔 Energy debate - Square, the other fintech company run by Jack Dorsey, will invest $5 million into a mining company, Blockstream, to build a solar powered mining rig and offer proof of concept that 100% renewable energy use for Bitcoin mining is possible.
Hit that 💚 if you liked today’s issue.
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