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Market summary: 📊
Indian markets circled in place on Friday as investors take time to digest the rally. US had a net positive day, ending the week on a high note.
US:
S&P 500 - up 0.47%
Nasdaq 100 - up 0.53%
India:
Nifty 50 - down 0.066%
Sensex - up 0.025%
What’s brewing hot? ☕
✅ ISRO embracing private space enterprise—first the first time in 5 decades, ISRO is opening its doors for India’s emerging private space industry, allowing 2 private firms to test out their satellites before they set out for launch. One of the sats belongs to student training organization Space Kidz Indi, while the other comes from BLR based Syzygy Space Tech. Both will have their engines as well as solar power systems and other set ups tested. As India’s private space industry warms up, ISRO’s role in expertise as well as infrastructure sharing becomes increasingly pivotal.
✅ The times, they are a changin’—Tesla’s purchase of $1.5 billion worth of Bitcoin has kicked off a domino effect. Two more traditionalists, Mastercard and BNY Mellon embraced the tech more formally over the week. Mastercard will work to enable processing and settlement of transactions of select crypto currencies on its network. BNY Mellon on the other hand suggested the creation of investment vehicles for its institutional clients to get exposure to digital currencies. In all, both news took Bitcoin up another 7-8%, leaving prices just shy of $50K.
✅ Another good week in the markets—the budget driven rally from last week was further bolstered by outstanding quarterly business performance reports from some of India’s top corporate giants. Auto companies surprised, Titan and others hinted at consumer sentiment recovering strong, while Adani Ports showed cargo traffic improving. Also, consumer price inflation seems well under control. In all, Sensex rests comfortably north of 50K, and as consumer and corporate spending returns to normalcy over the year, things lookin’ good for a record bounceback in growth. Isss time to put them index funds to some work.
Softbank’s got a SPAC for Grofers 😎
Softbank had raised two SPACs of over $650 million barely a week ago, and one of those entities is coming to pick up Indian grocery delivery startup Grofers and take it public. It’ll be listed in the US though.
Some context—a SPAC is basically a specially designed shell company whose sole purpose is to raise a bunch of capital from big money investors, list itself on the stock exchange, and then scout for an attractive private startup, merge with it, and take it public. By doing this, startups who have a looooong ramp to profitability tend to get the $$ commitment by bypassing the scrutiny that traditional IPOs generally bring.
Anyway, Softbank plans on raising a total of $1B for this particular transaction, and so far reception seems quite warm. And why not? Grocery delivery is a cutthroat market in India, but for 2020 alone the market grew by 68%, with 55%+ growth rates estimated to sustain for the next 5 years or so. Grofers saw 85%+ sales growth for 2020, with 3 million+ new app downloads.
BTW, what’s this obsession with listing in the US, and shutting out the average domestic investor from businesses at the core of the India growth story? SMH.
And oh, while we’re on big money gambits and Softbank, ☝️
Social commerce platform Meesho is close to raising another $250 million from Softbank and a bunch of existing investors, at a fiery valuation of $2 billion, nearly 2x from 2019 levels. 2021—the year of Indian unicorns. 🦄
The company basically empowers solopreneurs to sell merch by leveraging their personal network, while it offers an end-to-end managed commerce experience in the backend that controls sourcing, fulfillment, and redressal. COVID had nearly frozen business, but things are back to pre-pandemic levels by the end of 2020 and last we checked, the company reports 10 million+ users, with 70 million shoppers fulfilled through the service.
Sir, you’ve been rescued 🎵
When Trump left office, more relieved than the American public was the bois and gals running TikTok. With governance priorities changing, they could probably negotiate with the following administration and not have to settle for Oracle as their parent.
And that’s what’s happening—the Biden administration, keen on bringing things back to “normal” has apparently shelved the acquisition indefinitely. Odds are, while bureaucracy does it lazy bit, TikTok will keep growing its “value” over time and even if the government does turn around eventually to force their hands, Oracle could probably no longer afford to pay up.
In any case, US security officials will continue to actively review the service for its data sharing and privacy practices apparently.
Aight, that’s it for today, and a quick look at the hottest stuff this week…
📱 Fintech wildfires are unstoppable—payment aggregator BharatPe raised $108 million for its series D round, pricing the company at $900 million. Coatue led the bid with existing investors Ribbit, Sequoia, Steadview Capital and a bunch of others piling in. BharatPe basically provides small merchants with a unified payments service, that combines and links multiple payment apps through a single QR code. Just last month the company displaced Google to become the largest UPI processor in India, with annual payment processing run rate closing in on $6 billion.
🙄 Zuckerburg wants his own Clubhouse—days after Zuck made a surprise appearance on Clubhouse one night, reports came out that FB’s out building its own competitive service. If you know FB, there’s very little surprise here—they’re notorious for copying innovative features from other hit services and bringing them over to the FB ecosystem. Good thing however is that FB acts like this equalizer and suddenly billions of global users and creators have new features at their disposal to keep innovating with content. We’ll see how it pans out. But moral of the story? Don’t bring Zuck to a party.
🛒 Digital groceries had a record year—2020 was a big year for digital grocery sales, with lockdowns forcing reluctant Indian consumers to abandon their neighborhood store for online options. Total digital grocery revenues for the year grew nearly 65% to ₹6,280 crores, with Big Basket leading charge, growing nearly 43% in the year, while Grofers, Spencer’s Retail, DMart were other notable winners. Although lockdowns may be easing going forward, habits become hard to break, and the market is expected to keep growing, particularly as Reliance, Flipkart, and Amazon come after the space all guns blazing.
⌚ Titan’s quarter shows consumer is okay—Titan Company, one of the most widely followed stocks on Dalal Street, grew its revenues by nearly 17% YoY to ₹7,287 crores, for the last 3 months of 2020, as consumer demand recovered well during the festive season. Countless other consumer product companies have shown similar performances earlier which is partly responsible for the market’s rally so far. Management seemed quite confident about growth holding up into 2021, which sets up a good sentiment for the broad consumer market in India.
🌹 Match made a surprise acquisition—global dating giant Match, which owns dating properties like Tinder and Hinge, acquired Hyperconnect, a South Korean maker of video chat apps, in a deal valued at over $1.7 billion. Hyperconnect basically runs two distinct consumer apps with millions of downloads—one called Azar, which enables one-on-one video chats for users and the other Hakuna live, which provides live video broadcast services. Both services are multilingual too, with the ability to translate conversations into multiple languages at the other end, and reports suggest Match made the deals primarily for their technology.
💰 Gamestonk engagement helps Reddit raise—the social platform cashed in its newly gained clout in exchange for $250 million in fresh funding, but the valuation of $6 billion seemed ridiculously low for a one of a kind social service with over 50 million active regulars. Could be because all the things that make reddit great also mean it's hard to monetize such a platform solely based on ads, which is the only model the company has chased until now. In any case, valuation doubled from a year ago, and the platform had ad revenues grow 90% YoY last quarter.
🙌 Google and Global Payments Network launch payment APIs—GPN, an old school payment processing company, has partnered with Google, wherein Google will use the processor’s infrastructure to offer its own payment APIs to Google Cloud customers. Basically like Stripe, where GPN manages the backend processing and settlement operation, while Google manages consumer end of the APIs. Stripe may be popular online, but they probably own less than 1% of the total payment volumes processed worldwide, and big old school giants now making a harsh pivot via partnerships could make the space extremely competitive.
📈 Digital advertising enters 2021 in style—last week, we saw Google and Facebook report outstanding growth in revenues from digital ads. This week we saw Snapchat and Pinterest pull off a similarly outstanding performance. For Pinterest, revenue of $706 million was up 76% YoY and the global user base now stands at 460 million! For Snapchat, $911 million in ad revenues, was up 63% and 265 million users, mostly young folks, use the platform EVERYDAY! In all, the performances continues to underline the strength in broad digital advertising spending, as traditional advertising channels lose relevance emerging out of the pandemic.
Hit that 💚 if you liked today’s issue.
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