Runnin' outta juice
Ecommerce day zero, crypto infra progress, and Uber got no chill.
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Market summary: 📊
The bloodbath is not done yet. India had a pretty solid bounce back, but the US markets continued to spiral down and that may weigh on global stocks today. Seat belts on!
US:
S&P 500 - down 1.31%
Nasdaq 100 - down 2.88%
India:
Nifty 50 - up 2.19%
Sensex - up 2.28%
What’s brewing hot? ☕
✅ Lossmakers not invited—Uber is spinning off a tiny autonomous robotics division called Serve Robotics from inside its belly, which had fallen into Uber’s lap when the company had purchased delivery company Postmates for $2.65 billion last year. Serve basically deploys autonomous robots to deliver groceries and essentials in urban regions. Sure it’s cool, but Uber is losing patience for all loss making objects, and has been ruthlessly stripping anything and everything that’s being a drain on profits—take for example its self-driving business or its air taxi business, or the CEO of Postmates who was let go a few weeks ago for being redundant.
✅ Anything for Tesla—India’s rolling out the red carpet to Tesla, and part of the deal could involve some manufacturing related doles that’d make the company’s EV manufacturing process here extremely cheap. Hopes are that those savings are then passed onto end consumers. The government’s quite warm to the idea of helping, but wait until GOI’s corporate bros hear about the news, wink wink you know who’s already feeling quite threatened by Musk’s entry here. In any case, for India will have to beef up EV volumes by a HUGE amount to level up as a worthy manufacturing partner—Tesla made and sold some 1.3 million EVs there last year in China for example, whereas all of India purchased barely 5,000 electric cars last year.
Old guys keep pushing deeper in Crypto ⛓️
PayPal is spending about $300 million to buy Curv, a platform that acts as a custodian of crypto assets to other companies. The move will allow PayPal to confidently hold crypto assets that consumers or enterprises purchase on its platform, while linking each user to his pot in a secure fashion that doesn’t put all the responsibility of storing crypto keys on the user.
This is part of a series of acquisitions PayPal has been making to bring digital assets more widely to consumers, and compete against other platforms that are encroaching on its turf by doing so. After launching crypto services in the US last year, PayPal had tried buying crypto custody and trading platform BitGo for $750 million, but the deal had fallen through.
While we’re here, Goldman lookin’ to make some cash, ☝️
Goldman’s digital banking ambitions may have been kneecapped by Walmart, but the company won’t give in so easily on making the most of the crypto wave.
The suits have now restarted their crypto trading desk this month, and will be dealing in Bitcoin Futures and a bunch of other derivative products for their Wall Street buddies. It's kinda a big deal because these moves build the path for big institutional money to come into the crypto ecosystem, bringing the much needed stability and capital buy-in some of these assets demand. Can’t expect them to go buy coins worth billions on Coinbase!
We got some bad bad bois around here🏛️
Franklin Templeton, the asset manager and sponsor of mutual funds, is being investigated by the enforcement directorate over allegations of fraud and money laundering, after the company closed a few mutual fund schemes without investor consent, booking a loss for all investors, while securing profits for the executives themselves.
In simple terms, last year FT suddenly decided to close down 6 of its debt fund products after COVID hit and the quality of the assets the funds were holding began deteriorating. But right before that, the company’s executives apparently quietly sold their own stakes in the funds at a much higher profit without telling investors.
Moreover, when the closure went through, investors in the funds were furious their consent wasn’t noted and that because of that they’re eyeing nearly 30% loss in value within a year. Investors are now alleging that FT managers misappropriated funds, loaned it to companies that didn’t deserve it, and did not act in the interest of investors.
FT is obviously claiming it's all clean, and the matter is already pending in the Supreme Court along with a bunch of local courts, but this is the first time a national investigation authority has formally launched a probe.
Kya deneka bolo 🍊
Raw Pressery seems to have run out of juice. Two years ago, the direct to consumer cold-pressed juice company was valued at nearly ₹500 crore. But piling losses and investors bailing from writing any more checks, meant the company had to sell to D2C snack-vendor Wingreens Farms for a HUGE discount (~₹100 crores).
Latest data isn’t handy, but for the year of 2018, Raw Pressery had reported a ₹48 crore net loss on a pitiful ₹33 crore revenue base, despite having raised over ₹150 crores or so in venture capital. The numbers underline just how hard it is to scale a consumer brand, even as some companies make it look as easy as running a hot knife through butter.
Anyway, these persistent cash burn problems had forced the company to look for a possible buyer for quite some time now. The product portfolio will now supplement Wingreen Farm’s online farm-to-table snacking portfolio.
Closing out—moving past the AMZN era 👋
For a few years there it looked as though the ecommerce game was pretty much sealed, and generic marketplaces like Amazon would dominate the entire segment in some time. Traditional retail especially eyed its death.
But then COVID came, and threw everyone a last shot at survival. And some traditionalists seem to have made the most of that wildcard.
Quick look at how top global retailers showed signs of revival:
Target Group, one of the largest retailers in the US, reported $20 billion in ecommerce revenues, up 145% YoY. Everybody had written off Target as just another victim of Bezos’ onslaught, until now. Store pickup orders grew 70%, while curbside pickup grew nearly 600%!
Walmart, one of the largest retailers in the world had earlier reported e-commerce revenues up 69% YoY in the most recent quarter!
In India, Nestle, HUL, Britannia, Parle, and a host of other CPG firms and retail giants reported 2x bump ecommerce volumes since the pandemic began.
The sudden surge in demand during COVID brought HUGE queues and gridlocks, and for the first time showed consumers that winners like Amazon solely weren’t enough to service all the demand emerging from the marketplace.
Bottomline: the game’s nowhere near done. Ecommerce forms less than 20% of the global total retail sales, and we’re yet to see the bulk of the innovation this space will demand. Social commerce, video-first commerce, omnichannel commerce, DTC holding brands—there’s countless other shifts happening that’ll unleash unexpected giants in this game.
What else are we snackin’ 🍿
🎙️ Lets get it out - Twitter Spaces is hoping to beat Clubhouse to Android. The iOS only beta will now be expanded globally for Android users, but Android users for now will only be able to join and talk in Spaces, but won't be able to start their own. LOL.
😎 Want some of that India talent - PayPal is in talks to hire over 1,000 engineers for its India operations across Bangalore, Chennai and Hyderabad. The company’s India tech centers employ over 4,500 people, and the headcount expansion is matches the company’s plans of mounting fresh assaults in merchant banking, crypto, and other emerging fintech services.
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