Shark in trouble 💁♀️
Wealthfront sold, Britannia's problems, and Robinhood's struggle.
Morning Coffee readers! 👋
We’re somehow a month into 22. Mentally, still feels like 2020 though. Anyway, its budget week in India. GOI has a tough situation on its hands — be fiscally conservative, respecting its revenue shortfall situation, or open wallets generously and line up some boosts to make sure we hit our economic growth targets for the year. Markets will trade based on which side the wind blows.
Anyway, easy news day today with a couple major updates from the western world. Let’s get on with it! 🤙
Kicking off the week ☕
📈 No smoke without fire — rumors are BharatPe’s board is arming up to throw serious punches. After asking founder Ashneer Grover to sit at home for a few months just last week, the Board is apparently moving to terminate his services entirely, along with that of 15 more people (including the founder’s spouse) for alleged financial fraud. There’s little info on what that constitutes but internal investigations are still on. Here’s Mint.
💁♀️ Free speech or music — several yester-year artists are pulling their music from Spotify, after SPOT refused to take down the controversial podcast of Joe Rogan. Rogan, whose entire brand is based on speaking his mind freely, is known to bring folks de-platformed by other social apps (like Twitter, Facebook) for saying things on controversial topics (think vaccine mandates and such). Fyi, Spot had paid Rogan north of $100 million to get his content exclusively — which pulls 10 million+ users per episode, so a tough choice.
UBS wants to woo young investors 💲
What happened — Swiss-banking giant UBS is paying $1.4 billion to buy millennials focused investing platform Wealthfront, trying to push deeper and align its services to the next generation of retail consumers in the US.
Wealthfront is basically what they call a robo-advising platform, helping a base of about 430K affluent millennials and GenZ investors park their money into a diversified pot of assets — managing over $27 billion in assets, competing against the likes of Betterment, Acorns, Stash, and others.
Wealthfront’s algorithm charges just 0.25% — which as you can understand, is a steal compared to what financial advisors charge for mostly subpar guidance.
UBS meanwhile earns its bread by offering custom banking and money management services to a mostly wealthy client base. They’ve recently been rewiring services to service younger consumers (think tech bros and gals with stock options and growing wealth), and hope this transaction helps grow share against rival offerings from JP Morgan, Goldman and others
Worth noting — banks, who have been silent witnesses to the rise of fintech, are now starting to pull out their checkbooks to buy category leaders. And as liquidity dries up and the IPO feast ends, upstarts are counting on these exits.
Weekend raises in Venture Town 💰
Vyapar, a business accounting focused SaaS play, wrapped up a $30 million Series B from WestBridge Capital and a couple other existing investors.
The company sells a simple and functional billing, invoicing, and accounting platform to small business vendors nationwide — available as a desktop and a mobile app for enterprises and solopreneurs of all sizes. The 300-employee operation reaches some 3 million end-users.
Fresh funds will go to drive offline sales, new product offerings, and fuel hiring.
Meanwhile, there’s a Masterclass for India ☝️
Socialswag, a platform that’s building a Masterclass equivalent for India, where users can learn and get coached by experts, raised a $3.5 million pre Series A. IMEF led the bid, with Unicorn India Ventures and others pitching in.
Socialswag is combining these classes with Cameo-like functionality for “shouts” as well — giving celebs a bull blown solution to monetize their reach.
Inflation eats Britannia’s cookies 📉
What’s poppin’ — consumer giant Britannia reported its quarterly numbers towards the end of last week, which came a tad below expectations, as inflation bogs down FMCG companies all across.
Quick look at the numbers:
Revenue of ₹3,575 crores jumped 13% YoY, thanks to low compares and some price increases
Profits of ₹371 crores dropped 19% YoY
Management said inflation added as much as 20% to the cost of raw materials, thankfully offset by some price increases
Britannia also echoed sentiments shown by other FMCG giants like HUL earlier — claiming demand in rural India is waning as post pandemic stress hits hard. The commentary will weigh on the minds of investors as we enter the budget week.
Big picture — FMCG stocks have barely moved an inch in the past year, as macro gyrations and multiple pandemic waves become hard to balance.
Closing out — Robinhood is a dumpster fire ⚔️
Life came full circle with Robinhood pretty fast. As the meme stock frenzy fades, $HOOD which IPO'ed mid-2021, has lost over 75% of its value so far in the public markets!
Meanwhile the company’s financials continue to deteriorate — last quarter for example, Robinhood lost $423 million, on a revenue line item of $363 million. Engagement from traders dropped 9% YoY! Stock was beaten into a pulp, with HOOD now trading at a $10 billion steal.
There’s two major reasons at the center of the meltdown 1. an unsustainable business model that regulators and responsible shareholders don’t approve of 2. Brokerage technology has evolved so fast in the west for the past 5 years, it is quickly getting featurized in other popular apps, diluting $HOOD’s moat.
What now — Robinhood is trying to focus on banking accounts, cards, and crypto to claw deeper into its base. But bad PR is also a huge mountain to scale.
What else are we Snackin’ 🍿
🙏 Need ya - GOI has extended the term of LIC chairman for 1 more year, as the insurance mammoth pulls off a critical IPO this year.
👏 Victory for Nadal - Rafael Nadal won his 21st Grand Slam title at the Australian Open last night, barely months after facing a major injury.
Hit that 💚 if you liked today’s issue.
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