Summer unicorns 🦄
More IPOs, Adobe's killer quarter, and stuff from the week before.
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Market summary: 📊
Overall a flat week for India after markets hit a rocky patch following the hit job against Adani empire. US had a down day too, with traditional companies hammered, while tech was let off easy.
US:
S&P 500 - down 1.31%
Nasdaq - down 0.81%
India:
Nifty 50 - down 0.05%
Sensex - up 0.04%
Quick shot of weekend caffeine ☕
✅ Boomers electrifying — veteran automakers aren’t kidding. After GM’s overnight 75% bump to its spending plan yesterday, Ford, eager to counter, acquired battery management and fleet monitoring software startup Electriphi. The company builds mass charging stations, and provides analytics on how your fleet is charging, storing energy, etc., and will go to strengthen Ford’s commercial vehicle line up. Management is telling investors it can capture more than $1 billion in revenue just from charging by 2030. Old-school automakers making bold promises — it's as if auto-wars of motor-city Detroit are back again…
✅ IPO fest is back — stonk rally hit a minor hiccup this week, thanks to Adani’s shenanigans, but the line at the IPO counter is stretched around the block. Dodla Dairy saw its offering oversubscribed by nearly 45x, while COVID’s push to healthcare infra helped KIMS ( Krishna Institute of Medical Sciences) see respectable demand. Several other pitches got an overwhelming response. Meanwhile, PayTM just asked its existing shareholders to approve a $1.6 billion public raise, India’s largest ever IPO. In all, COVID’s brutal assault has not had as much as a scratch so far on investor enthusiasm!
Baby, how would you like another unicorn? 🦄
Tiger’s next target is payment aggregator and processor BharatPe — with the startup’s Series E round getting a $250 million check, at a $2.5 billion valuation.
For those unaware, BharatPe helps mainstreet merchants accept digital payments via QR codes, digital wallets, and other channels. At the same time, the startup uses vendors’ “revenue history” to better understand income potential and offer customized lending products to merchants, trying to fill gaps left by traditional banks.
6 million merchants use the platform, with 50K+ POS machines deployed, and transaction volumes topping $1.5 billion annually. Lending business apparently grew 10x in 2020.
Big picture — RBI just okayed BharatPe and Centrum Financial’s joint takeover of the asset-rotten and capsized PMC bank, which could allow BharatPe to accelerate the deployment of licensed and regulated banking products, which is what we believe drove Tiger to pull the trigger here. Otherwise, valuing the company at 1.6x its annual payments volumes? Come on.
Meanwhile, another BLOCKBUSTER deal, 👌
PharmEasy, the online pharma-giant, is looking to acquire old-school offline diagnostics services chain, Thyrocare for over $1 billion!
That’s quite the “Byju buyin’ Aakash” of the online pharma game. Thyrocare runs over 1,000 lab centers across India, as well as Bangladesh, Nepal offering a range of regular medical to specialized disease detection tests.
Instead of wasting $$ to fight an ever heating market share war against cash-loaded assault of Flipkart, Reliance, Tata (1mg) — PharmEasy gets to acquire extensive offline distribution with this deal, while at the same time buying into some serious cash flows of an old school giant. Good win!
Lastly, Quick look at Adobe’s stellar quarter 📈
You bet on Indian tech CEOs to deliver. Adobe, the $300 billion productivity and design software giant continues to impress under Shantanu Narayen’s leadership, smashing market’s projections for its second-quarter numbers.
Quick look at numbers:
Revenue of $3.84 billion, up 23% YoY
Cash flow of nearly $2 billion for the quarter
Subscription revenue up 22% YoY, Cloud revenues up 30%
R&D expenses of $612 million, up 15% YoY, signifying increased spending on developing new products
The spike in R&D spending was a good sign — leaving investors with hopes of exciting new products in the pipeline. Stock popped 3% post print, signaling market approval.
Tweet of the day 🐦
China’s stifling of its most promising tech giants is showing in the numbers. Meanwhile, the US has 2x’ed its unicorns so far in 2021, and India continues to outshine.
That’s all we have for today folks, here’s a quick look at all that went down this week…
👊 Kids fight over ARM — Nvidia’s $40 billion deal for ARM is dragging out, with regulators taking their sweet time to approve it. Meanwhile, things just got harder for Nvidia after radio-chip maker Qualcomm said if the deal falls through, then it’d very happily lead a HUGE round into ARM. Global governments and corporations are uneasy with Nvidia’s take over because that may give the GPU maker too much power over the market as 95% of the world’s smartphones use an ARM designed chip.
🛍️ Halt yo online shopping — closed ports, lack of workers, and soaring consumer demand is clogging up global shipping channels, which is spiking shipping prices, now up almost 500% more than it used to on average for the last 5 years. The impact will be felt on prices of everything from regular commodities (tea, coffee, etc.) to specialized orders (electronics, shoes, clothing), which will lead to either consumers absorbing the extra costs, or corporate profits taking a hit because businesses eat it up. Investors no like that!
🎮 Games make money — despite a record 2020, gaming fatigue is nowhere to be seen. For the first quarter of 2021, total game downloads spiked 30%, to 1 billion/week. Mobile game spending was up 40%, to $1.7 billion/week, further expected to grow nearly 3x faster than PC or Console. Roblox was the highest-grossing game worldwide, unsurprisingly dominated by the kids. $204 billion is expected to be spent on games in 2021, pumped up by dropped latencies, and increased bandwidths with the gradual release of 5G.
🛬 Flying on losses — India’s domestic airline industry is left in shambles by the 2.0 wave. Airlines cumulatively lost ₹10 to ₹25 crores for each day of operation between April to June. At the start of 2021, airline traffic had slowly begun to recover to nearly 80% of the pre-COVID levels, only to crash down by almost 60% on average by April. And with heavy fixed costs and thin margins associated here, it's imperative a special financial rescue program is structured for the industry. So far, GOI has been mum.
🤑 Cash for dinner — TikTok-daddy Bytedance is KILLING it with revenues at $34 billion for the year of 2020, up 111% YoY. The giant ended the year with almost 2 billion monthly active users across all the platforms, next to only FB and Google. New CEO Liang Rubo’s focus is on entering new “monetizable” verticals, we're thinking social and live commerce, payments, gaming. Also an IPO on the cards next year, likely the BIGGEST the world has ever seen.
⚰️ Good ol’ Google graveyard — Google is apparently cutting back aggressively on its consumer health division, and routing that talent to FitBit and Google Cloud. FitBit will carry the wearables + services load, while Google Cloud will pursue healthcare from the enterprise angle — APIs, data management tools, and other services. More than $250 billion is spent each year on IT by global healthcare companies, nearly 25% of which is wasted due to inefficiencies. Perfect opportunity for tech giants to mint some profits.
🔥 PUBG da real game — PUBG maker Krafton, is all set to ring in the LARGEST IPO by a Korean company to date, raising $5 billion at a $25 billion valuation. COVID-driven boom in gaming helped Krafton make more than a billion dollars in revenues last year, profitably, with operating margins of nearly 70%! Portfolio of games spans wide, but PUBG is the star by a mile with 1 billion+ downloads on mobile to date. India relaunch is imminent, which should further boost those numbers, AND management promises aggressive foray into web-based cartoons, movies, and paradigm shifts like AR.
👀 No patience — rumours broke out that nearly ₹44K worth of stock in the companies, held by 3 Mauritius based funds, had been frozen by the NSDL due to lack of compliance with anti-money laundering laws. SEBI hasn’t said anything yet, while Adani categorically denies and rejects the news, but investors in no mood for fun, ran for cover, dragging Adani stocks down ~15% from all time highs, and making Gautam $9 billion poorer by the end of the week. Brutal!
Hit that 💚 if you liked today’s issue.
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