Unicorns, some more 🌈
Airlines struggle, Device sales spike, and Amazon hurt.
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Market summary: 📊
Sensex and Nifty crawled back some in India, as investors aligned reality with expectations. US markets look firm on holding newly claimed territory.
US:
S&P 500 - down 0.16%
Nasdaq 100 - up 0.60%
India:
Nifty 50 - down 1.51%
Sensex - down 1.56%
Two things to begin with
1️⃣ Sequoia India’s 4th batch of the Surge accelerator has been flagged off, with 17 early stage companies from India as well as South East Asia participating, having raised over $45 million in total capital to date.
2️⃣ Soccer legend Diego Maradona, one of greatest to ever play the sport and a global icon, passed away yesterday at the age of 60 due to a cardiac arrest. Fans and citizens worldwide mourn his passing.
Tata votes that Airlines can make it ✈️
Tata Group, the majority owner in AirAsia, will write the company another $50 million check to help the airline survive the pandemic and keep paying its bills. The capital will come as a mix of debt and equity, and will likely scale Tata’s ownership of the airline beyond current 51% levels. The other portion is owned by Malaysia’s AirAsia Group Bhd.
Airlines have been dealt a death-blow like no other industry in the pandemic, particularly those that service international routes. But AirAsia’s India hardly gets to blame the pandemic for its problems, with the company struggling since its inception in 2014 to stand on its two feet, barely ever churning a profit.
Back in June, the AirAsia global group which is sick of poor performing airlines everywhere, tried hastily offloading its India stake to the Tatas. But Tata as it appears is reticent on bearing the entire loss-making operation on its own chest, and is on the lookout for a new partner to share some of the pain.
In the June quarter, AirAsia lost nearly ₹332 crores, even as the Tatas pumped ₹490 crore in it this fiscal year. The company grapples with a paltry 7% share in India. So yeah, its bad.. And probably not worth doubling down on wholeheartedly.
What matters: for the Tatas, pouring money to keep the fire burning is definitely a hard swallow, especially when they don’t get along very well with the skeptical Malaysian partners, but their inclination to do so underlines that they believe recovery once a vaccine is in place, could be imminent. However, none of that will come without a few painstaking more months.
Its raining Unicorns bruh 🌈
CARS24 zoomed into the unicorn club after DST Global pumped $200 million in its Series E round. Existing investors Exor Seeds, Moore Strategic Ventures, and Unbound chipped in as well.
The used car marketplace made fortune by adding transparency and liquidity to India’s notoriously lacking secondary car marketplace—successfully unlocking a category that a million startups before them failed to crack meaningfully.
The 2020 roller coaster—attacking hard problems comes with the guarantee of a high-octane roller coaster ride. Over the past year alone, the company went from raising $100 million and securing an NBFC license (for lending), to having to shut stores in the NCR region because of some payment-default woes and follow on legal action, when demand cratered due to COVID.
Tides turned coming out of the lockdowns though, as transaction volumes shot 20% over pre-covid levels, with monthly car volume sales of 15,000, and monthly revenues touching $50 million. Management expects ARR to top $600M this year after all.
Anyway, all looks well now, with the company joining India’s knighted club that this year alone has seen Zerodha, Pine Labs, FirstCry, Razorpay, Unacademy, Postman, and Nykaa book their spots firmly.
What matters: India views cars as a primary symbol of status in our society, and getting this consumer base to consider used cars as a viable alternative is a tough nut. Points for CARS24 to crack that. They’re now setting their eyes on the 2-wheeler segment, which should be much easier.
While we’re talking about unicorns,
Unacademy’s valuation got a 40% bump to $2 billion, after the company raised another $200 million from big boys Tiger Global and Dragoneer. With “great funds” comes great responsibility, and eyes are now set on displacing Byju’s from its throne. Possible?
Remote work bolsters demand for devices 🖥️
Dell and HP, two of the largest computing device vendors worldwide, reported their quarterly performance numbers yesterday which highlighted just how strongly the shift to remote-working is driving demand for new devices even this far out in 2020
Some highlights:
Dell’s consumer segment revenues up 14% to $3.5 billion last quarter
HP’s consumer device revenue up 24%
HP’s revenue from Monitors and Accessories up a solid 59%
Both business showed considerable decline in enterprise sales for devices, as upgrades for corporate workstations get deprioritized
These growth rates may seem unexciting to software buffs, but in the device hardware business, this is as good as it gets.
Also, the numbers are consistent with what we saw from Apple and Microsoft last month too, both indicating revenues from Surface and MacBook surprising meaningfully. Anyway, HP and Dell stocks are now soaring high and investors are holding their hopes even higher going into Christmas and holiday quarter.
PS: Both companies reported double-digit decline in revenues coming from “enterprise” buyers, which underlines how on average, most corporations slowly moved the cost of “devices” from their balance sheets to an expense that now employees bear—all in the name of remote work. Capitalism FTW.
Tweet of the day 🐦
Some midweek reading for investing nerds.
What else are we snackin’ 🍿
🙁 Layoffs show no respite - IBM is planning to cut about 10k jobs in Europe in a bid to lower costs at its slow-growth services unit. The cuts will affect about 20% of IBM’s staff in the region.
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