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Market summary: 📊
Decent bounceback yesterday from an otherwise gloomy week. US markets continue to remain choppy, with pandemic favorite tech quickly going out of fashion.
US:
S&P 500 - up 0.07%
Nasdaq 100 - down 0.30%
India:
Nifty 50 - up 0.84%
Sensex - up 0.88%
What’s brewing hot? ☕
✅ Can’t find enough space—pandemic helped the ecommerce industry grow by more than 50% last year, and that has caused a boom downstream for distribution centers and warehouses. Economist reports demand for warehousing has jumped nearly 32% in Asia, with the US and Europe seeing similar surge in demand. That also explains why GreyOrange Robotics, the warehouse automation player, is set to IPO—demand for new installations is probably shooting through the roof.
✅ Boring businesses make money—PayPal, the boring payment processor of the old internet era is doing quite well for a 27 year old company. For the first 3 months of 2021, the company processed nearly $285 billion worth of payments, and is on its way to do more than a trillion by the end of the year. PayPal’s p2p platform, Venmo (PayTM for the US) grew volumes by 61%—thanks to the recently added option to purchase crypto.
While we’re on crypto… hear about the dog-currency fly?
Techland theatrics ⚔️
Other than the prices of $DOGE, the Apple vs. Epic Games ongoing court battle is all that’s on the minds of people in techland.
Apple is defending the monetization of its App Store, which effectively controls the pipes to distribute applications and content to a billion (and counting) people worldwide. Any penny made online, 30% should go to Tim Cook and his henchmen.
Epic is primarily arguing that Apple should allow its billions of users to buy V-bucks, Fornite’s in-game currency, without charging the 30% commissions. Also, Epic is asking Apple to allow it to distribute its own app store to Apple users, without scrutiny.
More broadly though, Epic, literally on behalf of other independent developers, is claiming that the commissions charged and the extra policing are innovation thwarting—limiting the capacity of developers to invest in ultra innovative ideas around gaming, the metaverse, and more.
Key details to come out of the proceedings so far:
Fortnite, Epic’s leading gaming franchise, made $9 billion within 2 years of founding
Epic CEO Tim Sweeney says he would’ve taken a fair deal with Apple had they come to the table to negotiate—“see how well we work with Microsoft and Sony”
Apple’s argument is mostly structured around “look, this was okayed in the past” essentially citing flaws in antitrust laws, and putting the onus of more evidence on Epic
Why do we care: the outcome of this case could decide whether Apple’s App Store is a monopoly or not, which could forever change the way mobile software distribution really takes place today, offering developers more power, and consumers more control.
And if Apple looks too mighty for a fall… just ask Bill and Microsoft.
Lingering effects of the shocks 👛
Economic implications of the 2.0 wave are already here biting consumers—FMCG companies across the board are forced to jack up prices because raw materials are becoming expensive, because of rising costs down stream and jolted logistics nationwide.
Few prime examples:
Marico, maker of cosmetics to edible oils, raised prices of almost all products in its portfolio. Few like Saffola for ex, are seeing 50%+ bump in tags
HUL followed suit, bumping up its own rates, which helped deliver a resounding beat for last quarterly revenue numbers
With the market leaders freely jacking up $$, the laggards are expected to follow
And we’re likely nowhere close to the ceiling. With production cut, millions of small vendors driven out of business, the value chain is yet to fully absorb the ripple effects of the ongoing catastrophe.
Meanwhile, holders of stock in FMCG businesses can afford to rejoice—price increases will boost topline, and those revenue growth numbers won’t budge anytime soon.
Butt on fire 🔥
Twitter team has a habit of not moving until investors beat the **** out of that stock.
After a 20% beating post earnings—mostly for poor engagement and slow revenue growth, Twitter disclosed its acquiring Scroll, a company building a subscription-first, ad-free content consumption platform.
Scroll basically charges everyday users $5 a month for a reading platform that blocks ads, offering a more conducive reading experience. On the other hand the service works with publishers, like Recode or The Verge, to split the $5 so that publishers get to cut reliance on advertising as their sole source of income.
Great idea on paper, but there’s like a gazillion publishers on the internet, and acquiring two-sided buy-in at that scale is a challenging chicken-egg problem. Users don’t pay unless you have more publishers, publishers don’t join unless you have a million users...
Anyway, that problem is solved with Twitter, which already has hundreds of millions of users, and on the other hand literally works with every other publisher on the planet for news distribution.
Twitter could easily integrate Scroll within its own suite of upcoming subscription offerings, and offer an ad-free reading service for its power users. None of those details have been confirmed by either team though.
Bottomline: a few months ago, Dorsey promised the markets that Twitter will hit $7.5 billion in revenues by 2023. Every move the business makes here on out has to be additive to that goal. Investors are running thin on patience, and it's a deliver or get booted situation for the CEO.
Closing out—giants wearing new skin 💅
Bajaj Finance has been greenlit by RBI to finally go ahead and launch its own digital wallet.
3 months ago, Bajaj Finance announced a comprehensive digital makeover of its services, around a mobile service that works in-tandem with Bajaj’s offline operations, in addition to launching a host of new products around investing, insurance.
Now whether the giant can deliver a digital experience on par with venture-India is unknown, but they do have thick cash flows for acquisitions and experimentations, unrivaled distribution that they won’t have a dollar to spend to acquire, and prudent shareholders who will keep the pressure to deliver on—all of which already puts them ahead of 99% of fintech startups out there.
And if the agenda is to not reinvent the wheel, but just do enough to secure that profit moat, well… we love the odds.
What else are we snackin’ 🍿
💁♀️ You call it social, we call it a blog- Trump promised his fans a social network of his own after Twitter banned him. Yesterday he finally launched an MVP. Turns out it's just a blog, and so far only Trump can post there. That’s the story.
Hit that 💚 if you liked today’s issue.
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