September 17, 2023: Arm IPO Pop Could Bode Well

The share price Arm Holdings ended Thursday at US$63.59, up nearly 25% above the initial public offering price, a strong early sign for the tech listing market overall. Instacart is targeting a valuation of roughly US$8.6 billion to US$9.3 billion in its imminent IPO, a fraction of what the grocery-delivery company was previously worth. Although reports on Friday morning suggested this pricing could be revised up given ARM’s successful listing. Marketing automation software firm Klaviyo is targeting a valuation of as much as US$8.37 billion in its initial public offering, according to updated IPO paperwork on Monday, a slight drop from the more than US$9 billion valuation the company landed when it raised money in 2021. Google on Wednesday said it laid off hundreds of recruiting staff as the company slows hiring. SpaceX’s satellite internet business Starlink brought in US$1.4 billion in revenue in 2022, up from US$222 million in 2021. Apollo is among suitors for IGT’s global slot-machine unit, the unit could fetch US$4 billion to US$5 billion, or ~11x EBITDA. Faze Clan has fired its CEO as the esports industry struggles. The Biden administration has approved US$100 million to fix the nation’s broken EV chargers. Ford will double its F-150 hybrid pickup production as EV sales growth slows. Tesla is closing in on a new manufacturing process that could significantly reduce costs and increase production of its electric vehicles. Tesla is the most shorted stock in the market – and investors have bet against it more than any other name for 3 straight months, according to a recent report. Sophic Client Kraken Robotics CEO, Greg Reid recently presented to investors at the Planet MicroCap Showcase in Vancouver. The Company also recently reiterated guidance for strong revenue growth and are expecting to be Net Income positive this year.

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) — CEO, Greg Reid recently presented to investors at the Planet MicroCap Showcase in Vancouver.

The Company also recently reiterated guidance for strong revenue growth and are expecting to be Net Income positive this year.
https://www.youtube.com/watch?v=XrM7cVTnR9M

Inovia announces $34 million discovery fund for early-stage VCs.

Montréal-based Inovia Capital has launched its first Discovery Fund, closing $34 million (US$25 million) to invest in emerging North American VC fund managers focused on pre-seed and seed-stage startups. Inovia has already backed over a dozen VC firms through Discovery Fund I. It has also reserved a portion for direct investments into select early-stage companies. The fund’s LPs include several existing Inovia backers and some new strategic investors, including Deloitte Ventures and Roller Labs Ventures, Canadian Tire’s corporate VC arm. Inovia’s investor base consists largely of institutions, like pension funds, many of which have regular capital inflows regardless of economic conditions. https://tinyurl.com/2hebnm2r

Ontopical closes $3.3 million seed extension to help companies navigate the local government procurement process.

Calgary-based software startup Ontopical wants to make it easier for companies across North America to discover and win government contracts. Ontopical has spent the past few years collecting and organizing “a massive amount” of public sector data, including city, county, and school district agendas, minutes, budgets, and videos. https://tinyurl.com/388shry6

Arm stock price pops by nearly one-quarter after first trading day.

The share price Arm Holdings ended Thursday at US$63.59, up nearly 25% above the initial public offering price, a strong early sign for the tech listing market overall. The litany of bankers and executives trying to ensure a smooth deal appeared to largely do their jobs. Gains on the first day of trading allowed investors who bought into the IPO to generate a quick profit, likely increasing their appetites for more tech listings. The true test, of course, will be how Arm trades in the weeks and months ahead. The stock isn’t yet available for short sellers, Reuters reported, and the new US$65 billion market capital. https://tinyurl.com/2fnda775

Instacart to target much-diminished valuation range of under US$10 billion in IPO.

Instacart is targeting a valuation of roughly US$8.6 billion to US$9.3 billion in its imminent IPO, a fraction of what the grocery-delivery company was previously worth, in the latest sign of diminished investor enthusiasm for private growth companies. The expected valuation, on a fully diluted basis, is a far cry from the roughly US$39 billion Instacart garnered in a fundraising round in 2021, the year it started laying the groundwork for a public listing. Since then, valuations of high-growth startups have fallen as interest rates rose, making riskier investments less attractive. https://archive.ph/hoXFF

Klaviyo targets up to US$8.37 billion valuation in IPO.

Marketing automation software firm Klaviyo is targeting a valuation of as much as US$8.37 billion in its initial public offering, according to updated IPO paperwork on Monday, a slight drop from the more than US$9 billion valuation the company landed when it raised money in 2021. Klaviyo, along with Instacart and Arm, is gearing up to test an IPO market that has been all but frozen for big tech debuts for nearly two years. The company, which sells tools that help online sellers collect and use customer information like email addresses and phone numbers, brought in US$472.7 million in revenue in 2022 and turned profitable in the first half of this year. But its revenue growth has slowed since the peak of the pandemic’s e-commerce boom, and Klaviyo is trying to win more customers in other sectors like beauty, wellness and events. https://tinyurl.com/znmd86sr

AWS rejected Nvidia’s power play in cloud services.

Microsoft, Google and Oracle agreed to let Nvidia run its own cloud service using their data centers, but Amazon Web Services said “no,” The Information reported. Nvidia, designer of graphics processing units powering artificial intelligence, is positioning its cloud service, named DGX Cloud, as a way for customers to access better-performing GPU servers without making large, multi-year spending commitments with cloud providers. The service also shows how Nvidia, by far the biggest beneficiary of the boom in large-language models, is leveraging its strength to open up new business lines. Nvidia’s cloud play doesn’t necessarily take existing revenue from the cloud providers, since Nvidia is still paying them to reserve GPU capacity. But the deal puts Nvidia in a better position to forge direct relationships with customers and sell AI-related software to the customers, who might otherwise buy it from AWS and other cloud providers. Nvidia says selling AI- and virtual reality-related software to enterprises is a US$300 billion opportunity. https://tinyurl.com/3wphj9mz

Oracle touts US$4 billion in AI contracts but stock drops on slower growth.

Oracle customers including Elon Musk’s X.AI have signed contracts worth more than US$4 billion to rent servers for artificial intelligence training, Chairman Larry Ellison told analysts during an earnings call Monday. That means Oracle doubled its AI cloud commitments from the previous quarter, when Ellison said more than 30 AI startups agreed to purchase more than US$2 billion in cloud computing capacity from Oracle over an unspecified period. Still, Oracle’s stock fell more than 9% in after-hours trading as the company disclosed lower revenue growth for the current quarter, in part because it can’t open data centers fast enough to soak up demand from customers. (Coreweave, an Nvidia-backed GPU cloud startup has felt that pain too, The Information previously reported.) Ellison’s comments on AI growth came as Oracle Cloud Infrastructure revenue grew 66% to US$1.5 billion in the quarter ended August 31, a higher growth rate than its cloud competitors but lower than the 76% growth Oracle reported in the prior quarter. To be sure, Oracle’s cloud business is much smaller than Amazon Web Services, Microsoft Azure, and Google Cloud. But Ellison said the company has been able to attract AI startups because its infrastructure is twice as fast, and therefore less expensive, than its competitors. https://tinyurl.com/wa5x59ye

Google pays more than US$10 billion a year for search deals, lower than previously estimated.

Google pays a total of more than US$10 billion annually to be the default search provider in web browsers and devices of firms such as Apple, Samsung and Mozilla’s Firefox, lawyers from the U.S. Department of Justice said in the opening statement of their antitrust trial against Google, which started Tuesday in Washington. That figure is lower than the US$15 billion or US$20 billion some analysts estimated Google paid Apple to be the default search engine in its Safari browser. It isn’t clear whether government lawyers felt they had to use a lower figure that obscured the actual amount due to Google’s concerns around commercially sensitive information at the trial. The judge overseeing the case, Amit Mehta, previously said he would give Google some discretion over what data would be considered confidential and kept out of public view in the 10-week trial. Google’s lawyer, John Schmidtlein, told the judge that “this case is really all about Microsoft.” Google has argued that its search engine succeeded because it was superior, not because its search deals made it impossible for competitors like Microsoft’s Bing to eat into its market share. The DOJ disagrees. In one notable exchange, Mehta asked Google how often users switch away from Google as the default search engine. Those data would shed light on how advantageous its deals with Apple and Samsung actually are. Schmidtlein said the data aren’t available, but the question will almost certainly come up again when senior executives from Apple take the stand. https://tinyurl.com/5ypdncwb

Google lays off hundreds of recruiters.

Google on Wednesday said it laid off hundreds of recruiting staff as the company slows hiring. “We continue to invest in top engineering and technical talent while also meaningfully slowing the pace of our overall hiring,” Google spokesperson Courtenay Mencini said in a statement. Semafor earlier reported on the layoffs. Google has pared down some teams since cutting 12,000 employees in January, or 6% of staff. In June, for instance, Google laid off advertising staff at Waze as it looked to fold the mapping service into its other products, CNBC reported. https://tinyurl.com/yp77jpef

SpaceX’s Starlink generated US$1.4 billion in 2022 revenue.

SpaceX’s satellite internet business Starlink brought in US$1.4 billion in revenue in 2022, The Wall Street Journal reported Wednesday. That’s up from US$222 million in Starlink revenue in 2021, according to the report. SpaceX, which is known for its rocket launch business, opened up Starlink’s internet service to the public in 2020, and since then the service has since grown to more than 1.5 million users. But the service is still far behind SpaceX’s projections from 2015, previously reported by the Journal, that Starlink would bring in US$12 billion in revenue by 2022. SpaceX’s aspirations for Starlink helped justify its recent US$150 billion valuation in a company-organized secondary sale. The company told some investors that it plans to bring in US$8 billion in total revenue for the company in 2023, with earnings of about US$3 billion before interest, taxes, depreciation and amortization. https://tinyurl.com/598pmd97

Apollo is among suitors for IGT’s global slot-machine unit.

Apollo Global Management Inc. is among the potential suitors vying to acquire International Game Technology Plc’s global gaming division, according to people with knowledge of the matter. The unit could fetch US$4 billion to US$5 billion in a sale, including debt, said the people, who asked not to be identified because the details are private. IGT, led by Executive Chair Marco Sala and Chief Executive Officer Vince Sadusky, said in June it was exploring strategic alternatives including a sale, merger or spinoff of its global gaming and PlayDigital online segments. The company may decide to retain both businesses, it said at the time. The global gaming division, which makes slot machines, generated US$223 million in adjusted earnings before interest, taxes, depreciation and amortization in the six months ended June 30. A sale at about US$5 billion would represent a multiple of about 11 times Ebitda, a discount to the roughly 13 times multiple that rival Aristocrat Leisure Ltd. trades at. Spokespeople for Apollo and IGT declined to comment on the private equity firm’s interest. The two companies are familiar counterparties. In 2021, IGT sold its Lottomatica subsidiary in Italy to funds managed by Apollo. https://archive.ph/CRvIZ

Bob Iger’s grand plan for Disney is moving fast with reported talks to sell ABC.

Bob Iger continues to shake things up at the House of Mouse, and his next move could be selling the company’s flagship broadcast network ABC, all but spelling out the end of the broadcast era as we know it. Disney is in talks with Nexstar Media Group, the country’s largest TV station owner, to sell the ABC network and stations, Bloomberg first reported, citing people with knowledge of the discussions. “While we are open to considering a variety of strategic options for our linear businesses, at this time The Walt Disney Company has made no decision with respect to the divestiture of ABC or any other property and any report to that effect is unfounded,” a Disney spokesperson said in a statement responding to the report. But the reported talks are another sign that Iger means business when it comes to Disney’s streaming future. https://tinyurl.com/2p9c8brp

Tesla is the most shorted stock in the market – and investors have bet against it more than any other name for 3 straight months.

Tesla was the most shorted large-cap stock in US markets last month, securities firm Hazeltree found in a new report. Researchers wrote that Elon Musk’s EV maker topped the list for the third consecutive month. The second and third most popular large-cap stocks to short were Charter Communications and Apple, respectively, according to Hazeltree, which tracks 12,000 equities around the world. Meanwhile, Tesla stock surged as much as 10% on Monday after Morgan Stanley published a bullish research note and upgraded it to “Overweight.”Tesla has lofty upside potential because of its Dojo supercomputer, which the bank thinks could add another US$500 billion to the company’s market cap. https://tinyurl.com/ykcrjfu7

US Army orders more Microsoft AR headsets now that they no longer make soldiers want to barf.

The US Army is awarding Microsoft with another order of advanced mixed reality goggles designed for combat situations, Bloomberg reports. Microsoft had sent the Army a batch of 20 updated prototype headsets in late July, which were tested by two squads of soldiers in August who responded positively to improvements in its design: namely, they no longer felt nauseous and pained while wearing them. The problematic headsets were part of an order of 5,000 headsets the Army started taking delivery in September 2022. The newer headsets, now on version 1.2, had “demonstrated improvements in reliability, low light sensor performance, and form factor,” Army spokesperson David Patterson tells Bloomberg. The US Army awarded Microsoft with another contract on September 5th for the new systems and to see if the company could scale production. The US Army had asked Congress to fund its purchase of 6,900 headsets from Microsoft, but it was denied earlier this year. Instead, Congress reduced the US$400 million in funding the Army requested to just US$40 million to improve the system. The Army awarded Microsoft that money plus an additional US$125 million to continue development. The US Army plans to spend as much as US$21.9 billion on the project, and the headset will undergo testing in 2025 by the Army for use in combat. https://tinyurl.com/5mpyxy5a

Microsoft to host some Oracle servers to speed customers’ AI development.

Microsoft and Oracle Thursday said they will connect their cloud businesses more closely—including placing some Oracle servers inside Microsoft Azure data centers—to help customers move data between the two services, especially those developing data-heavy AI applications. Oracle will now make its Database product, which lets customers store and search through large amounts of data, available on Microsoft’s Azure cloud service. Oracle will operate servers inside Azure datacenters so customers can more quickly move their data from Oracle Database to other apps. Those apps could include Microsoft’s Azure OpenAI service, which customers can use to fine-tune data-hungry OpenAI models. Microsoft will also make Oracle Database available on the Azure store, giving Oracle a new way to reach Microsoft customers. The agreement specifies that Microsoft will be the only cloud provider—other than Oracle—to host Oracle Database in its data centers, according to an Oracle spokesperson. The partnership builds on previous collaborations between Oracle and Microsoft, which otherwise compete in the broader cloud market. In 2019, the companies strung cables between their data centers to make it easier for customers to run computing jobs across both of the companies’ clouds. The new partnership comes as Oracle is trying to encourage more customers to run its software in the cloud rather than on their own data centers, while Microsoft aims to win new business from developers, especially those building AI applications. https://tinyurl.com/4dbr747a

Faze Clan fires CEO as esports industry struggles.

Faze Clan, a merchandising and influencer marketing agency that was once synonymous with the esports space, has fired CEO Lee Trink. CFO Christoph Pachler will take over for Trink on an interim basis. Faze Clan cultivated a lavish and freewheeling image during its early years. The firm maintained teams across many different esports titles, created gaming-adjacent content for social media platforms like Twitch and Snapchat, and sold branded apparel. The firm was valued at close to US$1 billion near the end of 2021. Shares have plummeted to 18 cents from over US$20. By the end of 2021, Faze Clan had more than US$70 million in debt. Most of its teams have been reported to be unprofitable, and in 2023 alone, it has announced two rounds of layoffs. Esports, a sector that traditionally relies on sponsorships for its revenue, has seen significant declines in the past few years as advertising budgets tighten. https://tinyurl.com/3kxuebr6

Belgium to review iPhone 12 radiation risks, following France ban.

Contemporaneous with the launch of the iPhone 15, a scandal surrounding the iPhone 12 brewed this week. France regulators have banned sales of iPhone 12 as it claimed the phone’s radiation exposure exceeded legal limits. Apple has rejected the findings. But the story is still gaining steam. Via Reuters, Belgium Thursday morning said that it is also now reviewing potential health risks relating to iPhone 12. The Belgium state secretary said it is his duty to ensure their citizens are safe. Regulators in Germany are also reportedly investigating and a Spanish consumer group is campaigning for the device to be removed from sale in the country. https://tinyurl.com/47den5fj

ESPN’s standalone streaming channel is included in Charter and Disney’s new deal.

Disney and Charter have resolved the carriage dispute that blocked millions of viewers from watching ESPN, ABC, FX, and other Disney-owned networks. The two companies reached a deal on Monday, which includes bundling the upcoming ESPN streaming channel with Spectrum’s TV Select Plan. As part of the deal, Disney Plus’ ad-supported plan will also come included with the Spectrum TV Select package, while ESPN Plus will be given to Spectrum TV Select Plus subscribers. The standalone service differs from ESPN Plus in that it would offer the full range of content available on ESPN’s TV channel. ESPN Plus, on the other hand, functions as more of a companion app to the network and doesn’t offer access to some content, such as most live NBA games. Disney will still keep the ESPN channel on cable following the launch of its standalone app, according to The Wall Street Journal. The Charter Spectrum blackout lasted nearly two weeks, affecting 14.7 million customers in major markets like New York and Los Angeles. https://tinyurl.com/47s2bv8v

TikTok Shop officially launches in the U.S.

After months of testing, TikTok has finally launched its e-commerce product, TikTok Shop, in the U.S – where it has more than 150 million users. As part of the rollout, the company is bringing features such as a dedicated shop tab on the home screen, live video shopping, shoppable ads, and affiliate programs for creators. TikTok has been testing its e-commerce initative in the U.S. since last November. Over the course of the last few months, the company has added more vendors to the test. Bytedance has been experimenting with different formats of shopping in various markets such as the U.K. and many Southeast Asian countries. TikTok Shop also has a dedicated tab, which it rolled out to other markets in June, to let users search for different products, discover products through recommendations, browse items in different categories, and manage their orders. TikTok also has set up an affiliate funnel for sellers that lets them work with creators on a commission basis to sell products. Apart from letting brands host their products on the platform, Bytedance also provides logistics solutions under “Fulfilled by TikTok” along with a secure checkout method. TikTok has long partnered with Shopify to provide shopping solutions for businesses. The company also offers integration with e-commerce partners such as WooCommerce, Salesforce Commerce Cloud, BigCommerce, and Magento; Zendesk, Gorgias, and 1440 for customer service; Printful, Printify, NovaTomato for print-on-demand merchandise, Yotpo for reviews, and shipping service with WeeBee, Flowspace, and Easyship. https://tinyurl.com/3ksf6a2z

Qualcomm will continue supplying iPhone 5G modems for three more years.

It looks like Apple could still be relying on Qualcomm modem chips for its next few generations of iPhones. On Monday, Qualcomm announced the two companies had extended a modem supply agreement (that was originally set to expire this year) until 2026, suggesting that Apple is experiencing further delays with developing its own in-house 5G modem chips. No specific iPhone models have been mentioned, though Qualcomm said the new agreement will cover “smartphone launches in 2024, 2025, and 2026.” Bloomberg’s Mark Gurman claims that this doesn’t mean we won’t see Apple’s custom chip in the next three years, however, as the company has been planning a gradual rollout of the new component. By 2026, Qualcomm is now expecting it will supply 20 percent of the modem chips used in Apple phones – which is exactly where it assumed it would be by 2023 back when the original deal was signed in 2019. Apple has been working toward making a custom 5G modem chip for some time. The company purchased “the majority” of Intel’s smartphone modem business just three months after settling a lawsuit over Qualcomm’s patent licensing practices in 2019 and was reportedly in talks with chipmaking giant TSMC to produce the 5G iPhone modems in 2021. In which case, it must sting all the more that Huawei may have beaten Apple to produce homegrown 5G — the new Mate 60 handset is reportedly powered by a Chinese-made Kirin 9000s chip despite strict US-led export restrictions hindering Huawei’s access to advanced chipmaking tools. https://tinyurl.com/wm7kz35y

The Biden administration approves US$100 million to fix the nation’s broken EV chargers.

EV owners fed up with the often broken, discombobulated charging experience in the US are about to get a lifeline from the federal government. The US Department of Transportation is authorizing US$100 million to “repair and replace existing but non-operational, EV charging infrastructure.” The investment comes from a US$7.5 billion pot of money for EV charging that was approved as part of the 2021 Bipartisan Infrastructure Law. The department has already approved around US$1 billion for the installation of thousands of new EV chargers along major highways in the US. Broken EV chargers remain a major barrier to broader EV adoption. And it tends to mar the experience of owning an EV, as many EV owners told JD Power earlier this year in a survey. According to the Energy Department’s database of public EV chargers, around 6,261 of the 151,506 public charging ports were reported “temporarily unavailable” – or 4.1 percent of the total number. A charger can be identified as temporarily unavailable for several reasons, ranging from routine maintenance to power issues. https://tinyurl.com/4v9wth7c

Tesla’s new car-building process could be a huge industrial breakthrough.

Tesla is closing in on a new manufacturing process that could significantly reduce costs and increase production of its electric vehicles. According to sources who spoke to Reuters, the new process will enable the automaker to die-cast almost the entire vehicle underbody as a single piece instead of building out about 400 parts using conventional car-building techniques. Tesla’s current process to build its popular Model Y SUV already involves a unique use of massive, ultra-high pressure presses that can mold both the front and rear parts of the vehicle. Tesla calls this process “gigacasting,” which some experts say is already highly efficient and cost-effective compared to other automakers’ factories. But now Tesla is looking to up the ante. https://tinyurl.com/2bcux78b

Ford to double F-150 hybrid pickup production as EV sales growth slows.

Ford plans to double production of a hybrid version of its F-150 pickup truck amid slower-than-expected sales of the automaker’s all-electric vehicles. Ford expects to increase sales of the V-6 hybrid model for the 2024 model year to roughly 20% in the U.S. The F-150 hybrid production was announced in connection to Ford revealing refreshed versions of the truck for the 2024 model year. https://tinyurl.com/mr7yt688

European Union launches probe into China’s subsidies for electric cars.

The European Union said it is launching an anti-subsidy investigation into electric vehicles imported into the region from China. “Global markets are now flooded with cheaper Chinese electric cars. And their prices are kept artificially low by huge state subsidies. This is distorting our market,” said Ursula von der Leyen, the president of the European Commission, in her annual speech Wednesday. “Europe is open to competition, but not for a race to the bottom,” von der Leyen said. Europe’s probe into China’s subsidies for electric vehicles comes at a time when Chinese EV makers are stepping up their efforts to expand worldwide. China’s exports of electric cars have surged 120% in the first eight months of this year to 665,000 units, according to the China Association of Automobile Manufacturers. https://tinyurl.com/4x4wwm5a