November 17, 2024: And It’s Gone, NASDAQ Below Post Election Gap Up

Last week, Dow Jones lost 1.2%, S&P 500 was down 2.1%, Nasdaq composite lost 3.15%, and fell below the lows of the post election gap up. The 10-year jumped 12 basis points to 4.43%. Fed chief Jerome Powell on Thursday signaled that the Fed is in “no hurry,”. CoreWeave closed a US$650 million secondary share sale at US$23 billion valuation, a 3x increase in valuation over the past year. Trump’s win has stoked defense tech bulls, despite talk of a bubble — at US$14 billion, investors have valued Anduril between 18 and 19x this year’s expected sales, traditional defense contractors, which are profitable but grow much more slowly, are valued at ~1-2x sales. Shares of electric vehicle companies including Tesla fell Thursday after a report that the incoming Trump administration hopes to end US$7,500 consumer tax credits on the purchase of EVs. Tesla shares fell almost 6% after the Reuters report. Amazon is developing smart glasses for delivery workers, Reuters reported Monday. Apple is developing surveillance camera amid smart home push. OpenAI discussed plans for an AI data center that could cost US$100 billion. OpenAI is preparing to launch a new AI agent that can use a computer to take actions on a person’s behalf, such as writing code or booking travel, according to two people familiar with the matter. In Canada, Shopify stock was up more than 20% on revenue, margin growth. Sophic Client Intermap announced Q3 revenue grew 241% year-over-year, the stock closed the week up nearly 20%. Sophic Client, NowVertical Group reported Q3 results, which put the company on a path to achieving annual EBITDA of US$10 million, by achieving annual revenue of US$50 million and a best-in-class 20% EBITDA margin, the stock closed the week up around 150%. Sophic Client, ADM Endeavors reported Q3 results, revenue grew 12% y/y, the company is pursuing new school uniform opportunities and has hidden asset value in its new facility. Sophic Client, Plurilock announced a $5.4 million order with a law enforcement agency, and provided a corporate update.

Shopify (SHOP-NYSE, SHOP-TSX) shares surge more than 20% on revenue, margin growth.

Shopify’s revenue grew 26% in the third quarter from a year earlier to US$2.16 billion and its free cash flow margin rose to 19%, topping its previous forecast for the quarter by roughly three percentage points. The e-commerce giant has been highlighting improvements in its margins ever since it unloaded its money-losing logistics business to freight company Flexport in 2023. Free cash flow rose to $421 million, a 52% increase from a year earlier. The company, which generates revenue from payments and other merchant services as well as selling software subscriptions, said its gross profit margin dipped slightly as payments volumes grew during the quarter. Payments, the biggest source of Shopify’s revenue, is lower-margin than its software business, because Shopify pays some of what it charges merchants back out to its payments processors. Shopify shares surged more than 20% in Tuesday morning trading. https://tinyurl.com/3hmscpnr

Sophic Client Intermap (IMP-TSX, ITMSF-OTC) announces third quarter revenue grew 241% year-over-year.

Intermap Technologies, a global leader in 3D geospatial products and intelligence solutions, today announced results for the third quarter of 2024. Financial Highlights: Revenue of US$5 million, up 241% from US$1.5 million in the third quarter of 2023. Acquisition Services revenue grew to $2.9 million from nil in the third quarter of 2023 as the Company accelerated data collection for the Indonesian mapping program. Value-added Data revenue increased to US$1.1 million, compared with US$0.4 million in the third quarter of 2023. 30% adjusted EBITDA margin, compared with a loss in the third quarter of 2023 as the Company benefited from operating leverage with higher revenue and attractive contribution margins Intermap continues to execute on its Indonesia mapping program, leveraging AI/ML and other advanced proprietary technology. With recent advances in production processing automation combined with unmatched expertise and experience in feature extraction and radar interpretation, https://t.co/NDuY1bAjiI

Sophic Client NowVertical Group (NOW-TSXV, NOWCF-OTC) reports third quarter 2024 financial results.

Revenue was $10.7 million in Q3 2024, excluding recently divested Allegient and Seafront, Q3 2023 revenue was $9.8 million, translating to Q3 2024 year-over-year growth of 9%. Excluding Allegient and Seafront businesses, Adjusted EBITDA was $2.2 million in Q3 2023, translating to a Q3 2024 year-over-year decrease of 8%. Net Income was $0.6 million in Q3 2024, excluding the Allegient and Seafront businesses, Q3 2023 had a net loss of $0.2 million, translating to Q3 2024 year-over-year net income growth of 381%. “Our third quarter results clearly highlight the accelerated progress we’ve made in executing our One Brand, One Business Integration strategy. Q3 Adjusted EBITDA of $2 million, up from $1.6 million in Q1 2024 despite the Allegient divestiture, indicates our restructuring and efficiency focused measures are yielding results. Outstanding credit goes to our operator-first leadership team who have executed this at a faster pace than anticipated” said Sandeep Mendiratta, CEO of NOW. “We have renegotiated acquisition liabilities, leading to meaningful savings and a more favourable payment schedule for those liabilities. Acquisition related liabilities have been reduced in total by an estimated $5.4 million. Our third quarter has demonstrably put us on a path to achieving our objective of having annual EBITDA of $10 million, by achieving annual revenue of $50 million and a best-in-class 20% EBITDA margin. We believe we now have a platform for sustained organic revenue growth, with strong margins across our core markets.” https://t.co/Jd8kfwwZf9

Sophic Client ADM Endeavors (ADMQ-OTCQB) reports third quarter fiscal 2024 financial results.

Operating Results for the 3-Months Ended September 30, 2024: Revenue was US$2,166,235, a 12% increase over US$1,984,193 reported in Q3 2023 and a 77% improvement over the prior quarter’s US$1,222,600, due to increased sales from recently acquired brands and increased school uniform sales. Gross margin of 26% fell from 30% in Q3 2023, due to increased demand from labor intensive uniform school sales. Net income of US$125,809 decreased US$29,800 versus US$155,609 in Q3 2023 but increased US$125,608 over Q2 2024’s net income of US$201, due to increased marketing and selling expenses associated with investing in web development and e-commerce to create a stronger online presence. “Our third-quarter results demonstrate solid progress as we continue our strategic focus on the government sector,” said ADM Endeavors CEO Marc Johnson. “The peak season for uniform sales showed increased demand from existing customers, which is evident in our results. We are also actively pursuing new schools in the Dallas-Fort Worth area left without a uniform supplier following the recent exit of a major competitor. The upcoming completion of our new 100,000 sq. ft. facility in Q1 2025 will allow us to meet this heightened demand and capture additional market share.” Mr. Johnson further noted, “The recent appraisal of our new facility estimates its value at around $13 million, with an additional $3.7 million for the remaining adjacent land. This significant asset value is not yet reflected in our current market valuation. By focusing on both organic growth and strategic acquisitions, ADM is well-positioned to drive top-line growth and improve operational efficiency. We are confident in our ability to accelerate expansion and solidify our market leadership in the promotional products and school uniform sectors.” https://t.co/tR6kwu7vYr

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) announces $5.4 million order with a law enforcement agency.

Plurilock Security Inc., received a three-year sales order for a total of CAD$5.4 million with an existing Canadian Law Enforcement Agency (the “Customer”). The one-year contract with two optional years automatically renewing over a total of three years was awarded through the Company’s subsidiary, Integra Networks Corporation, and will provide the Customer with software licensing to enable a cloud operating model that integrates the scalability and flexibility of a public cloud with the security and reliability of a private cloud. https://t.co/YAlWcb6ehE

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB): corporate update for shareholders.

Strong Sales Momentum and Pipeline Growth: Plurilock’s strategic hires and industry alliances have led to a record US$19.3 million contract. Key partnerships with TD SYNNEX and CrowdStrike have increased credibility, leading to enhanced deal flow and cross-selling opportunities. Strategic Expansion of Critical Services Division: Division focuses on high-impact areas like AI-driven cybersecurity and Zero Trust architecture. Integration of prior acquisitions has resulted in $2 million in cost savings, enabling reinvestment into scalable, long term revenue streams. Strong Client Relationships Driving Multi-Million Dollar Contracts: Plurilock’s success in transforming legacy systems to next-gen AI technology has led to over US$22 million in sales within eight months for a major client, showcasing a trusted, ongoing partnership and significant cost savings for the client. Rising Demand in North America: Increasing cyber threats and potential policy changes under President-elect Trump, are expected to boost federal investments in cybersecurity, particularly in critical infrastructure. Plurilock is well-positioned to benefit from this rising demand. Strong Year-End Outlook: Plurilock’s seasonal business dynamics for the second half are driven by substantial contract milestones across Q4, marked by high-value deals, including significant contracts with law enforcement and semiconductor firms. Plurilock is set for a robust finish, highlighting scalable client relationships and expanding market presence. https://t.co/6zaopMau09

CoreWeave closes US$650 million secondary share sale at US$23 billion valuation.

AI cloud platform operator CoreWeave said on Wednesday it closed a US$650 million secondary share sale to investors, a deal that a source familiar with the matter said more than tripled the company’s valuation over the past year to US$23 billion. The investors were led by Jane Street, Magnetar, Fidelity Management and Macquarie Capital, and the higher valuation illustrated growing interest in the business of cloud infrastructure for generative artificial intelligence. CoreWeave provides access to data centers and high-powered chips for AI workloads, mainly from its backer and AI bellwether Nvidia. The US$23 billion valuation was up from US$7 billion about a year ago. CoreWeave was valued at US$19 billion in May after a US$1.1 billion Series C investment led by private equity firm Coatue, a source said at that time. CoreWeave competes against cloud computing service providers such as tech giant Microsoft’s Azure and Amazon’s AWS. New Jersey-based CoreWeave said investors in the latest stock sale included Cisco Investments, Pure Storage, BlackRock, Coatue, Neuberger Berman and others. Morgan Stanley and Goldman Sachs advised CoreWeave. Funding for private AI and cloud companies in the U.S., Europe and Israel is rising after three years of decline, and the 2024 amount is estimated to hit US$79.2 billion by the end of the year, venture capital firm Accel said in October. https://tinyurl.com/n67tbv69

Trump’s win stokes defense tech bulls, despite talk of a bubble.

Count defense tech bulls among the investor groups buoyed by last week’s election of Donald Trump as president. Some investors and executives are hopeful enough in what the Trump administration will do that they’re downplaying talk of a financial bubble forming among defense and aerospace startups. One bellwether may be Saronic Technologies, a startup that is trying to sell a fleet of autonomous military boats to the U.S. Navy. It raised US$175 million in July at a US$1 billion valuation, despite having secured only US$17 million in government contracts. And this year, Saronic expects to generate just US$12.5 million in revenue. Next year, however, the company hopes to boost that amount to more than US$150 million by winning big contracts with the Navy. In particular Saronic hopes to get contracts that are recurring sources of funding, known as programs of record. Still, the Saronic fundraising was the kind of deal that has set off alarm bells that the money flowing into young firms building rockets, drones and autonomous warships has far outpaced the government contracts won by startups—outside an elite few, like Anduril and SpaceX. Overall, top national security–focused startups have raised US$9.7 billion so far this year, according to the Silicon Valley Defense Group, putting the sector on pace to surpass the US$10 billion raised last year. That’s double the amount of capital the group of startups raised five years ago. Elon Musk, who runs SpaceX, a major recipient of Pentagon funding, could play a role in the Trump administration. Musk posted on X in response to Anduril co-founder Palmer Luckey last week after Trump’s win that it was “very important to open [the defense department and intelligence agencies to] companies like yours,” he wrote. “Pay for outcomes, not requirements documents!” Luckey, a longtime Trump supporter, said on Bloomberg television last week that a Trump win would help “a lot of new startups that are springing up in the wake of Anduril’s success.” Still, both Musk and Luckey will have to keep convincing investors to value their companies richly. At US$14 billion, investors have valued Anduril between 18 and 19 times this year’s expected sales, even though profits are likely years away. (Traditional defense contractors, which are profitable but grow much more slowly than Anduril, are valued at about one to two times sales.) SpaceX was valued at US$210 billion in a private share sale earlier this year, a slightly higher revenue multiple than Anduril. https://tinyurl.com/3fpxtrw4

SoftBank Group swings to profit on Vision Fund investment gains.

SoftBank Group swung to a net profit in the quarter through September, driven by investment gains in the company’s Vision Fund business. SoftBank reported a net profit of 1.18 trillion yen (US$7.66 billion) in the quarter, compared with a loss of 931 billion yen a year earlier. The Vision Fund division contributed about US$3.68 billion in investment gains in the quarter, thanks to higher share prices of publicly listed tech companies in its portfolio such as South Korean e-commerce firm Coupang. The latest quarterly earnings show how a rebound in public stocks and startup valuations is driving Vision Fund’s recovery. Vision Fund also cited successful initial public offerings by some of its portfolio companies in India, such as electric scooter maker Ola Electric and online retailer Brainbees Solutions, which operates a baby product brand called FirstCry. https://tinyurl.com/32x6b4wk

Chinese autonomous driving startup Pony AI seeks up to US$224 million in US IPO.

Pony AI is inching closer to its initial public offering in the U.S., but as it does so, it continues to drop its minimum target for what it hopes to raise in the transaction. Pony operates a fleet of 190 “robotrucks” in Beijing and Guangzhou and more than 250 robotaxis in Beijing, Guangzhou, Shenzhen, and Shanghai. The company told TechCrunch it can charge for robotaxi fares in all four cities and is fully driverless in Beijing, Guangzhou, and Shenzhen. In a filing Thursday, the Chinese self-driving technology company said it plans to issue 15 million American Depository Shares, with the possibility of issuing 2.25 million more if demand is high, at an expected price range of between US$11 and US$13 per share. At US$13, that would value the company at US$4.48 billion, based on 344.9 million shares outstanding immediately following the offering. Pony once hit a valuation of US$8.5 billion following the close of a Series D round in 2022, in which Toyota participated. Based on the company’s expected share price range, Pony could expect to rake in up to US$224 million from the transaction, which is well below its initial target of US$425 million. https://tinyurl.com/38yyswjr

Bitcoin hits US$88,000 as crypto market cap tops US$3 trillion.

The crypto market continued its broad rally on Monday, boosted by the prospect of a friendlier regulatory environment under the upcoming Donald Trump administration. Bitcoin reached another all-time high, surpassing US$88,000 Monday. Ethereum jumped 4.5% to US$3,330. The valuation of the total crypto market surpassed US$3 trillion for the first time since November 2021, the peak of the last bull run, according to data from CoinGecko. Coinbase shares surged 20% Monday to US$324.24, bringing the crypto exchange’s market value to more than US$81 billion. The shares are up more than 64% since Trump was declared as winner in the presidential election. MicroStrategy, which invests its corporate treasury in bitcoin, surged 26%. It announced it bought US$2 billion worth of bitcoin between Oct. 31 and Nov. 10. https://tinyurl.com/4ebkk57v

IAC explores spinoff of Angi.

IAC is considering spinning off its 85% stake in Angi, the home services website formerly known as Angie’s List, according to a letter that IAC CEO Joey Levin sent to shareholders on Monday. The stock price of IAC rose 1.4% in after-hours trading to US$55.89, while Angi’s stock fell 5.7% to US$2.47. Angi’s revenue fell 16% in the third quarter to US$297 million, compared to the same quarter last year, as Angi spent less on marketing, which brought down advertising revenue, the company said Monday. IAC expects a similar decline in Angi’s revenue during the fourth quarter, according to IAC’s shareholder letter. Angi swung to an operating profit of US$7.8 million in the third quarter from a loss of US$7.9 million in the same period last year. Under a spinoff, IAC’s stake in Angi would be distributed to IAC shareholders, according to a spokesperson for IAC. Angi would be the 10th standalone public company to come from IAC, said Levine’s letter. Previous spinoffs from IAC include Ticketmaster, Expedia, and Vimeo. https://tinyurl.com/4z9vsnc8

EV shares fall on report that Trump seeks end to tax credits.

Shares of electric vehicle companies including Tesla fell Thursday after a report that the incoming Trump administration hopes to end $7,500 consumer tax credits on the purchase of EVs. Tesla shares fell almost 6% after the Reuters report, quoting sources with direct knowledge of the plans. According to the report, aides to President-elect Donald Trump have mapped out plans to eliminate the EV tax credits to defray the cost of extending Trump’s 2017 income tax cuts, which are set to expire next year. Tesla shares are still up almost 24% since Nov. 5, when Trump, who was backed by Tesla CEO Elon Musk, won re-election. Rivian shares fell 14%, wiping out a surge in its share price after Tuesday’s announcement of a US$5.8 billion licensing deal with Volkswagen. Shares of Lucid Motors fell almost 5%. https://tinyurl.com/yc59tuf4

Salesforce to hire 1,000 people for AI product sales push.

The hiring surge is aimed at capitalizing on “amazing momentum” for the new artificial intelligence product, Chief Executive Marc Benioff said in a message. “Agentforce became available just two weeks ago and we’re already hearing incredible feedback from our customers.” The top seller of customer relations management software, Salesforce pivoted its AI strategy this year to focus on agents — tools that can complete tasks such as customer support or sales development without human supervision. It launched the product, dubbed Agentforce, last month, with initial pricing of about US$2 per agent conversation. Over the past two years, the San Francisco-based company has worked to control sales expenses by cutting jobs and persuading some customers to use more self-service or third-party purchasing options. At the end of January, Salesforce had 72,682 employees, according to a filing. Other software makers such as ServiceNow Inc. and Microsoft Corp. are also developing autonomous agents. Benioff has taken repeated jabs at Microsoft’s AI efforts. “When you look at how Copilot has been delivered to customers, it’s disappointing,” Benioff posted last month on X, citing Microsoft’s brand name for its AI assistants. The shares, which were up about 1.5%, jumped another 2.5% on the news Friday to a record high of US$322.81 in New York. The stock had gained 18% this year through Thursday’s close. https://archive.ph/JdQ98

Super Micro delays another filing after auditor’s resignation.

Troubled server maker says it needs more time to find auditor Firm has seen more than US$50 billion in market value wiped out. Super Micro Computer Inc., the troubled server maker whose auditor resigned last month, delayed yet another filing as it continues to search for a new accounting firm. The company said Wednesday that it can’t file its 10-Q quarterly report for the three months ended Sept. 30 in a timely fashion and will also need more time to prepare its 10-Q for the first quarter of 2025. The firm has already failed to file its annual 10-K report for the period ended June 30. https://tinyurl.com/57whp3jf

Amazon developing smart glasses for delivery drivers.

Amazon is developing smart glasses for delivery workers, Reuters reported Monday. The glasses would include an embedded screen that would give workers navigation instructions while they’re driving and when they arrive at customers’ homes, according to the report. That could enable workers to deliver more packages per shift, cutting down on Amazon’s delivery costs. For example, the glasses could tell workers exiting an elevator inside an apartment building which direction to turn, the report said. Hurdles to the project include gathering enough data to give useful instructions to users, as well as developing comfortable glasses with long enough battery life, according to the report. Reuters did not say when Amazon could launch the glasses. Amazon is also developing a new generation of its consumer smart glasses, called Echo Frames, that would also feature an embedded screen and could launch in 2026, according to Reuters. The current generation of Echo Frames, which launched in late 2023, have sold fewer than 10,000 units, according to the report. https://tinyurl.com/3d2nnnpt

Apple developing surveillance camera amid smart home push.

Apple is working on a home surveillance camera that could be released as early as 2026, according to a prominent Apple supply chain analyst. The camera is part of the company’s efforts to expand its smart home business with new products that integrate seamlessly with the iPhone, Siri and Apple Intelligence. Ming-Chi Kuo, a Taiwan-based analyst known for his deep contacts within Apple’s supply chain, said Apple’s goal is to eventually ship more than 10 million cameras annually. He added that Apple has chosen Chinese manufacturer Goertek to scale up manufacturing of the product. https://tinyurl.com/5n9yd36s

Database provider Snowflake steps into AI-powered search.

Snowflake, at its annual conference for developers, unveiled a preview of a forthcoming product that lets customers ask questions and get answers from the information they store in its database, as well as third-party products like Salesforce and Google Workspace. The product includes tools for building chatbots that can independently take actions based on the information, also known as AI agents. This is a significant step for Snowflake that helps raise its profile in enterprise AI and also positions it to compete for internal search business with startups like Glean and companies like Elastic NV. It comes amid a flurry of activity in this segment that includes recent new features from Dropbox and Perplexity that aim to make it easier for employees to find corporate documents and information. https://tinyurl.com/5nnnwk79

OpenAI discusses AI data center that could cost US$100 billion.

OpenAI said Wednesday it had shared information with U.S. government officials about how to build a data center for artificial intelligence that is five times larger than any data center that’s currently being developed. The AI firm’s top policy executive, Chris Lehane, said at an event in Washington that the company shared information about the potential impact of a data center requiring 5 gigawatts of energy—or enough to power five cities the size of Salt Lake City, Utah. The idea appears to resemble Stargate, the codename of a $100 billion supercomputing data center that OpenAI has discussed with its primary backer, Microsoft. In the meantime, OpenAI is working with data center providers to develop what could be a 1 gigawatt data center, according to the AI Data Center Database. Lehane said OpenAI is also calling on the federal government to help expand the country’s data center energy capacity so that it can maintain its lead in AI over China, which is part of Donald Trump’s stated agenda. OpenAI suggested the government speed up permitting processes for AI data centers and establish a “National Transmission Highway Act” to expand energy capacity and backstop high-cost energy projects by committing to buy power in order to lessen the credit risk of such projects, among other things. In an apparent nod to the president-elect, Lehane shared a presentation slide titled “Build Big Again,” detailing why supporting large AI infrastructure projects would reindustrialize the country and “revitalize the American Dream.” https://tinyurl.com/4x2pyvkw

OpenAI nears launch of AI agent tool to automate tasks for users.

OpenAI is preparing to launch a new artificial intelligence agent codenamed “Operator” that can use a computer to take actions on a person’s behalf, such as writing code or booking travel, according to two people familiar with the matter. In a staff meeting on Wednesday, OpenAI’s leadership announced plans to release the tool in January as a research preview and through the company’s application programming interface for developers, said one of the people, who spoke on the condition of anonymity to discuss internal matters. The planned release is part of a broader industry push toward agents, or AI software that can complete multi-step tasks for users with minimal supervision. Anthropic unveiled a similar agent that can process what’s happening on the user’s computer in real time and take actions on their behalf. OpenAI-backer Microsoft Corp. also recently launched a set of agent tools designed to send emails and manage records for workers. And Alphabet Inc.’s Google is said to be preparing to release an AI agent. OpenAI has been working on several agent-related research projects, according to three people. The one nearest completion will be a general-purpose tool that executes tasks in a web browser, one of the people said. OpenAI Chief Executive Officer Sam Altman hinted at the shift to agents in response to a question last month during an Ask Me Anything session on Reddit. “We will have better and better models,” Altman wrote. “But I think the thing that will feel like the next giant breakthrough will be agents.” The move to release an agentic AI tool also comes as OpenAI and its competitors have seen diminishing returns from their costly efforts to develop more advanced AI models. https://tinyurl.com/2mu7wnc2

Amazon adds telehealth, pharmacy services to compete with Hims & Hers.

Amazon is adding new telehealth and pharmacy services with upfront pricing for several health conditions, including anti-aging skin care treatment, erectile dysfunction and hair growth, the company said Thursday. The move puts Amazon more directly in competition with Hims & Hers, and the telehealth company’s shares dropped 17% after Amazon’s announcement. The new Amazon offering marries its One Medical pay-per-visit service more closely with Amazon Pharmacy. Prime members who use the service will be able to see an upfront cost of both their telehealth consultation and medication before booking their appointments. https://tinyurl.com/mpnh7wfy

Netflix’s ads tier now at 70 million monthly users.

Netflix said its ad-supported subscription tier is seeing momentum, announcing that it has now reached 70 million monthly active users globally. That is up from 40 million monthly active users in May. More than 50% of new Netflix sign-ups are now also for the ad tier in the countries that plan is available in, the company said in a blog post. (Netflix’s monthly active user metric is not equal to a paid subscriber, as multiple people can be viewing on the same subscription.) Netflix has also been making several bets on live sports and related content in an effort to draw more viewers and help with its advertising business. Chief among them is its plan to exclusively live stream two Christmas Day NFL games later this year. Netflix said the commercial time for both games have been sold out, with sports-betting service FanDuel and Verizon as two of the key sponsors for the games. Among other updates, Netflix said it has launched its own in-house ad server in Canada. It plans to roll that out globally next year. https://tinyurl.com/muyrku28

Disney’s streaming and film divisions drive profits, but tv continues decline.

Disney’s streaming segment posted operating profits of US$253 million in the September quarter, a big swing from the US$420 million loss a year earlier. The streaming profit helped offset a 38% drop in profits at its traditional TV business. Disney stock surged 9% in pre-market trading. Disney’s flagship streaming service, Disney Plus, added 4.4 million subscribers from the quarter ending in June, much of it driven by growth in international markets. The number of Hulu subscribers remained roughly flat. Disney executives presented an upbeat outlook for its 2025 fiscal year, which began at the start of October. Profits from Disney’s entertainment streaming operations—Disney+ and Hulu—will increase by about US$875 million in fiscal 2025, the company said, implying it will hit about US$1 billion. In the just-ended fiscal 2024 year, streaming’s operating income was US$143 million. However, Disney also said it expects a modest decline in Disney+ subscribers during the first quarter. The service ended September with 122.7 million subscribers, adding 4.4 million during the recent quarter primarily due to international markets. https://tinyurl.com/523u9cub

Meta to face trial over Whatsapp, Instagram acquisitions.

The Federal Trade Commission’s bid to break up Meta Platforms moved a step forward Wednesday after a judge in Washington ruled the case will go to trial. The FTC sued Meta in 2020, accusing the company of gaining an illegal monopoly over social media through its acquisitions of Instagram and Whatsapp. The case was dismissed in 2021, but the FTC later refiled an amended complaint. Meta tried to stop the case moving to trial, but the U.S. District Judge James E. Boasberg determined Wednesday that it will proceed. The judge’s full opinion is yet to be publicly released. In response to the order, a Meta spokesperson said in a statement that the company is “confident that the evidence at trial will show that the acquisitions of Instagram and WhatsApp have been good for competition and consumers.” On the other side, FTC spokesperson Douglas Farrar said the case “represents a bipartisan effort to curtail Meta’s monopoly power and restore competition to ensure freedom and innovation in the social media ecosystem.” https://tinyurl.com/bdfm53py

EU fines Meta US$843 million over ‘abusive’ Facebook ad practices.

The European Commission has fined Meta Platforms €797.72 million (around $843 million) for breaching antitrust rules in tying its classified advertising service Facebook Marketplace to the Facebook app. The commission said Meta had imposed unfair trading conditions on competing ad providers to “benefit its own service Facebook Marketplace,” gaining advantages that its rivals can’t match. Facebook Marketplace is accessible to all Facebook users. In addition to the fine, the EU ordered Meta to stop such practices. Meta said in a blog post Thursday that the company plans to appeal the decision but will comply in the meantime. “We aim to make announcements shortly to reassure our European users that Facebook Marketplace is here to stay,” the company said. https://tinyurl.com/yc35uett

Amazon launches Temu competitor called ‘Haul’.

Amazon has launched its Temu-like discount storefront under the name “Haul.” As of Wednesday morning, the storefront was visible on mobile in beta to some U.S. shoppers, offering items like US$3 handbags and US$14 pajama sets. The launch of Haul comes after a yearslong debate inside Amazon about how to respond to the rise of Chinese discount apps Temu and Shein. Similarly to those sites, Amazon is keeping prices low on Haul by shipping individual packages directly to U.S. shoppers via airfreight from China. Haul features much slower shipping times and tighter return policies than Amazon’s primary e-commerce store. Ahead of Haul’s launch, Amazon set aggressive price caps for Chinese sellers who wanted to list their wares on the site. That’s a significant departure from Amazon, which has typically incentivized sellers to lower their list prices but is not known to set hard-and-fast rules. The storefront’s launch also comes as retailers grapple with a potential crackdown on U.S.-China trade under the forthcoming Trump administration, which will likely hurt direct-from-China services like Haul, Temu and Shein. https://tinyurl.com/yjx4tm4z

Amazon ready to use its own AI chips, reduce its dependence on Nvidia.

Amazon is poised to roll out its newest artificial intelligence chips as the Big Tech group seeks returns on its multibillion-dollar semiconductor investments and to reduce its reliance on market leader Nvidia. Executives at Amazon’s cloud computing division are spending big on custom chips in the hopes of boosting the efficiency inside its dozens of data centers, ultimately bringing down its own costs as well as those of Amazon Web Services’ customers. The effort is spearheaded by Annapurna Labs, an Austin-based chip start-up that Amazon acquired in early 2015 for $350 million. Annapurna’s latest work is expected to be showcased next month when Amazon announces widespread availability of ‘Trainium 2,’ part of a line of AI chips aimed at training the largest models. Trainium 2 is already being tested by Anthropic—the OpenAI competitor that has secured US$4 billion in backing from Amazon—as well as Databricks, Deutsche Telekom, and Japan’s Ricoh and Stockmark. Amazon now expects around US$75 billion in capital spending in 2024, with the majority on technology infrastructure. On the company’s latest earnings call, chief executive Andy Jassy said he expects the company will spend even more in 2025. This represents a surge on 2023, when it spent US$48.4 billion for the whole year. The biggest cloud providers, including Microsoft and Google, are all engaged in an AI spending spree that shows little sign of abating. Amazon, Microsoft, and Meta are all big customers of Nvidia, but are also designing their own data center chips to lay the foundations for what they hope will be a wave of AI growth. https://tinyurl.com/ztdufrb

Sophic Client American Aires (WIFI-CSE, AAIRF-OTCQB) – A Revenue Model that’s a Breath of Fresh Aires.

In Sophic Capital’s Aires to Success report, we highlighted how the CEO of Sophic Capital client American Aires Inc. has developed, and is successfully executing against, a business model that leverages high-impact partnerships. In this report, we detail American Aires’ revenue model. American Aires generates revenues three ways: direct-to-consumer (DTC), international distributors, and OEM/licensing. DTC involves direct media advertising on channels such as Facebook, YouTube, TikTok, Rumble and Instagram. DTC also leverages content creation via podcasts and appearances on consumer programs like Dr. Drew and Ben Greenfield. International distributors facilitate ease of navigating the complexities to best serve international consumers. OEM/licensing applies to third party manufacturers or companies that choose to license American Aires’ electromagnetic field (EMF) protection products. Management estimates that DTC and international distributors could drive about $600 million of global revenue over time. This is based on 80% of the adult population in targeted markets (primarily USA, Canada and Australia) then extrapolated globally, a 13% addressable market, 10% Aries market share across its targeted geographies and $400 Consumer Lifetime Value. OEM/licensing has a $2 billion revenue potential. This opportunity is driven by opportunities to incorporate the Aires technology into consumer tech products, and is based on similar assumptions as DTC, but with lower wholesale pricing. Together, these three revenue models suggest American Aires is just beginning to execute on large growth opportunities. Finally, a key part of American Aires’ revenue model stems from its business strategy of generating loyal customers that translate into repeat business. In Sophic Capital’s Clearing the Aires report, we showcased American Aires’ suite of EMF protection products. The products scale in price as the effective diameters of coverage increase. American Aires’ loyal customers are repeat customers, often buying the same initial product for family or friends or purchasing higher-priced products with larger coverage ranges. Based on sales data, Management estimates that ~20-25% purchases are driven by repeat purchasers, who, once satisfied with their purchase, return to purchase products for their friends and family etc. Since joining American Aires in late 2021, Mr. Bruni’s strategy has boosted sales fourfold through the end of 2023, 128% year-over-year in 2022 and 79% in 2023 to over $10.4 million. https://t.co/V8MWgjHU8