August 06, 2023: Market Rally At A Crossroads

As we suggested in our July 23rd post tech stocks got bumpy on earnings last week. Nasdaq lost 2.85%, S&P 500 index fell 2.3%, and Dow Jones was down 1.1%. While most companies have reported earnings, there are more in the coming week, after which market participants can have a better picture of whether the market rally is at an inflection point. Apple lost 7% last week as sales fell, while profits rose on a services shift. Arm is aiming for a US$60 billion valuation in September IPO. New Relic is being taken private by TPG and Francisco Partners in a US$6.5 billion all-cash deal amid stiff competition in the application performance monitoring space from rival software companies Datadog and Dynatrace. CoreWeave, a cloud provider that rents servers with Nvidia’s graphics processing units has secured a US$2.3 billion loan to buy more GPUs and expand its footprint of data centers. Disney’s ESPN is plotting its streaming future, seeking tie-ups with leagues and rivals. Walmart is expanding its in-store advertising initiatives, including at checkout. Meta is reportedly developing a range of AI-powered chatbots with different personalities, a move aimed at increasing user engagement. SEC reportedly asked Coinbase to halt all trading—except for Bitcoin. AMD has plans for an AI chip debut by year-end, with a China AI opportunity. Sophic Client Legend Power announced the closing of a non-brokered Private Placement pursuant to the Listed Issuer Exemption for $2.3 million gross proceeds. Sophic Client UGE International announced a Best Efforts Overnight Marketed Offering of up to US$5 million of project development green bonds, which the company announced was oversubscribed along with key new hires and appointments. Shopify Q2 revenues beat guidance, helped by a price hike. National Bank acquired Silicon Valley Bank’s Canadian portfolio.

Sophic Client Legend Power Systems Inc. (LPS-TSXV, LPSIF-OTC) announces closing of non-brokered Private Placement pursuant to the Listed Issuer Exemption.

Legend Power closed a non-brokered private placement, pursuant to the listed issuer financing exemption under Part 5A of National Instrument 45-106 – Prospectus Exemptions (the “LIFE Exemption”), by issuing 12,685,113 units (each, a “Unit”) at a price of $0.18 per Unit for aggregate gross proceeds of $2,283,320 (the “Offering”). The Company filed a Form 45-106F19 offering document on July 18, 2023 related to the Offering. Pursuant to the Offering, each Unit consisted of one common share in the capital of the Company and one Common Share purchase warrant. Each Warrant entitles the holder to acquire one additional Common Share at $0.25 until July 31, 2025, subject to an accelerated expiry provision, whereby in the event the daily volume weighted average trading price of the Company’s Shares on the TSX Venture Exchange, or such other stock exchange where the majority of the trading volume occurs (the “Exchange”), exceeds $0.40 for a period of 10 consecutive trading days. Insiders of the Company participated in the Offering for $300,000. https://bit.ly/3QkJ1ZY

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) announces Best Efforts Overnight Marketed Offering of up to US$5 million of project development green bonds.

UGE International announced a “best efforts” overnight marketed offering of debentures by way of short form prospectus, for gross proceeds of up to US$5,000,000 (or Canadian dollar equivalent). The Offering will be led by Canaccord Genuity Corp. The Green Bonds will be denominated in US dollars and will be issued, at the subscriber’s discretion, at a price of US$977.50 per US$1,000 principal amount. The Green Bonds will have a term of approximately four years, maturing September 30, 2027, and bear interest at a rate of 9% per annum, payable semi-annually in US dollars in arrears commencing March 31, 2024. The Green Bonds will be secured against a pool of the Company’s projects that have reached UGE’s stage 3.1 or higher, as determined by the Company by a pledge to each subscriber of Green Bonds of the equity interests in the Pledged Projects. UGE will covenant with Subscribers to maintain a minimum coverage ratio of the value of the Pledged Projects equal to 150% of the aggregate amount of obligations outstanding under the Green Bonds. https://bit.ly/43NWXPw

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) announces new Chief Operating Officer, board appointment, and key leadership hires.

UGE International announces the appointment of its new Chief Operating Officer, member of the Board of Directors, and other key hires. Brandon McNeil has joined UGE as the Company’s Chief Operating Officer, overseeing UGE’s corporate operations. Brandon brings over 18 years of energy transition experience and is a dedicated team builder and cultural architect. Scot Melland has been appointed to UGE’s Board of Directors. Scot has over 30 years of experience investing in, growing, and operating technology companies in HR software, ecommerce, and digital media. Scot is the former Chairman & CEO of DHI Group (NYSE:DHX), a global online recruiting firm, where he led the company through a successful turnaround, public offering, and global expansion. He was Co-Founder & CEO of Vcommerce, an early ecommerce software company and has held executive positions at Cendant (CxLoyalty) and Ameritech (AT&T). UGE also made three additional key hires in recent months, adding to the leadership capacity needed to bring its increasing project backlog to fruition as operating assets. Furthermore, UGE is pleased to announce that its overnight marketed green bond, announced July 31, 2023, has been oversubscribed. The Company anticipates closing the offering within August, 2023. https://bit.ly/3rSkv8D

Shopify (SHOP-NYSE, SHOP-TSX) says profitability to improve after ditching logistics unit.

Shopify said Wednesday its revenue rose 31% from the previous year to US$1.7 billion, a higher rate than executives predicted last quarter, helped by a price hike for its e-commerce software subscriptions and more merchants using its payment processing tools. Shares briefly rose around 7% in after-market trading. The company said revenue growth would be slower in the current quarter, hurt in part by the sale of its logistics business this June. But Shopify said abandoning its capital intensive logistics ambitions should help its profitability—the company recorded US$97 million in free cash flow in the second quarter, and projected that its free cash flow in the coming quarter would be greater than its total for the first half of this year. https://tinyurl.com/2342pnxk

Local Logic raises $17.5 million to develop AI decision-making for location-based risks and opportunities in real estate.

Montreal-based proptech startup Local Logic has raised $17.5 million in Series B funding to continue its expansion in the United States while developing a series of new data products. GroundBreak Ventures and the provincial innovation fund Investissement Québec led the round, with participation from Band Capital Partners (an affiliate of Triovest Realty Advisors), Cycle Capital, Desjardins Group, Jones Boys Ventures, Second Century Ventures, and Shadow Ventures. The raise closed in early June. Local Logic secured $8 million in Series A financing in 2020. Previously the startup raised a $1.15 million funding round led by Cycle Capital Management in June 2017. https://bit.ly/3KnDIFq

National Bank reaffirms leadership in the Technology Banking space through acquisition of Silicon Valley Bank’s Canadian portfolio.

National Bank (the “Bank”) has entered into an agreement to acquire the commercial loan portfolio of Silicon Valley Bank’s Canadian branch. Under the terms of the agreement, the Bank will acquire a portfolio in the Technology, Life Science and Global Fund Banking sectors, further diversifying its commercial loan portfolio across Canada. The portfolio is comprised of approximately CAD 1 billion in loan commitments of which around CAD 325 million are outstanding. The assets will be integrated into National Bank’s Technology and Innovation Banking Group. https://tinyurl.com/5fsujv9v

Apple TV+ partners with Air Canada to offer free in-flight entertainment content.

As announced by the Canadian airline in a blog post, customers will now find Apple TV+ content on Air Canada’s in-flight entertainment system. With the partnership, Air Canada is bringing popular titles like Ted Lasso, Bad Sisters, Severance, and Foundation to the screens inside its aircraft. Air Canada’s in-flight entertainment system currently features more than 420 movies, 1,000 episodes of TV shows, 130 music albums, plus multiple podcasts. All content onboard Air Canada’s inflight entertainment equipped aircraft is complimentary for all customers. To celebrate the new partnership, Air Canada is offering two free months of Apple TV+ to new and returning subscribers. In Canada, the Apple TV+ subscription costs $8.99 per month. This isn’t the first time Apple has partnered with an airline to promote its online services. Back in 2020, American Airlines also started offering Apple TV+ content on its in-flight entertainment system. The same airline also lets Apple Music subscribers to stream songs on Apple Music for free using in-flight Wi-Fi. https://bit.ly/3s2Nbvp

Arm aims for US$60 billion valuation in September IPO.

SoftBank-owned chip designer Arm hopes to raise billions of dollars in its initial public offering next month at a valuation between US$60 billion and US$70 billion, Bloomberg reported Wednesday. Arm’s listing will be the most important test for the stagnant market for public offerings. The firm’s prospects may be raised by recent investor fervor for artificial intelligence firms, which are often powered by processors that Arm could help design. A successful listing for Arm will also prove important for struggling SoftBank, which bought the British firm for US$32 billion seven years ago. Arm expects to start its IPO road show for prospective investors the first week of September and then list its shares later next month, Bloomberg reported. https://tinyurl.com/5b48yk9p

TPG, Francisco to take software firm New Relic private in US$6.5 billion deal.

New Relic said it has agreed to be taken private by TPG and Francisco Partners in a US$6.5 billion all-cash deal amid stiff competition in the application performance monitoring space from rival software companies Datadog and Dynatrace. New Relic’s shares rose about 13% to US$83.85 on Monday following the deal involving the private equity firms. TPG and Francisco offered New Relic shareholders US$87 per share. That represented a premium of 15% to the stock’s closing price on May 16, a day before media reports of a potential deal. New Relic’s cloud-based software allows websites and mobile apps to monitor servers and databases, as well as to track user interactions, helping boost efficiency at a time when firms are looking to stretch every dollar. New Relic reported annual revenue growth of about 18% compared with Dynatrace’s 25% jump. Datadog posted a 63% surge in 2022 sales. The company has been targeted by several activist hedge funds including Jana Partners, Engaged Capital and Eminence Capital. Last year, Jana won representation on the company’s board. Qatalyst Partners is the company’s financial adviser, while Morgan Stanley is the lead financial adviser for Francisco Partners and TPG. https://tinyurl.com/2n58n5r8

Cloud startup CoreWeave raises US$2.3 billion in debt.

CoreWeave, an upstart cloud provider that rents servers with Nvidia’s graphics processing units, said it has secured a US$2.3 billion loan to buy more GPUs and expand its footprint of data centers. CoreWeave plans to operate 14 data centers by the end of the year, up from a previous goal of nine, according to a CoreWeave executive. By building out its infrastructure more quickly, CoreWeave hopes to attract more customers developing software for artificial intelligence, who need Nvidia’s chips but are struggling to get access to them. CoreWeave collateralized the loan with its supply of Nvidia’s H100 chips, the company told Reuters. The financing was led by Magnetar Capital and funds managed by Blackstone, with strategic participation from Coatue, DigitalBridge Credit, along with funds managed by BlackRock, PIMCO, and Carlyle. CoreWeave raised US$221 million in April in a funding round led by Magnetar Capital, with participation from Nvidia and investors Nat Friedman and Daniel Gross. The next month, CoreWeave raised another US$200 million from Magnetar. https://tinyurl.com/4zrj5wk6

Walmart pays US$1.4 billion to buy Tiger Global’s remaining Flipkart stake.

Walmart paid US$1.4 billion to buy out Tiger Global’s remaining holding of Flipkart shares as the retail giant further expands its stake in the Indian e-commerce startup. The transaction took place in recent days and Tiger Global, which has cashed most of its Flipkart shares earlier, overall made a gain of US$3.5 billion on an investment of US$1.2 billion, the New York-headquartered hedge fund told investors, according to a person familiar with the matter. Wall Street Journal first reported on the deal. Flipkart is the only Indian startup in which Tiger Global had invested more than US$1 billion, according to a person familiar with the matter. The U.S. investment giant, one of the earliest investors in Flipkart, has poured over $6 billion on Indian startups altogether. Tiger Global’s investment in Flipkart supercharged the Indian startup community and put the South Asian nation’s ecosystem on the world map. The secondary Flipkart shares sale valued the Bengaluru-headquartered at US$35 billion. Flipkart was valued at US$37.6 billion in a funding round in 2021, but has since internally cut its worth by about US$5 billion following the split of payments startup PhonePe. Walmart, which paid US$16 billion for a 77% stake in Flipkart in 2018, held 72% share in the firm as of last year, according to an analysis by market intelligence firm Tracxn. Tiger Global, prior to the recent transaction, held a 4% stake in Flipkart. An alternative perspective on Walmart’s over US$20 billion investment in Flipkart could be that the American giant has bought shares in a company that competes with the local division of Amazon, which was able to establish a similar business in-house for less than US$7 billion. https://bit.ly/43Pz61D

Listing of Ant Group is unlikely in the short term, state media report.

A listing of Jack Ma-backed Ant Group is unlikely in the short term, state media reported last Saturday, citing people close to regulation. Earlier this month, Ant Group announced a surprise share buyback that valued the fintech giant at US$78.54 billion, well below the US$315 billion touted in the suspended IPO. https://tinyurl.com/s8eyjefx

Biden to sign order curbing US tech investments in China by mid-August.

President Joe Biden is planning to sign an executive order to limit critical US technology investments in China by mid-August, according to people familiar with the internal deliberations. The order focuses on semiconductors, artificial intelligence and quantum computing. It won’t affect any existing investments and will only prohibit certain transactions. Other deals will have to be disclosed to the government. The timing for the order, slated for the second week of August, has slipped many times before, and there is no guarantee it won’t be delayed again. But internal discussions have already shifted from the substance of the measures to rolling out the order and accompanying rule, said the people familiar who spoke on condition of anonymity. The restrictions won’t take effect until next year, and their scope will be laid out in a rulemaking process, involving a comment period so stakeholders can weigh in on the final version. https://archive.li/BxpXO

Apple sales fall while profit rises on services shift.

Apple’s revenues fell 1%, but growth in its high-margin internet services business lifted the company’s profit 2%. In the fiscal third quarter ended July 1, Apple said its revenue fell to US$81.8 billion from US$82.96 billion in the same period a year ago as sales of its largest hardware products—iPhones, iPads and Macs—slowed across the board. The only exception was the product category that includes its Apple Watch and AirPod products, which grew 2% to US$8.28 billion. Meanwhile, Apple said its net income rose 2% to US$19.88 billion, or US$1.26 a share, from US$19.44 billion, or US$1.20 a share, a year earlier. That was due in large part to record revenue in Apple’s services unit, a business that includes its App Store and various subscription internet services. Revenue from services rose 8% to US$21.21 billion. While services represent only about a quarter of Apple’s total revenue, Apple’s gross profit margin from the business was about 71% in the quarter compared to roughly 35% for its hardware products. https://tinyurl.com/46fmwfdt

Amazon Operating Income jumps.

Amazon posted operating income of US$7.7 billion in the second quarter, up from US$3.3 billion the same period a year earlier and its highest in two years, as it managed to keep costs under control in its retail and subscriptions businesses in North America. Amazon Web Services had US$22.1 billion in revenue during the April through June quarter, a 12% increase and its slowest ever year-on-year growth since at least 2014. Revenue from advertising was up 22% at US$10.7 billion. The company reported US$134.4 billion in overall revenue during the second quarter, a 11% year-over-year increase. Amazon projected that revenue would rise between 9% and 13% in the third quarter versus the same period a year earlier, and that operating income would come in between US$5.5 billion and US$8.5 billion. Amazon shares jumped 7.5% in after-hours trading. https://tinyurl.com/3fd8frr5

SoFi shares rise after fintech raises revenue forecast for 2023.

SoFi Technologies Inc. shares rose after the online bank raised its revenue guidance for the year, citing benefits from deposit growth and lower funding costs on loans. SoFi now expects adjusted net revenue of US$1.97 billion to US$2.03 billion, up from its prior guidance of US$1.96 billion to US$2.02 billion, the financial-technology company said Monday. Total deposits at the end of the second-quarter reached US$12.7 billion, up from US$7.34 billion at the end of last year, the San Francisco-based lender said. “As a result of this growth in high-quality deposits, we have benefited from a lower cost of funding for our loans,” Chief Executive Officer Anthony Noto said. “Our deposit funding also increases our flexibility to capture additional net interest margin and optimize returns, a critical advantage in light of notable macro uncertainty.” Shares of the company, which have more than doubled this year, rose 4.7% in early New York trading. https://archive.li/ZjDj1

Airbnb reports continued deceleration in nights and experiences booked.

Airbnb shares slid as much as 6% in extended trading Thursday after the short-term home-rental company reported a smaller sum of nights and experiences booked in the second quarter than analysts had projected. Here’s how the company did: Earnings: US$0.98 per share, vs. US$0.78 per share as expected by analysts, according to Refinitiv Revenue: US$2.48 billion, vs. US$2.42 billion as expected by analysts, according to Refinitiv. Airbnb said it had 115.1 million nights and experiences booked during the quarter, up almost 11%, but less than the 117.6 million StreetAccount consensus. Nights and experiences booked increased 19% in the first quarter. In a letter to shareholders, Airbnb said the nights and experiences booked number was up against a tough comparison. https://tinyurl.com/3d372ct5

Uber reports first quarterly operating profit in Q2 2023 results.

Uber has reported an operating profit during a fiscal quarter for the first time in its history. The company reported its second-quarter earnings for 2023 on Tuesday morning, which included a net income of US$394 million for the quarter, up US$1.0 billion year-over-year and US$588 million versus the preceding quarter. The company attributed its net gain to a 22% increase in trips on the platform, combined with “cost discipline,” according to CEO Dara Khosrowshahi. Uber said it saw gross bookings grow 16% year-over-year in terms of revenue, and that trips reached an average of 25 million per day across the platform during the quarter. And while the company reported its first-ever net profit based on GAAP measurement, it still increased its spending on R&D and corporate G&A activity spending versus Q2 2022 and the previous quarter in 2023, with Khosrowshahi pointing to “new growth initiatives.” Uber’s freight business took a hit during the quarter, however: Revenue was down 30% year-over-year, which the company attributed to “the challenging freight market cycle” – something that could be interpreted as depressed consumer demand and continued supply chain challenges. As for what new initiatives helped drive increased business, Uber pointed to expansion of its Uber One subscription plan to new markets; the launch of video ads both via its app and through in-car displays; its Waymo partnership that sees Waymo’s self-driving ride-hail services available through Uber beginning in Phoenix; and the addition of new booking options through the app, including flights in the U.K., and car rentals beginning in Boston and Toronto. https://bit.ly/3YmA6t8

Superconductor breakthrough findings replicated, twice, in preliminary testing.

Humanity may be in the throes of another breakthrough that’s every bit as impactful as the invention of the transistor and the advent (and eventual vindication) of quantum computing. LK-99, as it’s been named, is a new compound that researchers believe will enable the fabrication of room-temperature, ambient-pressure superconductors. Initially published by a Korean team last Friday, frantic work is underway throughout the research world to validate the paper’s claims. For now, two separate sources have already provided preliminary confirmations that this might actually be the real thing — Chinese researchers have even posted video proof. Strap in, this is a maglev-powered, superconducting ride. Superconductors, a wild category of compounds that can conduct electricity without any losses, have been a metaphorical goose chase for years now, with multiple research teams claiming (and then retracting) papers and announcements of its achievement. The reason is simple: Few things come close to the potential of an actual superconductor discovery in terms of what it can do for humanity’s current and future technology. https://tinyurl.com/283uzzvb

Roblox on Quest VR headsets has gotten ‘well over’ 1 million downloads.

Roblox just launched in open beta on Meta’s Quest VR headsets last week, and it’s already been downloaded “well over” 1 million times, according to Roblox CEO David Baszucki. That number suggests that the app could potentially be a very popular one for VR devices; according to a February report from The Verge’s Alex Heath, Meta has sold nearly 20 million headsets, so it appears that a good number of those Quest owners are dabbling with Roblox. That said, Roblox and Meta have been positioning this open beta as a way for developers to test and optimize their experiences for Quest headsets, and for good reason: I’ve tried a few Roblox experiences on a Quest 2 and run into a handful of issues. But I imagine that many of the most popular Roblox experiences will get fixed up before the app officially launches for Quest headsets. Baszucki will be speaking at Code 2023 at the end of September, so maybe he’ll give a more detailed update about the company’s VR efforts at the show. https://bit.ly/3DLXNRW

Disney’s ESPN plots its streaming future, seeking tie-ups with leagues and rivals.

ESPN is hunting for a strategic partner as it tries to bring order to the messy world of streaming—and secure its own future in the process. Talks with potential partners and investors have touched on several roles ESPN can play in the fragmented streaming industry, from carrying local broadcasts for pro sports teams to serving as an industrywide hub to stream any live game, people familiar with the discussions say. On another track, ESPN is working to make a stand-alone version of its flagship TV channel available to cord-cutters in two to three years, or once its reach in the cable-TV world falls below 50 million households, people familiar with the plans say. Major League Baseball has had early talks with ESPN about having the network stream local baseball games in certain markets, people familiar with the matter said. The bankruptcy of the largest local sports TV player, Diamond Sports Group, has led the league to explore new options for delivering games to consumers. ESPN could offer those baseball games as an add-on to its US$9.99-a-month ESPN+ service, but it isn’t interested in paying a big fee for the media rights, as TV broadcasters have done. ESPN sees the potential for similar arrangements with other pro sports leagues. https://archive.li/r31s2

Flutter and Fox shut down Fox Bet sportsbook.

The FOX Bet joint venture was launched amid much funfair in September 2019 by FOX and The Stars Group (prior to its acquisition by Flutter) to replace the BetStars brand. The sports betting brand first went live in New Jersey using the same technology as BetStars, utilising unique FOX Sports content with a similar concept of migrating the successful Sky Bet model to the United States. Despite being rolled out to players in a further three US states – Colorado, Michigan and Pennsylvania – the two companies have now decided to shut down FOX Bet’s operations and will no longer be accepting bets after today (31 July). https://tinyurl.com/5622ncnh

Walmart expands in-store advertising initiatives, including at checkout.

Walmart is pushing to sell more in-store advertisements to third parties that appear on self-checkout screens and as 30-second radio spots on the store’s audio, as reported by CNBC. Businesses interested will have the option to choose regions or target specific stores. Walmart is beta testing food demo kiosks in some Dallas-Fort Worth-area stores and plans to expand the Costco-like sampler stations to 1,000 stores nationwide by the end of January. Advertisers can bundle the stations with other ad options, and there will be QR codes for customers to scan and buy the things they try. Advertising is a fairly small part of Walmart’s business right now: US$2.7 billion in the last fiscal year out of its total revenue of US$611.3 billion. Walmart CEO Doug McMillon outlined in April that the company’s plans to diversify its earning streams include advertising. CNBC reports other retailers like Target and Walgreens have also been testing ad displays throughout stores. https://bit.ly/4402HW9

Pinterest says AI recommendations keep users on site.

Pinterest’s monthly active users grew 8% to 465 million users, a similar growth rate to last quarter, but the company said those users were spending more time on the site, in part due to better post and ad recommendations powered by artificial intelligence. Pinterest’s revenue inched up 6% last quarter to US$708 million, in line with the social media scrapbooking site’s projections from last quarter, and said the company expects third-quarter revenue to increase “in the high single digits” compared to the year before. Pinterest shares fell around 4% in after-hours trading. The company also detailed progress on its plans to become more of an e-commerce destination. Click rates and saves on posts linked to shoppable items grew 50%, the company said, faster than growth in the first quarter. Pinterest also said it began testing AI-powered product recommendations in some categories, which it said helped boost how many shoppers made purchases of items they saw on the site. https://tinyurl.com/4nvvz3au

Meta plans AI-powered chatbots to boost social media numbers.

Meta is reportedly developing a range of AI-powered chatbots with different personalities, a move aimed at increasing user engagement on social platforms such as Facebook and Instagram, according to the Financial Times and The Verge. The chatbots, called “personas” by Meta staff, will mimic human-like conversations and might take on various character forms, such as Abraham Lincoln or a surfer-like travel adviser. The move to introduce chatbots to Meta platforms comes amid growing competition from social media platforms like TikTok and a rising interest in AI technology. Meta has also made big investments into generative AI recently, including the release of a new large language model, Llama 2, which could power its upcoming chatbots. https://tinyurl.com/3kz7kd3x

FCC fines robocaller a record US$300 million after blocking billions of their scam calls.

The FCC’s robocaller penalties are growing as the agency tracks down and terminates their operations — this time resulting in a record US$300 million forfeiture. But whether and when that money will be paid is, as always, something of an open question. The robocaller in this case was known by a variety of names and had been scamming people since 2018. https://tinyurl.com/2tdj958j

Amazon touts same-day delivery expansion.

Amazon said Monday that it plans to double the number of warehouses dedicated to making same-day deliveries to customers, a sign that the company still plans to spend on delivery infrastructure despite recent efforts to cut costs. Amazon currently offers same-day delivery for some items in 90 U.S. metropolitan areas, the company said. The company did not give a timeline for expanding its same-day delivery network, which is made up of warehouses that are smaller and located closer to customers than traditional Amazon fulfillment centers. Amazon overbuilt its delivery capacity during the pandemic, which then cut into profit margins as e-commerce growth slowed. The current emphasis on same-day deliveries shows Amazon still sees fast deliveries as a way to differentiate itself from rivals like Shein, which has longer delivery times but has started selling items identical to those on Amazon for lower prices through its new marketplace, The Information reported last week. https://tinyurl.com/2p9chmrr

Amazon looks to revamp lagging grocery business.

Amazon is making several changes in an attempt to revamp its grocery business, including letting people who aren’t Prime members make grocery orders; unifying online grocery carts from Whole Foods, Amazon Fresh and Amazon.com; and deemphasizing its pricey “Just Walk Out” system in physical stores. The changes, described by grocery chief Tony Hoggett in a Bloomberg interview, coincide with mounting investor scrutiny of Amazon’s spending on ancillary bets like grocery. While Amazon doesn’t break out online grocery sales, revenue growth from physical stores has been sluggish since Amazon paid US$13.7 billion for Whole Foods in 2017 and started opening its own Fresh grocery stores in 2020. Amazon is attempting to breathe life into Fresh stores, which some shoppers have criticized as sterile due to their green-and-gray color palates and grid of ceiling-mounted cameras powering Amazon’s Just Walk Out cashierless checkout system. Hoggett said Amazon is revamping Fresh stores to add brighter colors, more items like Krispy Kreme donuts and self-checkout lanes, though some stores will still feature Just Walk Out as well. Amazon has struggled to control the costs of running Just Walk Out, which still requires a large number of humans behind the scenes who manually review camera footage, The Information previously reported. https://tinyurl.com/yms8rnrk

SEC reportedly asked Coinbase to halt all trading—except for Bitcoin.

Coinbase’s CEO Brian Armstrong reportedly told the Financial Times that the U.S. Securities & Exchange Commission asked him to halt trading in the exchange with all currencies except bitcoin. According to Armstrong, the suggestion came just before the SEC sued Coinbase last month. The SEC’s lawsuit against Coinbase accuses the company of operating as an unregistered securities exchange with the commission’s lawyers further arguing that Coinbase was trading 13 cryptocurrencies that were identified as securities. Those alleged securities could cause Coinbase to fall under the purview of the SEC, but the exchange refused to register with the commission. Bitcoin is not believed to qualify as a security under the Howey Test, according to Reuters. Armstrong denied the SEC’s guidance and opted to handle it in court. https://tinyurl.com/mt69y42s

Revolut to halt U.S. crypto services due to regulatory climate.

U.K.-based fintech company Revolut is ending crypto trading for U.S. customers due to the uncertain regulatory climate around crypto in the country, a spokesperson told The Information. ”We’ve taken the difficult decision, together with our U.S. banking partner, to suspend access to cryptocurrencies through Revolut in the U.S.,“ the spokesperson said, who added that the decision only affects 1% of the London-based company’s crypto customers. Crypto services will still be available to users outside of the U.S. Revolut delisted three tokens for U.S. customers last month after Bakkt, which acquired Apex Crypto earlier this year and provided crypto services for Revolut, cut access for solana, cardano and polygon, all of which were alleged to be securities by the SEC. Bakkt had previously delisted 25 of the 36 tokens it supported after acquiring Apex Crypto, The Information first reported. The Securities and Exchange Commission has been cracking down on crypto companies by suing exchanges like Binance and Coinbase and alleging that popular tokens such as solana, polygon and cardano are securities. https://tinyurl.com/ycxzytbz

AMD plans AI chip debut by year-end, sees China AI opportunity.

Advanced Micro Devices on Tuesday forecast a strong finish to the year, driven by the planned launch of artificial-intelligence chips that could compete with Nvidia semiconductors. AMD shares rose about 3% in after-hours trading. CEO Lisa Su said AMD is set to ramp up production of its flagship MI300 artificial-intelligence chips in the fourth quarter. The accelerator chips, which are in short supply, are designed to compete against the advanced H100 chips already sold by Nvidia. Su said customer interest in the MI300 series chips is “very high” and AMD expanded its work with “top-tier cloud providers, large enterprises and numerous leading AI companies” during the third quarter. Investors are betting that MI300 chips, due for release later this year, will challenge Nvidia in the surging market for advanced AI chips. MI300s exceed the performance limits for sale to China under export controls issued in October, and unlike Nvidia and Intel, AMD has yet to create special chips for the lucrative Chinese market. https://tinyurl.com/5fm65wfm