August 28, 2022: Market Resumes Downward Trajectory

Last week, the Dow Jones fell 4.2%, the S&P 500 fell 4%, and the Nasdaq composite fell 4.4%. Hedge funds are piling back into their favorite FANG stocks amid rising uncertainties in the stock market as investors grapple with elevated inflation and a Federal Reserve that is still expected to raise interest rates, according to Goldman Sachs. Global spending on technology, which includes cloud services, is expected to rise about 3% this year, well below the 10% annual growth in 2021 and the nearly 7% gain the year before, according to Gartner. The US IPO market faced the worst year in two decades. So far this year, traditional IPOs have raised only US$5.1 billion, Dealogic data shows. Typically, at this point in the year, traditional IPOs have raised around US$33 billion. Instacart orders and revenue grew in the second quarter as consumers stuck to online grocery delivery despite rising prices and store reopenings, a promising sign for investors as the company prepares for an initial public offering as soon as later this year. An army of Tesla fans in South Korea holds a collective stake of more than US$15 billion, putting them among its top shareholders, report says. The U.S. and China are nearing an agreement that would allow American regulators to inspect the audit records of Chinese companies listed in New York. China’s Pinduoduo to enter US market in first international step. T-Mobile and SpaceX Starlink say your 5G phone will connect to satellites next year. Sophic Client, UGE International (UGE-TSXV, UGEIF-OTC) CEO Nick Blitterswyk discussed the solar boom and how Biden’s climate bill could benefit business on ‘ on Fox Business. Eguana (EGT-TSXV) announced a US$33.0 million strategic investment by ITOCHU Corporation and provides update on US$5 million second tranche loan from Western Technology investment. Sophic Client Swarmio (SWRM-CSE, SWMIF-OTC) announced that it received $802,275 in secured debt from various private lenders. Open Text (OTEX-NYSE, OTEX-TSX) plans to acquire Micro Focus at US$6 billion valuation.

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) featured on Fox Business.

CEO Nick Blitterswyk discusses the solar boom and how Biden’s climate bill could benefit business on ‘The Claman Countdown.’ https://bit.ly/3APoYec

Sophic Client Swarmio Media (SWRM-CSE, SWMIF-OTC): announces debt funding.

The Company announced that it has received $802,275 in secured debt from various private lenders. The debt is repayable on demand by the lenders at any time on or after the earlier of (i) November 30, 2022 or (ii) the date on which the Company closes an equity financing with gross proceeds of at least US$2,000,000 . Lenders of this debt also received common share purchase warrants entitling them to acquire an aggregate of 8,022,750 common shares of Swarmio at $0.05 per share for up to 5 years. https://bit.ly/3wvWL9t

Blockchain Venture Capital Inc. (BVCI-CSE) announces non-Brokered private placement.

The Company intends to complete a non-brokered private placement of up to 320,000 common shares (“Shares”) at a price of $2.50 per Share for aggregate gross proceeds of up to $800,000 (the “Private Placement”). The Company intends to use the proceeds from the Private Placement to fund corporate expenditures and general working capital purposes in respect of the development of the Company’s BvcPay platform and CADT. https://bit.ly/3Asi7px

Eguana (EGT-TSXV) announces US$33.0 million strategic investment by ITOCHU Corporation and provides update on US$5 million second tranche loan from Western Technology investment.

Eguana Technologies announced a strategic investment by the ITOCHU Corporation (“ITOCHU”) of US$33 million in the form of an unsecured convertible debenture (the “Debenture”) of the Company convertible into common shares of the Company (the “Common Shares”) at a conversion price of US$0.50 per share. ITOCHU’s investment is expected to expand the two companies’ long-term relationship and significantly increase Eguana’s immediate access to working capital to achieve business growth objectives globally. In addition, further to the Company’s news release dated April 4, 2022, the Company has elected to complete its second tranche draw with lending partner Western Technology Investment (“WTI”), pursuant to a loan agreement between the Company, Eguana Inc, EGT Markets Limited Partnership, Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc. dated April 1, 2022, as amended (the “Loan Agreement”). https://bit.ly/3pPRXZ3

Open Text (OTEX-NYSE, OTEX-TSX) plans to acquire Micro Focus at US$6 billion valuation.

Open Text Corp. shares sank 5% in after-hours trading Thursday after the company announced plans to acquire British software company Micro Focus at a valuation of US$6 billion. Open Text said it would pay 532 pence for each share of Micro Focus, roughly double the stock’s closing price on the London Stock Exchange, and assume the company’s debt. Micro Focus’s U.S. ADRs rose more than 90% in after-hours trading following the announcement. Open Text executives plan to finance the transaction with US$1.3 billion in cash and US$4.6 billion in fresh debt. Open Text, which is based in Canada, has increased in size in recent years through a series of acquisitions, which have included cybersecurity company Carbonite, encryption company Zix and a former Dell Technologies Inc. subsidiary.  https://bit.ly/3QVdbjZ 

Vive Crop Protection secures $34 million Series C to drive AgTech R&D.

Vive Crop Protection co-founder and CEO Darren Anderson believes the Mississauga-based AgTech startup can become agriculture’s “highest velocity innovation engine” on the input side. As Vive squares up to compete against major multinational agricultural chemical companies that are well-capitalized but slow-moving, Anderson believes the Canadian firm’s speed and efficiency puts Vive in a strong position to win in this market. “We can innovate and develop new products faster than anyone else,” Anderson told BetaKit in an interview. “We can get products to market in a couple of years for a couple of million bucks, whereas our competitors are all looking at tens to hundreds of millions of dollars and seven to 13 years.” Emmertech hopes to help Vive build its presence in Canada by brokering partnerships between the startup and the agriculture sector LPs that have invested in Emmertech’s $60 million CAD AgTech Fund. https://bit.ly/3pztuHp 

VendorPM secures US$20 million Series A to expand US footprint.

Toronto proptech startup VendorPM has raised US$20 million in its Series A round led by Prudence, an early-stage venture capital firm focused on real estate technologies.The other investors that contributed in the round are also largely made up of firms that play in the real estate space, including Navitas Capital, Alate Partners, Colliers, and RXR. Other participants consist of Bessemer Ventures, which led VendorPM’s US$6 million seed round earlier this year, as well as angel investors Dick Costolo (former CEO of Twitter) and Mark Rose (CEO of Avison Young). VendorPM said more than 120 commercial real estate organizations and property management groups use its platform, including Colliers, Golub & Co, Avison Young, and BentallGreenOak. The startup claims that its two-sided platform serves over 40,000 vendors and around 5,000 buildings across Canada and the United States (US). https://bit.ly/3cmvEHj 

Myplanet raises $14 million to become leader in emerging ‘composable commerce’ market.

As Myplanet founder and CEO Jason Cottrell puts it, the previous wave of commerce software vendors “really wanted you to use all of their stuff.”  For the first 10 years of its existence, Toronto-based software studio and consulting firm Myplanet’s work focused on helping clients transition from this type of tech to the expanding world of API-driven commerce. But as the latter category—which features emerging players like Germany’s Commercetools and Vancouver-based Elastic Path—grew, Cottrell and the Myplanet team noticed an opportunity to dive more deeply into what is often referred to as ‘composable commerce.’ For the past few years, Myplanet has helped large brands mix, match, and connect various commerce building blocks to suit their individual needs and improve their digital experiences. https://bit.ly/3CqtBMN 

Jombone closes $3.3 million to modernize the blue-collar staffing industry.

The blue-collar staffing space is dominated by multinational, legacy, publicly-traded players like Manpower, Randstad, and Adecco, which have seen a lot of success matching employers with job-seekers. After establishing a presence across Canada and seeing strong growth during COVID-19, Jombone has secured $3 million in seed funding, led by Toronto-based StandUp Ventures and Export Development Canada (EDC), to square off with legacy staffing giants and fuel its United States (US) expansion plans. The round, which closed in June and marks Jombone’s first institutional financing, consists of $3 million in equity capital and $300,000 in grant funding from NRC IRAP. In addition to StandUp and EDC, Jombone’s seed financing was supported by The51, N49P Ventures, and undisclosed angel investors. The raise brings Jombone’s total funding to $3.7 million. https://bit.ly/3KxkAUs

BarrelWise secures $3.1 million to modernize wine barrel management.

Vancouver startup BarrelWise has closed a $3.1 million seed round in recent weeks, led by Conexus Venture Capital through its Emmertech fund. The financing, which consisted of all equity and primary capital, also received contributions from Ag Capital Canada and several undisclosed, existing shareholders of BarrelWise. https://bit.ly/3e13ySb

Hedge funds are piling back into their favorite FANG stocks amid rising market uncertainties, according to Goldman Sachs.

Hedge funds are piling back into their favorite FANG stocks amid rising uncertainties in the stock market as investors grapple with elevated inflation and a Federal Reserve that is still expected to raise interest rates. Goldman Sachs analyzed the holdings of 795 hedge funds that hold US$2.4 trillion in gross equity positions and found that the FANG and growth stocks have regained popularity among the professional Wall Street traders. Specifically, Amazon has risen to the top to be the most popular holding among hedge funds, supplanting Microsoft. Meanwhile, Visa has displaced Apple from the top five most popular holdings among hedge funds, Goldman Sachs said. https://bit.ly/3cqY4jp 

Cloud companies’ outlook cools as customers tighten spending.

After years of rising pandemic-fueled demand, some cloud companies cut their revenue-growth outlook in quarterly results this week, citing pressure on customers to rein in spending and wider concerns of a slowing economy. On Wednesday, Salesforce one of the largest vendors of cloud business software, reduced its full-year outlook. The sales software vendor said it expected annual sales of between US$30.9 billion to US$31 billion, from previously projected revenue of between US$31.7 billion and US$31.8 billion. Customers are taking longer to sign deals as they become more careful with their spending, said Bret Taylor, co-chief executive of Salesforce. Salesforce’s shares were down about 5% on Thursday following the earnings report. Global spending on technology, which includes cloud services, is expected to rise about 3% this year, well below the 10% annual growth in 2021 and the nearly 7% gain the year before, according to Gartner Inc. Overall global cloud sales are expected to reach US$830.5 billion this year, up 17.5% from the prior year, but slowing from last year’s growth of 18.3%, according to International Data Corp. Growth is projected to slow further next year, with 16.3% growth, IDC said. https://on.wsj.com/3PW9yJt

IPO market faces worst year in two decades.

Late last year, hundreds of companies were in the final stages of preparing to go public, encouraged by the best 18 months ever for U.S. initial public offerings. Then a combination of factors—sky-high inflation, rising interest rates and Russia’s invasion of Ukraine—sent shock waves through the stock market. The IPO pipeline froze. So far this year, traditional IPOs have raised only US$5.1 billion all told, Dealogic data show. Typically at this point in the year, traditional IPOs have raised around US$33 billion, according to Dealogic data that goes back to 1995. Last year at this point, these offerings raised more than US$100 billion. IPO advisers say they don’t expect 2022 to follow that pattern, meaning it could end up being the worst year for raising money in IPOs since Dealogic, a research firm, started tracking it in 1995. https://on.wsj.com/3dRKfuH

Instacart revenue growth accelerates ahead of planned IPO.

Instacart orders and revenue grew in the second quarter as consumers stuck to online grocery delivery despite rising prices and store reopenings, a promising sign for investors as the company prepares for an initial public offering as soon as later this year. Revenue for Instacart during the three months ended in June climbed 39% from the year-earlier period to US$621 million, investors said, the highest quarterly revenue in Instacart’s history. The increase was stronger than in the first quarter, when revenue increased 15% year over year. The San Francisco-based company’s growth was driven by an increase in the number of orders placed on the app, which climbed 25% from the year-earlier quarter to more than 60 million, people familiar with the matter said. Instacart has faced mounting competition of late. Retailers are increasingly using several delivery companies to fill online orders and negotiate better terms. To maintain its edge, Instacart has announced plans to cut delivery times for major customers and pushed into advertising. https://on.wsj.com/3AHtfjI

An army of Tesla fans in South Korea holds a collective stake of more than US$15 billion in Elon Musk’s company, putting them among its top shareholders, report says.

Retail investors in South Korea hold a combined stake of more than US$15 billion in Elon Musk’s Tesla, according to Bloomberg. Many have gone all-in on the electric carmaker, with one family ploughing their entire US$230,000 life savings into Tesla stock, Bloomberg said. The stake held collectively by South Korean retail investors is equivalent to 1.6% of the company — more than the holdings of billionaire investor Larry Ellison or investment group T. Rowe Price, Bloomberg calculated, citing August 17 data. Tesla stock closed at US$889.36 Tuesday, meaning it’s down 15.8% year-to-date. It’s been beaten down amid a broad pullback in the tech sector on the back of interest rate hikes and recession fears. The stock also got knocked in June after Musk announced he’s thinking about job cuts at Tesla. https://bit.ly/3Anjp5m

SoftBank-backed Socar, South Korea’s largest car-sharing startup, tumbles on market debut.

Shares of Socar rose 1.25% from its IPO price of 28,000 won (US$21.10) in the initial minutes of the debut, before tumbling to 26,300 won and giving the firm a market cap of $642 million. Last week, Socar cut its targeted IPO offering to 102 billion won (US$78.1 million), giving the car-sharing company a valuation of 966.5 billion won (US$731 million) before the start of trading. Socar’s debut comes amid a sluggish period in the IPO market in South Korea that has prompted a series of Korean companies to delay their listing plans. Jaeuk Park, CEO of Socar, told TechCrunch earlier that the company was pushing ahead with its listing plans because it was confident in its performance and expected to generate both operating profits and net profits by the end of this year. https://tcrn.ch/3pzOptJ

U.S., China near deal to allow audit inspection of N.Y.-listed Chinese companies.

The U.S. and China are nearing an agreement that would allow American accounting regulators to travel to Hong Kong to inspect the audit records of Chinese companies listed in New York, according to people familiar with the matter, as the two countries move toward resolving a yearslong standoff. Securities regulators in Beijing are making arrangements for U.S.-listed Chinese companies and their accounting firms to transfer their audit working papers and other data from mainland China to Hong Kong, the people said. Regulators from the U.S. Public Company Accounting Oversight Board would then travel to the semiautonomous city to perform on-site inspections of the Chinese companies’ auditors and their records, they added. More than 200 U.S.-listed Chinese companies are facing the prospect of being booted off American stock exchanges starting in early 2024, if their auditors can’t be inspected by the PCAOB for three consecutive years. Around 160 companies—including Alibaba Group, JD.com and Baidu have so far been identified as noncompliant with the Holding Foreign Companies Accountable Act, which took effect last year. https://on.wsj.com/3wzdkla

Electronic Arts surges 12% on report of sale to Amazon.

Shares of Electronic Arts Inc. soared 12% in premarket trading on Friday following reports that Amazon.com Inc. is planning to announce a deal to buy the video game maker. According to USA Today, which broke the news, rumors have been circling online about a potential acquisition for EA, with Amazon, Apple Inc. and Walt Disney Co. among the potential suitors. A deal for EA would follow Microsoft Corporation’s deal to buy Activison Blizzard for US$7.5 billion, another major deal in the video-game space. It also comes on the heels of Amazon’s deal to purchase Roomba-maker iRobot . Amazon may announce the deal later on Friday.  https://bit.ly/3dZCWRv

Computer Services to be taken private for US$1.6 billion.

Computer Services Inc. shares rallied 45% in pre-market trades Monday after the company agreed to be taken private for US$58 a share in a deal valued at US$1.6 billion by buyers Centerbridge Partners, L.P. and Bridgeport Partners. The US58-per-share price values Paducah, Ky.-based Computer Services at a 53% premium over its closing level of US$37.88 on Friday. The deal follows a review process of strategic alternatives. The transaction is expected to close in the fourth quarter. Computer Services Chairman Steve Powless said the board “believes it is in the best interest of our shareholders.” The company will remain under CEO David Culbertson and its current management team. https://bit.ly/3wvhSZS 

DigitalOcean to buy Web-Hosting Firm Cloudways for US$350 million.

DigitalOcean Holdings Inc., a cloud services provider, agreed to acquire website-hosting firm Cloudways for US$350 million in an all-cash deal. DigitalOcean will buy Malta-based Cloudways in a bid to pick up more small-and-medium sized business customers. The transaction is expected to close in September, and a “significant portion” of the US$350 million will be paid over a 30-month period following the completion of the acquisition, DigitalOcean said Tuesday in a statement. https://bloom.bg/3PU61eH

EBay to purchase trading-card marketplace TCGplayer for up to US$295 million.

EBay Inc. plans to acquire TCGplayer, an online marketplace for collectible trading card games, in a deal valued at up to US$295 million, the company said Monday. The company called out trading cards as an “attractive category” recently showing “substantial growth,” and it noted that TCGplayer would continue to run autonomously after the deal is complete. EBay expects the deal to close in the first quarter of 2023. Its shares are off nearly 2% in Monday morning trading. They’ve gained about 4% over the past three months as the S&P 500 has risen roughly 7%. https://bit.ly/3Ae9TkW

T-Mobile and SpaceX Starlink say your 5G phone will connect to satellites next year.

T-Mobile says it’s getting rid of mobile dead zones, thanks to a new partnership with SpaceX’s Starlink satellite internet, at an event hosted by T-Mobile CEO Mike Sievert and Elon Musk. With their “Coverage Above and Beyond” setup, mobile phones could connect to satellites and use a slice of a connection providing around 2 to 4 Megabits per second connection (total) across a given coverage area. That connection should be enough to let you text, send MMS messages, and even use “select messaging apps” whenever you have a clear view of the sky, even if there’s no traditional service available. According to a press release from T-Mobile, the “satellite-to-cellular service” will be available “everywhere in the continental US, Hawaii, parts of Alaska, Puerto Rico and territorial waters.” The service is scheduled to launch in beta by the end of next year in “select areas,” and Sievert says he hopes it will someday include data. According to Musk, second-generation Starlink satellites launching next year will be able to broadcast service using part of T-Mobile’s mid-band PCS spectrum, which was bolstered when it was allowed to buy Sprint a few years ago. Musk said the new satellites have “big, big antennas” that are 5 to 6 meters across to enable the new connections and that the plan is to launch the equipment using its upcoming Starship rocket. https://bit.ly/3wAsnuQ

Elon Musk says Tesla will hike the price of FSD driver assistance software by 25% in September.

Tesla CEO Elon Musk on Sunday announced a 25% price increase for the company’s premium driver assistance system, which is marketed under the name Full Self-Driving, or FSD. The price will increase to US$15,000 from $12,000 on Sept. 5, Musk said in a tweet. Today, Tesla charges customers US$12,000 upfront for FSD, or US$199 per month on a subscription basis. https://cnb.cx/3dOYj8g

Netflix’s new ad-supported plan rumored to cost US$7 to US$9.

After Netflix lost hundreds of thousands of subscribers this year, the company has been desperately working on new ways to retain and gain subscribers. One of the moves is a new ad-supported plan announced in partnership with Microsoft. And while most of the details of this new plan remain unclear, it seems that the plan may be priced between US$7 and US$9. Currently, Netflix’s cheapest plan that offers only 480p content for a single device costs US$9.99 per month. https://bit.ly/3ApB7VS

BeReal counts 10 million daily users.

BeReal now has more than 10 million daily active users, the company wrote in an update to its online jobs board that was edited earlier this month. The startup noted it aims to reach more than 100 million users in the post. The updated page notes the startup still has fewer than 30 employees. The Information earlier reported that the French startup was nearing 8 million users by the end of July, up from 2 million in January, according to a person familiar with the app. BeReal raised US$30 million in Series A funding led by Andreessen Horowitz, Accel and New Wave last year. This spring, it raised additional funding in a Series B round at a pre-money valuation of US$600 million, in a round led by DST Global, according to a person familiar with the company. https://bit.ly/3pQuWFc

Elon Musk subpoenas former Twitter CEO Jack Dorsey.

As Twitter and Elon Musk prepare for their October 17th trial date in the Delaware Court of Chancery to argue over his attempt to break their US$44 billion acquisition agreement, Musk’s legal team submitted a subpoena for evidence from a familiar face: former Twitter CEO Jack Dorsey.Dorsey stepped down as Twitter CEO for the second time last November and handed control of the company he helped create to Parag Agrawal. He’s running Square and Block and, reportedly, egging on Musk’s attempt to buy Twitter in private messages. The subpoena lists what information Dorsey is being asked for. A recent ruling by Judge Kathaleen McCormick also gave Musk’s team access to information from the former Twitter head of product Kayvon Beykpour, and in a separate filing today, Musk’s team subpoenaed the other Twitter exec Agrawal fired on the same day as Beykpour, Bruce Falck. https://bit.ly/3cd8Mdh

China’s Pinduoduo to enter US market in first international step.

The Shanghai-based company is looking for new growth avenues at a time when its domestic economy is sputtering, and will follow in the footsteps of successful international ventures like Shein and AliExpress. It’s currently preparing its merchant partners for the move, the people said, asking not to be named as the matter is not yet public. US-traded PDD holds roughly a 13% share of Chinese online retail, according to industry intelligence firm EMarketer, and has in recent times curtailed its heavy investment in online groceries, which were seen as the most promising new outlet for growth in the country. As it adopts more cost-control measures, the US market offers an enticing outlet to use its existing infrastructure and merchant network internationally. Despite a late arrival, PDD broke through in China’s highly competitive internet retail space by bringing in social e-commerce practices that have helped build an annual active user base of more than 880 million. It won over shoppers by creating a sort of WhatsApp-Groupon mashup, where consumers spot deals on products, like toys and fruits, and then recruit friends to buy at a discount. The company has largely withstood macroeconomic headwinds this year and is projected to report 2.5% growth in revenue for the second quarter. Market leader Alibaba Group Holding Ltd., which runs AliExpress as its international arm, logged its first-ever sales contraction during the same period. https://bloom.bg/3dXZZfG

FTX grew revenue 1,000% during the crypto craze, leaked financials show.

FTX rode the crypto craze to a billion dollars in revenue last year while expanding its global footprint through a flurry of acquisitions, according to internal documents seen by CNBC. The crypto exchange’s revenue soared more than 1,000% from US$89 million to US$1.02 billion in 2021. Its profitability, like many start-ups, depends on how you measure it. Operating income was US$272 million, up from US$14 million a year earlier. FTX saw net income of US$388 million last year, up from just US$17 million a year earlier. By way of comparison, publicly traded Coinbase also experienced a cash boom during crypto’s bull market, with US$7.4 billion in revenue and US$3.6 billion of net income last year. But in the second quarter of this year, it reported US$808.3 million in revenue, a decline of 64% from the year-ago quarter, and a surprise net loss of US$1.1 billion, compared with US$1.59 billion in net income a year earlier, as retail trading volumes cratered. https://cnb.cx/3QLN3bs 

Crypto’s massive marketing efforts have drawn few new investors.

Sam Bankman-Fried, founder and chief executive of crypto trading platform FTX. Despite a blitz of media attention and marketing spots, the number of people who’ve invested in crypto over the last year hasn’t grown. Over the past year, crypto companies like FTX, Coinbase and Crypto.com have shelled out tens of millions of dollars to attract new customers. The results, released Tuesday, build off an initial survey in September. Back then, Pew researchers asked 10,371 Americans if they have “ever invested in, traded, or used a cryptocurrency.” Some 16 percent said they had. Last month, the nonprofit asked another sample group — slightly smaller, at 6,034 Americans — the same question. The number hadn’t grown, with the same 16 percent saying they had at some point invested or traded in the alternate currency. https://wapo.st/3dXUY6O

Intel needs 7,000 workers to build its US$20 billion chip plant in Ohio.

Intel first announced the Ohio project in January of this year and is on track to begin construction in late 2022. Once finished, the 1,000-acre site will house two factories, or fabs, and employ at least 3,000 people. But it has future plans to invest US$100 billion into the project, expand the site to 2,000 acres, and eventually build a total of eight fabs, not just two. Actual chip production isn’t expected until 2025. Construction on the chip factories is expected to pick up speed now that President Joe Biden has signed off on the CHIPS and Science Act, which provides semiconductor companies like Intel with US$52 billion in funding.  https://bit.ly/3pWWn0p