December 03, 2023: Market Breadth Finally Improving, Some IPO Talk

Last week, Dow Jones rose 2.4%, S&P 500 was up 0.8% and Nasdaq composite gained 0.4%. Dow Jones hit a 52-week high, S&P 500 set a 2023 closing high, with Nasdaq not far behind. Russell 2000 also finally rose above a key level. Reddit is again holding talks with potential investors for an IPO. Rubrik, a Microsoft Corp.-backed cloud and data security startup, is also considering an IPO as soon as Q1 2024. Kim Kardashian’s Skims, valued this summer at US$4 billion, is also discussing strategic options including an IPO. Shein confidentially filed for U.S. IPO. Lineage Logistics is targeting a valuation of more than US$30 billion in a large 2024 IPO. Tiger Global’s biggest venture fund has a 18% loss after markdowns. Neuralink, Elon Musk’s brain implant startup, quietly raised an additional US$43 million. OpenAI is not planning to give Microsoft, and other investors board seats. Blackstone will buy Pet-Care site Rover for US$2.3 billion. Snowflake reported revenue growth of 32% as its CEO hails ‘stabilizing’ software market. Salesforce revenue rose 11%, the company said customers are embracing a ‘new era’ of AI. Amazon has grabbed the crown of biggest delivery business in the U.S., surpassing both UPS and FedEx in parcel volumes. SoFi is shutting down its crypto business, even as MicroStrategy made its biggest bitcoin purchase in years. In Canada, Shopify merchants set a sales record over Black Friday, Cyber Monday. Open Text will sell the AMC business to Rocket Software for US$2.28 billion in cash. Constellation Software was mentioned in the Economist magazine, it is now Canada’s second largest tech firm. Will it lead to the magazine curse? Sophic Clients, Kraken, Ionik, UGE, Clear Blue and Renoworks reported financials last week. New institutional investors appear to be accumulating Kraken based on recent trades, as the Company is hitting an inflection point.

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) reports record financial results.

Consolidated revenue for Q3 2023 was $20.3 million compared to $12.3 million, an increase of 66% over the comparable quarter and was Kraken’s strongest revenue quarter to date. Revenue mix was 85% Products / 15% Services. Product revenue in the quarter was $17.2 million, an increase of 126% over the comparable quarter. Adjusted EBITDA for the quarter was $4.4 million compared to an Adjusted EBITDA of $1.7 million in the comparable quarter. Kraken is tightening its range for 2023 financial guidance. The Company expects revenue to be in the $66 – $72 million range (previously $66 – $78 million) and adjusted EBITDA1 in the $12 – $15 million range (previously $12 – $17 million). The mid-point of the guidance range ($69 million in revenue and $13.5 million in adjusted EBITDA) implies revenue growth of 70% and adjusted EBITDA1 growth of 155% over 2022. Capex in 2023 is expected to be approximately $6 million. Consistent with the last two years and the Company expects to give guidance for 2024 in the April 2024 timeframe. https://bit.ly/3N14ogA

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) awarded $3 million seabed survey contract.

Kraken Robotics Inc. has been awarded a $3 million contract to supply high-resolution seabed mapping services (Robotics as a Service or RaaS) to a survey operator, in support of an unnamed navy customer. https://bit.ly/49V3wE3

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) awarded $1 million contract to survey buried subsea pipeline.

The contract, valued at $1 million, will be completed in the first half of 2024. https://bit.ly/3sZP5xJ

Sophic Client Ionik (INIK-TSXV, INIKF-OTCQX) announces third quarter 2023 results.

Revenue of $37.6 million, compared to $39.1 million for the three months ended June 30, 2023 and $25.5 million for the three months ended September 30, 2022, with growth driven by the acquisition of Ubiquity in September 2022 and SCS and OpenMoves in April 2023. Adjusted EBITDA of $3.9 million, compared to $4.0 million for the three months ended June 30, 2023 and $3.0 million for the three months ended September 30, 2022. Cash as at September 30, 2023 was $8.9 million compared to $8.4 million at June 30, 2023, an increase of $0.5 million. https://bit.ly/46wG39s

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) reports fiscal q3 2023 financial results.

To summarize, key business highlights in Q3 2023 included: Achieved NTP on 1.5MW of projects, as the Company begins to consistently move projects from its backlog into construction. Project backlog was 343 MW as compared to 229 MW on September 30, 2022, as the overall market continues to be robust, but down slightly from 356 MW on June 30, 2023 as the Company has been completing a full review of its backlog to firm up its project completion process and timelines. Closed US$5.9 million green bond offering on August 24, 2023. Key financial results in Q3 2023 included: Ended Q3 2023 with 3.8 MW of operating assets that contributed US$110.7K and US$401.5K of energy generation revenue with 90% and 91% gross margins, respectively, for the three and nine month periods ended September 30. This represents an increase of 50% year to date in recurring revenue over the prior year while Q3 comparatives to 2022 declined 22% due in part to an outage associated with one of the larger facilities and also in part to a true up of accruals after one utility began regularly settling its account. Realized total revenue of US$247.6K and US$1,066.8K, representing declines of 86% and 61% for the three and nine month periods, respectively, as compared to the same periods in 2022. This decline is associated with both the run-off of the Company’s legacy third party EPC contracts and its shift away from providing external engineering services. https://bit.ly/3RjsKoe

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) reports record third quarter 2023 revenue and Adjusted EBITDA.

Revenue was $2,273,377, a 404% increase from $451,421 for the quarter ended September 30, 2022 (“Q3 2022”), and up 202% from $752,325 in the prior quarter (“Q2 2023”). Revenue was in-line with the Company’s October 5th, 2023 pre-announcement. Q3 revenue represents a record level of quarterly revenue since Q1 2021, notwithstanding the seasonality in the Company’s business. Recurring revenue was $195,315, a 37% increase from $142,940 in Q3 2022. Adjusted EBITDA was $33,187 versus $(987,427) in Q3 2022, a 103% improvement from Q3 2022, and a record in the Company’s entire operating history. Cash at September 30, 2023 was $1,086,050 versus $853,330 at December 31, 2022. As of September 30, 2023, the Company has $3,900,304 million of available government funding, with $3,337,057 million receivables in government grants, and $563,247 million receivables in the form of a 10-year interest free loan to fund its plans going forward over the next 3 years. https://bit.ly/47sn29j

Sophic Client Renoworks (RW-TSXV, ROWKF-OTC) announces profitable third quarter 2023 financial results and provides outlook.

Quarterly revenue of $1,716,307 for the three months ended September 30, 2023 versus $1,653,445 in 2022. Gross margins continue to be strong at 71% and 63%, respectively for the third quarters of 2023 and 2022. Recurring revenue of $559,660 versus $476,915 for the same period in 2022, a 17% increase. https://bit.ly/412KFCT

Shopify (SHOP-TSX, SHOP-NYSE) merchants set $9.3 billion sales record over Black Friday, Cyber Monday.

Defying industry forecasts of a slowdown in retail purchases, Shopify merchants hit a new sales record this Black Friday-Cyber Monday weekend. According to a report released by Shopify Tuesday, the e-commerce giant’s merchants generated a cumulative $9.3 billion in sales over Black Friday-Cyber Monday weekend. This marks a 24 percent increase from the same period 2022, which was itself a record-setting Black Friday-Cyber Monday for the company. Shopify merchants generated $4.1 billion on Black Friday, as per a Saturday report, implying the remaining $5.2 billion was generated on the remainder of the weekend and Cyber Monday. Shopify’s results were part of what was a record-setting Black Friday-Cyber Monday weekend in many countries, despite global economic slowdown and fears in many countries of an impending recession. https://tinyurl.com/jfxfsznt

Open Text (OTEX-TSX, OTEX-NASDAQ) to sell AMC business to Rocket Software for US$2.28 billion in cash.

Open Text agreed to divest its application modernization and connectivity business to Rocket Software for about US$2.28 billion in cash. Open Text, which develops and markets enterprise information management software and solutions, said the deal reinforces and expands its focus on the cloud and artificial intelligence and results in more predictable growth. The divestiture is expected to close in Open Text’s fiscal fourth quarter ending June 30. Software, associated services and about 750 employees of AMC will be integrated into Rocket Software under terms of the agreement. https://tinyurl.com/4343dheh

Constellation Software (CSU-TSX) mentioned in Economist magazine: How a Canadian company became the world’s best acquirer of tech firms.

One happy buyer is Constellation Software. The Canadian firm’s targets must have sales of at least $5 million and show consistent revenue and profit growth. A strong management team, preferably founder-led, is a plus. Though it has splurged on larger deals, the median value of firms it acquires is around $3 million. According to Royal Bank of Canada , since 2005 Constellation has spent $8.7 billion on more than 860 firms. In that time its revenue has grown by about 25% a year on average. This year it could exceed $8 billion. The company’s market value is up by a big-tech-like 250% in the past five years, to $50 billion, outperforming the tech-heavy NASDAQ index. It is now Canada’s second-largest tech firm after Shopify, an e-commerce platform. https://archive.is/S8ss2

Sun Life (SLF-TSX, SLF-NYSE) makes $9.5 million investment into digital pharmacy Pillway.

Toronto-based digital pharmacy Pillway has secured a $9.5 million strategic investment from Canadian insurance giant Sun Life. This all-equity investment, which Pillway classified as Series A financing, marks the startup’s second raise since its founding in 2017, and comes three years after it closed $5 million in seed funding from Well Health Technologies in 2020. To date, Pillway has raised $14.5 million. Pillway’s partnership with Sun Life seems to be following in the footsteps of another Canadian healthtech startup: Montréal-based virtual care company Dialogue Health. The insurance giant initiated a partnership with Dialogue in 2020 and later launched the co-branded Lumino Health Virtual Care product. That same year, Sun Life gained a minority stake in Dialogue, leading a $43 million round that also secured the insurer rights to acquire additional equity. The partnership between Dialogue and Sun Life continued over the next three years, eventually culminating in Sun Life’s acquisition of Dialogue for $365 million in July. https://tinyurl.com/5ah29s78

With $2 million raised to date, Omnicart aims to serve hyperlocal last-mile delivery.

Vancouver-based last-mile delivery platform Omnicart has secured $1 million in fresh funding from sole participant Foodhub, a United Kingdom-based company that provides online food ordering and management software to restaurants. https://tinyurl.com/4pc9755d

Diagram Ventures announces new $60-million VC fund to build and back early-stage cleantech startups.

Montréal-based venture builder and investor Diagram Ventures has launched a ClimateTech Fund, securing nearly $50 million in commitments as part of its initial closing. Diagram’s new cleantech-focused venture capital (VC) fund will launch and invest in early-stage technology startups developing solutions to help tackle climate change and reduce emissions. According to Diagram, the fund will help build and back startups developing “capital-efficient digital solutions that accelerate the global transition to a more sustainable future.” Diagram’s ClimateTech Fund marks the latest in a group of new cleantech-focused Canadian VC funds rolled out in recent weeks. These commitments put Desmarais family-connected, Sagard-backed Diagram close to its target of $60 million total for the ClimateTech Fund. The fund is anchored by Sagard and the Québec government, through Investissement Québec. Its other major limited partners (LPs) include Mavrik (the family office of Mark Pathy), Fondaction, and CDPQ-financed Fonds québécois d’amorçage Teralys. The ClimateTech Fund also counts several undisclosed individual investors among its LP base. Since 2016, Diagram has launched and invested in 23 companies, including Breathe Life, ClearEstate, Dialogue, Nesto, and Novisto. To date, Diagram has focused largely on FinTech startups. Earlier this year, it launched its latest FinTech with a first close of $100 million. https://tinyurl.com/5n6heau5

Federal government reaches deal with Google on Online News Act.

Google and the federal government have reached an agreement in their dispute over the Online News Act that would see Google continue to share Canadian news online in return for the company making annual payments to news companies in the range of $100 million. Sources told Radio-Canada and CBC News earlier Wednesday that an agreement had been reached. The federal government had estimated earlier this year that Google’s compensation should amount to about $172 million. Google estimated the value at $100 million. https://tinyurl.com/3nrr6a6m

Reddit leads class of 2024 IPO candidates testing the water.

Reddit is again holding talks with potential investors for an initial public offering for the social media company, according to people familiar with the matter, as hopefuls prepare for a long-awaited reopening of the market for new listings. The San Francisco-based firm, whose users helped fuel the meme-stock frenzy that made 2021 a banner year for equities, is weighing an IPO as soon as in the first quarter, the people said. Reddit was working with Morgan Stanley and Goldman Sachs Group Inc. on the listing, Bloomberg News reported last year, and was considering a valuation of as much as US$15 billion. Companies planning first-time share sales in the US have been stymied for months by volatile markets and a relatively weak showing for four closely watched debuts in September and October, which all but slammed the door on big-ticket IPOs in 2023. With this year’s total US volume set to just barely surpass 2022 — the worst year in over a decade for IPOs in the country, according to data compiled by Bloomberg — hopefuls weighing sizable listings and their advisers are largely turning their gaze to 2024. Rubrik Inc., a Microsoft Corp.-backed cloud and data security startup, is also considering holding its IPO as soon as in the first quarter, people familiar with the deliberations said. Kim Kardashian’s Skims underwear label, valued this summer at US$4 billion, is discussing strategic options including an IPO that could come as soon as next year, people with knowledge of the matter said, asking not to be identified as the information isn’t public. https://archive.is/zWJb8

Shein confidentially files for U.S. IPO.

Online fast-fashion giant Shein has confidentially filed for an initial public offering in the U.S., according to media reports Monday. Shein has hired Goldman Sachs, JPMorgan Chase and Morgan Stanley to work on the offering, which could take place next year, the Wall Street Journal reported. Shein’s revenue for the first three quarters of this year jumped 40%, The Information previously reported. The China-founded e-commerce company is on pace to pull in as much as US$33 billion in revenue this year, which would make it the world’s largest fast fashion brand, ahead of longstanding brands like H&M and Zara. Shein was last valued at US$66 billion in May by investors including Sequoia Capital China and General Atlantic. Over the past year, Shein has expanded its focus and sought to challenge other e-commerce players like Amazon by listing products from outside sellers on its site and expanding its offerings beyond women’s apparel to include appliances, electronics and home goods. It also struck a partnership in August with Sparc Group, a joint venture between U.S. shopping mall giant Simon Property Group and Forever 21 owner Authentic Brands Group. https://tinyurl.com/y7unvt4x

Lineage Logistics eyes over US$30 Billion valuation in IPO.

Lineage Logistics LLC is targeting a valuation of more than US$30 billion in an initial public offering, people familiar with the matter said, in what could be one of next year’s largest listings. The temperature-controlled storage and logistics giant and its advisers are talking to potential investors about supporting an IPO that may take place as soon as the first half of 2024, according to the people, who asked not to be identified discussing non-public information. Lineage has picked Goldman Sachs Group Inc. to work alongside Morgan Stanley as a lead bank preparing the offering, according to the people. Bloomberg News first reported Lineage’s plans for an IPO in September. https://archive.is/fkQRn

Tiger Global’s biggest venture fund has 18% loss after markdowns.

Investors in Tiger Global Management’s biggest venture fund were sitting on an 18% paper loss at the end of September after the firm slashed valuations for multiple portfolio companies, according to people familiar with the matter. The nearly $13 billion Private Investment Partners 15 fund marked down AI-powered email company Superhuman by 45% and cut its valuation for privacy search engine platform DuckDuckGo by 72%, said the people, who asked not to be identified because the information is private. Tiger Global also marked down its stakes in Bored Ape Yacht Club, a collection of nonfungible tokens, by 69%, and NFT marketplace OpenSea by 94%, the people said. All of the figures represent how much Tiger Global has written down the valuations since first investing in each company. Tiger Global cut valuations in its venture funds last year by about 33%, resulting in a $23 billion decline in value. The PIP 15 fund had its final close early last year. https://archive.is/oHh8V

Huawei’s new smart car firm valued up to US$35 billion amid advanced stake talks.

Huawei Technologies’ new smart car software and components firm is set for a valuation of up to 250 billion yuan (US$34.67 billion) after it sells stakes to investors including Changan Auto, three people with knowledge of the matter said. The Chinese company said on Sunday it will spin off its four-year-old Intelligent Automotive Solution (IAS) business unit – which aimed to become the equivalent of German automotive supplier Bosch of the intelligent electric vehicle (EV) era – into a new company which will receive the unit’s core technologies and resources. Main auto partner Chongqing Changan Automobile and relevant parties will own up to 40% of the new firm, a Changan Auto statement showed on Sunday. Neither Changan Auto nor Huawei disclosed financial details. Changan Auto and its ultimate parent, state-owned China Ordnance Equipment Group – also known as China South Industries Group – are considering acquiring about 35% and 5% respectively of the new firm, which could be valued at 200 billion to 250 billion yuan, two of the people said. Potential minority shareholders include state-owned automakers FAW Group and Dongfeng Motor Group (0489.HK), which are also in advanced talks with Huawei to acquire up to 5% each, said the three people. Huawei will likely remain the single largest shareholder with 40% to 50% for at least the next two-to-three years, said two of the people. Deal details – notably the ownership split and valuation – have not been finalised and are subject to change, the three people said. The transaction will also be subject to regulatory approval, said one of the people as well as a fourth person with knowledge of the matter. https://tinyurl.com/rvu9mrec

Neuralink, Elon Musk’s brain implant startup, quietly raises an additional US$43 million.

Neuralink, the Elon Musk-founded company developing implantable chips that can read brain waves, has raised an additional US$43 million in venture capital, according to a filing with the SEC. The filing published this week shows the company increased its previous tranche, led by Peter Thiel’s Founders Fund, from US$280 million to US$323 million in early August. Thirty-two investors participated, according to the filing. Neuralink hasn’t disclosed its valuation recently. But in June, Reuters reported that the company was valued at about US$5 billion after privately executed stock trades. https://tinyurl.com/5db3p7kn

OpenAI not planning to give Microsoft, other investors board seats.

OpenAI is not planning to give seats on its new board to investors—including its largest backer, Microsoft—The Information reported on Tuesday. While the new board hasn’t been finalized, it is unlikely to add members from shareholders because doing so may conflict with the mission of the nonprofit that governs the startup, according to a person familiar with the situation. Investors including Microsoft, Khosla Ventures and Thrive Capital were caught off-guard when OpenAI’s board ousted Sam Altman earlier this month. Altman had been on the board before he was fired, but he is not expected to join the reconstituted board. https://tinyurl.com/8ctdexvm

AWS unveils AI chatbot and assistant, taking aim at OpenAI.

Amazon Web Services on Tuesday unveiled an AI chatbot and assistant called Amazon Q, launching a rival to OpenAI’s ChatGPT aimed at enterprise customers. The product, which is not yet available to all customers, starts at US$20 per user per month and will help customers use large language models for business tasks such as drafting emails, querying data, and summarizing documents. Amazon Q will also be embedded into several AWS cloud services. The chatbot can access a company’s proprietary business data, including information from applications including Microsoft 365, Google Drive, Slack, Atlassian, and others. OpenAI in August launched a version of its ChatGPT for enterprise customers. Selipsky did not indicate which AI model AWS uses to power the AI chatbot. But on the product’s webpage, the frequently asked questions section indicates it is powered by “various foundation models from Amazon Bedrock within Amazon Q,” meaning it might be powered by AWS’s internal models or models from companies like Anthropic or AI21 Labs, which are available through Amazon’s AI service, Bedrock. As Google and Microsoft did during their cloud conferences earlier this year, Selipsky brought Nvidia CEO Jensen Huang on stage, signifying that the companies have a strong relationship, despite the fact that AWS is making its own AI chips. Huang said that AWS would eventually offer Nvidia’s DGX Cloud service. When Nvidia launched DGX Cloud earlier this year, AWS was noticeably absent from the announcement. https://tinyurl.com/msbf2y2a

AWS launches ‘multimodal’ ai models, image generator.

Amazon Web Services on Wednesday unveiled two “multimodal” artificial intelligence models that can understand and generate both text and images, as it seeks to catch up to the capabilities of OpenAI and other AI rivals. One of the models powers an image generator, similar to OpenAI’s Dall-E and Midjourney. The other model can help businesses develop new features that involve images; in a demonstration AWS executive Swami Sivasubramanian showed how a retailer could let its customers upload a picture of their couch so the retailer could give them recommendations for home decor they could purchase. The image search model is available to AWS cloud customers but the image generator isn’t widely available yet. When it launches, the image generator could compete with one from Stability AI, which sells access to AI image software through AWS. Google also has been hard at work on a multimodal model, Gemini, but has delayed its release to customers of Google Cloud. https://tinyurl.com/ych86bxs

Blackstone to buy Pet-Care site Rover for US$2.3 billion.

Mergers are out of the dog house, at least for a day. Private equity giant Blackstone said Wednesday it would buy publicly traded dog-walking and pet care marketplace Rover for US$2.3 billion. Rover, which went public in 2021 by merging with a special purpose acquisition company as it capitalized on investor enthusiasm for a pandemic-driven surge for pet care, saw its share price slump around the time interest rates began rising, though the stock has made a rebound this year. Consumer demand for pet care has stayed relatively resilient and is expected to grow, according to research from Morgan Stanley. Blackstone’s purchase is the latest example of private equity’s interest in scooping up companies that went public via SPAC. The private equity firm is paying US$11 per share in cash, a nearly 30% premium to Rover’s Tuesday closing price of US$8.50. https://tinyurl.com/5y2x6hre

Iger plays down talk of asset sales.

Walt Disney CEO Bob Iger tried to tamp down talk that he plans to sell much of Disney’s traditional TV business, without foreclosing the possibility entirely. Speaking at a staff town hall meeting, Iger said comments he made earlier this year in a CNBC interview suggesting asset sales were on the table was meant to gauge investor reaction to the idea, according to the Wall Street Journal. The Journal quoted Iger saying he “did not think everyone would run with a story that everything is being sold, which is not the case.” He said no decisions had been made. https://tinyurl.com/wrznx5fk

Snowflake revenue rises 32% as CEO hails ‘stabilizing’ software market.

Snowflake revenue increased 32% to US$698.5 million in the three months ending in October compared to a year earlier, the company said on Wednesday, which CEO Frank Slootman attributed to “strong execution in a broadly stabilizing macro environment.” The quarterly revenue was significantly higher than the US$675 million revenue that Snowflake had predicted last quarter, and the company’s stock was up nearly 7% in after-hours trading on Wednesday. But the company’s rate of growth is slightly lower than its 36% revenue growth in the quarter prior, when Slootman said the company was seeing tailwinds from increased interest in the company’s data management software from AI developers. Meanwhile, free cash flow was up 70% year-over-year to US$111 million, compared with US$88 million last quarter. https://tinyurl.com/yc4yda2w

Salesforce revenue rises 11%, says customers embracing ‘new era’ of AI.

Salesforce’s revenue grew 11% to US$8.72 billion, the company said on Wednesday, meeting the projection the company set last quarter. The company also raised its projection for full-year cash flow growth to as high as 33%. Shares were up more than 7% in after hours trading. CEO Marc Benioff attributed the solid earnings to the popularity of Salesforce’s new suite of AI products, including tools powered by OpenAI’s models that let its customers automatically draft sales emails or create customer service chatbots. Those new AI features, which launched in June, cost customers US$50 per person per month for the new AI features, or US$360,000 per year for an all-inclusive enterprise subscription. Meanwhile, Salesforce has been testing out ways to drive down the costs of running the AI tools, such as swapping out OpenAI’s models for cheaper open source models when possible, The Information previously reported. Free cash flow for the quarter was US$1.37 billion, compared to US$115 million a year prior, and more than double the US$637 million free cash flow last quarter. https://tinyurl.com/4kcwvj9m

Apple partner Foxconn to invest US$1.5 billion in India.

Foxconn plans to invest US$1.54 billion in India, the latest in its growing expansion plan, following a surge in revenues in the South Asian market. Foxconn said in a stock exchange filing that the investment will help it fulfil “operational needs.” The investment comes two months after the Taiwanese firm said it plans to double its workforce and investment in India by next year. Foxconn works with many firms including Apple and assembles their devices in plants in India as many tech giants look to shift part of their manufacturing base to India in a move that analysts describe as “China+1.” https://tinyurl.com/mrj7pvk6

GM to slash spending on Cruise.

General Motors CFO Paul Jacobson said the automaker would cut spending on Cruise by “hundreds of millions of dollars” next year, signaling likely layoffs at the self-driving car unit. In the same conference call with investors, CEO Mary Barra said the company expects the “pace of Cruise expansion to be more deliberate when operations resume.” Cruise lost a license from California regulators to operate its self-driving car fleet in San Francisco after one of its vehicles dragged a pedestrian under itself and the company allegedly did not reveal the full extent of the incident. Barr said GM’s priority is to refocus on “safety, transparency, and accountability, and build trust with regulators at the local, state and federal levels.” Earlier this month, Cruise CEO Kyle Vogt resigned and the company canceled a planned employee share sale, though it later reinstated it. Cruise lost more than US$1.7 billion in the first nine months of the year, and as of Sept. 30, US$1.7 billion in cash and marketable securities, indicating it would need to raise more money from GM or other investors. https://tinyurl.com/3h4rvsr7

Anduril’s new drone killer is locked on to AI-powered warfare.

The company’s latest product, a jet-powered, AI-controlled combat drone called Roadrunner, is inspired by the grim reality of modern conflict, especially in Ukraine, where large numbers of cheap, agile suicide drones have proven highly deadly over the past year. This kind of aerial threat has come to define the conflict in Ukraine, where Ukrainian and Russian forces are locked in an arms race involving large numbers of cheap drones capable of loitering autonomously before attacking a target by delivering an explosive payload. These systems, which include US-made Switchblades on the Ukrainian side, can evade jamming and ground defenses and may need to be shot down by either a fighter jet or a missile that costs many times more to use. Roadrunner is a modular, twin-jet aircraft roughly the size of a patio heater that can operate at high (subsonic) speeds, can take off and land vertically, and can return to base if it isn’t needed, according to Anduril. The version designed to target drones or even missiles can loiter autonomously looking for threats. https://tinyurl.com/3dajzb28

Sports Illustrated reportedly published articles by fake AI-generated writers.

Sports Illustrated has become the latest publication to get called out for using artificial intelligence to generate content. The magazine said it will take down several articles after a report found they were written by fake, AI-generated authors. Futurism identified two Sports Illustrated writers, “Drew Ortiz” and “Sora Tanaka,” whose biographies appeared to be fake. Two anonymous sources involved in the creation of the articles in question told Futurism that Sports Illustrated had been using AI to create fake author profiles, and said that some articles under their names were generated by AI. In a statement to Futurism, Sports Illustrated owner Arena Group denied publishing AI-generated articles but said they were removing the pieces while an internal investigation took place. An Arena representative said the articles were “licensed content” produced by “an external, third-party company” named AdVon Commerce, in a now-defunct partnership. https://tinyurl.com/kxkycepm

Apple and Paramount Global discuss streaming bundle.

Apple and Paramount Global have discussed offering a package of their streaming services—Apple TV Plus and Paramount Plus—at a discount, the Wall Street Journal reported. The reported talks are the latest sign of streaming services joining forces, at least in marketing, to reduce the frequency at which people churn. Disney has long offered a bundle of its services—Disney+, Hulu and ESPN+—while Warner Bros. Discovery offered a combined version of its two services—Max and Discovery Plus. The talks come as streaming services generally are focused more on profitability and less on growth. https://tinyurl.com/2jdajfv8

Meta plans Threads Europe launch.

Meta Platforms is planning to launch its text app Threads in Europe as soon as next month, according to the Wall Street Journal. The social media company initially excluded Europe from Threads’ July launch out of concern that the app would not comply with Europe’s Digital Markets Act, which comes into effect in March. The expansion into Europe would allow Meta to tap into a larger user base as it tries to catch up to X, which has significantly more users. It’s unclear exactly how Meta has ensured Threads satisfies the DMA, which restricts the commingling of user-data between apps. However, the Journal reported that the company will allow people to view Threads without signing up for an account. Meta also announced this month that Threads users now have the option to delete their account without also deleting their Instagram account—something that was not possible when Threads launched. https://tinyurl.com/bddaa27j

ByteDance to drastically scale back videogame business.

ByteDance, TikTok’s Chinese parent company, is drastically scaling back its videogame business, according to a person with knowledge of the matter. The company will shut down the operations of some of its game development teams, according to the person. The move, reported earlier by Reuters, is part of ByteDance’s broader restructuring of businesses that haven’t lived up to expectations as it tries to focus more on the growth of its core social media and e-commerce businesses. ByteDance also is considering selling Shanghai Moonton Technology, a videogame studio it acquired two years ago in a deal that valued the business at nearly US$4 billion. “We regularly review our businesses and make adjustments to center on long-term strategic growth areas. Following a recent review, we’ve made the difficult decision to restructure our gaming business,” a ByteDance spokesperson said in a statement Monday. ByteDance began its foray into videogames about five years ago by acquiring studios in China and hiring industry veterans from Chinese videogame giants such as Tencent and NetEase. But ByteDance has so far failed to become a major global competitor in the videogame market. Last year, the company’s videogame division laid off a substantial number of employees. Earlier this year, one of its executives, Huang Linbin, who was in charge of one of ByteDance’s game studios in China, left the company, The Information previously reported. https://tinyurl.com/3b5nk545

After Musk tirade, X faces prospect of more advertisers fleeing.

Social media company X faces the prospect of more advertisers fleeing and has no clear fix in sight, ad industry experts said, after billionaire owner Elon Musk lashed out at some of the biggest brands for dropping the platform. After apologizing for his post while speaking at a New York Times DealBook event on Wednesday, Musk unleashed a profanity-laced tirade against advertisers for fleeing the platform and accused the brands of “blackmail.” He appeared to single out Walt Disney CEO Bob Iger, who spoke earlier at the event and said an association with X was “was not a positive one for us.” X risks not only losing corporate advertisers, but also money from political candidates, a revenue stream that reopened after the platform lifted a ban on political ads. U.S. political ad spending in 2024 – when a presidential election will be held – is expected to reach a record $10.2 billion, according to AdImpact, which tracks political ads. Ad spending on X in the United States from January through October this year declined 64%, compared with the same period in 2022, according to data from media analytics firm Guideline, which tracks advertising spending data from major ad agencies. https://tinyurl.com/k6rmt9xh

The Biggest delivery business in the U.S. is no longer UPS or FedEx.

Amazon.com has grabbed the crown of biggest delivery business in the U.S., surpassing both UPS and FedEx in parcel volumes. The Seattle e-commerce giant delivered more packages to U.S. homes in 2022 than UPS, after eclipsing FedEx in 2020, and it is on track to widen the gap this year, according to internal Amazon data and people familiar with the matter. The U.S. Postal Service is still the biggest parcel service by volume; it handles hundreds of millions of packages for all three companies. A decade ago Amazon was a major customer for UPS and FedEx, and some executives from the incumbents and analysts mocked the notion that it could someday supplant them. Amazon’s outsize growth combined with strategy shifts at FedEx and UPS have changed the balance. As Amazon’s share of deliveries has increased, FedEx and UPS have said in recent years they weren’t in a race for volume and were instead focused on delivering more profitable parcels. FedEx parted ways with Amazon in 2019. Amazon accounts for about 11% of UPS’s revenue. https://archive.is/zqGp0

Apple proposes exit from partnership with Goldman Sachs.

Apple has proposed to Goldman Sachs that they exit the contract that covers their entire consumer partnership, including the Apple Card and their high-yield savings account, in the next 12 to 15 months, The Wall Street Journal reported. The move will likely end the partnership, as Goldman itself has been trying to get out of the deal for months. It’s a remarkable about-face for the two companies, which signed a deal to extend the pact through 2029 just over a year ago. Goldman has been trying to wriggle out of the deal after it decided to pull the plug on its move into consumer banking, a failed yearslong effort to diversify away from the old-school Wall Street revenue model of trading and advising on deals. The Journal’s report didn’t say whether Apple had already lined up a new issuer for the Apple Card, though it has reported that American Express and Synchrony Financial have taken part in discussions about issuing the card. https://tinyurl.com/3frj6cx3

Berkshire Hathaway exits India’s Paytm with US$164 million sale.

Berkshire Hathaway Inc. exited India’s Paytm by selling its 2.5% stake in the digital payments service provider via a block deal on Friday, according to information available on a local stock exchange. BH International Holdings, an entity related to Berkshire Hathaway, sold 15.6 million shares in One 97 Communications Ltd., the parent of Paytm, via a single block trade that took place soon after start of trading on India’s National Stock Exchange. The shares were sold at 877.20 rupees (US$10.52) each, fetching the seller about 14 billion rupees, according to terms of the deal seen by Bloomberg News. The value of the investment stood at 21.7 billion rupees prior to Paytm’s debut in 2021, according to its IPO document. Investors in the SoftBank Group Corp.-backed company, which reported a loss in the September quarter, are betting it will finally turn a profit in 2024 after making inroads into credit and expanding its mainstay payments network. https://archive.is/APURq

SoFi shutting down its crypto business.

SoFi told customers on Wednesday that it’s shutting down its crypto trading service, which had been under mounting scrutiny from bank regulators. SoFi, which offers lending and a range of other services, received a bank charter last year, putting it under the purview of bank regulators. It had warned in its 2022 annual report that it would potentially have to stop offering crypto products by early 2024 due to guidance from the Federal Reserve. Other fintech companies have pulled back on crypto this year by delisting tokens or shuttering services entirely, blaming falling customer demand and a lack of clarity about which tokens constitute securities in the eyes of the SEC. Trading app Stash earlier this month said it was ending its crypto services. https://tinyurl.com/bfvfcpd

Michael Saylor’s MicroStrategy makes its biggest bitcoin purchase in years as Wall Street grows more bullish.

MicroStrategy bought US$593.3 million worth of bitcoin last month, marking the firm’s largest purchase in nearly three years. A Thursday filing disclosed that the company added 16,130 tokens to its holdings in November, purchased at an average price of US$36,785 per bitcoin. MicroStrategy’s total trove of bitcoins is now valued around US$6.5 billion. This month’s bitcoin spree was the firm’s biggest since February 2021, when MicroStrategy spent US$1 billion to add 19,452 tokens, Bloomberg reported. https://tinyurl.com/yeun7k96

FTX is set to begin selling US$744 million of assets to pay back creditors of the failed crypto exchange.

FTX, the failed crypto exchange founded by the now-convicted Sam Bankman-Fried, has won approval in court to start selling off its stakes in digital trusts managed by Grayscale. Court documents show that FTX aims to sell its stakes in funds managed by Grayscale, worth about US$744 million, per Bloomberg, aiming to do so without disrupting markets while still maximizing value.So far, FTX’s new leadership has recovered roughly $7 billion in assets, with about half that in cryptocurrency, the report said. Before its collapse, FTX was touted as a blue-chip cryptocurrency trading platform helmed by a rising star in Bankman-Fried.. https://tinyurl.com/bdetsynr

Apple to likely make mac, iPad chips only with TSMC in Arizona.

Apple on Thursday said it would tap Amkor to assemble the chips it will manufacture with TSMC in Arizona. The announcement suggests Apple will only make Mac and iPad chips in the U.S., and that its “Made in America” initiative will do little to reduce its reliance on Taiwan for making the iPhone, its most successful product by sales. Apple will be TSMC’s largest customer in Arizona when the facility comes online in 2025, but Apple hasn’t specified which chips will be made there or how many. Chips for the iPhone, Apple Watch and high-end Macs are currently only assembled in Taiwan by TSMC because they use more complicated processes. Meanwhile, Amkor has historically assembled chips that go into the Mac and iPad, according to a former Apple employee with direct knowledge of the matter. An Apple spokesperson declined to comment. Apple’s inability to make iPhone chips in Arizona shows how difficult it will be for President Biden to bring chip manufacturing to the U.S. without completely reshaping the entire supply chain for semiconductors, which is heavily concentrated in Asia. Amkor was founded in South Korea but moved its headquarters to Arizona, near TSMC’s upcoming chip-making facility, earlier this year. Amkor also announced Thursday it would spend $2 billion to build its new packaging facility in Arizona, which will eventually employ 2,000 people. https://tinyurl.com/3pnzcfyz