On the back of risks we highlighted last week, markets struggled mid week, as Fed chief Powell largely ruled out a March rate cut, and Google results weighed on tech stocks. That said, Dow Jones and S&P 500 rose 1.4% last week as both set record highs. Nasdaq gained 1.1% to close at a two year high driven by gains on Thursday and Friday owing to Meta and Amazon results. US venture capitalists are reportedly sitting on US$311 billion in unspent cash, as they shy away from risky bets on Silicon Valley start-ups and concentrate on finding ways to return capital to their own backers. Rubrik, the cybersecurity software startup that Microsoft invested in at a US$4 billion valuation in 2021, plans to go public in New York as early as April, as it handles a U.S. fraud investigation into one of its former employees. Internet discussion forum Reddit is targeting a valuation of at least US$5 billion in its upcoming initial public offering, about half the price at which it last raised funds privately. Sierra Space Corp. is making preliminary plans to go public and exploring possible acquisitions as the company drives toward debuting its long-awaited cargo spaceplane, potentially by the summer. Jeff Bezos could sell up to US$8.5 billion in Amazon stock in next year. A Delaware judge voided the US$56 billion compensation package of Tesla CEO Elon Musk. Tesla’s share price slid about 3% in after-hours trading following news of the decision. In Canada, Sophic Client Kraken was mentioned as a recent buy by PenderFund Capital Management. Sophic Client Renoworks and Eagleview announced a new all-in-one virtual 3d design and measurement tool for exterior contractors. Railtown AI announced a $2.5 million non-brokered private placement. Recent Canadian tech financings appear to have been well received by investors, which bodes well for the space. Exro will acquire California-based SEA Electric in a $332 million EV-tech deal.

Canadian Technology Capital Markets & Company News

A long standing smallcap money manager in Canada offers his advice on going down cap and also highlights some recent buys including Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC).

“We also purchased Kraken Robotics Inc., which makes sonar systems and underwater batteries for ships and submarines. There’s a lot of demand for this technology today, especially given the growing geopolitical conflicts around the world. We started buying the stock in the fourth quarter of last year and continue to add to it this year.”

Sophic Client Renoworks Software Inc. (RW-TSXV, ROWKF-OTC) and Eagleview announce new all-in-one virtual 3d design and measurement tool for exterior contractors.

Renoworks announces a new integration with EagleView, a leading geospatial data, analytics, and intelligence company who utilizes proprietary aerial imagery. Now contractors can experience a simplified workflow, enhanced homeowner-customer engagement, and expedite project timelines with Renoworks Pro – a solution that marries instant and interactive 3D home visualization with EagleView’s Full House precise measurements. The solution: enables the measurement and visualization of remote projects, improves close rates and homeowner customer experience, and removes the need to visit the job site, download additional apps, or take multiple photos. The Renoworks Pro is currently available to contractors from both EagleView and Renoworks. Interested clients can learn more at www.eagleview.com/product/visualizer. https://bit.ly/42jmIYK

Railtown AI Technologies Inc. announces $2.5 million non-brokered private placement.

Railtown AI Technologies announced a non-brokered private placement of up to 16,666,667 units of the Company at a price of $0.15 per Unit for aggregate gross proceeds of up to $2,500,000. Each Unit will consist of one common share in the capital of the Company and one-half of one common share purchase warrant. Each Warrant will entitle the holder thereof to acquire one additional Share at an exercise price of $0.30 per Share for a period of 24 months from the closing date of the Offering. The Offering is being completed pursuant to the listed issuer financing exemption under Part 5A of National Instrument 45-106 Prospectus Exemptions. Any securities issuable under the LIFE Exemption will not be subject to a hold period in accordance with applicable Canadian securities laws. The Offering may close in tranches, with the first tranche expected to close on or around February 10, 2024. http://tinyurl.com/3wbmvhnu

Exro to acquire California-based SEA Electric in $332-million EV-tech deal.

Calgary-based electric vehicle (EV) tech firm Exro has entered into a $332-million agreement to acquire California-based SEA Electric. The deal will see Exro’s energy-efficiency-focused offerings and SEA’s propulsion systems combine to provide an end-to-end solution, the companies said in a statement. The CEOs of both companies referred to their respective offerings as “complementary.” The transaction, which values SEA at approximately $402 million, will see Exro issue approximately $332 million in Exro shares to SEA stockholders, while Exro will assume approximately $62 million in SEA net debt. Exro said that the combined company will have an asset-light business model combined with its 2024 revenue targets, providing it with “a defined path” to profitability within 12 months of closing the transaction. The transaction is expected to close by the end of Q1 2024. Ozdemir will remain as CEO through the transaction while SEA founder and CEO Tony Fairweather will join Exro as the chief product officer. The combined company will operate under the Exro name. Alongside the acquisition, Exro plans to raise approximately $30 million through the issuance of subscription receipts of Exro, as well as $12 million in debt financing from SEA’s arrangement with a Canadian pension fund manager. Exro trades on the Toronto Stock Exchange under the symbol EXRO. Its stock price has been steadily declining since trading at $2.75 per share on Jan. 31, 2023 to $0.95 per share on Jan. 31, 2024. Its share value dropped 8.1 percent following news of the acquisition. Prior to the acquisition, SEA had multi-year commitments from Toyota and Volvo subsidiaries, Hino and Mack, respectively, for its propulsion system technology. The combined company will aim to deliver more than 1,000 propulsion technology systems to the clients in 2024. Exro forecasts its aggregated revenue to exceed $200 million in 2024. http://tinyurl.com/3yakjtec

Femtum raises $5 million to commercialize lasers for semiconductor manufacturers.

Québec City-based advanced manufacturing startup Femtum has closed over $5 million in seed funding for its laser technology for the semiconductor industry. The equity round was co-led by Canadian deep tech fund i4 Capital, which closed $40 million for its seed fund last year, and German high-tech fund ELAS Technology Investment. Quantacet, Boreal Ventures, Eureka, Hamamatsu Ventures, and VIGO Ventures also participated in the financing. The startup has previously raised over $1 million in both dilutive and non-dilutive funding, including a pre-seed round. With a headcount of 15, including 12 full-time and three part-time employees, Femtum said it is looking to be a key player in the Canadian and international semiconductor ecosystem, and plans to use the new funding to commercialize its lasers for semiconductor manufacturers. http://tinyurl.com/cs7yc6pc

Global Markets: IPOs, Venture Capital, M&A

Silicon Valley investors build US$300 billion cash pile in start-up funding crunch.

US venture capitalists are sitting on US$311 billion in unspent cash, as they shy away from risky bets on Silicon Valley start-ups and concentrate on finding ways to return capital to their own backers. American VC groups have deployed just half of a record US$435 billion they raised from investors during the pandemic-era boom between 2020 and 2022, according to private markets data company PitchBook. That has added to a pile of unspent reserves — known in the industry as “dry powder” — which has accumulated as venture firms adopt a more cautious stance to investing amid declining start-up valuations, preferring to find ways to back more established tech groups or prop up their existing portfolio of companies. VCs are coming under increasing pressure to return capital to their own backers — institutional investors, foundations and pension funds, known as “limited partners”. LPs typically receive a return when a VC fund successfully “exits” a start-up at the point they are sold or achieve a public listing. But a dearth of exits meant US-based VCs distributed just US$21 billion back to their LPs last year — a seventh of the total paid out in 2021, according to PitchBook. “LPs don’t usually like to put pressure on VCs to spend money, but if you’re entering your third year of not doing anything, they’re starting to ask what are my fees for,” said a Silicon Valley venture capital investor. Most VCs continue to charge LPs a management fee regardless of whether they had made investments, but Sequoia Capital, one the premier tech VC groups, started waiving fees on capital it had not yet committed to companies in some of its funds last year. https://archive.is/HTYBC

Rubrik plans April listing amid U.S. probe into former employee.

Rubrik Inc, the cybersecurity software startup that Microsoft invested in at a US$4 billion valuation in 2021, plans to go public in New York as early as April, as it handles a U.S. fraud investigation into one of its former employees, according to people familiar with the matter. The probe, which has not been previously reported, is being carried out by the U.S. Department of Justice and is focused on a person who worked for Rubrik’s sales division, two of the sources said. The Department of Justice is looking into whether the former employee diverted funds paid by the U.S. government for 110 contracts with Rubrik into an operating entity he had created, one of the sources said. The source said the contracts were worth a total $46 million, but did not disclose the amount allegedly diverted by the employee. Rubrik is co-operating with the investigation and hopes it will be wrapped up by the end of March so it can launch its initial public offering (IPO), the sources said. If this pans out, Rubrik, which has already registered the IPO confidentially with the U.S. Securities and Exchange Commission, will be a publicly traded company as early as April, the sources added. Rubrik generates annual recurring revenue of over US$600 million, which is growing in high single-percentage digits, according to the sources. The company has so far raised more than US$1 billion in equity and debt from investors including Greylock Partners and Lightspeed Venture Partners, according to PitchBook. The U.S. IPO market has yet to recover from two years of subdued activity. Arc’teryx maker Amer Sports Inc priced its US$1.375 billion offering below its indicated price range this week, after BrightSpring Health Services also discounted its IPO last week. http://tinyurl.com/4myj2s3f

In upcoming IPO, Reddit considers US$5 billion valuation target.

Internet discussion forum Reddit is may target a valuation of at least US$5 billion in its upcoming initial public offering, about half the price at which it last raised funds privately, Bloomberg reported. At that level, Reddit would be valued at about the same multiple of this year’s expected revenue as Snap, and slightly below Pinterest, assuming Reddit pulls in about US$1 billion in sales this year. (It generated more than US$800 million in 2023, The Information reported.) Companies determine their IPO valuations with their bankers, after soliciting feedback from firms that want to invest in the listing. Companies often have to give those IPO investors a discount to where the company eventually expects its stock to trade. Reddit expects to go public in March. http://tinyurl.com/4vbuntw7

Sierra Space hastens IPO groundwork ahead of spaceplane debut.

Sierra Space Corp. is making preliminary plans to go public and exploring possible acquisitions as the company drives toward debuting its long-awaited cargo spaceplane, potentially by the summer. The Colorado-based company has begun laying the groundwork internally for an initial public offering, Chief Executive Officer Tom Vice told Bloomberg News in an interview on Thursday. Sierra hasn’t settled on timing but would take the step “when the market looks like it’ll give us the right credit for valuation. “We want access to the public markets,” Vice said. “We’ve been working for a year and a half to make sure that we are public company ready.” The comments, ahead of a media event to kick off flight testing of its Dream Chaser spaceplane at a NASA facility in Sandusky, Ohio, suggest the company is moving closer to an offering after exploring options to raise capital over the past several years. Vice also hinted at “inorganic add-ons” and “consolidation activity” — CEO speak for mergers and acquisitions — to support its portfolio of products that also includes satellites and space stations. Sierra, whose valuation climbed to more than US$5 billion as of September after its latest private capital injection, was formed by defense contractor Sierra Nevada Corp. in 2021. http://tinyurl.com/bdz77pke

Apple CEO: AI is “huge opportunity,” will share more details this year.

Apple CEO Tim Cook told analysts that the company plans to share details of its work on artificial intelligence later this year and that it saw a “huge opportunity” related to generative AI. The comments came after Apple reported slightly higher revenue in the quarter ended Dec. 30, up 2% when compared with the same quarter a year ago. Apple will most likely announce new features that use generative AI at its annual developer’s conference in June. The company hasn’t disclosed any specifics about its efforts, though it recently published research papers highlighting its work fitting large language models on devices and creating digital avatars with just short video clips. Recently, code was discovered in a beta of Apple’s operating system that shows engineers are experimenting with ChatGPT through Siri, though this is likely for internal testing purposes only as Apple is training its own competing models. http://tinyurl.com/39xn2buc

Meta is paying first-ever dividend, authorizes US$50 billion buyback.

Meta announced on Thursday that it will pay a quarterly dividend for the first time, and said it authorized an expanded US$50 billion share buyback program. The company will pay a per share dividend of 50 cents, joining peers Apple, Microsoft and Oracle, which all have regular payouts. The board intends to issue a cash dividend on a quarterly basis, “subject to market conditions.” Meta announced the news alongside its fourth-quarter financials, which topped estimates on the top and bottom lines. Shares rose more than 14% in extended trading. The dividend will be paid in March to all shareholders of record as of Feb. 22. The after-market rally continues a boom in Meta’s stock after the company’s market cap almost tripled in 2023. The stock eclipsed its 2021 record last month. With a current market capitalization of US$1 trillion, the expanded authorization is equal to about 5% of shares outstanding. The company had $30.9 billion available for share repurchases as of December. Neither Amazon nor Alphabet have ever paid a dividend. Microsoft issued its first dividend in 2003, while Oracle’s was initiated in 2009. http://tinyurl.com/5n9x8yuh

Jeff Bezos could sell up to US$8.5 billion in Amazon stock in next year.

Amazon founder Jeff Bezos filed to sell about US$8.5 billion worth of Amazon shares in the next 12 months, he revealed in a securities filing on Friday. If he follows through on the sales, it would be the first time Bezos has sold Amazon shares since 2021. Bezos said he adopted a trading plan to sell 50 million shares, about 5% of the 992 million shares he owned as of last February, Amazon filings show. Bezos has voting rights to about 1.3 billion, including shares owned by his ex-wife MacKenzie Scott. Bezos’ directly owned stake is currently worth about $170 billion, based on Amazon’s current share price, according to a regulatory filing on Friday. Bezos would remain Amazon’s biggest shareholder even after the sales. http://tinyurl.com/2me8s5d7

Before Amazon ditched iRobot deal, FTC said it planned to sue.

When Amazon called off its US$1.4 billion acquisition of iRobot on Monday morning, it blamed the European Union for scuttling the deal. But Amazon was also facing an equally large threat from the Federal Trade Commission in the U.S. FTC officials told Amazon executives during a meeting last week that agency staff planned to recommend the FTC’s commissioners file a lawsuit to block the iRobot acquisition, according to a person familiar with the matter. The two sides had a “last rites” meeting—typically the final step before the FTC files a lawsuit—on the calendar for early this week, the person said. The likely FTC suit, which would have followed a review of the deal that began in September 2022, shows that Amazon and iRobot would have had a difficult time getting the deal through even if it had persuaded the EU to approve it. It underscores FTC chair Lina Khan’s aggressive approach to antitrust, which has also included opening an inquiry into big tech companies’ investments in OpenAI and Anthropic earlier this month. iRobot said Monday that it’s laying off 31% of its workforce and replacing its CEO. Amazon is paying iRobot a US$94 million termination fee. http://tinyurl.com/32xuv8fu

Elon Musk’s US$56 billion Tesla compensation voided by judge, shares slide.

A Delaware judge voided the US$56 billion compensation package of Tesla CEO Elon Musk. The pay package that Tesla granted Musk in 2018 was the largest compensation plan in public corporate history, the judge noted. Tesla’s share price slid about 3% in after-hours trading following news of the decision. “The plaintiff is entitled to rescission,” Delaware Chancery Court Judge Kathaleen McCormick wrote in her ruling agreeing that Musk’s pay package was inappropriately set by Tesla’s board. http://tinyurl.com/2766uce6

Tesla will hold shareholder vote to move incorporation to Texas.

Tesla CEO Elon Musk said the electric car maker will move immediately to hold a shareholder vote to transfer its state of incorporation to Texas from Delaware. He made the announcement on social media site X, which he owns, after he conducted a poll in an earlier post on X asking if Tesla should change its state of incorporation to Texas. More than 87% of about 1.1 million X users who casted their votes chose “yes.” Musk’s announcement comes after a Delaware Chancery Court judge earlier this week struck down Tesla’s 2018 $55.8 billion pay package for Musk, ruling that the company and its board of directors failed to justify the CEO’s hefty compensation. In one of his X posts shortly after the ruling, Musk said: “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.” http://tinyurl.com/4n7zjye4

Activist Elliott builds roughly 13% stake in Etsy, secures board seat.

Activist investor Elliott Management has a “sizable” investment in e-commerce firm Etsy, which announced on Thursday that Elliott partner Marc Steinberg would join the company’s board. The activist investor has built a roughly 13% position in the stock, a person familiar with the matter told CNBC. That economic interest is a blend of shares and options, CNBC’s David Faber said. The position would make it Etsy’s largest investor. Etsy shares shot up more than 10% on the news. Elliott and Etsy have been meeting for a few months, CNBC’s Faber said. Still, the e-commerce company’s stock is down about 10% year to date. Etsy’s other largest shareholders include Vanguard, with an 11% ownership stake, and BlackRock, which holds about 5% of shares. The opening months of any year most often see significant activist activity, as many companies’ nominating deadlines near. http://tinyurl.com/42hcmm6x

AMD increases AI chip sales projection 75% as overall revenue stalls.

Advanced Micro Devices, the top rival to Nvidia in artificial intelligence chips, raised its projected sales in 2024 from AI chips 75%, to more than US$3.5 billion, thanks to its latest graphics processing unit. By comparison, Nvidia’s data center revenue, which is largely made up of GPU sales, could top US$16 billion in the current quarter alone. The results showed just how far AMD is behind Nvidia, whose data center revenue nearly quadrupled last quarter year-over-year. In the December quarter, AMD data center chip sales, which includes GPUs and general purpose computing chips, rose 38% to US$2.3 billion from the same period a year earlier. But the company said data center chip sales would be flat in the current quarter compared to the December one. Another issue: The company posted 10% revenue growth in the fourth quarter compared to the same period a year earlier but projected no year-over-year growth in the current quarter. AMD’s stock fell around 6%. Su said AMD is working with Microsoft, Oracle and Meta Platforms to install the latest GPUs in their data centers. All of those companies also buy chips from Nvidia. Su notably did not indicate whether Amazon Web Services, the largest cloud provider, was interested in AMD’s GPUs. The Information previously reported that AWS is focusing on Nvidia GPUs, as well as its in-house AI chips, Trainium and Inferentia. http://tinyurl.com/mdbvuj6e

Qualcomm returns to growth as smartphone sales pick up.

Mobile chip giant Qualcomm reported a 5% lift in revenues and higher profits for the quarter ended Dec. 24, the first of its fiscal year, a sign that an uptick in the smartphone market is flowing through to Qualcomm’s results. The chip giant, which supplies mobile chips in a wide range of top name smartphones, had suffered a sharp slump in revenue last year due to a slump in the smartphone market. But smartphone sales began to recover late last year, which translated to a 16% increase in handset revenue for Qualcomm, the company reported on Wednesday. Qualcomm also benefited from a big increase in automotive chips, while those serving internet of things devices fell sharply. http://tinyurl.com/3ukc5h25

Chip gear maker shifting from China soars 166% in four months.

Chip equipment maker J.E.T. Co.’s shares have more than doubled since their September debut in Tokyo, bolstered by expectations that US and Japan initiatives to boost semiconductor prowess will propel sales. The little-known supplier to China’s Semiconductor Manufacturing International Corp. and South Korea’s Samsung Electronics Co. is the second-best performer on the Tokyo Stock Exchange’s Standard Market of small-to-mid-sized companies, rising 166% in four months since its initial public offering. On top of a nascent chip recovery that’s lifted the Philadelphia Stock Exchange Semiconductor Index by 28%, J.E.T. is seen to have room to win new customers in its home market and abroad. http://tinyurl.com/yy4yaypx

Kuo suggests iPhone shipments will drop 15% this year – and iPhone 16 won’t help.

Ming-Chi Kuo is out with a new investor note focused on his predictions for the iPhone in 2024. The Apple analyst says his latest supply chain survey suggests Apple has “lowered its 2024 iPhone shipments of key upstream semiconductor components to about 200 million units.” According to Kuo, this marks a decline of around 15% year-over-year for iPhone shipments. He attributes this fall to factors including a slowdown of iPhone sales in China, writing that “Apple’s weekly shipments in China have declined by 30–40% YoY in recent weeks.” Kuo continues: iPhone 15 series and new iPhone 16 series shipments will decline by 10–15% YoY in 1H24 and 2H24, respectively (compared to iPhone 14 series shipments in 1H23 and iPhone 15 series shipments in 2H23, respectively). The iPhone faces structural challenges that will lead to a significant decline in shipments in 2024, including the emergence of a new paradigm in high-end mobile phone design and the continued decline in shipments in the Chinese market. Looking ahead to the iPhone 16 lineup coming later this year, Kuo says we shouldn’t expect significant design changes or new artificial intelligence features this year. “It is expected that Apple will not launch new iPhone models with significant design changes and the more comprehensive/differentiated GenAI ecosystem/applications until 2025 at the earliest,” he writes. “Until then, it will likely harm Apple’s iPhone shipment momentum and ecosystem growth.” http://tinyurl.com/594xmdkp

Emerging Technologies

Meta releases new version of code-generating model.

Meta Platforms released a new version of its open-source large language model designed to assist people writing code, called Code Llama, on Monday. This version of Code Llama has 70 billion settings that encode what models learn during training, known as parameters, and is larger than previous versions. In August, Meta released three sizes of Code Llama, with 7 billion, 13 billion and 34 billion parameters. Larger models generally return better results, while smaller models tend to be faster. The release on Monday included two additional variations of Code Llama—one specializing in the programming language Python, and the other in understanding and following natural language instructions. They come as Meta trains Llama 3, the next generation of its open-source LLM. Llama 3 will be able to generate code, CEO Mark Zuckerberg told The Verge in an interview. http://tinyurl.com/4m7dzjh6

Nvidia CEO says nations seeking own AI systems will raise demand.

Nvidia Corp. Chief Executive Officer Jensen Huang said countries around the world aiming to build and run their own artificial intelligence infrastructure at home will drive up demand for his company’s products. Nations including India, Japan, France and Canada are talking about the importance of investing in “sovereign AI capabilities,” Huang said in an interview Thursday with Bloomberg Television. “Their natural resource – data – should be refined and produced for their country. The recognition of sovereign AI capabilities is global.” At the time of the interview, Huang was in Canada, which itself is home to a number of academic institutions that have significantly contributed to breakthroughs in the type of generative AI systems that power tools such as OpenAI’s popular ChatGPT. The country now finds itself with a growing need for the supercomputers necessary to capitalize on the work of its academics, he said. https://archive.is/1pyNU

Neuralink implants technology in first human, Musk Says.

Elon Musk’s Neuralink, which is developing a brain-computer interface device, implanted its technology into a human for the first time on Sunday, Musk said in a post on X. The person, he said, “is recovering well.” The surgery represented the beginning of a human trial of Neuralink’s technology, which aims to allow “people with paralysis to control external devices with their thoughts,” according to a company announcement. Neuralink says the trial is meant to evaluate the safety of its implant and its surgical robot. Neuralink has opened the trial to people who are quadriplegic as a result of a cervical spinal cord injury or having amyotrophic lateral sclerosis (ALS). http://tinyurl.com/sycxxbmm

Apple Vision Pro shipments begin.

Apple’s new Vision Pro mixed reality headset finally went on sale in stores and started shipping on Friday. To mark the occasion, Apple CEO Tim Cook was present when Apple’s Fifth Ave store in midtown Manhattan opened on Friday morning at 8 a.m. Cook shook hands and took selfies with the first customers walking in to buy the Apple Vision Pro. There was much fanfare and a heavy media presence, with Apple employees cheering and at least one celebrity—Neil Patrick Harris—on site. The device, which costs US$3,499, is one of the iPhone maker’s most significant new product launches in several years. Analysts are expecting the company will sell roughly 500,000 units in the first year, which wouldn’t lift revenue by any significant margin for the company but could challenge Meta Platforms’ Quest headsets and virtual reality ambitions. The enthusiasm about the launch appears to have helped Apple’s stock, which in late afternoon trading was down only slightly. It had opened the day sharply lower, reflecting investor reaction to the company’s signal on Thursday night that revenue in the current quarter would be lower than a year earlier. http://tinyurl.com/yfv9sv6r

Media, Streaming, Gaming & Sports Betting

YouTube now has more than 100 million Premium subscribers.

YouTube reached an important milestone on Thursday for its paid music and video tiers, crossing the 100 million subscriber benchmark globally. That figure includes trial subscriptions, so the real number of paid subscribers is fewer. YouTube’s subscription tiers have been a primary revenue generator for Google’s subscriptions services, which hit US$15 billion in revenue (including YouTube TV and Google One) in 2023. It’s been roughly nine years since YouTube launched a paid, ad-free subscription service; it later decided to divide YouTube Red into YouTube Premium and YouTube Music Premium. YouTube Music is the company’s streaming music service; the ad-free Premium tier costs US$10.99 per month. YouTube Premium, at US$13.99 per month, includes Music Premium and also removes ads from YouTube, unlocks higher-quality streaming, and enables background play and downloads. The company’s subscriber count didn’t distinguish between the two tiers, which makes it hard to tell how many people are actually using YouTube Music compared to other music platforms like Apple Music and Spotify and how many are paying extra for YouTube Premium. At a combined 100 million subscribers, YouTube’s numbers are still behind those of Netflix (260.8 million subscribers) and Spotify (226 million paid subscribers). It’s more comparable to Disney Plus, which crossed the 150 million paid sub mark last year. But YouTube Premium shouldn’t really be seen as a competitor to other premium streaming services, especially given its quite varied offerings (user-generated video, live TV, streaming music, on-demand video). YouTube also abandoned the streaming arms race and stopped making most original content in early 2022. To that end, YouTube’s primary source of revenue is still advertising, not subscriptions. But 100 million is nothing to sneeze at, and the steady growth of YouTube Premium and YouTube Music means they’ll play an important role in YouTube’s future. http://tinyurl.com/yx6azhak

Universal Music, TikTok fail to reach new licensing agreement.

Universal Music Group, opens new tab will cease licensing its content to TikTok and TikTok Music services, as the music label said on Tuesday that its agreement with the social media platform has not been renewed. UMG has been pressing TikTok for appropriate artist and songwriter compensations in their contract renewal discussions, among other things, it said in a letter addressed to its artist and songwriter community. UMG said TikTok proposed paying artists and songwriters at a rate that is a “fraction of the rate” that similarly situated major social platforms pay. http://tinyurl.com/mpftdtsr

Adtech, Privacy & Regulatory

EU unanimously approves draft AI act.

Member countries of the European Union on Friday unanimously approved the final text of the AI Act, a wide-ranging framework for regulating applications of artificial intelligence. The vote followed months of debate and lobbying, as countries such as France and Germany pushed back against laws they said would stifle their budding AI startup ecosystems. The AI Act will ban some high-risk applications of AI, like social scoring, and place transparency and stress-testing requirements on companies developing advanced conversational AI. The legislation now goes to EU lawmakers, who are set to vote on it on February 13, followed by the European Parliament in March or April. If passed, the act will go into effect later this spring, with a tiered implementation of its various rules over the next two years. http://tinyurl.com/5exu5msv


TikTok tests shopping features on more videos.

TikTok is testing a new feature that will push viewers on more videos to use its TikTok Shop shopping service, marking its latest effort to grow its U.S. e-commerce business. The new feature, which can appear on videos from any user, identifies objects in videos and links to a page of similar products for sale on TikTok Shop. Previously, only creators with sizable followings or brands that had set up TikTok Shop on their account could post videos that linked to TikTok Shop products. Bloomberg first reported the new features and a TikTok spokesperson’s confirmation of the test. http://tinyurl.com/mwrdrpjr

China’s Temu launches $3 billion US online ads blitz in challenge to Amazon.

Chinese internet marketplace Temu has launched a multibillion-dollar internet advertising blitz in the US, as it seeks to grab market share from Amazon in the world’s biggest consumer market. Shanghai-based ecommerce giant PDD Holdings launched Temu in the US in September 2022 and then spent close to US$3 billion in marketing last year, according to estimates from research group Bernstein. Analysts at Goldman Sachs have found that Temu paid about US$1.2 billion for Meta advertising alone in 2023. The huge outlay has vaulted the online marketplace, which offers shoppers cheap goods shipped from China, into the ranks of the biggest online advertisers in the US, alongside the likes of Amazon, Target and Walmart. In a company presentation on Tuesday, the Chinese group said it had 70 million monthly active users in the US. Temu had an estimated 13mn in the country in January 2023, according to SensorTower data. However, it has captured just 1 per cent of the US ecommerce market in 2023, according to Bernstein. That trails behind Amazon’s roughly 40 per cent. https://archive.is/XgD6y

Sophic Capital Client Insights

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC): In Sophic Capital’s A “Sun-sational Take on Community Solar we uncovered incentives for adoption and discussed tailwinds in the U.S. Community Solar industry. This follow on report highlights Sophic Capital client UGE, a full lifecycle developer and operator of U.S. community solar projects.

The Company’s energy subscribers range from individual households to large corporate clients like T-Mobile and Bloomberg. UGE also works with landowners and commercial & industrial building owners, by leasing their land or roof space to host a solar project. This report looks at how UGE finances its projects. http://tinyurl.com/3fybh4u6


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The Company’s Material or the information provided in the Material shall not in any form constitute as an offer or solicitation to anyone in the United States of America or any jurisdiction where such offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. If you choose to access Sophic’s website and/or have signed up to receive the Company’s monthly newsletter or any other Material, you acknowledge that the information in the Material is intended for use by persons resident in Canada only. Sophic is not an investment advisor nor does it maintain any registrations as such, and Material provided by Sophic shall not be used to make investment decisions. Information provided in the Company’s Material is often opinionated and should be considered for information purposes only. No stock exchange or securities regulatory authority anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. Sophic and/or its principals and employees may have positions in the stocks mentioned in the Company’s Material and may trade in the stocks mentioned in the Material. Do not consider buying or selling any stock without conducting your own due diligence and/or without obtaining independent investment advice from a qualified and registered investment advisor. The Company has not independently verified any of the data from third party sources referred to in the Material, including information provided by Sophic clients that are the subject of the report, or ascertained the underlying assumptions relied upon by such sources. The Company does not assume any responsibility for the accuracy or completeness of this information or for any failure by any such other persons to disclose events which may have occurred or may affect the significance or accuracy of any such information. The Material may contain forward looking information. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words and include, without limitation, statements regarding, projected revenue, income or earnings or other results of operations, strategy, plans, objectives, goals and targets, plans to increase market share or with respect to anticipated performance compared to competitors, product development and adoption by potential customers. These statements relate to future events and future performance. Forward-looking statements are based on opinions and assumptions as of the date made, and are subject to a variety of risks and other factors that could cause actual events/results to differ materially from these forward looking statements. There can be no assurance that such expectations will prove to be correct; these statements are no guarantee of future performance and involve known and unknown risks, uncertainties and other factors. Sophic provides no assurance as to future results, performance, or achievements and no representations are made that actual results achieved will be as indicated in the forward looking information. Nothing herein can be assumed or predicted, and you are strongly encouraged to learn more and seek independent advice before relying on any information presented.