Last week, the Dow Jones was up 3%, the S&P 500 rose 4.3%, and the Nasdaq composite rose 4.7%. Amazon, and Apple stock responded well to earnings last week, while Meta piled onto growing fears that advertising demand is plummeting, posting its first decline in revenue since going public. Shares of Roku tumbled more than 25% in after-hours trading on a miss, and following the company’s projection of only 3% top-line growth for Q3. Spotify stock jumped on strong subscriber growth, and forecasts. Instacart aims to go public before year’s end, defying a frozen IPO market. Eutelsat and OneWeb agree on merger to create European satellite juggernaut. Twitter trial over Elon Musk merger is set to begin Oct. 17, as Elon Musk countersues Twitter over the merger, but details aren’t yet public. Twitter’s ‘mounting’ ad pressures mean the stock could be in mid-teens without support from Musk deal, according to MoffettNathanson. Google has delayed a phase-out of Chrome ad trackers to 2024 as antitrust trials loom. Crypto exchange FTX US expands stock trading, plans options next. Coinbase Global Inc. is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities, according to three people familiar with the matter. The company’s shares dropped as much as 9.2%. The U.S. passes US$52 billion in chip subsidies to boost production, counter China. Solar stocks jump as Senator Joe Manchin reaches a deal with Democrats that includes climate spending. Shares of SunRun and SunPower both jumped as much as 13% while First Solar surged 10% and SolarEdge rallied 6%. Sophic Client UGE (UGE-TSXV, UGEIF-OTC) closed up 7%. In Canada, Converge Technology secured a $500 million loan to continue acquisition spree. Volatus Aerospace announced a prospectus offering. CGI sees ‘Perfect’ deal climate as valuations improve. Clearco, Shopify, and Coinsquare announced layoffs as markets and the economy remains turbulent.
Canadian Technology Capital Markets & Company News
Converge Technology (CTS-TSX) secures $500 million loan to continue acquisition spree.
Gatineau-headquartered IT and cloud solutions provider Converge Technology announced this week that it has refinanced an existing $300 million asset based-lending (ABL) credit facility with a new, five-year $500 million global revolving credit facility led by J.P. Morgan and the Canadian Imperial Bank of Commerce. The Bank of Nova Scotia, the Toronto-Dominion Bank, and the Bank of Montréal are also participating in the lender group. This new credit facility will also include an uncommitted accordion feature of $100 million, providing Converge with a total borrowing capacity of up to $600 million. According to Converge, the expanded loan will allow the company to borrow in certain foreign currencies to fund its ongoing global expansion. The company added that the cost of borrowing and flexibility will be more favourable than the current ABL. https://bit.ly/3oIardg
Volatus Aerospace Corp. (VOL-TSXV) announces prospectus offering and provides Q2 2022 revenue guidance of $6.5 million.
The Company filed a preliminary short form prospectus in connection with a proposed marketed public offering of 11,111,200 units of the Company at a price of $0.36 per Unit for aggregate gross proceeds to the Company of up to $4,000,032, subject to an over-allotment option as described below. Additionally, the Company wishes to provide preliminary unaudited revenue results for the quarter ending June 30, 2022. The Offering is being led by Echelon Wealth Partners Inc., as lead agent and sole bookrunner, and a syndicate of agents, including Integral Wealth Securities Limited to sell, by way of a marketed short form prospectus offering on a commercially reasonable best efforts agency basis, 11,111,200 Units. https://yhoo.it/3oZCSDX
Canada’s CGI (GIB’A-TSX, GIB-NYSE) sees ‘Perfect’ deal climate as valuations improve.
Quebec technology firm CGI Inc. sees a “pretty perfect” environment for acquisitions after a selloff in the sector made the price of potential targets more reasonable, company executives said. The Montreal-based IT and business consulting company expects to meet a target of making $1 billion (US$776 million) in deals this year, Chief Executive Officer George Schindler said on a conference call with analysts Wednesday. CGI said revenue grew 8% to $3.26 billion (US$2.5 billion) in the fiscal third quarter ended June 30, as it sees strong demand for its services. https://bloom.bg/3Bns7CA
Accenture continues Canadian tech acquisition spree with Solvera Solutions, Eclipse Automation.
Global tech provider and consulting giant Accenture is continuing its acquisition spree of Canadian tech companies with the recent addition of Solvera Solutions and an agreement to acquire Eclipse Automation. Solvera marks Accenture’s sixth Canadian acquisition since 2020, joining XtremeEDA, Gevity, Cloudworks, Avenai, and Callisto Integration. In 2019, Accenture also acquired Toronto-based Zafin. https://bit.ly/3PWpwn3
BrainBox AI’s Series A round reaches US$30 million following EDC top-up.
Montréal-based HVAC tech company BrainBox AI has announced the close of its Series A financing round, securing US$30 million overall. This close adds an additional US$6 million to the Series A round, which had an initial close in October of US$24 million. Founded in 2017, BrainBox uses artificial intelligence (AI) to help lower energy consumption in buildings. https://bit.ly/3BlTih3
Stadium Live scores $12.8 million Series A to engage Gen Z sports fans.
Stadium Live founder and CEO Kevin Kim wants to meet the next generation of sports fans where they are—online. Traditional sports leagues need to attract younger audiences to ensure their survival. But the way kids are engaging with professional sports is changing, and major leagues have struggled to capture the attention of younger fans amid shifting viewership habits and the rising popularity of e-sports https://bit.ly/3OEdH3T
Fable raises $8.4 million Series A to fuel move beyond tableware.
Direct-to-consumer (D2C) tableware startup Fable has secured $8.4 million (US$6.55 million) in Series A financing to move beyond the dinner table. Vancouver-based, sustainability-focused Fable—not to be confused with the Toronto-based accessibility tech startup of the same name—currently sells premium dinnerware products to North American consumers, from plates and bowls to utensils and textiles. With its Series A funding, Fable plans to expand into the United Kingdom (UK), open new retail locations, and offer a wider selection of home goods products. https://bit.ly/3PIsoEE
Verv closes $3.8 million seed round to develop at-home blood testing kit.
Sudbury-based healthtech startup Verv has secured $3.8 million in seed funding from United Kingdom vitro diagnostics company Randox Laboratories. With a finger prick of blood, Verv claims that its blood plasma separator provides the appropriate blood sample for analysis. According to Future Market Insights, the demand for self-testing kits is predicted to reach a valuation of US$11.55 billion by 2030. https://bit.ly/3Bg1pvJ
GreenCentre Canada secures over $2.5 million from FedDev Ontario to launch cleantech accelerator program.
GreenCentre Canada has secured an over $2.5 million investment from the federal government through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) to launch a new accelerator program for businesses in the cleantech sector. GreenCentre will support entrepreneurs developing technologies in areas including energy and fuels, resource recovery, water treatment, anc consumer products from renewable resources. https://bit.ly/3vcTqLR
Clearco cuts a quarter of staff amid “significant headwinds”.
Co-founders Michele Romanow and Andrew D’Souza told Clearco employees about the cuts in an email on Friday morning. The email, shared with BetaKit, stated, “Today we have made the hard decision to reduce our workforce by 125 people and are considering strategic options for our international operations.” The email added that “invites will go out shortly to those who are part of this reduction in force followed by meetings with team leads.” Prior to the company-wide layoffs, Clearco claimed to have employed 500 individuals globally. Romanow and D’Souza cited the current macroeconomic environment as the reason for the layoffs, and called the move necessary in order to ensure Clearco is “able to support as many founders as possible,” and “to come out of this economic downturn a sustainable and profitable company.” The announcement of the layoffs follows a tumultuous time for Clearco. The company has been quietly downsizing in recent months, as reported by The Logic, with multiple sources indicating to BetaKit that Clearco had made more layoffs than it had initially claimed in June. Clearco also quietly increased the repayment fee for its loans, and has reportedly been seeking to renegotiate agreements with some of its lenders in order to reduce the amount it pays for its borrowed capital — used to make its loans to startups. That increase in fee came in relation to market conditions, and after Clearco saw a surge in demand for its loans as small-and-medium-sized businesses that Clearco serves also feel the affects of the macroeconomic environment. Clearco has been working to keep its ship afloat in recent months – from subleasing some of its Toronto office space and cutting spending on things like software, to reports that it secured $60 million USD in equity this year from existing investors and “tapped Silicon Valley Bank for tens of millions in added financing.” All this comes after Clearco, which raised $550 million USD across two fundraising rounds last year, has failed to bring in as much revenue as it had expected to. This led to the company raising expectations for its salespeople (which in turn created high turnover) and shuttering products such as ClearAngel, which was meant to provides companies at the earliest stages revenue-share funding and support. Romanow told The Globe that after raising additional capital this year, she does not expect Clearco to need to raise further capital this year, and that the company is aiming to be cash flow positive by the end of this year. https://bit.ly/3zKR9du
Shopify (SHOP-TSX, SHOP-NYSE) stock tanks amid report of layoffs and slowing e-commerce growth.
Shopify Inc. is reportedly planning to lay off around 10% of its workforce as it admits that e-commerce growth hasn’t continued as robustly as expected, according to The Wall Street Journal, which cited a memo to staffers. Shares of Shopify were off more than 12% in premarket trading Tuesday. The company, has seen its stock sink 73% so far this year as the S&P 500 has declined 17%. https://bit.ly/3J4pebK
Coinsquare lays off 24 percent of staff amid turbulent crypto market, shifted focus. Coinsquare has joined the increasing number of tech companies and crypto firms making layoffs among tougher market conditions. The Toronto-based startup confirmed to BetaKit that it has laid off about 24 percent of its employees, which included contract workers. Coinsquare has seen its headcount reduced from 125 employees prior to the layoffs to approximately 95 workers now. The company also introduced a pay cut for its executives, though declined to disclose any further details. https://bit.ly/3oDs7ac
Tim Hortons offers a free coffee and pastry for spying on people for over a year.
Canadian coffee giant Tom Hortons is proposing offering impacted customers a free hot drink and baked good as settlement in class action lawsuits filed after the company spied on app users for over a year. The news provides a conclusion to one of the more bizarre location data gathering scandals in recent years. “As part of the proposed settlement agreement, eligible app users will receive a free hot beverage and a free baked good. Distribution details will be provided following approval, in the event that the court approves the settlement,” the email continues. The email specifies that the one free hot beverage has a retail value of $6.19 CAD plus taxes, and the free baked good has a retail value of $2.39 CAD, largely leaving the Tim Hortons menu wide open for any impacted customers to choose from and load up on all the extras. As the email alludes to, in the Tim Hortons app tracked every time a user entered or left a Tim Hortons competitor, a major sports venue, or their home or workplace. In June, Canadian regulators said that Tim Hortons’ data collection violated Canadian law. https://bit.ly/3vnzOET
Global Markets: IPOs, Venture Capital, M&A
Instacart aims to go public before year’s end, defying a frozen IPO market.
Instacart Inc. expects to go public before year’s end, according to people familiar with the matter, earlier than many on Wall Street had expected amid a frozen market for new listings. An initial public offering this year would be a bold move in one of the slowest years for IPOs in more than a decade. Many bankers advising companies on going public have said they don’t expect large, unprofitable firms to launch IPOs until volatility subsides and other recent IPO stocks recover. https://on.wsj.com/3BpAWvB
German electric carmaker e.Go will go public via Athena SPAC.
Next.e.GO Mobile SE, a German maker of compact electric vehicles, is going public through a merger with a blank-check firm to create a company valued at US$913 million, including debt.The deal will provide e.GO with about US$285 million of proceeds, assuming investors don’t redeem their shares, according to a statement Thursday, confirming a Bloomberg News report. That includes US$235 million from Athena Consumer Acquisition Corp. and US$50 million in in debt. https://bloom.bg/3Q5kRj2
Saudi Arabia plans IPO of US$500 billion project Neom by 2024. Saudi Arabia’s Crown Prince Mohammed bin Salman said they are planning an initial public offering of the Kingdom’s US$500 billion megaproject Neom as soon as 2024. Talking to reporters in Jeddah, the crown prince said the Kingdom is setting aside $80 billion for Neom Investment Fund, where it would invest in companies that agree to operate in the futuristic city, Bloomberg has reported. https://bit.ly/3BK2wnN
Alibaba to apply for primary listing in Hong Kong.
Alibaba Group said it would pursue a primary listing of its stock in Hong Kong, in a move that would make it easier for investors in mainland China to buy the Chinese e-commerce giant’s shares for the first time. Alibaba, which is listed in New York, currently also has a secondary listing in Hong Kong. But that status means its shares aren’t available on Stock Connect, a platform that allows mainland China-based investors to trade Hong Kong-listed stocks and vice versa. A primary listing would make Alibaba’s stock available on Stock Connect. And Alibaba, whose share price in Hong Kong has dropped 45% over the past 12 months, could use some additional liquidity and pent-up demand from Chinese investors. Alibaba said in a statement that it expects its primary listing in Hong Kong to occur before the end of this year. The company’s Hong Kong-listed shares rose more than 5% after the announcement. The move comes as New York-listed Chinese companies are facing delisting risks due to new disclosure requirements from the U.S. Securities and Exchange Commission. https://bit.ly/3OKgt82
Jack Ma plans to cede control of Ant Group.
In less than six months, China’s tech giant Ant went from planning a blockbuster IPO to restructuring in response to pressure from the central bank. As the U.S. also takes aim at big tech, here’s how China is moving faster. Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd. after more than a year of extraordinary pressure from Chinese regulators. The authorities halted Ant’s US$34 billion-plus IPO in 2020 at the 11th hour and are forcing the technology firm to reorganize as a financial holding company regulated by China’s central bank. https://on.wsj.com/3vqkiIq
Eutelsat and OneWeb agree on merger to create European satellite juggernaut.
Two major players in the European satellite space are merging in a $3.4 billion all-share transaction, a move that is widely seen as a challenge to Elon Musk’s SpaceX. Rumors emerged earlier this week that France’s Eutelsat was gearing up to buy its British rival OneWeb, and the duo have now confirmed these plans. https://tcrn.ch/3PUTBDC
Twitter trial over Elon Musk merger to begin Oct. 17.
Twitter Inc. and Tesla Inc. Chief Executive Elon Musk officially have a court date for their merger trial. Chancellor Kathaleen McCormick of the Delaware Chancery Court has set the trial for Oct. 17, according to an order filed late Thursday. The trial is scheduled to run through Oct. 21. McCormick earlier this month sided with Twitter’s request for an expedited trial that would begin this fall, while Musk’s representatives had been pushing for a February 2023 start. Musk agreed in April to purchase Twitter for US$44 billion, but he said in early July that he was terminating the deal due to his concerns over the accuracy of Twitter’s public disclosures on bot accounts. Twitter is seeking to move forward with the merger under the original terms and recently scheduled a Sept. 13 shareholder vote on the matter. Twitter shares are up 1.5% in Friday morning trading. They’ve lost 15.4% over the past three months as the S&P 500 has fallen 0.6%. https://on.mktw.net/3cTkMjS
Elon Musk countersues Twitter over merger, but details aren’t yet public.
Elon Musk countersued Twitter on Friday, intensifying the conflict between the Tesla CEO and the social networking company he agreed to buy, but the lawsuit is not yet available to the public. It wasn’t clear why Musk asked the court to keep details of his countersuit confidential when the billionaire, who is also the CEO of SpaceX, had been vocally critical of Twitter on social media and in press interviews in recent months. Musk’s legal team filed a confidential countersuit in a Delaware court on Friday, which means a copy was not available to the public immediately, but a version of it could be made public in the near future with sensitive details redacted. https://cnb.cx/3OTKimI
Twitter’s ‘mounting’ ad pressures mean stock could be in mid-teens without support from Musk deal.
Twitter Inc. shares could be trading in the mid-teens without Tesla Inc. Chief Executive Elon Musk’s contentious US$54.20/share deal for the company helping to prop up the name, according to MoffettNathanson analyst Michael Nathanson. The stock closed Friday at US$39.84. “Snap’s ad growth has further decelerated into 3Q, so we expect a similar trend for Twitter as well,” he wrote. “We expect Twitter’s advertising growth to remain depressed over the next several quarters as it contends with mounting macroeconomic pressures.” https://bit.ly/3J562uz
Meta piles onto growing fears that advertising demand is plummeting, posting its first decline in revenue since going public.
Facebook-owner Meta piled onto fears of plunging demand in the advertising market, warning it expects to generate less revenue than expected next quarter. The company announced Wednesday that weaker-than-expected advertising demand is being driven by broader uncertainty in the economy, as experts say the chances of a coming recession grow. Even worse, Meta set expectations for Q3 revenue at US$26 billion to US$28.5 billion, well below Wall Street’s current estimate of US$30.4 billion. https://bit.ly/3OI7XGg
Roku misses Q2 estimates as streaming hours dip from prior quarter.
Roku fell well short of Wall Street financial forecasts for the second quarter — and the streaming platform saw the number of hours streamed by customers drop from Q1. The company had 63.1 million active accounts as of the end of Q2, adding 1.8 million in the period, beating analyst forecasts. Customers in the quarter streamed 20.7 billion hours, a decrease of 200 million hours from last quarter. Shares of Roku tumbled more than 25% in after-hours trading on the miss, and following the company’s projection of only 3% top-line growth for the third quarter. Overall, Roku posted revenue of US$764.4 million, up 18%, and a net loss of US$112.3 million (or 82 cents per share). Wall Street analyst average estimates pegged Q2 revenue at UA$805.2 million with a loss of 68 cents per share. https://bit.ly/3ziThYx
Spotify stock jumps on strong subscriber growth, forecasts.
Spotify lightened the mood in the tech sector Wednesday with a rarity in these times of economic turbulence: a strong earnings report and an unequivocally bullish outlook for the future. The streaming music service reported that its total monthly active users were up 19% to 433 million in the second quarter compared to a year earlier—5 million more than Spotify had forecast for the period. It cited growth in Latin American among young adults and reactivations of accounts in Europe, among other factors, for the strong performance. Spotify’s revenue grew 23% to €2.86 billion ($2.9 billion). The money-losing streaming service saw its net loss widen to €125 million (US$127 million) from €20 million (US$20.3 million) a year earlier. The company’s shares were up around 12% to US$116.14 following the report. In prepared remarks for the company’s earnings call, chief financial officer Paul Vogel struck an optimistic tone that is in short supply from other tech executives these days. “We continue to monitor the global macro outlook, but to date have seen no real impact on our user or subscriber outlook,” he said. https://bit.ly/3PObOD4
MBS’s US$500 billion desert dream just keeps getting weirder.
Neom, the Saudi crown prince’s urban megaproject, is supposed to have a ski resort, swim lanes for commuters, and “smart” everything. It’s going great—for the consultants. Yet five years into its development, bringing Neom out of the realm of science fiction is proving a formidable challenge, even for a near-absolute ruler with access to a US$620 billion sovereign wealth fund. https://bloom.bg/3Bns7CA
Quest 2 price jumps to US$399 as meta costs rise.
The price for a new Quest 2 is jumping to US$399 as Meta says “the costs to make and ship our products have been on the rise.” Oculus Quest 2 debuted at US$299 in 2020, US$100 cheaper than Oculus Quest from 2019. In 2021, Facebook bumped the base Quest 2 headset’s storage from 64GB to 128GB while holding the suggested entry price firm at US$299. Earlier this year, Meta changed the headset’s branding on the physical device to its new corporate identity — officially becoming Meta Quest 2. https://bit.ly/3zw5Lwn
Study suggests that pill can cut hereditary cancer risk by 60%.
A years-long trial appears to have shown that resistant starch — a digestion-resistant molecule found in a range of everyday foods including slightly underripe bananas, oats, peas and beans, rice, pasta and more — has an astonishing ability to help prevent a range of hereditary cancers. Published in the journal Cancer Prevention Research, the double-blind longitudinal study followed nearly 1,000 patients with Lynch Syndrome, an inherited genetic condition that increases the individual risk of several cancers, for almost 20 years. According to a press release, the researchers at the universities of Newcastle and Leeds placed participants in two groups back in 1999. There was a short treatment period thereafter, which lasted until 2005. During the treatment period, each individual received a pill. One group took a placebo, while the other took a daily dose of resistant starch. There was no notable difference in the individuals’ health at the end of that short treatment period. But the study was designed for follow-up, and in extremely intriguing results, those who took the daily starch pill — which contained the approximate amount of the digestion-defying molecule that one would find in an average-sized underripe banana — were far more likely to be cancer-free nearly 20 years later. https://bit.ly/3cPyHYj
Media, Streaming, Gaming & Sports Betting
NFL+ streaming service announced, Apple still ‘front-runner’ for Sunday Ticket rights.
As reports continue to circulate regarding Apple’s interest in a deal for NFL Sunday Ticket, the NFL has officially announced its new NFL+ streaming service. The new NFL+ streaming service offers access to a number of NFL games exclusively on your iPhone and iPad, with some caveats. NFL+ will cost US$4.99 per month or US$39.99 annually and offers access to live local and nationally broadcast games on phones and tablets. https://bit.ly/3JafLj1
Facebook will share music revenue with creators.
Meta Platforms announced creators can now earn money from their Facebook videos that feature licensed music. Creators earn a 20% cut from revenue on eligible videos, with an unspecified amount going to rights holders and Meta. Previously, creators could use licensed music in their videos but didn’t earn anything from it. The music must be part of Facebook’s licensed music library and videos need to be 60 seconds or longer. The creator does not need to own the music rights to the song they use in order to earn revenue. Facebook Reels are not eligible for revenue sharing for music. https://bit.ly/3voCFOc
Facing their first recession, Twitch streamers are tightening their belts.
Khairi Harris, who goes by the handle “KDotDaGawd” on Twitch, is hanging onto his career as a full-time streamer by a thread. Last month he found himself scanning the classifieds for a part-time job to help make ends meet; a last-second promotional contract with a PC hardware company kept his finances from flatlining. For now, at least, he can pay his bill. On a platform where 25 percent of the top 10,000 highest-paid streamers don’t even make minimum wage, promotional deals help prevent some from slipping through the cracks. https://wapo.st/3OR9p9K
Adtech, Privacy & Regulatory
Google delays a phase-out of Chrome ad trackers to 2024 as antitrust trials loom.
It’s been two and a half years since Google announced it would follow Apple’s lead by blocking most online advertising trackers known as cookies in its web browser, but the world is no closer to that being a reality. Google on Wednesday said it was pushing back the planned move by another year, to the second half of 2024, to allow for more tests of a cookie-less web, which some news publishers say would hurt them and benefit Google. It is worth noting that by the end of 2024, court trials stemming from twin antitrust cases filed against Google by the Department of Justice and the Texas Attorney General could be concluded. Why does that matter? Texas is attacking Google’s dominance in selling advertising-technology services to website publishers and advertising firms, and the DOJ has been considering filing a similar case. (The agency’s existing antitrust lawsuit focuses on Google’s web search dominance.) So any moves Google makes to draw even more attention to its ad tech dominance could damage its defense. Texas filed its case after news publishers complained to antitrust investigators that Google’s plan to block the ad trackers through Google Chrome, the world’s top web browser, would hurt their sites while indirectly benefiting Google’s own ad business. Meanwhile a bipartisan group of U.S. senators that has been trying to rein in Google and other big tech companies has introduced a bill that would regulate the shadowy world of online ads more like how the government regulates Wall Street, by aiming to prevent potential conflicts of interest. That draft legislation would effectively force Google to sell or spin off major parts of its ad technology operations—namely, its ad exchange that connects buyers and sellers of online ads. The Texas AG unearthed alarming evidence against Google, including allegations that the company rigged ad-exchange auctions for its own gain as well as to aid Facebook, a longtime rival. In exchange, Facebook allegedly agreed to end an advertising practice called header bidding, which Google viewed as a growing threat to its ad exchange. https://bit.ly/3PQkfOy
Instagram walks back its changes.
Instagram will walk back some recent changes to the product following a week of mounting criticism, the company said today. A test version of the app that opened to full-screen photos and videos will be phased out over the next one to two weeks, and Instagram will also reduce the number of recommended posts in the app as it works to improve its algorithms. “I’m glad we took a risk — if we’re not failing every once in a while, we’re not thinking big enough or bold enough,” Instagram chief Adam Mosseri said in an interview. “But we definitely need to take a big step back and regroup. [When] we’ve learned a lot, then we come back with some sort of new idea or iteration. So we’re going to work through that.” The changes come amid growing user frustration over a series of changes to Instagram designed to help it better compete with TikTok and navigate the broader shift in user behavior away from posting static photos toward watching more video. https://bit.ly/3PM9NHP
IBM Security report finds data breaches are costlier than ever before. IBM Security’s 2022 Cost of a Data Breach Report, based on analysis of real-world data breaches experienced by 550 organizations globally between March 2021 and March 2022, found that the average cost of a data breach has hit an all-time high of US$4.35 million. Insufficient security staffing was noted to be a serious issue, with 62% of organizations saying they are not sufficiently staffed to meet their security needs, averaging $550,000 more in breach costs than those that state they are sufficiently staffed. https://bit.ly/3b4GOzX
SEC charges ex-congressman with insider trading over buys of Sprint, Navigant stocks. The Securities and Exchange Commission on Monday said it has filed insider trading charges against Steve Buyer, a former Republican congressman from Indiana. The SEC said Buyer bought US$568,000 in Sprint stock in his own accounts and other accounts after a T-Mobile executive told him at a March 2018 golf outing about the planned merger of the two wireless carriers before the deal had been made public, with those trades providing an immediate profit of more than US$107,000. The regulatory agency also said Buyer bought more than US$1 million in Navigant Consulting shares in 2019 across several accounts ahead of a public announcement that the company would be acquired by Guidehouse, with those trades providing a profit of more than US$227,000. https://bit.ly/3z1GFVI
Alibaba scales back global expansion plan to rival Amazon.
The group launched Alibaba.com, its business-to-business ecommerce website, in the US three years ago with the aim of signing up more than 1 million local businesses and compete globally with the likes of Amazon, which has a similar platform for wholesalers. But Alibaba.com’s US operation has failed to meet its initial targets, forcing the Chinese company to readjust its growth plans, according to three people familiar with the operations. The project has also been hit by dozens of staff departures from its New York office. The troubles at its US business-to-business arm come as Alibaba steps up its international push as its domestic operations continue to get hit by Beijing’s tech crackdown, slowing economy and rising competition. However, Alibaba.com has struggled to retain US sellers since its launch, in part down to the difficulty of competing with the prices of global merchants. The majority of US sellers cancel their subscriptions after a year, according to past and current employees. Alibaba.com has now slashed its target of signing up 1 million US small businesses to just 2,000 each year, one person said. https://on.ft.com/3bfqEUq
Fintech, Blockchain & Cryptocurrency
Crypto exchange FTX US expands stock trading, plans options next.
Crypto exchange FTX US is expanding its no-fee stock trading service to all US users, including non-crypto investors, in a move to expand its customer base and increase assets under custody. “Our beta users were from a pool of existing FTX US crypto users,” Brett Harrison, president of FTX US, said in an interview. “It will be very interesting when we open it to all to see how many FTX US users start to trade stocks, and to what it extent we will be able to bring new users.” https://bloom.bg/3ziH0TV
Coinbase faces SEC probe on crypto listings; shares tumble.
Coinbase Global Inc. is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities, according to three people familiar with the matter. The company’s shares dropped as much as 9.2%. The probe by the SEC’s enforcement unit predates the agency’s investigation into an alleged insider trading scheme that led the regulator last week to sue a former Coinbase manager and two other people. https://bloom.bg/3zzN4Jp
U.S. Treasury investigating Kraken for violating sanctions.
The U.S. Treasury Department is investigating whether crypto exchange Kraken skirted U.S. sanctions by allowing users in Iran and other countries to buy and sell crypto, the New York Times reported on Tuesday. Kraken has been under investigation from the Treasury Department’s Office of Foreign Assets Control since 2019, according to the Times, which cited five people affiliated with the company or familiar with the matter. The inquiry is expected to end with a fine levied on Kraken. Marco Santori, chief legal officer at Kraken, told the Times that the exchange “does not comment on specific discussions with regulators” and “closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.” The investigation isn’t the first time Kraken has been under regulatory scrutiny. The exchange paid the Commodity Futures Trading Commission a $1.25 million fine last year to settle charges that it improperly offered margin transactions to retail customers. Kraken did not admit to or deny the CFTC’s findings. Kraken’s CEO Jesse Powell has also been under fire from employees who told the Times he has made “hurtful” comments and helped create a toxic work environment. https://bit.ly/3BtOCpr
U.S. passes US$52 billion in chip subsidies to boost production, counter China.
Let the government subsidy sweepstakes begin! U.S. lawmakers, after realizing that decades of outsourcing and offshoring microchip manufacturing overseas was a bad long term strategy, approved US$52 billion in new grants and US$24 billion worth of tax breaks for companies to build chip facilities and develop more advanced chip technologies on U.S. soil. The money will be doled by separately the commerce, defense and state departments as well as the National Science Foundation. Importantly, chip developers applying for money may be restricted from expanding chip manufacturing efforts in China, where many chip fabrication facilities are located, except for chips based on older technology. The legislation is aimed partly at lessening the risk of a chip shortage, which has impacted the U.S. auto industry and other industries. And it is also partly a reaction to U.S. fears over the growth of chip fabrication in China (Intel has operated such facilities there), the technological progress of that country’s domestic chip companies—namely, Semiconductor Manufacturing International Corp—and China’s stated plan to control Taiwan, home to the most important chip fabrication firm, Taiwan Semiconductor Manufacturing Co. To be sure, the new U.S. subsidies and tax breaks probably represent a tiny sliver of what the Chinese government has given to SMIC and other homegrown chip efforts. And they are unlikely to change the conditions that led U.S. chip developers to offshore key facilities in the first place. The question now is how the U.S. executive-branch agencies will prioritize requests for money that will come from all corners of the industry—including from Intel, which gave dividends to shareholders while cutting chip fab buildouts—to venture capital-backed chip startups that solely operate in the U.S., and how they will evaluate whether funds are going toward existing technologies or to develop new ones. Things should get interesting as various companies jockey for position. https://bit.ly/3cWtw9f
Solar stocks jump as Senator Joe Manchin reaches a deal with Democrats that includes climate spending. Solar stocks were higher Thursday, following news that Senator Joe Manchin (D-WV) and Majority Leader Chuck Schumer reached a deal on a spending bill that includes climate funds. The agreement includes US$369 billion in climate and energy spending aimed at cutting US carbon emissions 40% by 2030. Manchin previously signaled that he wouldn’t support a bill with new tax or climate provisions. Shares of SunRun and SunPower both jumped as much as 13% while First Solar surged 10% and SolarEdge rallied 6%. https://bit.ly/3BvTtGV
Faraday Future delays launch of its debut electric vehicle.
Faraday Future’s first car is still a far way off in the future, according to recent regulatory filings. The California EV company that has flirted with bankruptcy more times than I can count said this week that it needs more cash in order to launch its debut electric vehicle, the FF91. As such, the company is pushing back customer deliveries to the third or fourth quarter of 2022. The company has been on shaky ground for most of its existence: Faraday Future said it was going to build a US$1 billion factory in the Nevada desert but never did; it’s been hemorrhaging money and employees for years; it put its own headquarters up for sale to cover its debts; emergency investors emerged, only to later get mired in court battles over control of the money; and the founder and CEO, Jia Yueting, was hiding in the US from Chinese debt collectors. https://bit.ly/3PFlZdj
Ford posts Q2 profit, expects to produce 14,000 EVs this month.
Ford Motor has dodged some of the pain and losses that rival General Motors experienced in the second quarter. Ford reported Wednesday US$40.2 billion in revenue, a 50% increase from the same period last year, and an adjusted operating income that tripled to US$3.7 billion. Those figures, which absolutely crushed Wall Street expectations, sent shares up as much as 6% in after-hours trading. Shares have since settled and are up 5.18%. That’s quite the turnaround from Ford’s first-quarter results when it reported a net loss of US$3.1 billion largely driven by the loss in valuation of its stake in EV startup Rivian. https://tcrn.ch/3zd1vle
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