Last week, Dow Jones lost ~10 bps, S&P 500 rose 0.9%, and NASDAQ Composite gained 1.7% and hit a record high on Friday. Klarna is considering a US$20 billion IPO this year. eToro is getting interest about a public market listing. Investing platform Webull will go public through a SPAC deal. Stripe struck a deal with investors that allows current and former employees to cash out some of their shares in an offering valuing the startup at US$65 billion. Hedge funds are reportedly dumping tech stocks at the quickest pace in seven months after piling in ahead of Nvidia’s wild earnings report. At the same time, options on Nvidia, accounted for 25 cents of every dollar of premium – the price of contracts – traded in U.S. single-stock options over the past month. Various companies including Apple, Fisker and Polestar signalled problems with the EV market. In Canada, Sophic Client, Kraken Robotics announced that its minehunting systems were operational with the Royal Danish Navy, under a 2020 contract. Sophic Client, UGE achieved a Notice to Proceed milestone for a second 1.4MW solar project in Texas. UGE had the project appraised by an independent third party for a fair market value of US$3.1 million or US$2.22/Watt. Sophic Client, Clear Blue provide a Q4 2023 corporate update, which bodes well for 2024 results and also announced product updates. Railtown AI closed the final tranche of its previously-disclosed non-brokered private placement. Collectively across all tranches of the Offering, aggregate gross proceeds of nearly $3 million was raised. Toronto startup ideogram raised $80 million for AI image generation, Andreessen Horowitz is leading the round.

Canadian Technology Capital Markets & Company News

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) minehunting systems operational with the Royal Danish Navy.

This contract was signed in September 2020, following a competitive bidding process. Under the contract with the Danish Ministry of Defence Acquisition and Logistics Organization (DALO), Kraken has delivered four complete turnkey mine-hunting systems, with each system consisting of a KATFISH™ towed Synthetic Aperture Sonar, Tentacle® Winch and Autonomous Launch and Recovery System (ALARS), topside command and control equipment, and remote operation and monitoring capability for standoff mine-hunting operations. In 2023, Kraken also entered in a 7-year sustainment contract with DALO, with options for two further 7-year extensions, for a total possible 21 years of sustainment. The sustainment program includes regularly scheduled maintenance, repair, and overhaul as well as provision of training and spare parts, and the delivery of regular capability enhancements through software updates. Throughout 2024, Kraken will also be delivering additional spares, including spare towcables and two spare KATFISH towbodies. https://bit.ly/4bXpOpR

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) achieves Notice to Proceed milestone for second 1.4MW solar project in Smithville, Texas.

UGE, has reached the ‘Notice to Proceed’ (NTP) milestone for a 1.4MW ground-mount solar project in Smithville, Texas. The NTP milestone indicates that financing for the project has closed and all necessary permits and interconnection approvals for the project are in place. This is UGE’s second solar project in the town of Smithville, Texas; the first (“Smithville 1”), which also totals 1.4MW, reached commercial operation in January of 2023. Both projects were part of an acquisition made by UGE that also includes a 5MW battery energy storage system (“BESS”) which is currently under development. Although there is not yet a community solar program in Texas, the market for clean energy in the state is robust, with municipalities and commercial customers routinely procuring large amounts of renewable energy. Additionally, ERCOT, the Independent System Operator (ISO) that controls approximately 75% of the grid in Texas, has well-developed rules for interconnection, making project development faster and easier in Texas than in many other states. UGE will continue to pursue more projects in Texas in 2024 and beyond. Together UGE’s two Smithville solar projects will generate over 5 million kilowatt hours of electricity each year, enough to power over 700 homes. Annually they will offset over 3,500 metric tons of CO2 emissions, the equivalent generated by burning about 415,000 gallons of gasoline. UGE had the project appraised by an independent third party for a fair market value of USD$3.1 million or USD$2.22/Watt. UGE will receive a grant through the U.S. Department of Agriculture’s Rural Energy for America Program (“REAP”), which supports energy efficiency and renewable energy in rural and agricultural areas of the United States. UGE’s grant will total USD$1 million. Having reached NTP, the Smithville 2 project will now enter deployment and construction – the final phase before reaching commercial operation. UGE has 8 projects totaling 17.3MW in this final development phase. Once complete, these projects will join UGE’s operating portfolio, which currently stands at 5.6MW. https://bit.ly/3wFe6zK

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) provides Q4 2023 corporate update.

Clear Blue Technologies International Inc. announces a Q4 2023 corporate update, including preliminary Q4 financial results. Revenue is expected to be $2.1M (up $1.922M from $178k in Q4 2022 and almost equal to Q3 2023, which was $2.2M), exceeding the previously announced Q4 guidance range of $1.8M – $2M. Q4 continued to exhibit very strong gross margins in line with previous periods (37% in Q3 2023). Revenue was distributed across all business units. 2024 revenue is expected to be significantly greater than 2023 and 2022 revenue which were $5.4M and $2.6M respectively. With typical business seasonality, strong sales orders in the first half of the year leads to stronger revenue in the second half of the year. Clear Blue’s business growth has accelerated following a challenging 2022 and 2023. This is expected to lead to increased order intake in 2024, followed by revenue growth. The cash position at the end of the quarter was $0.5M, approximately $2M of accounts receivables and $2.0M in non-dilutive capital from across government programs all expected in early 2024. “We believe our robust and growing pipeline is providing us increased visibility into order intake for 2024…These opportunities cumulatively represent an order pipeline in the low hundreds of millions of dollars.” said Miriam Tuerk, CEO of Clear Blue. Clear Blue has a strong 2024 sales funnel for each product. All products are expected to achieve meaningful growth with revenue split fairly evenly across each unit. https://bit.ly/48AxqLU

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) releases Esite edition of Illumience and provides update on its ‘Road to Zero Diesel’ R&D program.

Clear Blue announces full integration of its Esite product with its industry leading Smart Power Cloud management service, Illumience. Currently in beta release, the service goes live in March 2024 to all our telecom infrastructure customers. Our patented energy forecasting and management will minimize generator operations and maximize solar energy performance. It is the key focus of our Artificial Intelligence (AI) roadmap. Supported by a $5 million grant from the Government of Canada, in 2024 and 2025, smarter predictive analytics supported by machine learning will bring significant cost benefits to our customers. Together, our target is a 20-50% reduction in generator fuel consumption, which ultimately could deliver an increase in profit of 5-10% for telecom infrastructure customers. To date, Clear Blue has shipped to 55 countries around the world with products operating in a wide variety of conditions. Over this time, the Company has processed more than 1 trillion cloud transactions from our production systems. This large proprietary data store forms the basis for the next layer in the AI stack – machine learning. With more than 38,000 years of operating data, we have the largest repository of solar and energy performance of Telecom and IOT systems. This is the key to leading the market in Artificial Intelligence. As companies experience un-paralleled cost and currency pressures, reducing and eliminating diesel energy costs – including both fuel and site servicing costs – is of utmost importance. Clear Blue has already proven that it can deliver the lowest upfront cost – as an example, solar only systems with Clear Blue’s Smart Power have a 40% lower Capex than other systems. Now, Clear Blue is bringing this capability to diesel powered larger systems via our AI driven product roadmap. https://bit.ly/3SRHV7M

NurRAN Wireless and Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) planning 2024 deployments at Mobile World Congress (MWC) 2024 in Barcelona this past week.

A short chat between Clear Blue Cofounder & CEO Miriam Tuerk and NuRAN President & CEO, Francis Letourneau. https://bit.ly/49wxu0o

Railtown AI Technologies Inc (RAIL-CSE). announces final closing of Life Non-Brokered Private Placement.

Railtown AI Technologies has closed the final tranche of its previously-disclosed non-brokered private placement (the “Offering”) of units of the Company (each, a “Unit”). This tranche of the Offering consisted of 1,863,667 Units at a price of $0.15 per Unit for gross proceeds of $279,550. Each Unit consists of one common share in the capital of the Company (each, a “Share”) and one-half of one common share purchase warrant (each whole warrant, a “Warrant”), with each Warrant entitling the holder thereof to acquire one additional Share at an exercise price of $0.30 per Share for a period of 24 months. Collectively across all tranches of the Offering, a total of 19,330,003 Units were issued for aggregate gross proceeds of $2,899,550.https://tinyurl.com/2p8ynmba

Toronto startup Ideogram raises $80 million for ai image generation.

The startup excels at generating AI images that include legible text. Ideogram launched in August 2023, led by several former Google employees who helped create the first version of the tech giant’s image-generation software. Ideogram, a company developing artificial intelligence image generation technology, is raising $80 million from investors — a large round for a startup that’s less than two years old. Andreessen Horowitz is leading the round, with participation from Index Ventures, Redpoint Ventures, Pear VC and SV Angel. The startup declined to give its valuation. https://tinyurl.com/4cd4mh6e

Helcim closes $27 million to bring payment stack to underserved SMBs.

Calgary-based FinTech startup Helcim has closed $27 million (US$20 million) in Series B financing. The funding round was led by Headline, a San Francisco-based venture capital firm, with participation from new investors Clocktower Ventures, Vesey Ventures, and SilverCircle, as well as returning investors Information Venture Partners and Aquiline Technology Growth. Founded in 2008, Helcim offers a suite of payment solutions to traditional small to medium-sized businesses, such as home-services businesses, retail merchants, auto-repair shops, and health-care clinics. The startup’s product suite includes point of sale, invoicing, online checkout, debit and credit cards, and a payments terminal, among other services. Helcim is looking to fill what it sees as a gap for Main Street businesses, which often deal with high average order values (which measure the average amount of money each customer spends per transaction), lower digital payment penetration, and tighter working capital needs. http://tinyurl.com/mrs7jdu4

Canadian-founded Power closes $16.3 million Series A to connect patients with clinical trials.

Canadian-founded, San Francisco-based Power has raised $16.3 million (US$12 million) in Series A funding to bolster its clinical trial discovery platform. The all-equity round, which closed in late December 2023, was led by Kin Ventures and Contrary, with participation from 20Growth, 14W, Common Metal, Otherwise Fund, as well as returning investors Air Angels, ARTIS Ventures, and Footwork. Founded in 2021 by Canadian entrepreneurs Brandon Li and Michael ‘Bask’ Gill with a mission to modernize the discovery and accessibility of clinical trials, Power’s software allows patients in the United States to find treatment options within their area. The idea for the platform was sparked by the founders’ respective experiences searching for clinical trials when their loved ones were diagnosed with cancer. https://tinyurl.com/yck5rsbj

Elevated Signals raises $7.9 million Series A to scale its manufacturing operations software.

Vancouver-based Elevated Signals has raised $7.9 million to fuel the expansion of its manufacturing operations software into new sectors. The Series A round, which closed in November 2023, was led by Yaletown Partners, with participation from Third Kind Venture Capital, WGD Capital, Colin Harris, Raiven Capital, and Pareto Holdings. https://tinyurl.com/456kkmmc

Omers, Harvest Consider Potential US$3 Billion Sale of Epiq Systems.

Omers Private Equity and Harvest Partners are exploring the sale of Epiq Systems, a provider of technology and other services to the legal profession that they took private in 2016, people with knowledge of the matter said. The investment firms have tapped advisers to solicit interest from potential suitors in the company, said the people, who asked not to be identified discussing confidential information. The company might fetch US$3 billion or more, including debt, in a sale, one of the people said. Epiq has at least US$1.2 billion in outstanding debt, according to data compiled by Bloomberg. https://archive.is/XMhVX

Facebook, YouTube to face new Canada ‘harmful’ content rules.

Bill to hold platforms responsible for extremist material. Also creates new hate crime offense, digital safety regulator. Prime Minister Justin Trudeau’s government introduced an online safety law in Canada, joining European countries in trying to compel internet companies to actively regulate and remove harmful content. The Online Harms Act, introduced in parliament on Monday, will make platforms responsible for reducing exposure to damaging content, including material that bullies or sexually victimizes children, or incites extremism, violence or hatred. http://tinyurl.com/4hnskd3m

Global Markets: IPOs, Venture Capital, M&A

Klarna considers aiming for US$20 Billion valuation in IPO this year.

Klarna is having detailed discussions with investment banks for an IPO could happen as soon as the third quarter, Bloomberg reported. The company is “considering seeking a valuation of around US$20 billion,” according to the report, which cited people familiar with the matter. A Klarna IPO would be a key step for the Swedish fintech company that was valued as high as US$45.6 billion in 2022 but whose value dropped to US$6.7 billion in a funding round just a year later. News of the IPO discussions follows a dramatic board fight in recent weeks as big investor Sequoia Capital sought to remove Silicon Valley veteran Michael Moritz from the board before meeting resistance and ultimately withdrawing its request. The Sequoia partner and Klarna board member who had spearheaded the potential ouster stepped down from the board. https://tinyurl.com/4j7pf3he

‘We definitely are eyeing the public markets’: eToro CEO considers IPO after scrapped SPAC deal.

Stock brokerage platform eToro is getting interest from bankers and investors about a public market listing after its scrapped plans to go public via merger with a blank-check company, CEO Yoni Assia told CNBC. “We definitely are eyeing the public markets,” Assia told CNBC in an exclusive interview last week. “I definitely see us becoming eventually a public company.” “When is the ideal time to do that? We’re always evaluating the right opportunity at the right time and the right market,” he added. Assia said that his brokerage company has built good relationships with exchanges, including the Nasdaq stock exchange. EToro has already put the work in toward becoming a public company, he suggested, and the question of listing is more a matter of when, not if. Figures shared by eToro with CNBC exclusively show that the firm recorded US$630 million in revenue in 2023, more or less matching the US$631 million in revenue it attracted in 2022. But the company reported more than US$100 million in EBITDA (earnings before interest, tax, depreciation, and amortization), an impressive margin for a retail brokerage business. The company did not provide a comparable profit figure for 2022. EToro relies mainly on fees related to trading, like spreads on buy and sell orders, as well as fees for non-trading activities like money withdrawals and currency conversion. EToro now has 35.5 million registered users, and over 3 million funded accounts. The company crossed US$10 billion in total customer assets under administration in 2023, according to its financials. https://tinyurl.com/y85unxus

Investing platform Webull to go public through SPAC deal.

The brokerage, which surged in popularity during the GameStop mania, had previously considered an IPO. Digital brokerage Webull said it has struck a deal to go public through a merger with a special-purpose acquisition company. Webull said it would merge with SK Growth Opportunities, which trades on the Nasdaq under the ticker SKGR. After the deal’s closing, the combined company would be listed on the Nasdaq as Webull. Webull expects to begin trading under a new ticker around September, according to Webull Group President Anthony Denier. https://tinyurl.com/yha5unsz

Shein is considering moving its massive IPO from New York to London amid scrutiny over its supply chains and ties to China.

Fast-fashion brand Shein may move its initial public offering, or IPO, from New York to London. The retailer, which was founded in China but is now based in Singapore, confidentially filed to go public last year. It was seeking a valuation of US$80 billion to US$90 billion. Shein — which is known for its super-fast turnover of trendy items at rock-bottom prices — still prefers to list in the US, but is considering listing in London as it thinks the US Securities and Exchange Commission will not approve its IPO, Bloomberg reported, citing people with knowledge of the application. It’s also considering Hong Kong or Singapore as potential IPO locations, according to the media outlet. Shein’s IPO could be a huge one. If the retailer is valued at US$90 billion, it would be able to raise US$9 billion even if just 10% of its shares go public. This would put it just behind Porsche’s US$9.1 billion IPO in 2021. However, Shein faces challenges in its plans to go public in the US. US lawmakers have lobbied to delay Shein’s public offering until they can verify there’s no forced labor in its supply chain. Shein has repeatedly said it does not use manufacturers in Xinjiang, where there are concerns over human rights abuses. Republican senator Marc Rubio has also urged the SEC to press Shein to make additional disclosures about its operations and ties to the Chinese Communist Party. http://tinyurl.com/mpecnwwv

Stripe valued at US$65 billion after striking staff share deal.

Stripe Inc. struck a deal with investors that allows current and former employees to cash out some of their shares in an offering valuing the startup at US$65 billion, according to a statement. Under the deal, Stripe and some of the firm’s investors will buy more than US$1 billion of stock from such staffers, according to a person familiar with the matter who asked not to be identified discussing private information. Stripe said in the statement that using a portion of its own capital to buy the shares will offset dilution from the firm’s employee equity compensation programs. Unlike many financial-technology companies with similar brand recognition, Stripe hasn’t yet opted for an initial public offering, remaining a private company. https://archive.is/Skj45

Hedge funds are dumping tech stocks at the quickest pace in 7 months after piling in ahead of Nvidia’s wild earnings report.

Nvidia’s blockbuster earnings report last week has been followed by big outflows from the tech sector among hedge funds as they look to take some chips off the table after piling in ahead of the chip maker’s results. A note to clients from Goldman Sachs’ prime brokerage unit said hedge funds have been selling tech at the fastest pace in seven months after a six-week period of buying before Nvidia reported results last Wednesday. “After a 6-week buying streak, HFs unloaded Tech stocks at the fastest pace in 7+ months, as the sector was net sold for 4 straight sessions incl. Thurs post NVDA results,” the analysts wrote. Nvidia sent investors into a frenzy with its earnings last Thursday, adding US$267 billion in market cap, good for the biggest-ever addition to market value in a single trading session. http://tinyurl.com/mr3wcwh9

Tech companies cash in on ‘frothy’ stock rally with convertible bond sales.

Risky technology groups are rushing to raise cheap cash on the convertible bond market while investor enthusiasm about artificial intelligence fuels a surge in their stock prices. US companies have raised roughly US$7.4 billion through such debt in February, according to data from LSEG, the highest monthly figure since August, with tech and fintech groups accounting for three-quarters of the total. Last week was the busiest in a year for sales of so-called convertibles. The Federal Reserve has been holding its benchmark interest rate at a 22-year high since July, but borrowers in convertible markets have been able to raise funds at much lower interest rates with relatively few restrictions on how they spend them. “A frothy market, particularly on the equity side, will present an opportunity for many companies to access a free lunch,” said John McClain, a portfolio manager at Brandywine Global Investments. “Converts are open for business.” https://tinyurl.com/5n8kuweu

Humanoid robot developer raises US$675 million from Microsoft, OpenAI.

Figure, a San Francisco-area startup that develops human-like robots, announced on Thursday that it had raised US$675 million in Series B funding at a US$2.6 billion valuation including the investment. Microsoft and OpenAI led the funding, according to a person at one of the companies with knowledge of the deal, with participation from Nvidia, Amazon Industrial Innovation Fund, Jeff Bezos and Intel Capital. The 80-person startup also announced a partnership with OpenAI, which will develop specialized AI models for Figure’s robots. Figure’s robots could also provide valuable real-life training data for OpenAI’s models, although such an agreement wasn’t disclosed. OpenAI previously employed a group of robotics developers that was disbanded in 2021, and it’s also invested in humanoid robotics competitor 1X Technologies. Figure plans to use Microsoft’s cloud service, Azure, for storage, training and infrastructure purposes. The startup also announced its first commercial deal with carmaker BMW in January. https://tinyurl.com/y8ehhyd7

EU regulators to scrutinize Microsoft’s US$16 million investment in Mistral.

The European Commission, Europe’s top antitrust regulator, plans to examine Microsoft’s investment in the French generative AI startup Mistral, the commission said on Tuesday. Microsoft announced on Monday a partnership with Mistral under which it will make Mistral’s large language models available for developers to purchase from Microsoft’s Azure cloud platform. Microsoft said it is investing US$16.3 million in Mistral as part of the deal. Microsoft’s deal with Mistral reflects the software giant’s ambitions to serve as a platform where companies can access AI models created by multiple different vendors. But the size of the Mistral deal pales in comparison to Microsoft’s US$13 billion investment in OpenAI, which financed the development of OpenAI’s massive AI models. In exchange, Microsoft got 49% of OpenAI’s future profits and the rights to reuse OpenAI’s models throughout its own products, while making OpenAI an exclusive cloud customer of Azure. The OpenAI arrangement has already drawn scrutiny from regulators in the US, Europe, and the UK, who are evaluating whether Microsoft’s massive investment should be considered equivalent to an acquisition. https://tinyurl.com/4uvj7hr6

SEC has probed whether OpenAI leaders misled investors.

The Securities and Exchange Commission has been looking at whether OpenAI leaders including CEO Sam Altman misled any of the private company’s investors, said a person who was contacted by the agency. The probe followed the former OpenAI board’s contention that Altman wasn’t “consistently candid” in his communications with the board, and it isn’t clear whether the agency has received any complaints from investors or others. The vast majority of SEC probes don’t result in any actions. The prior board of the non-profit that oversees OpenAI’s for-profit arm fired Altman in November but reinstated him two weeks later, following an employee revolt. As part of the reinstatement, most of the earlier board stepped down and Altman agreed to let a law firm review his actions that led to the ouster. That investigation hasn’t concluded. Spokespeople for OpenAI and the commission didn’t immediately comment. The Wall Street Journal earlier reported on the probe. OpenAI’s for-profit arm was recently valued at around US$85 billion in an employee share sale. Its revenue has surged to about US$150 million per month thanks to ChatGPT and other artificial intelligence the company sells to enterprises. https://tinyurl.com/3n3wr568

Elon Musk sues OpenAI for breaching founding agreement.

Elon Musk filed a lawsuit against OpenAI and its executives for breaching the Chat GPT-maker’s founding mission of developing artificial general intelligence for the benefit of humanity. The lawsuit, filed in San Francisco on Thursday, also named OpenAI CEO Sam Altman and President Greg Brockman as co-defendants. Musk co-founded OpenAI in 2015 and stepped down as co-chair in 2018. The company continues to run as a nonprofit with a charter that states its primary fiduciary duty is to humanity. In the lawsuit, Musk alleges that OpenAI and its leaders have departed from that mission, taking aim at a series of dramatic events in November that led to the abrupt firing then rehiring of Altman and OpenAI reshuffling its board. “OpenAI,Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft. Under its new Board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity,” the lawsuit said. https://tinyurl.com/2s3955bb

Nvidia bets dominate US options market as AI fervor grows.

Options on artificial-intelligence darling Nvidia, accounted for 25 cents of every dollar of premium – the price of contracts – traded in U.S. single-stock options over the past month, nearly US$3 billion in options premium traded in the chipmaker’s options every day on average, a Reuters analysis of Trade Alert data showed. During several recent sessions, Nvidia surpassed Tesla, opens new tab as the option market’s most heavily traded name for the day. Nvidia’s options should remain popular with traders, “both from a hype and mechanical index perspective,” said Garrett DeSimone, head of quantitative research at OptionMetrics. “It represents such a large portion of S&P 500 weighting.” The stock’s options have drawn a range of bets, including ones guarding against a drop in the stock toward US$350 by March and others that would bear fruit if the stock extended its meteoric rise toward US$900 and higher in coming months. A host of other AI names has also drawn heavy options volume, including Super Micro Computer and Arm Holdings. Nvidia’s shares are up about 60% year-to-date, while those of Super Micro Computer have risen 200% and Arm’s have gained 77%. Nvidia is not the first company to captivate options players. Derivatives bets on electric-vehicle manufacturer Tesla accounted for around half of all equity, index and ETF options premium in October 2021, as the company’s shares soared. Tesla’s options remain a crowd-puller that still often feature on the list of any given day’s most actively traded options. https://tinyurl.com/54k2pam9

Google stock falls 4.5% after backlash over AI chatbot’s racial results.

Google shares fell by 4.5% Monday after prominent investors in Silicon Valley attacked the company for releasing an artificial intelligence-powered image generator that sometimes refused to generate images of white people and gave historically inaccurate results, such as showing images of racially diverse Nazis. On Friday, Google executive Prabhakar Raghavan, who oversees the Gemini chatbot that produced such results, said in a blog post that “some of the images generated are inaccurate or even offensive.” Over the weekend, users also spotted Gemini giving embarrassing textual responses, including in response to a question about whether Elon Musk negatively impacted society more than Adolf Hitler. Some critics, such as Y Combinator co-founder Paul Graham, said he believed the fiasco exposed deeper problems at Google, including liberal bias among staff and a bureaucratic corporate culture. Several prominent voices, including Altimeter Capital’s Brad Gerstner and industry analyst Ben Thompson, also took aim at CEO Sundar Pichai, questioning his leadership of the company. Google stock is down 0.4% so far this year while the broader Nasdaq 100 index is up 8.4%. https://tinyurl.com/ydek684p

Salesforce introduces dividend, reports steady revenue growth.

Salesforce will start paying a dividend, the latest tech firm to do so, after reporting 11% growth in revenue in the three months ending January. Free cash flow for the fiscal year rose 50% to US$9.5 billion. Salesforce tempered expectations for the year ahead by projecting that full year revenue for 2024 will grow at a slightly lower rate of roughly 8.6%. CEO Marc Benioff said the steady growth was driven by ongoing interest in the company’s Einstein suite of AI products, which rely on models from OpenAI and others for tools that let customers automatically respond to customer service queries or spin up sales emails, among other tasks. Salesforce first started selling the AI products in June to a limited number of customers and this week made the products broadly available. The introduction of a dividend is the latest step by Salesforce to improve its standing with investors. The enterprise software firm faced a rebellion by activist investors a year ago, and has since slashed costs. Last year it increased the size of its stock buyback. On Wednesday, Salesforce said it would again increase its share buyback plan by US$10 billion over the coming year. The company’s shares were down by roughly 4% in after-hours trading Wednesday. https://tinyurl.com/4fmnpft5

Zoom shares jump as quarterly results beat on top and bottom lines.

Zoom shares rose as much as 13% in extended trading on Monday after the video chat software vendor announced fiscal fourth-quarter results that topped analysts’ expectations. Revenue increased less than 3% from US$1.12 billion a year earlier, according to a statement. The company reported net income of US$298.8 million, or 98 cents per share, for the quarter that ended Jan. 31, compared with a net loss of US$104.1 million, or 36 cents per share, in the year-ago quarter. Far from its heyday during the Covid-19 pandemic, when a surge in the number of remote workers sent revenue up over 100% for five straight quarters, Zoom is now mired in single-digit growth. https://tinyurl.com/44pywfjd

Unity shares sink on weak guidance.

Unity Software shares plummeted 17% in extended trading on Monday after the gaming software company issued weaker-than-expected guidance for the current quarter. Unity said it expects first-quarter adjusted earnings of US$45 million to US$50 million, below the US$113 million that analysts were expecting. The company said going forward, it would only provide revenue guidance for its “strategic portfolio,” which includes its engine, cloud and monetization business units. Unity said in January that it would cut 1,800 jobs as part of a corporate restructuring plan that included ending efforts deemed to be “non-strategic,” such as professional services and the Luna marketing business. The company said first-quarter guidance for its strategic portfolio would come in between US$415 million and US$420 million. Analysts were expecting total first-quarter revenue of US$534 million. https://tinyurl.com/v6saj9xb

Dell shares soar on dividend increase despite lower revenue.

Dell Technologies shares rose 17% in extended trading despite posting lower revenue after the company said it was boosting its dividend by 20%, to US$1.78 a share. The Round Rock, Texas-based maker of computers and related equipment also said it benefited from strong demand for its servers geared for artificial intelligence applications. For the three months ended Feb. 2, Dell posted net income of US$1.16 billion, compared with $606 million in the same period a year earlier. Revenue for the quarter fell 11% to US$22.3 billion from US$25 billion. Dell said orders for its “AI-optimized servers” increased nearly 40% from the prior fiscal quarter and order backlog for the servers nearly doubled to US$2.9 billion. https://tinyurl.com/y9xtpzvx

C3.ai stock skyrockets 26% as earnings beat keeps the AI hype soaring.

Wall Street’s artificial intelligence hype has yet to show signs of slowing, with C3.ai as the latest beneficiary of investors’ frenzy around the technology. The software firm posted earnings on Wednesday that beat expectations, sending its stock as much as 26% higher to US$37.36 at midday on Thursday. The jump comes a week after Nvidia’s double-digit one-day rally following its massive earnings beat. “Our significant first mover advantage in Enterprise AI is generating tailwinds as market interest in adopting AI accelerates,” chief executive and chairman Thomas M. Siebel said in a statement. C3.ai pointed to a spike in deals with firms across sectors, including agreements with Google Cloud and Microsoft. In the quarter ending January 31, C3.ai reported US$78.4 million in revenue, beating the company’s guidance for US$74 million to US$78 million and up 18% from the same quarter last year. Subscription revenue, which made up 90% of total revenue, climbed 23% year-over-year to hit $70.4 million. The company reported an adjusted loss of US$0.13 per share, better than the expected loss of US$0.28, per FactSet. For the year ahead, C3.ai gave an upbeat outlook, with full-year revenue estimated to range between US$306 million to US$310 million, above Wall Street’s estimate of $305.6 million. “We view this quarter as a step in the right direction for C3 as the company’s entire product portfolio continues generating unprecedented demand for its AI platform to improve operations, optimize processes, and transform businesses,” Wedbush’s Dan Ives wrote in a note Thursday. Wedbush raised its price target for C3.ai from US$35 to US$40 per share. https://tinyurl.com/3fzk9wuh

Emerging Technologies

Apple Vision Pro’s components cost US$1,542—but that’s not the full story.

Research firm Omdia has published the first publicly available educated estimates of how much the materials for each Vision Pro really cost Apple. The analysis sets an overall price tag for the materials and identifies which components cost the most money. Omdia Senior Research Director David Hsieh estimates that the total bill of materials comes in at around US$1,542. The consumer price for the headset starts at US$3,499 but can be as much as a thousand dollars more than that, depending on the configuration the buyer chooses. Vision Pro presents both the real and the virtual worlds to the user with two micro-OLED displays, one for each eye. Together, these dual displays are the most expensive component in the headset, costing US$456. Another external display (the one used for EyeSight) costs around US$70, Hsieh estimates. That means that Omdia estimates the device’s displays account for about 35 percent of the total cost of the device’s materials. The runner-up category is silicon; a roll-up cost estimate of both the M2 system-on-a-chip and the R1 processor together lands at US$240, or just over 15 percent of the total cost of the device’s materials. No matter how accurate that US$1,542 number is, we should steer clear of the temptation to declare that Apple profits US$1,957 on each Vision Pro sold for US$3,499, as that’s certainly not the case. A bill of materials like this doesn’t take into account manufacturing, shipping, or marketing, nor does it factor in the cost of research and development. There’s no way to know from these estimates how much profit Apple earns on each Vision Pro sold, but it’s definitely a lot less than the difference between the price tag and the bill of materials. https://tinyurl.com/2r7z43c2

Meta might demo a pair of ‘true’ AR smart glasses later in 2024.

Citing unnamed Meta sources, a Business Insider report claims that the company plans to demo a pair of true AR smart glasses later this fall at Meta Connect. The glasses, dubbed internally as “Orion,” are a separate product from the recently launched Ray-Ban Meta Smart Glasses and its Meta Quest headsets. The former product, while featuring some beta multimodal audio AI features and a camera, doesn’t have any visual AR elements. Meanwhile, Meta Quest headsets are primarily used for VR gaming and a handful of mixed reality experiences. Ostensibly, what makes these Orion glasses “true” AR devices is the fact that they’re supposed to be more technologically advanced with a visual element — we don’t know much else yet. The report suggests that there’s a lot of internal pressure at Meta to have a high-quality demo and that some company insiders have been experimenting with advanced prototypes. That said, it doesn’t seem like the Orion glasses are ready for prime time just yet. Business Insider says that even if the glasses are demoed at Meta Connect, they won’t be available for the public. The Verge’s Alex Heath reported last year that 2024 was when the company plans for an “internal” launch of the glasses, with a public release slated for 2027. Before then, it’s more likely that we’ll see a third generation of Ray-Ban smart glasses in 2025 that come with a “neural interface band” as an input device. https://tinyurl.com/2xmab2km

Media, Streaming, Gaming & Sports Betting

Disney spins off India business in US$8.5 Billion JV with Reliance Industries.

Disney has agreed to form a joint venture with Indian billionaire Mukesh Ambani’s Reliance Industries to merge its Star India business with Reliance’s Viacom18. The combined company, which will include Disney-owned TV networks and its Disney+ Hotstar streaming service in India as well as Viacom18’s networks and rival streaming service, is valued at about US$8.5 billion on a post-money basis, the companies said. Following completion of the deal, the joint venture will be controlled by Reliance, which will own 16.3% of the business, with Viacom18 taking 46.8% and Disney owning 36.8%. For Disney, the deal helps improve the finances of its streaming business. The Disney+ Hotstar service has lost roughly 23 million subscribers since its peak of 61.3 million subscribers at the end of the company’s fiscal 2022 in October of that year. That was largely due to Disney losing the rights to stream cricket games to Viacom18. The Disney+ Hotstar business, while once large in terms of number of subscribers, also historically has had a much lower revenue per subscriber: US$1.28 at the end of Disney’s fiscal first quarter of 2024 in December compared to US$8.15 per subscriber for Disney+ in the U.S. and Canada. Disney said it will take a non-cash impairment charge of between US$1.8 billion and US$2.4 billion, half of which is the result of a lower valuation for the Star India business and the rest of which reflects the business coming off of its books. Reliance said it will invest roughly US$1.4 billion into the joint venture. https://tinyurl.com/d8m84nfx

Adtech, Privacy & Regulatory

Publishers allege Google advertising tools deprived them of income.

A group of 32 media companies including German publishing giant Axel Springer sued Google in a Dutch court, alleging that the company abused its dominant position in advertising to lower their digital ad revenues, according to Reuters. The publishers, many of which are based in the EU, appear to be capitalizing on evidence that has surfaced in U.S. courts. Texas and federal authorities have sued Google for allegedly abusing its dominance in the market for software that helps publishers and advertisers buy and sell ads on websites that Google doesn’t own. U.S. authorities have provided evidence and alleged that Google rigged advertising auctions and effectively stole money from website publishers that rely on the advertising tools. The EU’s top antitrust body also is aiming to break up Google’s ad technology business for similar reasons. Google has denied wrongdoing. In a statement on Wednesday, Oliver Bethell, a Google legal director, called the lawsuit “speculative and opportunistic. We’ll oppose it vigorously and on the facts.” https://tinyurl.com/4y3nzbwx


Thrasio, once king of e-commerce aggregation, files for Ch.11.

Thrasio, the U.S. start-up that raised billions of dollars and popularized the concept of e-commerce aggregation — buying up and restructuring dozens of smaller brands and third parties selling on marketplaces like Amazon in a bid for better economies of scale — has commenced a restructuring of its own. The company has filed for Chapter 11 bankruptcy protection to cut its losses on a mountain of debt. It said it has also secured an emergency US$90 million in emergency financing from unnamed existing lenders. Thrasio raised more than US$3 billion in equity and debt over the years to fuel its roll-up play, and its collapse into bankruptcy protection is one of the biggest examples of how mighty growth-stage tech companies have fallen in recent times. The restructuring support agreement covers 81% of Thrasio’s revolving credit facility lenders and 88% of its term loan lenders, the company said, and it will erase around US$495 million of its existing debt, as well as defer all interest payments in the first year post-emergence from Chapter 11. http://tinyurl.com/y3v9kcd4

Fintech, Blockchain & Cryptocurrency

BlackRock’s bitcoin ETF draws US$520 million in a day as latest rally pumps up investor enthusiasm.

Bitcoin’s latest rally toward all-time highs fueled the second-largest daily inflow into a US exchange-traded fund this week. BlackRock’s iShares Bitcoin Trust (IBIT) absorbed US$520 million in a single day on Tuesday, marking not only the largest daily influx among ETFs tracking the world’s top cryptocurrency but also the second-largest daily cash infusion for a US ETF. The rush of money came as bitcoin stages a fresh rally back toward it’s previous all-time high of US$69,000. The token was up another 5% on Thursday, trading around US$63,000. The nearly dozen spot bitcoin ETFs in the market were approved in early January, and touted as an easier access point for investors looking for exposure to the token without having actually to buy it. BlackRock’s ETF has seen inflows for 32 days in a row. Analysts told Bloomberg that the rally was “definitely” driven by retail traders with a growing appetite for the slate of bitcoin ETFs, and their robust demand is pushing up the price of the underlying crypto. Also bolstering the rally this month is anticipation for bitcoin’s halving event this spring. In April, the amount of bitcoin rewarded to miners will be reduced by half. The periodic event drives the scarcity narrative that’s at the heart of the long-term bull base as the crypto marches toward its supply cap of 21 million. Previous halving events were followed by new all-time highs within 12 months. https://tinyurl.com/2u2fwjm7


India gives green light to chip plants worth US$15.2 billion.

India gave the go-ahead to construction of three semiconductor plants worth 1.26 trillion rupees (US$15.2 billion) by firms including Tata Group and CG Power on Thursday, as the country pursues its goal of becoming an electronics powerhouse. India, which is seeking to rival countries such as Taiwan in chipmaking, expects its semiconductor market to be worth US$63 billion by 2026, but does not yet have a chipmaking facility. Prime Minister Narendra Modi wants to make India a chipmaker for the world as his government tries to overcome setbacks faced in its bid to offer US$10 billion in incentives to the industry. Indian Electronics Minister Ashwini Vaishnaw said construction will begin on the plants within the next 100 days, adding that they will manufacture and package chips for sectors including defence, automobiles and telecommunication. https://tinyurl.com/5fz5wv7m


Apple reportedly ends work on electric car, moves staff to AI unit.

Apple is canceling its electric car effort, a decade-long project in which it had invested billions of dollars, according to Bloomberg and numerous other outlets. Many of the 2,000 employees working on the initiative will move to Apple’s artificial intelligence unit, led by John Giannandrea, who has also overseen the car effort. Some will be laid off. The move follows years of development challenges associated with the effort, known as Project Titan. It comes at a time when other electric car makers, including Rivian and Lucid Motors, are struggling. Apple recently hoped to sell the vehicle for around US$100,000 and feature self-driving technology in its software, Bloomberg reported. Apple’s competitors are investing deeply in developing new, AI-powered features on hardware devices, raising the stakes for Apple to produce cutting-edge AI technology for its phones and other products such as the Vision Pro. Apple boosted spending on developing conversational AI, with which it hopes to improve its Siri voice assistant and automate customer-support tasks, The Information reported in September. https://tinyurl.com/4y6s8fne

Fisker shares plunge after EV maker raises doubt on its survival.

Shares of embattled electric vehicle maker Fisker Automotive plunged as much as 35% in after-hours trading Thursday after the company said it might not have sufficient funds to last the year and raised “substantial doubt” that it would survive in its current form. In a call after the close of trading, company founder Henrik Fisker sought to reassure Wall Street analysts, telling them that he was in negotiations with a “large automaker” for a potential investment in Fisker. “We’ll be back,” he said. Fisker reported that it delivered just 4,929 of the 10,193 EVs that it produced last year, a sign of tepid demand for its US$39,000 Ocean model. The news comes at a time of great stress among EV startups, with Rivian and Lucid Motors forecasting flat sales this year and facing their own cash crunches. Even market leader Tesla warned last month that its 2024 sales will be slow. Fisker said it would cut 15% of its workforce, and had US$396 million of cash, cash equivalents and restricted cash as of the end of last year, down from US$737 million a year earlier. https://tinyurl.com/yttexb9u

Polestar borrows US$1 billion to fund rollout of electric vehicles.

Polestar has raised US$950 million in debt financing as the struggling luxury EV maker seeks funding outside of its parent Geely to roll out key new models. The three-year loan facility from a syndicate of 12 banks will help bridge Polestar’s path to breaking even on cash flow, the company said Wednesday, a day ahead of reporting full-year financials. The company has been contending with model delays and waning EV demand. “It’s a big, big portion of the US$1.3 billion that we see as required to reach the cash flow break even-point in 2025,” Chief Executive Officer Thomas Ingenlath said in an interview. BNP Paribas, Natixis, Standard Chartered, BBVA, HSBC and SPDB, are among the 12 banks in the syndicate. The company’s woes are mirrored across EV newcomers, where a number of manufacturers have struggled as public companies. Polestar listed via a reverse merger in 2022, and at one point reached a valuation of US$27.6 billion. Sentiment has since soured amid slowing EV growth and waning risk appetite for new businesses that have stumbled in the difficult phase of scaling up output. The transition to has also been tricky for Polestar, even as it shares production facilities with long-standing automaker Volvo Car. Polestar’s shares have declined 34% this year, taking losses over the past 12 months to 72% to value the manufacturer at US$3.1 billion. Volvo Car last week said it will reduce its stake in Polestar from 48% to 18% and stop funding the unprofitable electric-vehicle maker to focus on its own shift to battery technology. Under the new structure, Geely Sweden Holdings becomes the second largest shareholder. https://tinyurl.com/yeyw3nph

Musk promises new Tesla roadster in 2025.

Elon Musk said Tesla has completed designing its new Tesla roadster car, and aims to ship the vehicle by the end of 2025. Tesla stock, which has been in a slump in recent months, rose 1.6% on Wednesday even as the broader stock market sold off. The long-promised car, which was first announced in 2017, would be an update to the original Tesla Roadster, a sports car released in 2008. In posts on X early Wednesday, Musk said the new Roadster would be a collaboration between Tesla and Musk’s rocket company SpaceX, and claimed the car will be able to go from 0 mph to 60 mph in less than 1 second. “There will never be another car like this, if you could even call it a car,” he wrote. The Roadster is one of several upcoming products at Tesla, which has seen growth slow in recent months amid an aging product lineup. Tesla released its new pickup Cybertruck at the end of 2023, its first new car since 2020. The company is also working on a new low cost vehicle, as well as a robotaxi which is designed to drive autonomously. https://tinyurl.com/4n38dpuf

Shell’s US solar unit launches asset sale, sources say.

Shell’s U.S. solar business Savion has put around a quarter of its assets up for sale, according to a marketing document and industry sources, as the oil major extends a retreat from owning renewables projects under CEO Wael Sawan. Investment bank Jefferies is running the sale of up to 10.6 gigawatts (GW) of solar generation and storage assets currently in development, or parts of those projects, according to the document sent to potential investors and seen by Reuters. The total value of the assets, located in the northeast, southeast and west of the United States, was unclear. Project valuations often depend on power prices where they are located. https://tinyurl.com/yv9yxbue

Sophic Capital Client Insights

Sophic Client ADM Endeavors (ADMQ-OTCQB) – Endeavor Unleashed.

Uniforms unify. Logos communicate. To capitalize on both markets, an entire industry dedicated to decorating uniforms and creating promotional products has evolved. The American promotional products and uniform sectors represent substantial, multi-billion-dollar markets. Sophic Capital client, ADM Endeavors, Inc. operates within this sphere as a diversified entity, specializing in direct marketing and value-added manufacturing. Its core offering revolves around tailored promotional products, uniforms, and wearable items. Since 2010, the Company has operated a vertically integrated business, consisting of a retail sales division, screen print production, embroidery production, digital services, import wholesale, government procurement and school/work wear uniforms. ADM has strategically targeted contracts with governmental bodies and educational institutions for recurring revenue streams. In our next report, we’ll highlight ADM’s revenue model and catalysts for growth. https://bit.ly/3SY8tnM


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