May 15, 2022: Price Drives Narrative

Other than a likely short covering rally on Friday, the pain in growth stocks continued through last week. As Shopify’s (SHOP-NYSE, SHOP-TSX) stock price continued to slide, the company’s senior executives are putting on a public display and promising to personally buy chunks of the firm’s shares on the open market. This all came a few days after a filing showed Uber CEO Khosrowshahi bought US$5 million of the company’s own beaten down stock. Uber CEO also told staff, the company will cut down on costs, treat hiring as a ‘privilege’. PopReach (POPR-TSXV) closed a US$33 million in credit facilities with Bank of Montreal. Instacart, the biggest online grocery in the U.S., has confidentially filed to go public this year, the company said, confirming an earlier report by Bloomberg. Goldman Sachs is exiting work on most SPACs because of liability concerns as regulators tighten guidelines, report says. Twitter CEO Parag Agrawal said Friday in a series of tweets that he still expected Elon Musk’s purchase of Twitter to close, “we need to be prepared for all scenarios,” explaining why he made management changes and is acting to control costs. Salesforce has sold out of the last of its shares in data-analytics software maker Snowflake, according to a regulatory filing on Friday. Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five public companies, including Robinhood and Monday.com, the filing shows. Tiger Global has been hit by losses of about US$17 billion during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history. Ark Invest’s 75% decline in its flagship ETF hasn’t stopped investors from pouring US$1.3 billion in the fund in 2022. SoftBank is cutting its startup investments 50-75%. Samsung is in talks to hike chipmaking prices by up to 20%.

Shopify (SHOP-NYSE, SHOP-TSX) executives say they’re personally buying the company’s beaten down stock.

As Shopify’s stock price continues to slide, the company’s senior executives are putting on a public display and promising to personally buy chunks of the firm’s shares on the open market. Shopify founder and CEO Tobi Lutke tweeted on Wednesday that he’d recently placed an order to buy US$10 million of stock. The Canadian e-commerce company’s share price has been hit particularly hard amid a broader tech meltdown, and has tumbled 80% in the last six months. Allan Weinward, Shopify’s chief technology officer, tweeted soon after that he had done the same. And Kaz Nejatian, a vice president of product, told staff over Slack that he’d also piled into the stock. “I know we have a habit of not talking about the stock price, but I want to talk about it a bit,” Nejatian wrote. “I just liquidated some of my family portfolio and bought Shopify shares. This is a meaningful portion of my family’s savings.” Nejatian also took a swipe at Wall Street analysts for downgrading Shopify’s stock after Lutke had done the same in a thread on Twitter on Sunday. This all comes a few days after a filing showed Uber CEO Khosrowshahi bought US$5 million of the company’s own beaten down stock. https://bit.ly/3MhwilV

PopReach (POPR-TSXV) closes US$33 million in credit facilities with Bank of Montreal.

PopReach Corporation announced that it has closed the senior secured credit facilities previously announced by the Company on April 18, 2022 (the “Facilities”) with the Bank of Montreal (“BMO” or the “Lender”). The Facilities consist of a US$8 million revolving facility (“Revolver”), a US$25 million non-revolving term facility (“Term Loan”), and an “accordion” option for up to an additional US$15 million acquisition facility on the Term Loan subject to Lender and other typical approvals discussed below (“Acquisition Line”) to support the Company’s M&A growth strategy. The Revolver remains undrawn, and the Company has no debt outstanding other than US$25 million on the Term Loan. The Facilities bear interest at a rate of the Lender’s U.S. Base Lending Rate, currently 4.50%, plus an applicable margin.  https://bit.ly/3NfZryi 

Used vehicle marketplace clutch secures US$150 million in debt from Neuberger Berman to expand it’s fleet.

Toronto-headquartered startup Clutch has secured US$150 million in debt financing from funds managed by private investment management firm Neuberger Berman to drive its national expansion and inventory of used vehicles. Clutch’s platform allows customers to browse a large selection of high quality vehicles and access its end-to-end online purchase experience. Clutch raised its US$150 million debt round just months after it unveiled US$100 million in Series B funding last November. The company’s latest investment brings its total funding to around US$317 million. This cumulative amount includes Clutch’s US$7 million seed round in 2020, US$20 million in equity financing led by Canaan Partners, US$40 million in debt from Upper90, and the US$100 million Series B round in November. https://bit.ly/3N4xWra

Maverix leads US$85 million investment into Shopify-focused ecommerce aggregator Agora.

Only weeks after making its first investment in influencer marketing agency, Viral Nation, John Ruffolo’s Maverix Private Equity has led an US$83.5 million investment in an e-commerce aggregator specializing in the Shopify ecosystem. Agora Brands’ business model is to acquire small-to-medium sized direct-to-consumer businesses with US$1–20 million in annual revenues, primarily within the Shopify ecosystem. U.S. retail ecommerce sales are projected to continue growing rapidly at a compound annual growth rate of 12.5 percent, becoming a US$1.65 trillion market by 2026.  Agora does face competition in the ecommerce aggregator space, notably from two Canadian companies: Emerge Commerce and WeCommerce. While Emerge acquires and operates niche, North American market leaders in the digital deals space, WeCommerce specifically acquires businesses within the Shopify ecosystem. Maverix is also pursuing deals for a significant minority position of 20 to 40 percent. https://bit.ly/3stIEj9

Certn raises $65.1 million to scale background check tech beyond Canada. 

Victoria-based startup Certn has raised $65.1 million (US$50 million) in its all-equity Series B round that closed on April 29. Led by B Capital, the financing also received contributions from BMO, Tribe, Inovia Capital, Telstra Ventures, Scribble, Moxxie Ventures, and Gaingels Covalent Ventures. Certn offers people intelligence solutions with a focus on real-time comprehensive background checks and ongoing risk monitoring for employees, contractors, and tenants. VentureBeat reported that Certn’s solution is used by over 2,800 enterprises. The company also intends to create 160 new roles this year in addition to a number of its past strategic hires, which includes a new managing director for the United States market. Certn has recently made inroads to the United Kingdom market this year, with its acquisition of southeastern England-based Credence. https://bit.ly/3sv117d

Lighthouse Labs raises US$7 million seed round, co-led by Accel, BlockTower and Animoca Brands, to build the open metaverse navigation engine.

Lighthouse, the company building the open metaverse navigation engine, announces that it has raised a US$7 million seed round co-led by Accel, BlockTower and Animoca Brands.Many new worlds have emerged to empower creators and capitalize on a market opportunity estimated at US$680 billion by 2030. Its platform, which will launch this summer, will enable users to search for places, events, creators, experiences, and even friends across and within virtual worlds. Beyond search, Lighthouse will offer a portal where users will be able to see trending activities, build groups of friends to explore the metaverse, see where their NFTs are usable and follow the work of specific brands and creators.  https://bit.ly/3l2uh1i

Georgian backs Ventioin again in $123.7 million in series C round.

Montréal-headquartered industrial tech startup Vention has raised $123.7 million (US$95 million) in Series C funding. Fidelity Investment Canada ULC participated in the financing as a new investor, alongside existing investors White Star Capital, Bain Capital Ventures, and Bolt Ventures. According to Vention, this new funding will be used to grow the company’s go-to-market, expand its global distribution footprint, and accelerate the development of its hardware and software platform. Vention claims a client base of over three thousand across five continents and 25 manufacturing industries, which includes Google, Universal Robots, Stryker, and Fanuc. Vention closes its Series C round following a period of significant growth for the company. Since its Series B almost two years ago, Vention has more than doubled its headcount, increasing its employee base from 100 to 260. With a total funding of around $182.2 million to date, Vention’s past financing rounds comprises a $38 million Series B round, $17 million Series A round, and $3.5 million in seed funding. https://bit.ly/3suKWP4

Shopify (SHOP-NYSE, SHOP-TSX) unveils push into digital advertising.

Shopify has finally unveiled plans for a digital ads tool that will allow merchants to better target new customers on social media platforms. The company announced “Shopify Audiences” on Tuesday, which will allow merchants to use Shopify’s data to find prospective buyers around the internet. Shopify said the tool would initially only work on Facebook and Instagram, but would soon roll out to TikTok, Snap and Pinterest. It’s been a widely anticipated move for Shopify as news that the company was working on the tool leaked last year. As The Information explained recently, Shopify has for years been reliant on Facebook ads in order for merchants to find new customers, with both companies severely affected by new privacy changes by Apple which have rocked the digital advertising sector. https://bit.ly/3yyFJtm

Dapper labs launches US$725 million ecosystem fund for flow blockchain innovation.

Vancouver-based Dapper Labs has launched a US$725 million ecosystem fund designated to drive innovation and growth across the Flow blockchain ecosystem. The Flow blockchain was developed by Dapper Labs, the company behind CryptoKitties and NBA Top Shot, in 2019. Powered by Cadence, an original programming language built specifically for digital assets, Flow is an open, decentralized platform created as a solution to the problem of blockchain scalability for consumer applications such as games and digital collectibles. With a partnership network that includes the NBA, NFL, UFC, and Dr. Seuss, Dapper Labs claims that Flow has seen daily transactions triple since September 2021. The funding is expected to be used by developers for product development, product scaling, team expansion, user acquisition, and general operating expenses. The Vancouver startup has raised multiple large rounds of funding throughout last year, including a US$250 million USD round in September, and $305 million last March. https://bit.ly/3wpBqxA 

Instacart has confidentially filed for IPO.

Instacart, the biggest online grocery in the U.S., has confidentially filed to go public this year, the company said, confirming an earlier report by Bloomberg. The company could list its shares as early at this year, but the timing could change given current market conditions, Bloomberg said. The value of the venture capital-backed company has fallen sharply recently after its Covid-19 pandemic boost faded. It said that it was cutting is valuation to US$24 billion in March from US$39 billion in a funding round a year earlier. Market sentiment has taken a sharp downturn in recent weeks as tech stocks have been particularly hard hit by rising interest rates amid signs that many won’t be able to make a profit. https://bit.ly/37J1SKo

Grindr to go public through blank-check company.

Gay-dating app Grindr said late Monday it has agreed to merge with a so-called blank-check company in a deal that values the combined company, to be called Grindr Inc., at US$2.1 billion. The business combination with special purpose acquisition company Tiga Acquisition Corp. TINV, would raise about US$384 million, Grindr said. Its business is a “highly profitable business in early innings of monetization journey,” with 2021 revenue at US$147 million, up 30% from 2020, and 10.8 million monthly active users in 2021, who spend on average 61 minutes on the app a day, Grindr said.  https://reut.rs/3wtoeYC

Goldman Sachs is exiting work on most SPACs because of liability concerns as regulators tighten guidelines, report says.

Goldman Sachs is pulling out of working with most SPACs it took public following new liability guidelines from regulators, according to a Bloomberg report on Monday. The move by the second-biggest underwriter of special purpose acquisition companies in 2021 throws into doubt what’s next for the billions of dollars raised for blank-check vehicles. SPACs serve as a faster alternative to the traditional IPO route, and they boomed in 2020 and 2021. Last year alone, 613 blank-check companies filed to go public via a SPAC, but activity has slowed in 2022 with the number of filings so far at 63, according to data from SPACInsider. The Securities and Exchange Commission has embraced a plan for tightening oversight of SPACs, including exposing underwriters to greater liability risk. Goldman will fulfill its role in cases where the public company is very close to completing the de-SPAC process, two sources told Bloomberg. https://bit.ly/3L6O4a8

Twitter CEO still expects Musk deal to close.

Twitter CEO Parag Agrawal said Friday in a series of tweets that he still expected Elon Musk’s purchase of Twitter to close, “we need to be prepared for all scenarios,” explaining why he made management changes and is acting to control costs. Agrawal had sent a memo to staff on Thursday announcing a hiring freeze, citing business pressures caused by the Ukrainian war and supply chain constraints, and also announced the departure of two senior executives. Twitter became just the latest company to take steps to control costs, following Meta Platforms and Uber, amid signs of worsening economic conditions. In his Friday tweets, he said he had been asked why he was making these changes if Twitter was being acquired. “Our industry is in a very challenging macro environment right now” and he wouldn’t “use the deal as an excuse to avoid making important decisions for the health of the company.” Earlier Friday, Elon Musk tweeted that the deal was “temporarily on hold” while he looked into estimates that spam accounts represent less than 5% of Twitter’s users, although Musk later tweeted he was still committed to the deal. Twitter stock fell 10% to just above US$40, well short of Musk’s US$54.20 a share offer. Musk’s move raised the prospect that he wanted to renegotiate the price down https://bit.ly/3we62Uc

Twitter’s stock tumbles after Elon Musk tweets buyout deal is ‘temporarily on hold’.

Shares of Twitter Inc. plunged 17.9% in premarket trading Friday, after Elon Musk tweeted that the deal to buy the social media company was “temporarily on hold.” Musk, the chief executive of electric vehicle maker Tesla Inc., 5.68%, said the hold on the deal is “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Twitter’s stock is on track to open at the lowest price seen during regular-session hours since March 17, which was before Musk first disclosed he had acquired a large stake in Twitter. Tesla’s stock rallied 4.5% ahead of the open. https://on.mktw.net/3sy26Ls

Twitter’s market cap has dropped to US$9 billion below Musk’s purchase price as concerns about deal emerge.

 As Elon Musk pursues ownership of Twitter, shares of the social media company are dropping, suggesting some concern among investors that the deal won’t reach the finish line. Twitter has slid nearly 13% since reaching its high for the year in late April. As of market close on Thursday, the stock traded at US$45.08, well below the US$54.20 that Musk agreed to pay on April 27. The difference represents more than US$9 billion in market value. Musk would have to pay a US$1 billion breakup fee should he choose to walk away. The Tesla CEO is worth more than US$220 billion. Before Musk made his bid to buy Twitter outright, he failed to disclose a more than 9% stake in the company within the SEC’s mandatory 10-day window. For one, Twitter shares would only be valued in the US$20s if it remained a public company. Secondly, he said regulatory issues are casting a shadow over the deal. Finally, Ives said, Musk’s financing of the acquisition, in part by leveraging his Tesla shares, presents greater risk and uncertainty. Bloomberg reported Thursday that he’s in talks to raise equity and preferred financing to eliminate the need for a US$6.25 billion margin loan tied to his Tesla shares. CNBC has not confirmed the report. Internally, Twitter may be taking steps to shore up its balance sheet in case Musk bows out as inflationary pressures punish the broader tech market. https://cnb.cx/3yx4Z31 

Elon Musk’s belated disclosure of Twitter stake triggers regulators’ probes.

Federal regulators are investigating Elon Musk’s late disclosure last month of his sizable stake in Twitter according to people familiar with the matter, a lag that allowed him to buy more stock without alerting other shareholders to his ownership. The Securities and Exchange Commission is probing Mr. Musk’s tardy submission of a public form that investors must file when they buy more than 5% of a company’s shares, the people said. The disclosure functions as an early sign to shareholders and companies that a significant investor could seek to control or influence a company. The SEC investigation hasn’t been previously reported. An SEC spokesman declined to comment. An attorney for Mr. Musk didn’t respond to a message Wednesday seeking comment. Mr. Musk likely saved more than $143 million by not reporting that his trades had crossed the 5% threshold, said Daniel Taylor, a University of Pennsylvania accounting professor, since the share price could have been higher had the market known of the billionaire’s growing stake. Investors who cross that line are required to file a form with the SEC revealing their stake within 10 days. Mr. Musk’s holdings topped 5% on March 14, securities filings show, meaning he should have disclosed his stake by March 24 under SEC rules. https://on.wsj.com/3NdexV1

Salesforce dumped rest of its Snowflake shares during first-quarter market plunge.

Salesforce has sold out of the last of its shares in data-analytics software maker Snowflake, according to a regulatory filing on Friday. Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five public companies, including Robinhood and Monday.com, the filing shows. The company had previously unloaded 95% of its Snowflake shares, reducing its holdings to US$35 million worth at the end of 2021. Salesforce sold the remaining shares in the first quarter, when Snowflake plunged 32%. While Salesforce hasn’t yet reported results for its latest quarter, other big companies that also invest in their tech peers have racked up billions of dollars in losses from those holdings. Salesforce will similarly be required to reckon with mark-to-market accounting after notching investment gains of US$3.38 billion over the last two years, when tech stocks were soaring. https://cnb.cx/3NdeFUv

Tiger Global hit by US$17 billion losses in tech rout.

Tiger Global has been hit by losses of about US$17 billion during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history. Still, the losses eclipse some of the US$4 trillion hedge fund industry’s biggest drops of recent years. These include the US$12.1 billion lost by investment group Bridgewater in 2020 during the market tumult caused by the coronavirus pandemic, or Melvin Capital’s loss of approximately US$7 billion during the GameStop retail trading frenzy at the start of last year. The fund lost 43.7 per cent in the first four months of this year, the Financial Times reported earlier this month, more than double the 21 per cent decline posted by Wall Street’s tech-heavy Nasdaq Composite share gauge. Tiger’s dollar losses, which are for its hedge fund rather than its private equity business, do not include the impact of a tech sell-off late last year, which left Tiger down 7 per cent for the whole of 2021. https://on.ft.com/3L2LKRv

Ark Invest’s 75% decline in its flagship ETF hasn’t stopped investors from pouring US$1.3 billion in the fund in 2022.

Investors can’t seem to get enough of Ark Invest’s flagship ETF based on year-to-date net inflows of US$1.3 billion through Monday, according to data from Bloomberg. That’s despite the fact that the Ark Invest Disruptive Innovation ETF has sold off 75% from its record high, and is down 58% year-to-date. The weakness in Ark’s flagship ETF puts its assets under management well below its record of US$28 billion reached in 2021. Of the ETF’s 37 holdings, none of them are positive year-to-date, and only Tesla has positive gains over the past year. The willingness of investors to stick with Wood and her disruptive investment strategy throughout the painful decline could be attributed to the firm’s willingness to share its research with others. “Most of our stocks are not in broad-based benchmarks,” she said. But that could be a double-edged sword, as stocks that are excluded from indexes see little to no buying pressure from the millions of passive investors that dollar-cost-average into the stock market via their 401(k) every two weeks when they get paid. https://bit.ly/3stqgHe

SoftBank is cutting its startup investments 50-75%.

Japanese conglomerate SoftBank is severely cutting its planned startup investments through next March, Chief Executive Masayoshi Son said in a Thursday earnings call. With the announcement, Son joins a chorus of VCs who have been vocal about an economic downturn forcing them to tighten their belts. After a heady 2021 for much of the industry, startups have turned to quick cost-cutting and layoffs. The Dow has seen the longest downturn since 2020 this week, while crypto markets also fell 10% between Thursday and Friday alone. The impact on VC looks particularly dramatic in the case of SoftBank, which is coming off a record-breaking 2021. Its US$100 billion Vision Fund and US$50 billion Vision Fund 2 (which includes US $30 billion of its own money) made it and Tiger Global among the biggest players in VC last year. But in the last few months, the conglomerate’s VC strategy has done a 180. SoftBank recently reported a loss of US$20.5 billion at its Vision Fund for the last fiscal year. The accompanying drop in SoftBank’s value, along with the market slide, has meant Son taking a huge financial hit — some US$25 billion, or almost two-thirds of his personal fortune. https://bit.ly/3yCl47S 

SoftBank Vision Fund posts US$26 billion loss; Son pledges defence.

Japan’s SoftBank Group Corp (9984.T) reported a record US$26.2 billion loss at its Vision Fund investment arm on Thursday, as rising interest rates and political instability whiplashed high-growth tech stocks. The loss was in stark contrast to a year earlier when SoftBank delivered a record annual profit, putting founder and CEO Masayoshi Son’s strategy of concentrating heavily on riskier, high-growth stocks under more scrutiny. South Korean e-commerce firm Coupang is trading 70% below its listing price. Ridehailers SoftBank’s own shares fell 8% ahead of earnings to 4,491 yen and are down more than half from highs in March last year. The group is 40% through a 1 trillion yen buyback programme launched in November. SoftBank also recorded, in its non-consolidated earnings, a 669.5 billion yen loss due to its SB Northstar trading arm, which placed bets on listed stocks and derivatives but racked up personal losses for Son. The unit’s activity was part of a push to diversify SoftBank’s portfolio beyond e-commerce company Alibaba (9988.HK), whose shares have fallen by more than two thirds as regulatory action roils China tech companies. https://reut.rs/3LdB7LH 

Robinhood shares surged over 30% after crypto billionaire Sam Bankman-Fried disclosed a 7.6% stake in the trading platform.

Bankman-Fried acquired about 56.3 million shares in Robinhood markets through his investment firm, Emergent Fidelity Technologies, according to a Thursday regulatory filing with the US Securities and Exchange Commission (SEC). That makes the 30-year-old’s stake worth about US$482 million, based on Robinhood’s closing share price of US$8.56. Bankman-Fried paid about US$648.3 million for the shares, according to the SEC filing. Bankman-Fried is the founder and CEO of cryptocurrency exchange FTX. The no-commission trading platform lost US$3.7 billion in 2021. Its stock, which debuted at US$38 a share in July 2021, is down over 70% since its IPO. Revenue fell 43% in the first quarter of 2022 from a year ago as trading activity fell, the company disclosed in April. Robinhood share price closed 5.03% higher at US$8.56 on Thursday. They were last up about 24% at US$10.60 a share in after-hours trade after surging as much as 37% to US$11.70. https://bit.ly/3l7Hohv 

Rivian plunges 22% as Ford and other investors to sell millions of shares as lock-up period expires.

Rivian stock plunged 22% on Monday as its early investors take advantage of the expiration of its lock-up period and sell millions of shares. CNBC reported over the weekend that Ford is selling 8 million of its Rivian shares through a block trade with Goldman Sachs. Ford owned about 12% of the electric truck manufacturer, or about 102 million shares, prior to the sale. Meanwhile, JPMorgan is selling a block of 13 million to 15 million Rivian shares for an unknown seller, CNBC reported. Both share blocks are priced at US$26.90, which represents a 6.7% discount to Friday’s close. Rivian stock fell 19% to US$23.32 in Monday trades. Both Ford and Amazon revealed billion-dollar losses related to their Rivian stakes in their most recent earnings calls. Rivian went public in November and saw its valuation peak at US$153 billion. But supply chain disruptions have led Rivian to delay some of its deliveries and raise prices on its flagship car by more than US $10,000. Rivian’s valuation has fallen to just US$23 billion today. https://bit.ly/3L4YlUw 

Canoo warns it may not have enough funds to bring EVs to market.

Shares of Canoo, which were down 5% Tuesday, fell another 17.5% in after-market trading following the release of its earnings. Just last month, Canoo was even selected by NASA to build the ground crew transportation vehicles for the Artemis space exploration program. The EV startup, which earlier this week filed suit against one of its major investors in an attempt to reclaim US$61 million in profits from allegedly suspicious stock trades, closed out the quarter with US$104.9 million in cash and cash equivalents. Canoo announced in August 2020 that it had reached an agreement to merge with special purpose acquisition company Hennessy Capital Acquisition Corp., with a market valuation of US$2.4 billion. At the time, Canoo said it was able to raise US$300 million in private investment in public equity, or PIPE, including investments from funds and accounts managed by BlackRock. Perhaps the only bright spot in Canoo’s earnings was it that received US$30.4 million as part of a settlement agreement with Dutch automotive manufacturing company VDL Nedcar. The partnership ended in December as Canoo explored a new deal with VDL Groep. https://tcrn.ch/37AO8Bk

Peloton crumbles 20% to a record low after third-quarter earnings miss reveals a ‘thinly capitalized’ company.

Peloton’s post-pandemic decline continued on Tuesday, with the stock plunging as much as 20% to a record low after it reported fiscal third-quarter earnings that missed analyst estimates. Here were the key numbers: Revenue: US$964.3 million, versus analyst estimates of US$969.8 million. Earnings per share: -US$2.27, versus analyst estimates of -US$0.86. Q4 Revenue Guidance: US$675 million to US$700 million, versus analyst estimates of US$823.7 million. Peloton’s quarterly revenue was down 23.5% year-over-year. The company expects to record an adjusted EBITDA loss of up to US$120 million in its fiscal fourth quarter. Recent reports suggest Peloton is looking for an equity investor to take a more than 10% stake in the company to boost its cash position. The company, which at one point was worth nearly US$50 billion at its peak, is worth about US$3.5 billion today. Shares pared losses Tuesday and were down 16.5% at US$11.80. https://bit.ly/3l2ttJF

Unity Software’s stock plunges nearly 30% on weak revenue guidance.

Unity Software Inc.’s. stock plummeted 29.3% in extended trading Tuesday after the software company reported fiscal first-quarter results that were largely in line with Wall Street analysts’ forecasts, but issued poor second-quarter and fiscal year revenue guidance. Unity reported a net loss of US$177.6 million, or 60 cents a share, compared with a net loss of US$107.5 million, or 39 cents a share, in the year-ago quarter. Adjusted earnings were a loss of 8 cents a share. Revenue increased 36% to US$320.1 million from US$234.8 million a year ago. Analysts surveyed by FactSet had expected on average a net loss of 8 cents a share on revenue of US$321 million. However, Unity said it expected Q2 revenue of between US$290 million and US$295 million, while analysts polled by FactSet anticipate US$360 million on average. For the fiscal year, Unity is projecting US$1.35 billion to US$1.43 billion; analysts polled by FactSet predict US$1.5 billion. Shares of Unity have sunk 66% this year, while the broader S&P 500 index SPX, -1.65% has declined 16%. https://on.mktw.net/39VqXTg

Upstart plummets 52% as the consumer lending platform points to recession risks and cuts its full-year outlook.

Upstart Holdings, a consumer lending platform that uses AI to determine creditworthiness, plunged Tuesday as the company cut its full-year revenue projection and flagged a gloomier outlook for the broader economy. The shares tumbled 57% to US$32.95 in premarket action, hitting prices not seen since December 2020 when the company’s shares began trading. The stock dropped as the company late Monday reduced its full-year 2022 revenue projection to US$1.25 billion from its previous projection of about US$1.4 billion. Girouard also said when consumer rates go up, “that means on the margin, a whole bunch of people that would have been approved are no longer approved. Upstart forecast second-quarter revenue of US$295 million to US$305 million, which was below the FactSet consensus estimate of US$335 million. Revenue more than doubled to US$310.1 million, outstripping expectations of US$300 million. Adjusted earnings also more than doubled to US$0.61 a share, higher than Wall Street’s view of US$0.53 a share. https://bit.ly/3wlFJdB

DiDi’s stock sinks into record-low territory after disclosing need to delist from NYSE.

Shares of DiDi Global Inc. dropped 2.0% in premarket trading Thursday, putting them on track to open in record-low territory, after the China-based ride-hailing giant disclosed that it would have to delist from the NYSE to complete a cybersecurity review initiated by regulatory authorities. DiDi concluded that if it doesn’t complete the review and rectification, there would be a “material adverse impact” on its ability to conduct normal operations. Earlier in May, the company disclosed that the U.S. Securities and Exchange Commission was also looking into its IPO. DiDi’s stock closed Wednesday at US $1.53, or 89.1% below the US $14 IPO price. So far this year, DiDi’s stock has plunged 69.3%, while the iShares MSCI China ETF has tumbled 26.1% and the S&P 500 has dropped 17.4%. https://on.mktw.net/38qofon 

Uber CEO tells staff company will cut down on costs, treat hiring as a ‘privilege’.

Uber will cut back on spending and focus on becoming a leaner business to address a “seismic shift” in investor sentiment, CEO Dara Khosrowshahi told employees in an email obtained by CNBC. “After earnings, I spent several days meeting investors in New York and Boston,” Khosrowshahi said in the email, which was sent out late Sunday. “It’s clear that the market is experiencing a seismic shift and we need to react accordingly.” Tech stocks have plunged sharply from the highs of the coronavirus pandemic, as investors fret over the prospect of an end to the era of cheap money that defined a historic bull market. The Nasdaq Composite last week recorded its fifth consecutive weekly decline, its longest such losing streak since 2012. It makes Uber the latest tech company to warn of a slowdown in hiring. Facebook parent company Meta last week told staff it would stop or slow the pace of adding midlevel or senior roles, while Robinhood is cutting about 9% of its workforce. Uber shares closed down more than 11% on Monday. The stock, which hit a new 52-week low earlier in the session, has fallen more than 45% year to date. https://cnb.cx/37J1V92

Display for foldable iPhones could use similar tech to Samsung.

Apple has reportedly started development work on a new type of display for foldable iPhones or iPads. The technology described is similar to that used in Samsung’s Galaxy Z Fold 3. One of the challenges of creating robust foldable screens is making them thin enough to survive continual folding and unfolding for a number of years … For Apple products, the Cupertino company creates its own designs for displays, then outsources production to companies like Samsung and LG. Samsung Display currently has the most advanced display manufacturing capabilities, so has often been the sole supplier of screens for Apple until other suppliers catch up. There also remains the possibility that Apple won’t launch a folding iPhone at all. The company has reportedly taken the view that folding phones may involve too many compromises to be anything more than a passing fad.  https://bit.ly/3w5FOTz 

‘An army of robots’ and zero human workers will build a dam in China.

China is using artificial intelligence (AI) to effectively turn a dam project on the Tibetan Plateau into the world’s largest 3D printer, according to scientists involved in the project. The 180 metre (590 feet) high Yangqu hydropower plant will be built slice by slice – using unmanned excavators, trucks, bulldozers, pavers and rollers, all controlled by AI – in the same additive manufacturing process used in 3D printing. When completed in 2024, the Yangqu dam will send nearly five billion kilowatt-hours of electricity each year from the upper reaches of the Yellow River to Henan, the cradle of Chinese civilisation and home to 100 million people. The power will travel via a 1,500km (932 miles) high voltage line built exclusively for green energy transmission. https://bit.ly/3Lc9TFh

Disney+ beats subscriber estimates in Q2 2022 while Netflix struggles.

Disney reported its fiscal Q2 2022 results on Wednesday with some pretty positive numbers. This comes as Netflix has been losing users and reconsidering its business model. As reported by CNBC, Disney+ closed the quarter with 137.7 million subscribers, while industry analysts expected about 135 million subscribers. In the second quarter alone, the platform gained 7.9 million new users. Counting ESPN+, Hulu, and other Disney-owned streaming platforms, the company now has more than 205 million subscribers. The numbers were good enough to make Disney’s stock rise almost 5% in after hours trading. Earlier this year, Netflix revealed that it lost 200,000 subscribers last quarter, with the expectation of losing up to 2 million in the coming months. Netflix blames “unpaid accounts” for these numbers, which is how the company refers to users who use passwords shared by friends and family. At the same time, Apple TV+ is also having a good time. Both Disney+ and Apple TV+ are cheaper than Netflix. And although Netflix has a considerably larger catalog than any other streaming platform, subscribers have been complaining that the company doesn’t renew most shows, which makes them lose interest in the platform. The result, as we can see, is Netflix losing ground to other smaller streaming platforms. https://bit.ly/3a0hSst

Podcast ad revenue in the US to top US$2 billion this year, new study predicts.

Podcasting continues to grow in the US as experts predict ad revenue will grow 47% to over US$2 billion in 2022. Surprisingly, the numbers actually show a depreciation from last year as the sector grew 72% in 2021, reaching US$1.45 billion. However, it’s still not bad as the numbers suggest that podcast advertising grew twice as fast as the total internet advertising market last year, which increased 35%. While the US is expected to continue double-digit growth in the sector, it should rise over 100% by 2024. That would make the market worth a whopping US$4.2 billion two years from now. The report claims there are three factors that are driving podcast ad revenue increases. A continuous increase in listeners and content, increased use of automated ad technology, and uptick in ad spending bumps podcasting to the US$2 billion medium it’s becoming. It looks like podcasting is a significant driver of income for brands and will continue to be for some time; everybody seems to be starting a podcast these days and I don’t blame them. Go where the money is, and frankly, it’s in podcasting. https://bit.ly/3Nctt5E 

Nintendo says it now has more than 100 million annual playing users.

Nintendo has revealed that it now has more than 100 million annual playing users. Between April 2020 and March 2021, Nintendo had 87 million annual playing users, 57 million annual playing users between April 2019 and March 2020, and 36 million between April 2018 and March 2019. Earnings also reveal that Nintendo shipped 4.11 million Switch consoles between January and March, bringing its total to 23.06 million for the fiscal year. The number represents a 20% decline year over year when compared to the past year’s figure of 28.83 million. Nintendo says the decline was due to shortages in semiconductors and other components. Nintendo has shipped 107.65 million Switch consoles since it was launched in March 2017. The company forecasts sales of 21 million Switch units in the current fiscal year, which ends in March 2023. Nintendo is set to release a number of Switch games this year, including Splatoon 3, Xenoblade Chronicles 3, Pokémon Scarlet and Pokémon Violet. One of the most anticipated titles, The Legend of Zelda: Breath of the Wild 2, was recently delayed to spring 2023. https://tcrn.ch/3st944K 

Elon Musk thinks he can double Twitter’s revenue through subscriptions alone.

Elon Musk — the world’s richest man and Twitter’s new owner — expects Twitter to earn almost US$10 billion in revenue from subscriptions by 2028, a projection that doubles the US$5 billion in total revenue the platform made last year. In a pitch deck viewed by the Times, Musk gave investors a taste of what to expect under his ownership. This reportedly includes driving up Twitter Blue subscribers to 69 million by 2025 and more than doubling that number to 159 million by 2028. Launched last year, Twitter Blue is the service’s US$2.99 / month subscription that gives users access to an “undo tweet” button, app customization, ad-free articles, and other exclusive features. Musk expects a huge growth in total Twitter users as well, growing from the 217 million users reported last year to 600 million Twitter users in 2025 and, eventually, 931 million in 2028. The pitch deck also outlines plans for an unnamed subscription service outside of Blue, called “X,” which Musk expects to bring in nine million subscribers in 2023 and 104 million by 2028. Earlier this week, Musk hinted at charging governments and corporations a “slight cost” to use Twitter. Musk’s pitch deck reportedly includes plans to rake in US$15 million from some sort of payments business as well, which he expects to grow to US$1.3 billion by 2028. Building out Twitter’s services will take some work, a likely factor behind Musk’s plans to hire 3,600 additional employees. https://bit.ly/3N3alHn

The EU could start enforcing rules to regulate big tech in spring 2023.

The European Union aims to begin enforcing the Digital Markets Act (DMA) in spring 2023, Commission executive vice president Margrethe Vestager announced at the International Competition Network (ICN) conference last week. Vestager previously stated that the antitrust legislation, which introduces a new set of rules to curb the power of Big Tech, could be implemented as early as October of this year. As noted by TechCrunch, Vestager suggests that the Commission will be prepared to act against any violations made by “gatekeepers” — a classification that includes Meta, Apple, Google, Microsoft, and Amazon — as soon as the laws come into force. The DMA, which still needs final approval from the Council and Parliament, defines gatekeepers as companies that have a market capitalization of over €75 billion (US$82 billion) and own a social platform or app that has at least 45 million monthly users. These entities can face fines of “up to 10 percent of its total worldwide turnover in the preceding financial year” if found in violation of the DMA’s rules, a fee that could increase to 20 percent in the case of a repeat offense. In accordance with the DMA, gatekeepers will have three months to declare their status to the Commission, followed by an up to two-month wait period to receive confirmation from the EU. https://bit.ly/395Gq2s

MicroStrategy falls 24% as bitcoin inches closer to its margin call level of US$21,000.

Bitcoin has dropped more than 20% over the past week, dipping below US$31,000, after it was rejected at a key resistance level ofUS $40,000. That’s bad news for MicroStrategy, as it has taken out billions of dollars in debt to buy more than 129,000 bitcoin over the past two years. And MicroStrategy’s underlying software business is not profitable enough to service that debt, so the success of the company’s highly leveraged bet on crypto is solely dependent on the price of bitcoin rising well above its average price paid of US$30,700. If bitcoin falls below US$21,000, MicroStrategy will be met with a margin call from one of its loans. In March, MicroStrategy took out a US$205 million bitcoin-collateralized loan with Silvergate Bank to purchase more bitcoin. The software company’s total bitcoin holdings are now worth just over US$4 billion. Earlier this year, CEO Michael Saylor said he doesn’t plan to ever sell MicroStrategy’s bitcoin stash. That signals investors may be somewhat uneasy with its billions of dollars in debt, its slowly declining software business, and its exposure to a extremely volatile asset. https://bit.ly/38nha82 

SEC chief Gary Gensler says crypto exchanges are ‘market making against their customers’.

Securities and Exchange Commission Chariman Gary Gensler said cryptocurrency exchanges are “commingling” services, which could go against their customers’ best interests. The SEC chief warned the lack of separations between services like custody, market-making, and providing a trading platform leaves clients vulnerable. Some tokens like Binance, USD Coin and Tether, which are all stablecoins tied to fiat currencies like the US dollar, are closely tied with exchanges, he added. Coinbase, Binance and Bitfinex, which is connected to Tether, didn’t immediately respond to Insider’s requests for comment. Binance referred Bloomberg to a blog that says its stablecoin follows “strict guidelines and remaining transparent with the user community.” Gensler previously has said blockchain technology possessed the tools to be a “catalyst for change.” But he’s been a vocal critic of crypto recently and has consistently maintained that cryptocurrencies fall under SEC guidance and thus should be regulated as such. https://bit.ly/3yExGv1 

Instagram will start testing NFTs for select creators.

Instagram will start testing digital collectibles this week, allowing a small group of U.S. users to share their non-fungible tokens on the photo-sharing app. Meta Platforms, the parent company of Instagram, also plans to roll out NFTs on Facebook. In the future, it said it plans to allow people to share their digital collectibles as AR stickers in disappearing Instagram Stories. Users will be able to post NFTs they own or created by linking third-party crypto wallets, such as MetaMask and Rainbow, to their Instagram app. Ethereum and Polygon blockchains will be supported to start, followed by Flow and Solana. Instagram said there will be no fees for posting or sharing NFTs. NFTs on Instagram will have a “special shimmer visual treatment” although the company didn’t provide details on what this would look like. On Twitter, users can display their NFTs as their avatars, which appear in a hexagonal shape instead of a circle. Last year, Instagram head Adam Mosseri told The Information the company was “exploring” an NFT marketplace. https://bit.ly/3wweqNP

Samsung in talks to hike chipmaking prices by up to 20%.

Samsung Electronics Co. is talking with foundry clients about charging as much as 20% more for making semiconductors this year, joining an industry-wide push to hike prices to cover rising costs of materials and logistics. Contract-based chip prices are likely to rise around 15% to 20%, depending upon the level of sophistication, according to people familiar with the matter, who asked not to be identified due to the sensitivity of the issue. Chips produced on legacy nodes would face bigger price hikes, they said. New pricing would be applied from the second half of this year, and Samsung has finished negotiating with some clients, while it is still in discussions with others, the people said. Samsung’s decision is a shift from its relatively stable pricing policy last year, when the industry rushed to raise prices in the wake of a global chip shortage. The company is facing multiple macro risks such as the war in Ukraine, lockdown measures in China, rising interest rates and inflation. That’s throwing a wrench into business plans typically made a few years in advance. Manufacturing costs for chipmakers are now rising at about 20 to 30% on average on all fronts, from chemicals, gas and wafers to equipment and construction materials. Contract chip manufacturers including TSMC and United Microelectronics Corp. are warning clients that they plan to raise prices by a mid-to-high single digit percent, on the heels of a price hike several months ago. The industry leader TSMC has told clients that it plans to raise prices by about 5% to 8% from 2023, following a 20% price hike last year, according to the Nikkei. UMC is also planning another round of 4% price hikes in the second quarter. ASML Holding NV — a key supplier to Samsung and TSMC — warned last month of rising pressure on labor costs, in addition to higher material costs and transportation costs. https://bloom.bg/3FStpFV

Tesla’s solar roof has a new competitor — Ikea.

Ikea announced that it was branching out into home solar panels in the US on Thursday. The furniture company will team up with SunPower Corporation, a residential energy services provider, to create the initiative called Home Solar.  The market for residential solar panels was estimated to be about US$9.1 billion in 2020 and is expected to continue to grow in the coming decade, per data from Grand View Research. However, Tesla and SunPower’s products vary. While Tesla replaces existing roofing with sleek black solar panels, SunPower’s panels are added on top of the roofing shingles, making them a more traditional product. The residential solar market is expected to grow in the coming years, but the industry has faced some headwinds from supply-chain snarls. Ikea did not specify how much its solar panel installation process and monthly usage fees would cost.  California is a prime market for the launch of Ikea’s Home Solar initiative as it was home to about 40% of the nation’s residential solar energy capacity last year, according to the California Public Utilities Commission. https://bit.ly/3LaD2kn

EV company Lordstown completes US$230 million sale of its Ohio factory to Foxconn.

Struggling EV company Lordstown completed the sale of its Ohio factory to Foxconn, the Taiwanese company that assembles Apple’s iPhone. If the sale wasn’t completed before May 18th, the company would have had to pay back the US $200 million that Foxconn put down as a deposit — an amount that Lordstown has said it does not have. The new joint venture will be called MIH EV Design LLC and will be 55 percent owned by Foxconn and 45 percent by Lordstown. Foxconn will commit US $100 million to the joint venture, including a US $45 million loan to Lordstown, to build a lineup of electric pickup trucks. Since buying it from General Motors in 2019, Lordstown Motors has put about US $240 million worth of work into getting the factory ready to build its electric pickup truck, the Endurance. It has struck deals with the likes of Geely, which is China’s largest private automaker, as well as Fisker Inc., a California EV startup that has yet to make an electric vehicle. https://bit.ly/38pV9p8