The Dow Jones Industrial Average jumped 6.2% in last week’s stock market trading. The S&P 500 index leapt 6.6%. The Nasdaq composite popped 6.8%. The small-cap Russell 2000 ran up 6.55% – a refreshing change after weeks of declines. Sand Hill Road’s doomsayer-in-chief—Sequoia Capital—is back with a warning to its startup founders: Don’t expect a recovery from the current market downturn to happen quickly. 15,000 startup employees were laid off in May. This week’s cuts bring this year’s total to over 28,000, per Layoffs.fyi, compared to about 10,000 total in 2021 and a staggering 80,000 in 2020. 25 companies that listed during the SPAC boom of 2020 and 2021 have already issued warnings that they could go bust within a year, according to a data analytics firm. These blank-check vehicles raised $96 billion in the first quarter of 2021 alone, according to the Harvard Business Review. A growing number of Chinese tech start-ups, , are willing to list shares publicly in China at valuations lower than during private funding rounds in so-called blood listings, according to Reuters. Snap’s warning sent shock across digital advertising as investors fled social media stocks. Cathie Wood’s ARK Invest bought almost US$44 million in shares of Nvidia on Thursday, after the tech company reported its first-quarter earnings. A Twitter shareholder sued Elon Musk for market manipulation. Apple could be in talks to buy EA gaming, Disney and Amazon also potential suitors. iPhone production plans said to be 20 million down on consensus expectations. Samsung will reportedly produce 30 million fewer smartphones this year.
Although the broader market has free fallen for weeks now, Canadian microcap stocks have been declining since March 2021. And while we won’t call a bottom, microcaps look VERY cheap for long-term investors. Take advantage of this time to do your research and find the winners that will come out of this downturn and provide outsized returns. Dig into our company summaries HERE, and if there are any you’d like to learn more about, please feel free to reach out.
Canadian Technology Capital Markets & Company News
We won’t call a microcap bottom but…. We think it could be time to really dig in on microcap stocks that have been taken out to the woodshed.
Although the broader market has free fallen for eight weeks now, Canadian microcap stocks have been declining since March 2021. And while we won’t call a bottom, microcaps look VERY cheap for long-term investors. Take advantage of this time to do your research and find the winners that will come out of this downturn and provide outsized returns. Dig into our company summaries, and if there are any you’d like to learn more about, please feel free to reach out. https://bit.ly/3NYAesz
This founder just listed his NFT company on a Toronto stock exchange with a valuation over US$17 million.
Here’s why he thinks it’s a good time for crypto firms to go public. On Wednesday, NFT Technologies, a firm that helps novice investors put their money in Web3, listed publicly on the NEO stock exchange in Toronto. The listing makes it one of the first nonfungible-token companies to make such a move and the first this year. The company is listed at a valuation of about $28 million, or about US$21.8 million. By market close that value dropped to a little over US$17 million. While most companies delay their public launches during market downturns, Mario Nawfal, NFT Technologies’ cofounder and CEO, said this could be the best time for crypto firms to list on a public exchange. According to a Google Trends analysis, interest in NFTs peaked in January before collapsing nearly 77% in the past five months. Similar data from NonFungible, a website that tracks the NFT ecosystem, suggested sales of NFTs declined 89.6% since a peak in September. https://bit.ly/3GlqTYY
Forma AI poised to grow AI-supported sales compensation management platform.
Forma announced it has raised US$45 million in series B funding for expanding marketing and development of the platform. Agile, responsive sales organizations have improved their results in the last few years with the inclusion of next-gen tools such as Salesforce, Hubspot, Sage and others. But sales compensation management – a US$1 trillion annual cost center – remains a decades-old bottleneck. Forma uses automated workflows to unite the compensation process across an organization to bring finance, HR, sales, sales operations and IT together within a single collaboration tool to put everybody in these departments on the same page. This enables better communication for making quicker decisions and goals attained faster than usual. With 400% revenue growth in 2021 and rapid enterprise adoption of its revolutionary SPM platform, Forma plans to use the capital to expand its product development and go-to-market capabilities to meet growing demand in the SPM market. https://bit.ly/3lEEIbx
WeCook raises $40 million to fuel expansion of “ready-to-eat” meal service.
Dorval, Québec-based WeCook Meals, which makes and delivers “ready-to-eat” meals, has secured a $40 million strategic equity investment from Claridge Food Group. Claridge Food Group is a new investment vehicle designed to aid the growth of Québec-based food processing companies. WeCook, formerly known as Nutrition Fit Plus, was founded in 2013 by Plourde and Jonathan Roy. The home meal delivery company targets customers who “want to eat well but don’t have time to cook” with healthy meals curated by an in-house chef using ingredients from local suppliers. https://bit.ly/39ZCBfW
Canadian human resources startup Humi secures $31 million Series B.
Human resources tech startup Humi has secured $31 million in a Series B funding round led by Kensington Capital Partners. With a focus on providing HR tech specifically tailored to Canadian companies, Humi is looking to expand its platform’s capabilities and meet what it says is a rising demand for its solution. Struck Capital and Tribe Capital, which led Humi’s $15 million Series A in 2020, provided follow-on funding, while Telus Ventures, Kensington, and Flex Capital came on as new investors. The Series B round included $25 million in equity and $6 million in debt and was closed earlier this year. The financing brings Humi’s total funding to date to $51 million. https://bit.ly/3wTiCXN
Worximity secures $14 million for smart factory analytics tech.
Montréal-based startup Worximity has raised $14 million to further advance its smart factory technology that utilizes machine learning, artificial intelligence, and the Internet of things (IoT). The financing comes from Investissement Québec and existing Worximity investors, the Fonds de solidarité FTQ and Marel, a multinational food processing company based in Europe that has strategically invested in the startup since 2019. https://bit.ly/3PV3a6u
Limacharlie closes $7 million to allow companies to manage, develop cybersecurity strategies.
Led by a former employee of Google’s Chronicle and Canada’s Communications Security Establishment (CSE), LimaCharlie has set its sights on providing security professionals with the infrastructure they need to deliver custom cybersecurity strategies. The Vancouver and Mountain View, California-based software startup has closed $7 million (US$5.45 million) in seed financing, led by San Francisco’s Susa Ventures, to bring “an engineering approach to cybersecurity” through its “security-infrastructure-as-a-service” model. The startup’s latest financing brings LimaCharlie’s total funding to $8.1 million, and valuation to $30.7 million. https://bit.ly/3PFHon5
Haloo raises $2.9 million to offer IP verification tech as a solution for NFT theft, fraud.
Toronto-based startup Haloo (formerly Heirlume) has raised $2.9 million (US$2.3 million) in all-equity, primary seed funding in a round co-led by The W Fund and The51. Launched in 2020 by co-founders Julie MacDonell (CEO) and Sarah Ruest (CTO), Haloo uses artificial intelligence (AI) to provide users with instant trademark searches, fail-safe trademark applications, and automated brand enforcement. Haloo’s total funding to date is at around US$4 million, which includes its past US$1.7 million raise last year with contributions from MaRS IAF, Backbone Angels, Future Capital, and Angels of Many. Haloo previously announced the US$1.7 million as a seed round. However, when the $2.9 million financing was raised, the company told BetaKit that they now classify the US$1.7 million as pre-seed, and noted that the $2.9 million was raised at a higher valuation. Backed by almost US$3 million in fresh funds, Haloo intends on expanding throughout the United States, and to build out distribution through integration partnerships. https://bit.ly/3yTnvD5
Global Markets: IPOs, Venture Capital, M&A
Sequoia warns founders of ‘Crucible Moment,’ advises how to ‘Avoid the Death Spiral’.
Sand Hill Road’s doomsayer-in-chief—Sequoia Capital—is back with a warning to its startup founders: Don’t expect a recovery from the current market downturn to happen quickly. Over the years, Sequoia, the venture firm behind Google, Apple and Airbnb, has developed a reputation as the tech industry’s Cassandra, through memos and presentations that it shared with the leaders of its portfolio companies during past macroeconomic crises. In 2008, that took the form of a 56-slide survival guide to the Great Recession, entitled “R.I.P. Good Times.” In early 2020, as the pandemic began upending the economy, Sequoia sent its founders a grim memo entitled, “Coronavirus: The Black Swan of 2020.” Its latest warning to its portfolio companies takes the form of a 52-slide presentation. https://bit.ly/3zlheAr
15,000 startup employees were laid off in May.
Total startup layoffs reached nearly 15,000 in May, according to the latest data from Layoffs.fyi, which tracks job cuts in the global startups industry. This week alone, Istanbul-based Getir let go of 4,480 people, Berlin-based Gorillas, another fast delivery firm, announced it was laying off 300 employees, and the buy now, pay later firm Klarna said it was cutting cut 10% of staff. This week’s cuts bring this year’s total to over 28,000, per Layoffs.fyi, compared to about 10,000 total in 2021 and a staggering 80,000 in 2020, when the coronavirus pandemic upended the tech industry. Deep cuts are expected to continue in 2022 as the economic downturn intensifies and investors pressure founders to radically reduce costs in order to stay afloat. https://bit.ly/3z6gMWq
A score of SPAC merger companies that listed during the boom are warning they probably won’t survive much longer.
25 companies that listed during the SPAC boom of 2020 and 2021 have already issued warnings that they could go bust within a year, according to a data analytics firm. Audit Analytics found that 10.8% of the 232 stocks that merged with blank-check companies over the past two years have issued going-concern warnings, which indicate a company will struggle to stay afloat over the next 12 months. A SPAC, or special purpose acquisition company, raises money through an IPO and then aims to acquire or merge with another company. Chamath Palihapitya is one high-profile sponsor, while companies including Lucid Motors and Virgin Galactic have merged with SPACs to list on public markets. These blank-check vehicles raised $96 billion in the first quarter of 2021 alone, according to the Harvard Business Review. But the market has struggled since that boom. Morgan Creek’s Exos SPAC Originated ETF, which tracks these vehicles, is down 44% over the past year. 21 of the 25 vulnerable companies had revenue less than $100 million in 2021, according to Audit Analytics. Just under 6% of all the stocks listed on the New York Stock Exchange and Nasdaq issued going-concern warnings last year, the firm’s director of research Derryck Coleman told Insider. https://bit.ly/3t26mmY
Chinese tech firms forced into ‘blood listings’ as capital dries up.
A growing number of Chinese tech start-ups, once the darlings of equity markets, are willing to list shares publicly in China at valuations lower than during private funding rounds in so-called blood listings. Unlike tech sector woes elsewhere, triggered mainly by rising interest rates, the misery in China comes from frothy tech markets and disruptions from harsh COVID-19 restrictions. Public offerings at slashed valuations could translate into losses for venture capitalists in late funding rounds. CloudWalk Technology Co, hailed as one of China’s “Four Dragons” in Artificial Intelligence (AI), debuts in Shanghai on Friday following an initial public offering that slashed its pre-IPO valuation by 29%. Smarter Microelectronics (Guangzhou) Co, a loss-making chipmaker, submitted an application this month for a Shanghai IPO that could see a 78% slump in valuation, according to calculations based on the company’s draft prospectus. And Wuxi Shoulder Electronics Co is waiting for regulatory registration for a Shanghai IPO that could see its value slump one-third from its private market price tag. China’s tech-focused STAR Market (.STAR50) has tumbled nearly 30% this year, and many stocks have fallen below IPO prices on debut. https://reut.rs/3PNcMA3
Instacart to slow hiring to focus on profitability ahead of IPO.
Grocery delivery startup Instacart Inc. is planning to slow the pace of hiring as it prepares for an initial public offering, focusing instead on profitability. “We hired more than 1,500 people over the last year and nearly doubled the size of our engineering teams,” the company said in a statement to Bloomberg. “As part of our second-half planning, we’re slowing down our hiring to focus on our most important priorities and continue driving profitable growth.” https://bloom.bg/3LTuLl2
Snap plunges 30% after CEO warns company will miss revenue and earnings estimates, slow hiring.
Snap shares plunged 30% in extended trading on Monday after CEO Evan Spiegel warned in a note to employees that the company will miss its own targets for revenue and adjusted earnings in the current quarter. The social media company will also slow hiring through the end of the year as it looks to manage expenses. In April, Snap reported first-quarter earnings that missed Wall Street expectations for sales and profit. At the time, the company said it expected between 20% and 25% year-over-year growth in revenue. It forecast adjusted earnings before interest, taxes, depreciation, and amortization of between US$0 and US$50 million. The news hit the online advertising market hard, sending many of Snap’s peers tumbling after hours. Shares of Facebook parent Meta dropped 7% in after-hours trading. Twitter fell almost 4%, while Pinterest slid 12%. Outside social media, shares of advertising companies also fell after hours — Google parent Alphabet was off more than 3%, while The Trade Desk fell more than 8%. As of Monday’s close, Snap shares were down over 50% for the year, compared to the 17% drop for the S&P 500. After hours, the stock dropped 28% to US$16.15. https://cnb.cx/3yW1wev
Snap’s warning sends shock across digital advertising as investors flee social media stocks.
Social media companies were already having a rough year from the cutback in digital ad spending caused by rising inflation, supply chain challenges and the war in Ukraine. Forecasts for the second quarter called for meager growth at best, and stock prices were getting hammered. That was all before Snap CEO Evan Spiegel warned late Monday of an environment that’s worsened since his company reported quarterly results in April, when guidance was already disappointing. Snap, which had previously projected second-quarter growth of 20% to 25%, lost an astounding 43.1% of its market cap on Monday. Beyond that, Pinterest plunged 23.6%, Facebook parent Meta dropped 7.6%, Google lost 5% and Twitter sank 5.6%. https://cnb.cx/3anGHP7
Cathie Wood’s ARK bought $44 million Nvidia shares after the gaming firm beat earnings.
Cathie Wood’s ARK Invest bought almost US$44 million in shares of Nvidia on Thursday, according to a trading update, after the tech company reported its first-quarter earnings. ARK’s purchase of 245,286 Nvidia shares at Thursday’s closing price of US$178.51 were worth US$43.7 million. Nvidia’s earnings report showed stronger than expected revenues, but the chip maker warned that tough macroeconomic conditions would reduce its sales. The company said the Russia-Ukraine war and COVID restrictions in China would have a US$500 million hit on its revenue for the current quarter. Nvidia’s revenue for the current quarter is expected to be $8.10 billion, “plus or minus 2%,” the company said. Its revenue for the first quarter was $8.29 billion, up 46% from a year ago. The company’s shares dropped over 10% after the report on Wednesday, but had climbed back up by Thursday and closed the day up 5.16%. Nvidia stock is down over 37% in the year to date. ARK bought Nvidia stock across three of its ETFs, including its flagship ARK Innovation ETF, ARKK, which bought the most, at over 191,000 shares. ARK had previously owned Nvidia stock but completely shed its holdings in November last year. https://bit.ly/38Vqssa
Andreessen Horowitz raises US$4.5 billion crypto fund.
Andreessen Horowitz on Wednesday announced the biggest crypto-focused venture capital fund ever, calling this moment a “golden era” for web3 companies, even as crypto markets tumble. The US$4.5 billion fund—the firm’s fourth and biggest to focus on crypto—will dedicate US$3 billion to venture investments and US$1.5 billion to seed investments. So far this year, the market cap for all cryptocurrencies has tumbled by nearly US$1 trillion to US$1.27 trillion. But the firm is undeterred. “Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users. More importantly, a massive wave of world-class talent has entered web3 over the last year… That’s why we decided to go big,” wrote Chris Dixon, who leads Andreessen Horowitz’s crypto team, in a blog post. The crypto fund is much larger than other notable launches in recent months, which already have been significant in size. So far this year, Haun Ventures raised US$1.5 billion, Electric Capital raised US$1 billion, DragonFly Capital raised US$650 million and Bain Capital Crypto raised US$560 million. https://bit.ly/3PM1mN0
GameStop climbs after the video-game retailer launches a cryptocurrency wallet ahead of its rollout of an NFT marketplace.
GameStop stock advanced Monday after the company said it’s opened a wallet for gamers to manage their digital assets as it prepares to launch a marketplace for non-fungible tokens. The GameStop Wallet will allow gamers and others to store, send, receive and use cryptocurrencies and NFTs across decentralized apps without having to leave their web browsers, the videogame retailer said in a statement Monday. The stock rose as much as 3% to US$98.52 in early trading. But shares have lost about 35% in 2022 after surging by 687% in 2021 during a stunning run-up in so-called meme stocks. GameStop’s self-custodial wallet was in its beta stage, running on the ethereum blockchain. It will enable transactions on the NFT marketplace that it’s aiming to launch in the second quarter of 2022. Earlier this year, the company teamed up with Immutable X, a protocol for trading Ethereum NFTs, to help it run its NFT marketplace as GameStop aimed to push into the business of digital collectibles. Ether, the token that runs on the Ethereum blockchain, rose 2% on Monday to US$2,070.87. https://bit.ly/3PHmdki
Lyft joins Uber in ‘significantly’ slowing hiring and cutting budgets, but promises no layoffs.
Lyft will be scaling back on hiring and reducing budgets amid concerns of an economic slowdown, but it’s stopping short of firing workers. The rideshare startup joins a growing list of tech companies that are finding it more challenging to be profitable. Both companies said many drivers left their platforms during the pandemic to work as delivery drivers or found driving unprofitable because of high gas prices. Now Lyft and Uber have to spend more to get drivers back on their platforms as they expect customers to return. They do so by dangling joining bonuses and rewarding drivers for picking up more passengers. https://bit.ly/3PHMAqx
Twitter shareholder sues Elon Musk for market manipulation.
A Twitter investor is suing Elon Musk for market manipulation for his tweets about the buy being “on hold.” The proposed class-action suit, filed in a federal district court in San Francisco on Wednesday, alleges that Musk manipulated the value of the social media company via his tweets, which hurt investors and employees. The complaint argues that Musk used tweets about spam bots to lower Twitter’s stock price so he could renegotiate the price of the deal. “Musk’s market manipulation worked — Twitter has lost US$8 billion in valuation since the buyout was announced,” the complaint says. Twitter shares have fallen more than 19% to below US$40 from where they traded the day before Musk announced a deal to take the company private in a buyout worth US$54.20 a share. The complaint further argues that Musk made his tweets and public comments to help ease the pressure from a planned loan backed by his Tesla equity that was originally meant to add to financing the Twitter deal, which he dropped this week, the WSJ reported. https://bit.ly/3POKKnC
Elon Musk commits more cash to Twitter deal, sending Twitter stock higher and Tesla shares lower.
Tesla Inc. Chief Executive Elon Musk increased the amount of cash he is committing to acquiring Twitter Inc., according to a Wednesday filing with the Securities and Exchange Commission. Musk increased his commitment by US$6.25 billion, with the rest funded by debt financing, according to the filing. Margin-loan commitments for US$12.5 billion expired, with banks committing to still provide half that amount and Musk promising the rest. Musk had previously stated that the Twitter deal was “on hold,” and also promised he would not sell more Tesla stock after reaping nearly US$4 billion from sales in April. The filing also stated that Musk continues to negotiate with Twitter shareholders, including cofounder Jack Dorsey, in an attempt to convince them to remain as investors instead of cashing out. Twitter stock gained more than 5% in after-hours trading, while Tesla shares declined more than 1%. https://bit.ly/3LJphJP
Apple in talks to buy EA gaming, Disney and Amazon also potential suitors.
Video game publisher Electronic Arts (EA) is actively seeking a potential buyer or merger. Apple has reportedly been in talks with the company about buying EA out according to Puck. Disney and Amazon have also been in talks about purchasing the video game company. The Redwood City-based firm has published hits like Apex Legends, Madden, and The Sims franchise. The idea for a buyout or merger came after Microsoft purchased Activision Blizzard for US$68 billion earlier this year. Shortly after, Sony purchased Bungie, the studio behind Destiny for US$3.6 billion. According to Puck, EA ideally would like a merger so Andrew Wilson can remain CEO of the combined company. Apple has not commented on a potential deal with Electronic Arts. https://bit.ly/3sWtUJY
Broadcom to acquire VMware in US$61 billion deal.
Broadcom Inc. said Thursday morning that it has reached an agreement to acquire VMware Inc. The deal values VMware at about US$61 billion and will see Broadcom assume roughly US$8 billion of VMware’s net debt. VMware shares had surged 25% in Monday trading after media reports suggested a deal was imminent, and the stock was up 0.3% in premarket trading Thursday. Broadcom’s stock was up 1.6% premarket. Broadcom said in a release that once the deal is complete, the company plans to operate its Broadcom Software Group under the VMware name, “incorporating Broadcom’s existing infrastructure and security software solutions as part of an expanded VMware portfolio.” Broadcom Chief Executive Hock Tan said in the release that the deal “combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company.” https://bit.ly/3NEX5c6
iPhone production plans said to be 20 million down on consensus expectations.
Apple’s iPhone production plans for 2022 are said to be around 220 million units – some 20 million lower than the consensus estimates of analysts. It would also represent zero growth on 2021. First, the global chip shortage. The shortage was created by a mix of factors. These include increased demand for technology during the pandemic, COVID-related production disruption, and a growing demand for chips by car-makers; as cars rely on increasing numbers of microprocessor units. Second, widespread production disruption in China due to city-scale lockdowns as the country continues to insist it can eradicate COVID-19 despite growing frustration on the part of the population. Finally, rapidly growing inflation – due in part to “the Great Resignation” and in part to global effects of Russia’s invasion of Ukraine – is reducing disposable income, meaning less money to spend on new gadgets. Apple had previously warned that its revenue for the current quarter could be down by as much as US$8B, but we’ll need to wait to hear its expectations for the launch quarter. https://bit.ly/3wZlEKu
iPhone 14 Max production delayed by three weeks due to COVID-19 lockdown.
Nikkei Asia reported this week that Apple and its suppliers are struggling with iPhone 14 production due to COVID-19 lockdowns in China. Yesterday’s report revealed that a specific iPhone 14 model was affected by delays in the engineering verification test (EVT), when suppliers finalize all parts and processes before starting mass production. Jeff Pu predicts that Apple will build 91 million iPhone 14 units by the end of the year despite production delays for the 14 Max model, which is more than the 84 million iPhone 13 units Apple shipped in 2021. However, it’s unclear whether production delays will push Apple to hold off on the official announcement of the iPhone 14. https://bit.ly/3Nxgr2Q
Samsung will reportedly produce 30 million fewer smartphones this year.
Samsung is the biggest smartphone manufacturer on the planet, but it’s not immune to the pressure that the entire market has been feeling. A new report this week claims that Samsung is preparing to cut its production forecasts, with as many as 30 million fewer smartphones produced in 2022. Korean publication Maeil Economic Daily reports that Samsung has notified its partners of cuts to smartphone production for the remainder of 2022. Initially, Samsung planned to produce around 310 million smartphones during 2022, but that has been cut down to around 280 million devices. Notably, this news comes just a day after Bloomberg reported that Apple wouldn’t increase production this year, with plans to produce 220 million iPhones this year. Market forecasts had expected around 240 million units this year. Samsung and Apple have roughly the same reasons for their conservative production schedules this year. Samsung cites the continued rising inflation as a key reason for lessening production, especially as that influences consumer spending on new products. Further, the ongoing shortage of chips and other components continues to affect everyone from Samsung to Apple, and limits production accordingly. And finally, uncertainty around the war in Ukraine and the subsequent economic issues in Russia have affected the market. https://bit.ly/3z2JeZe
Alibaba’s revenue beats estimates but China Covid impact looms.
Alibaba Group’s revenue for the quarter through March grew 9%, beating analysts’ expectations—even though it was the slowest pace of quarterly growth since the Chinese e-commerce giant went public in 2014. Alibaba’s New York-listed stock was up 12% as of Thursday morning. But Alibaba’s business continues to face challenges in the current quarter through June, as China’s severe Covid lockdown in Shanghai since late March has dealt a major blow to key supply chains for manufacturers and retailers. Alibaba, whose last fiscal year ended in March, didn’t provide its annual revenue forecast for the current fiscal year, saying that it cannot control or predict the risks and uncertainties arising from Covid. During a conference call with analysts Thursday, Alibaba CEO Daniel Zhang said that the Chinese government’s measures to stimulate consumption and fix supply chains could pave the way for a recovery from Covid. In the quarter through March, Alibaba’s revenue from its core commerce operations in China grew 8%. Revenue from its local consumer services segment, which consists of food delivery, travel and other businesses, grew 29% in part because the company scaled back its spending on subsidies that had a negative impact on revenue. The rate of revenue growth for its cloud computing business slowed to 12% in the quarter, from 20% in the previous quarter. Alibaba said slower cloud computing growth was due in part to weaker demand from customers in China’s internet sector amid macroeconomic headwinds. Alibaba also reported a net loss of $2.56 billion in the quarter, due mainly to a decline in the value of its stakes in other publicly traded companies. https://bit.ly/3wT6hmv
Mark Zuckerberg says creating the metaverse will bleed money for years.
Mark Zuckerberg told shareholders that creating the metaverse will bleed money for three to five years. The Meta CEO told the company’s annual meeting that some products wouldn’t be ready for 15 years. The Facebook owner spent US$10 billion on the idea of an immersive virtual world in 2021 alone. It has 10,000 employees working on Zuckerberg’s vision and wants to hire an additional 10,000 to work on the project. However, those plans are likely to be on hold after Meta imposed a hiring freeze in early May amid anticipation of an economic slowdown. Eventually, the metaverse would generate revenue by becoming a platform for creators and businesses to sell virtual products and services. Former and current Facebook employees told Insider in April that Zuckerberg is interested in little except the metaverse but lacks a coherent strategy for the project he regards as the future of the internet. https://bit.ly/39ZDeGa
Walmart is expanding its drone deliveries to reach 4 million households.
Walmart announced on Tuesday that it’s planning on expanding the number of stores that offer drone-delivered packages; by the end of the year, it hopes to fly deliveries from 34 sites across Arizona, Arkansas, Florida, Texas, Utah, and Virginia. Walmart says that customers who live near drone-capable stores will be able to order items weighing less than 10 pounds in total between 8AM and 8PM. The deliveries, which cost US$3.99, are done via a drone operated by a company called DroneUp, which has a partnership with Walmart. As Ars Technica points out, though, Walmart’s system does have some limitations. Currently, it’s legally required to have line-of-sight to the drones while they’re flying, meaning that it has to have control towers in its stores’ parking lots to offer drone service. This limitation also means that deliveries have to happen within a 1.5-mile radius of the store. And, of course, DroneUp has to hire more operators as more people use the service. https://bit.ly/39Uzkyc
Dyson eyes robots that can do your household chores.
Dyson has shown off a series of prototype robots it’s developing and announced plans to hire hundreds of engineers over the next five years in order to build robots capable of household chores. The company, best known for its range of vacuum cleaners, says that it aims to develop “an autonomous device capable of household chores and other tasks,” with The Guardian noting that such a device could be released by 2030. It’s currently recruiting 250 robotics engineers with expertise in “computer vision, machine learning, sensors and mechatronics,” and hopes to hire 700 more over the next five years. Dyson says it’s already added 2,000 new employees to its workforce this year. As well as making hires, the company is also building out what it hopes will be the UK’s largest robotics research center. In 2020, Dyson announced plans to invest £2.75 billion (around US$3.45 billion) in areas including robotics, new motor tech, and machine learning software by 2025. It plans to spend £600 million (around US$750 million) of that investment this year. https://bit.ly/3wLAYLy
Hyundai plans to spend US$10 billion on EVs, AVs and robotics in the US by 2025.
Hyundai said it plans to invest more than US$10 billion toward accelerating electrification and autonomous vehicle technology in the U.S. by 2025. Part of that pot includes the US$5.5 billion Hyundai has earmarked for its new EV plant and battery manufacturing facility in Georgia announced Friday. Non-affiliated suppliers are contributing another US$1 billion into that project pushing the total cost to US$6.5 billion. The remaining US$4.5 billion of Hyundai’s total U.S. investment will go into what the automaker has identified as “key future businesses.” The investment will also help Hyundai upgrade R&D operations for its Kia and Genesis brands, the company said. In 2020, Hyundai purchased from SoftBank an 80% stake in Boston Dynamics, in a deal that valued the mobile robotics firm at US$1.1 billion. Part of its $10 billion investment announced Sunday will go toward creating a robotics value chain, from component manufacturing to logistics. In 2019, Hyundai established a US$4 billion joint venture with Aptiv, a global supplier developing AV technology. Motional, the resulting AV technology company, is currently piloting autonomous driving technology on the Lyft and Via ride-share apps in Las Vegas. The venture is developing an app for customers to plan their journey using a mix of cars, trains, advanced air mobility, eVTOLs and e-scooters. It aims to begin commercial service in 2028. https://tcrn.ch/3wKOFcG
Media, Streaming, Gaming & Sports Betting
The NFL is looking to launch its own streaming service this summer, says report.
The National Football League is expected to launch its own mobile-focused streaming service, NFL+, as early as July, according to a report from the NFL owner meeting in Atlanta by Sports Business Journal (SBJ). The platform will reportedly cost around US$5 per month and will feature live in-market games on mobile phones and tablets as well as other possible content, including radio, podcasts and a variety of other team-created content. Amazon and Apple are the front-runners for the NFL Media stake and Sunday Ticket. Sunday Ticket has been with DirecTV for many years, and once this expires, the deal will cost over US$1.5. billion, according to reports, and will be in the US$2.5 billion range. In addition to broadcast deals with FOX, NBC, CBS and Amazon, the NFL also has the NFL Network that is included in many cable, satellite and streaming service packages. So, we will have to see if fans are willing to pay an extra US$5 for content they can already find elsewhere. https://tcrn.ch/3Gnxx0R
Adtech, Privacy & Regulatory
Mark Zuckerberg sued by D.C. Attorney General over Cambridge Analytica scandal.
Meta Platforms CEO Mark Zuckerberg was sued Monday by the Washington, D.C. Attorney General’s office for privacy violations stemming from the Cambridge Analytica Scandal, which allowed the now-defunct consulting firm aligned with former President Donald Trump to improperly collect data on tens of millions Facebook users. D.C. Attorney General Karl Racine sued Facebook in 2018 over the same incident. The lawsuit is ongoing, but a judge ruled earlier this year that Racine’s office waited too long to add Zuckerberg as a defendant. In 2019 Facebook settled a similar case with the Federal Trade Commission, agreeing to pay US$5 billion. Rebecca Kelly Slaughter and Rohit, The FTC’s two democratic commissioners at the time objected to the settlement on the grounds that it wasn’t punitive enough and didn’t hold Zuckerberg personally liable. FTC staff never deposed Zuckerberg during their investigation. Today’s lawsuit alleges that Zuckerberg personally oversaw the decision making process that led to Cambridge Analytica to access Facebook user data with the use of third party developer tools. Facebook has since restricted information about its users that is available to outside app developers. Though Zuckerberg and Facebook are expected to defend the lawsuit, it could end with personal fines against the CEO, a rarity in government enforcement actions. https://bit.ly/3lT5D3j
U.K. competition authority opens new Google investigation.
The U.K.’s Competition and Markets Authority has opened a new investigation into Google’s ad business, this time delving into its ad technology system and whether the company’s practices hurt competition. It is the latest antitrust probe the ad giant faces around the world and centers on the infrastructure that makes its core revenue generating business hum. The competition watchdog said its probe focuses on Google’s demand-side platforms, which let advertisers buy ad inventory from publishers, ad exchanges that facilitate the sales of that ad space and its systems that manage publisher’s ad inventory. The CMA is exploring whether Google made it harder for its competitors by limiting how those third-party ad servers work with its own systems or by binding services together through its business contracts in a way that limits clients’ ability to work with rivals. If Google has squelched competition, it could raise prices for advertisers and reduce the money publishers make from ads, prompting them to make lower quality content or build paywalls. Google using its ad technology position to favor its own services could hurt rivals, Google’s customers and consumers, Andrea Coscelli, the CMA’s chief executive said in a statement announcing the probe. A Google spokesperson said it will continue to work with and answer questions from the CMA. “Advertising tools from Google and many competitors help websites and apps fund their content, and help businesses of all sizes effectively reach their customers,” the spokesperson said. The CMA is already investigating other areas of Google’s businesses and practices, including its efforts to remove third-party cookies from its Chrome browser and a partnership with Meta related to header bidding, in which website publishers seek bids from advertisers via several ad exchanges, that the authority said may have harmed competitors. https://bit.ly/3agynR1
Twitter to pay US$150 million to settle with U.S. over privacy, security violations.
Twitter Inc has agreed to pay US$150 million to settle allegations it misused private information, like phone numbers, to target advertising after telling users the information would be used for security reasons, according to court documents filed on Wednesday. Twitter’s settlement covers allegations that it misrepresented the “security and privacy” of user data between May 2013 and September 2019, according to the court documents. The complaint said that the misrepresentations violated the FTC Act and a 2011 settlement with the agency. U.S. officials pointed out that of the US$3.4 billion in revenue that Twitter earned in 2019, about US$3 billion was from advertising. The company made US$5 billion in revenue for 2021. It said in a filing earlier this month that it had put aside US$150 million after agreeing “in principle” upon a penalty with the FTC. https://reut.rs/3MSrWlA
Amazon aims to sublet up to 30 million square feet of warehouse space.
Amazon plans to sublet between 10 million to 30 million square feet of warehouse space, reports say. It’s also thinking of ending or renegotiating some warehouse leases. The e-commerce giant ramped up capacity during COVID-19, but now has to cope with over-expanding. It’s the latest sign that over-expansion during the pandemic is now biting the e-commerce giant as economies reopen. Amazon hasn’t decided on how much space it needs to shed, the Journal reported on Monday, quoting an unnamed source. But it’s expected to let go of at least 10 million square feet, and may even double or triple that amount, said the person. Excess capacity, together with productivity loss and inflation, cost the company US$6 billion last quarter, Insider reported. That contributed to its first-ever quarterly loss since 2015. The company announced it was US$3.8 billion in the red over the first three months of this year in an April news release. https://bit.ly/3PEuaHb
Fintech, Blockchain & Cryptocurrency
Klarna fires 10% of its team amid valuation crunch.
The Swedish buy now, pay later company is about to lay off 10% of its workforce, according to CEO and cofounder Sebastian Siemiatkowski. LinkedIn shows the company has over 6,500 employees. In a prerecorded video message, shared with employees at 4pm CET and seen by Swedish tech site Breakit, Siemiatkowski says the layoffs are mainly due to market constraints. Last week the WSJ reported that Klarna was seeking a new round of investment that could see its valuation brought down by a third, from US$46 billion to US$30 billion. According to the newspaper, the goal was to raise as much as US$1 billion of fresh capital. As economic conditions bite, a number of Europe’s other big tech companies have laid off significant numbers of staff in the last few months. https://bit.ly/3yU5Afq
EBay is entering the NFT business, with an assist from hockey legend Wayne Gretzky.
EBay is getting into NFTs — with an assist from hockey legend Wayne Gretzky. The company announced Monday that it’s launching 13 limited-edition digital collectibles in partnership with Web3 platform OneOf, each of which contains a 3-D animated rendering of Gretzky making one of his signature moves on the ice. Earlier this month, eBay bought a 25% stake, worth US$263 million, in toy maker Funko alongside a consortium including former Disney CEO Bob Iger, sports agent Rich Paul and the Chernin Group. During the recent collectibles boom, Gretzky trading cards have set records for hockey memorabilia, with a rookie card selling for US$3.75 million in 2021. In 2020, another Gretzky card became the first hockey card to sell for over US$1 million. Meanwhile, cryptocurrency — the asset class that fuels each NFT purchase on the blockchain network — has experienced a downturn. The price of ethereum has recently traded down by as much as 60% from its 2021 peak, while bitcoin hit its lowest level since December 2020 last week, under US$26,000. https://cnb.cx/39JHZnb
Stellantis picks Indiana for its US$2.5 billion EV battery factory with Samsung.
Stellantis, the parent company of Dodge, Jeep, and Chrysler, has selected Kokomo, Indiana, as the site for its next electric vehicle battery factory. The plant will be built in partnership with South Korea’s Samsung SDI, a leading EV battery maker. The new facility will create 1,400 new jobs and cost US$2.5 billion to construct, though Stellantis and Samsung are willing to spend up to US$3 billion on the project, Mark Stewart, chief operating officer of Stellantis, said at the press conference. The cost will be split between the two companies. Stellantis had previously announced that it will build a US$4.1 billion EV battery plant, along with LG Energy Solution, in Windsor, Ontario. Stellantis, which has been slower to embrace EVs than Ford and General Motors, has said it is targeting the sale of 5 million EVs by 2030. Globally, battery production is expected to grow from 95.3 gigawatt hours (GWh) in 2020 to 410.5 GWh in 2024, according to GlobalData, a data and analytics company. https://bit.ly/3yXl9T
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