Shopify’s shares plunged on Thursday after the e-commerce company announced plans to make a big fulfillment acquisition even as its revenue growth slows dramatically. Neo Financial has become Canada’s latest unicorn tech company after securing a $185 million Series C round. Neo is one of the quickest Canadian tech companies to reach unicorn status. Stellantis will spend US$2.8 billion to increase production of electric vehicles at two of its Canadian plants, the company said on Monday. About a third of the fresh funds will come from the Canadian government and the Ontario government. Elon Musk’s decision to accept some foreign investors as part of his US$44 billion buyout of Twitter runs the risk of inviting the kind of regulatory scrutiny over U.S. national security that social media peer TikTok faced, legal experts say. Warren Buffett bought US$600 million worth of Apple last quarter, may be buying more now. Peloton is seeking a minority investment to help stabilize its business as an e-commerce slowdown and eased Covid restrictions hurt its sales, as the bike maker is looking to sell 15% to 20% of itself to a private equity firm or industry peer. The U.S. SEC is investigating Didi Global’s 2021 initial public offering where it raised $4.4 billion just before it was revealed to be under a cybersecurity investigation by Chinese authorities. The SEC has also added more than 80 Chinese companies, including e-commerce giants JD.com and Pinduoduo, to a list of Chinese stocks that face delisting risks for failing to meet disclosure requirements. Microstrategy said it faces a margin call if Bitcoin falls to US$21,000. Chips for chipmaking machines are affected by chip shortage, says TSMC and Intel. President Joe Biden’s administration said it will provide US$3.1 billion in funding to support the domestic production of advanced batteries that will spur electric vehicle adoption.
Canadian Technology Capital Markets & Company News
Shopify (SHOP-NYSE, SHOP-TSX) shares plunge on slower revenue growth, acquisition news.
Shopify’s shares plunged on Thursday after the e-commerce company announced plans to make a big fulfillment acquisition even as its revenue growth slows dramatically. Shopify on Thursday said its revenue rose 22% to US$1.2 billion in revenue for the first quarter of the year, down from the 41% jump it reported in the previous quarter. The company anticipates slow revenue growth in the first half of 2022 because government stimulus checks and Covid lockdowns are no longer driving online sales. Shopify also said it stopped taking a cut from the first US$1 million that apps generate on its app store, which will adversely impact its revenue. The Canadian e-commerce giant also racked up a US$1.4 billion net loss in the first quarter due in part to US$1.6 billion in realized and unrealized losses on its equity investments. Shopify’s equity investments include installment loan fintech Affirm, whose stock tumbled more than 50% over the first three months of 2022. Shopify generated US$1.3 billion in net income during the same period last year. Despite the red ink, Shopify is set to make good on its 2019 promise to pump at least US$1 billion into its fulfillment business, which helps merchants house products in warehouses close to their customers. The company said it will acquire e-commerce fulfillment startup Deliverr for US$2.1 billion. Shopify has not disclosed the revenue it earned from its fulfillment service since its launch in June 2019. The acquisition comes as Shopify’s biggest competitor could threaten its fulfillment ambitions. Amazon in April announced that merchants that don’t sell items through Amazon will be able to offer expedited delivery to Amazon Prime customers. But Shopify CEO Tobias Lütke said on a call to discuss the results that Amazon’s initiative, called “Buy with Prime,” aligns with Shopify’s mission to power entrepreneurship. “We are thrilled with Amazon making this decision,” Lütke said. “We are happy to integrate it into Shopify.” Shopify’s stock dropped more than 15% following its earnings release. https://bit.ly/3kNKVkOS
Deveron (FARM-TSXV) to acquire controlling interest in A&L Canada Laboratories.
The Company has entered into a definitive agreement (the “Purchase Agreement”) dated May 2, 2022 with certain vendor shareholders to acquire a 67% equity interest in A&L Canada Laboratories East, Inc. (“A&L”), with an option to purchase the remaining 33% following the three-year anniversary of closing. Total consideration payable to the vendor shareholders includes $42.8 million in cash and $7.5 million in the Company’s common shares (the “Acquisition”). The $7.5 million in the Company’s common shares will be distributed to a company controlled by Greg Patterson, one of the vendor shareholders who, upon closing of the Acquisition, is expected to continue as President, CEO and director of A&L and be appointed to Deveron’s Board of Directors (subject to regulatory approval). The $50.3 million acquisition for a 67% equity interest in A&L is expected to be financed through a marketed public equity offering led by TD Securities Inc. of approximately $20 million in subscription receipts and a $24 million credit facility. https://bit.ly/3kNKWFo
mCloud (MCLD-TSXV, MCLD-NASDAQ) closes Carbon Royalty Corp funding of US$15 million for First 30 AssetCare™ EV implementations at auto dealerships.
The Company announced it had closed US$15 million in funding for the first 30 AssetCare EV implementations at auto dealerships in New York and California in partnership with Carbon Royalty Corp. On March 30, 2022, mCloud announced it had signed an agreement with Carbon Royalty Corp to partner in the implementation of these solutions. Carbon Royalty Corp fully funds the implementation of these AssetCare contracts and each party receives 50% of the tax incentives, carbon credits, and other financial benefits over the life of these contracts, typically on 20-year terms. https://bit.ly/3vRhcOk
TIMIA Capital (TCA-TSXV) to acquire Brightpath Capital.
The Company entered into a non-binding letter of intent (the “LOI”), dated April 29th, 2022 and effective May 4th, 2022, pursuant to which it has agreed to acquire Brightpath Capital Corporation and Brightpath Residential Mortgage LP I (collectively, “Brightpath”), one of Canada’s leading private providers of residential mortgages focused on Ontario and British Columbia, for a purchase price of approximately $30.5 million comprised of a combination of 31,250,000 common shares (“Common Shares”) with a deemed value of $0.40 per share and 18,000,000 series A preferred shares (“Preferred Shares”) with a deemed value of $1.00 per share (the “Transaction”). Brightpath is a leading private provider of residential mortgages in Canada specializing in arranging mortgages for those who are seeking alternatives to traditional banking institutions. https://bit.ly/38a5XHG
Neo Financial joins Canada’s unicorns as Peter Thiel’s Valar triples down with $185 million round.
Neo Financial has become Canada’s latest unicorn tech company after securing a $185 million Series C round at a more than $1 billion valuation. The round also marks the third consecutive round that Peter Thiel-backed firm Valar Ventures has led for Neo. Valar first invested in Neo in 2020, leading its $25 million Series A round and $64 million Series B round a year later. With total funding to date now sitting at $299 million, Neo is one of the quickest Canadian tech companies to reach unicorn status. For its Series C round, Neo received backing from a mix of new and return investors. In addition to Valar, Altos Ventures, Maple VC, and Golden Ventures, which led Neo’s seed round (Golden was also notably an investor in Chau’s former startup, SkipTheDishes). Chau noted that other existing investors also returned for this round – both institutional and angel – though declined to disclose details. New investors that came on board for the latest round are Tribe Capital, Blank Ventures, Gaingels, and Knollwood Advisory. The round also included secondary capital that allowed for early investors and employees to sell a portion of their shares to new investors. The secondary was in addition to the $185 million. The sizeable financing round will fuel Neo’s war chest as it attempts to take on not only the country’s big banks, but a broad selection of FinTech challengers, including Koho, Wealthsimple, Stack, and Mogo. https://bit.ly/3KOWWBl
Tailscale closes $128 million Series B to scale VPN service, amass more developer evangelists.
A slew of American investors have backed Canada’s newest unicorn, as Tailscale has raised $128 million to begin scaling its operations by spending “a lot” on engineering, and investing “a bit” in marketing and sales. Toronto-based Tailscale has seen increased demand due to COVID-19 and the company’s unique go-to-market approach. Tailscale’s all-equity, all-primary Series B financing closed in April and was led by a pair of new United States investors in CRV and Insight Partners. The round also saw participation from a group of mostly US-based existing investors in Accel, Heavybit, Uncork Capital, Montréal-based Inovia Capital, and undisclosed individual investors. The round brings Tailscale’s total funding to nearly $148 million. Pennarun declined to share the startup’s valuation, but slyly hinted that Tailscale had reached a $1 billion valuation. Tailscale was founded in 2019 by a group of former Google software engineers, including Montréal-based Pennarun, Toronto-based COO David Carney, CTO David Crawshaw, and Brad Fitzpatrick. https://bit.ly/3MQqccj
Sprout.vc closes initial $10 million for second Western Canada-focused seed fund.
Edmonton-based Sprout.vc has secured a first close of nearly $10 million for its second seed-stage venture capital fund. Sprout.vc, which focuses on early-stage B2B software start-ups in Western Canada, launched its first $1 million fund in 2019 to test the market for a seed VC fund built by B2B entrepreneurs. The firm invested in 10 companies, nine of which were based in Alberta and British Columbia. The Fund II investors include undisclosed family offices and “successful” entrepreneurs from throughout Alberta and BC. According to Sprout.vc Partner Shaheel Hooda, approximately one-third of the first close was provided by Sprout.vc’s Fund I investors. Sprout.vc plans to raise additional capital for Fund II from family offices, strategic investors, and other funds, towards its larger target of $20 million. In addition to providing seed-stage capital, the Alberta-based firm offers mentorship and strategic advice and makes investor introductions to help start-ups raise follow-on financing. https://bit.ly/3Flsxtd
PayTic raises $2.95 million to help banks, credit unions centralize program management.
Charlottetown-based PayTic has secured $2.95 million in an investment round led by Build Ventures, a venture capital firm located in Nova Scotia that invests in early-stage tech companies across Atlantic Canada. The financing also saw the participation of Island Capital Partners, Concrete Ventures, and Outlierz Ventures. PayTic is part of a growing number of FinTech startups in Canada that are created to support traditional financial institutions instead of competing with them. OneVest is one such company, with technology aimed at making it easier for banks and FinTech startups to roll out digital wealth management services. OneVest recently secured $5 million in seed funding, garnering the support of FinTech-focused investors like Luge Capital and National Bank’s NAventures. Vancouver’s Responsive, which provides wealth advisor solutions for banks and private managers, raised $3.5 million in a Series A round led by Co-operators, a Canadian insurance company. https://bit.ly/3LTPPJ5
Cyno secures $2.3 million seed round to bolster virtual care for employees.
St. John’s telehealth startup Cyno has secured $2.3 million in all-equity seed funding led by Pelorus Venture Capital. Founded in 2017 by CEO Peter Barbour, Cyno provides a virtual care platform that enables employees to search, book, and meet with health and wellness providers virtually, offering over 250 different virtual health services. Backed by over $2 million in new capital, Cyno intends to increase its team headcount and expand its offering across North America, with some of the money will also going towards bolstering Cyno’s privacy protection and encryption processes. A member of St John’s-based incubator Genesis, Cyno raised more than $1 million in 2019. In September, the startup closed a $600,000 pre-seed round from local investors, with the rest of the funding coming from the federal government’s Atlantic Opportunities Agency (ACOA). Cyno has also participated in Propel’s Incite program. With the $2.3 million, Cyno’ total funding to date is $3.3 million. Cyno closed its seed round amid a burgeoning Canadian telehealth sector. https://bit.ly/3yoEXii
Boundless Life secures $2 million seed round to help families transition to digital nomad lifestyle.
Montréal-headquartered Boundless Life has secured $2 million in a SAFE, all-equity seed funding round from a combination of venture capitalists, angel investors, and syndicates. American investment firm IDEA Fund Partners led the round, with participation from Anges Québec, Avalanche VC, CUBD Ventures, Massive VC, GV Angels, several founding families, and investors in real estate and education from Europe, North America, South America, and Asia. Boundless has also received scout cheques from Lightspeed Venture Partners and Sequoia Capital. Inspired by the Finnish school system, Boundless’ curriculum allows students aged one to 12 to participate in global cohorts where their studies are adapted to the culture of the country they’re visiting. Boundless doesn’t have direct competition as the company is positioned in a niche market, targeting people who have children. https://bit.ly/3kMUOPX
Supportbench secures $1.9 million to become Zendesk for B2B companies.
Vancouver-based startup Supportbench has secured $1.9 million in funding as it looks to build a Zendesk-like customer support engine for B2B businesses. The $1.9 million SAFE marks Supportbench’s first outside capital after Klimuk and Alibhai self-funded the startup through five years of building its tech and operations. Investors in the round include StandUp Ventures, N49P Ventures, United States-based Liquid2 Ventures, and a number of undisclosed angel investors. Supportbench’s first outside capital comes after years of trying to raise financing but getting turned down. StandUp Ventures Managing Director Michelle McBane told BetaKit the firm invested in Supportbench in large part due to its founders’ experience. https://bit.ly/3FqKeYu
Untether AI secures $1 million for partnership with General Motors.
Toronto-based artificial intelligence (AI) hardware startup Untether AI is teaming up with General Motors (GM). The two-year partnership is being funded with $1 million from the Ontario government through the Ontario Vehicle Innovation Network (OVIN) R&D Partnership Fund. Bob Beachler, vice president of product at Untether, told BetaKit that the project is also supported by $2.09 million in “in-kind” contributions from both GM and Untether in the form of people and salaries. Through their collaboration, Untether and GM will work together to demonstrate an autonomous vehicle (AV) perception system based on Untether’s computation technology. GM is no stranger to Untether and its AI-powered offerings. Its global venture capital arm, GM Ventures, has been a strategic investor in Untether since 2018. Untether’s investor base comprises a number of notable firms across the VC, tech, and auto industry, including GM. In July last year, Untether revealed $125 million in a funding round that was co-led by New York-based Tracker Capital and existing investor Intel Capital. It also saw participation from new investor Canada Pension Plan Investment Board (CPPIB), and Untether’s other previous investors, including Toronto’s Radical Ventures. With the recent OVIN and industry investments, Untether has secured around $155 million in total funding to date. https://bit.ly/3w4Dj2N
Stellantis, Trudeau invest US$2.8 billion to boost EV production in Canada.
Stellantis will spend US$2.8 billion to increase production of electric vehicles at two of its Canadian plants, the company said on Monday. The funding is a portion of the US$35.5 billion Stellantis dedicated to electric vehicles and new software over the next year in its push to move away from internal combustion engines and be carbon net zero by 2038. About a third of the fresh funds will come from the Canadian government and the Ontario government, which plan to invest up to US$410.7 million and US$398 million, respectively, alongside Stellantis, a signal that Canada is keen to support domestic production of EVs at a time when advancing climate change initiatives coincide with increasingly dire supply chain constraints. The funding will add more than 650 engineering jobs to the Windsor R&D center, according to Stellantis. The company also said an additional 2,500 jobs will be created at the Stellantis-LG Energy Solution joint battery venture. At CES this year, Stellantis said it will become all-electric by 2028. We can expect the vehicles produced in those factories to feature the automaker’s new software technology, from which Stellantis has said it plans to generate US$22.5 billion annually. Through its 14 brands, Stellantis currently has 29 electrified models on sale globally. By the end of the decade, the automaker hopes to reach 75 BEVs globally, 25 of which will target the U.S. market. https://tcrn.ch/3vLfJJf
Instacart now partners with Canada’s top five grocers, adds ten new retailers.
The Company announced partnerships with more than ten new retailers to make same-day delivery more accessible countrywide, including retailers such as food and pharmacy leader Metro Inc., discount retailer Giant Tiger, specialty grocer Galleria Supermarket and more. Following its launch with Metro, Instacart now partners with the top five grocers across Canada, including Costco, Loblaws and Walmart. Same-day delivery via Instacart is available to approximately 90% of Canadian households and all 10 provinces. https://bit.ly/3P2JRaJ
Global Markets: IPOs, Venture Capital, M&A
Musk’s new Twitter funding could draw TikTok-like U.S. scrutiny.
Elon Musk’s decision to accept some foreign investors as part of his US$44 billion buyout of Twitter runs the risk of inviting the kind of regulatory scrutiny over U.S. national security that social media peer TikTok faced, legal experts say. Musk disclosed on Thursday that Saudi Arabia’s Prince Alwaleed bin Talal, Qatar’s sovereign wealth fund and Binance, the world’s biggest cryptocurrency exchange founded by Chinese native Changpeng Zhao, were part of a group of investors that will help him fund the acquisition of Twitter. This could give the Committee on Foreign Investment in the United States (CFIUS) an opening to scrutinize the deal for potential national security risks, six regulatory lawyers not involved in the transaction and interviewed by Reuters said. CFIUS is a panel of government agencies and departments that reviews mergers and acquisitions for potential threats to U.S. security. Former President Donald Trump’s administration turned to CFIUS in 2020 in a bid to force TikTok’s Chinese parent ByteDance to divest the short video app. One area of potential scrutiny for CFIUS, the lawyers said, could be Musk’s business dealings with foreign governments hostile to free speech or keen to overtake the United States technologically. Tesla Inc, the electric car maker he leads, relies heavily on China, for example, to manufacture and sell its vehicles. https://reut.rs/38UZqAN
Musk likely to appoint himself temporary Twitter CEO.
Elon Musk could appoint himself CEO of Twitter after closing his US$44 billion deal to buy the company, CNBC’s David Faber reported Thursday. The temporary arrangement — which CNBC said is “expected” to happen — would last “a few months,” sources told the network. Musk did not immediately respond to Insider’s request for comment. The news follows Musk’s disclosure that he has secured a new US $7 billion in equity financing for the acquisition, including US$1 billion from Oracle co-founder Larry Ellison. Twitter’s current CEO, Parag Agrawal, who has been in the role since November, told staff at an all-hands meeting last week that he had unspecified regrets about his time leading the company. https://bit.ly/3vOuRWC
Warren Buffett bought US$600 million worth of Apple last quarter, may be buying more now.
Early this year, AAPL shares dropped from highs near US$180 to US$150 by mid-March. Speaking to CNBC‘s Becky Quick, Buffett revealed that Berkshire Hathaway purchased US$600 million worth of Apple stock after seeing it dip for three days in a row. Notably, he said that he would have kept buying in Q1 if the price had stayed low. However, it increased back up to nearly US$180 by the end of March. Given the right price, Buffett said he’ll keep buying up as much AAPL as possible. Writing in Berkshire’s annual shareholder meeting letter, Buffett praised Apple CEO Tim Cook for how he approaches customers as well as the impact of his management skill. Buffett also endorsed Apple’s stock repurchase program which was just increased by US$90 billion at the company’s latest earnings call. Berkshire Hathaway is the largest single owner of Apple shares outside of ETFs and other funds. For Berkshire, Apple makes up 47.5% of its holdings with a value of just under US$160 billion. https://bit.ly/3seB7ET
Peloton seeks minority investment.
Peloton is seeking a minority investment to help stabilize its business as an e-commerce slowdown and eased Covid restrictions hurt its sales. The bike maker is looking to sell 15% to 20% of itself to a private equity firm or industry peer, The Wall Street Journal reported. The news comes just three months after rumors started swirling that Peloton was looking for a buyer, with potential suitors including Amazon and Nike. Last month, activist shareholder Blackwells Capital again called for Peloton to explore selling itself. A potential sale of a minority stake in the fitness equipment maker would mark the latest in a series of turnaround efforts for the company as Peloton looks to revive its once hot business. Peloton’s revenue only grew 6% year-over-year in the quarter ended in December, compared to a 128% increase the same period a year earlier. Peloton in February announced that it was laying off 20% of its staff just as it had hired former Netflix and Shopify chief financial officer Barry McCarthy to replace John Foley as CEO. Last month, Peloton said it was cutting prices on its home exercise equipment while raising monthly subscription fees for North American customers, a move the company hopes will increase bike sales and subscribers. Peloton’s shares dropped more than 3% in after hours trading on Thursday after closing down more than 9%. https://bit.ly/38a6glO
FaZe Clan’s SPAC merger in doubt after missing the mark on financial forecast.
FaZe Clan, one of the most recognizable names in esports and gaming, could be taking a financial stumble. In October, the North American brand declared that it would go public on the NASDAQ at a US$1 billion valuation through a merger with the SPAC (Special Purpose Acquisition Company) B. Riley Principal 150 Merger Corp. (BRPM). A recent amendment to its merger filing (Form S-4) with the SEC (Securities and Exchange Commission) revealed potentially detrimental issues with the business. Sources are telling Sports Business Journal that the FaZe Clan merger may be dead in the water, placing an additional burden on the status of FaZe Clan’s plans to go public. The latest turn of events could cost FaZe Clan and its stakeholders dearly. Worst-case scenario, the US$1 billion figure on the horizon can turn into a fight against bankruptcy. Not only did the recent developments drop the post-merger market capitalization of FaZe Clan substantially below the billion-dollar mark, but it also reduced the expected transaction proceeds from the merger by presumably at least US$73 million, which is in doubt at best. https://bit.ly/3LTsEyL
Didi Global says SEC investigating IPO.
The U.S. Securities and Exchange Commission is investigating Didi Global’s 2021 initial public offering where it raised $4.4 billion just before it was revealed to be under a cybersecurity investigation by Chinese authorities. “We are cooperating with the investigation, subject to strict compliance with applicable PRC laws and regulations. We cannot predict the timing, outcome or consequences of such an investigation,” the company said in an annual filing. Days after Didi’s debut last June on the New York Stock Exchange, Chinese authorities launched a probe into the ride-hailing firm and blocked new downloads of its app in China. Beijing’s crackdown on Didi was followed by a raft of new restrictions that made it tougher for Chinese companies to sell shares overseas. “We have no information on whether or when the prohibition on the download of our apps will be lifted or to measure how much of an impact it ultimately will have on our financial and operating performance,” the company said. Didi is planning a shareholder vote May 23 on the delisting of its stock from New York, but has no plans for relisting elsewhere as it awaits the outcome of Beijing’s investigation. https://bit.ly/3MSvow4
JD.com, Pinduoduo added to list of U.S.-listed Chinese firms facing delisting risks.
The U.S. Securities and Exchange Commission has added more than 80 Chinese companies, including e-commerce giants JD.com and Pinduoduo, to a list of New York-listed Chinese stocks that face delisting risks for failing to meet disclosure requirements. U.S.-listed Chinese companies are grappling with pressure from both Washington and Beijing. While U.S. regulators demand full access to those companies’ audit books, Beijing has blocked Chinese companies from complying with these requirements by only allowing domestic firms access to audit paperwork. Other Chinese firms newly added to SEC’s list include online video site Bilibili, online videogame firm NetEase and electric car makers Xpeng and Nio. https://bit.ly/3N0Cqim
Facebook hiring freeze is partly Apple’s fault, says CFO.
A ”massive” Facebook hiring freeze has been announced, which the company says will affect “almost every team across the company.” Parent company Meta told employees that four factors were behind the decision, and that Apple’s introduction of App Tracking Transparency was the first of these … Business Insider got access to a memo sent to all employees by chief financial officer, David Wehner. In it, he lists four factors responsible for slowing revenue growth and increased costs. Apple’s introduction of App Tracking Transparency is the first one listed (1) Loss of signal from iOS changes (2) The war in Ukraine (3) The “general macroeconomic environment” (4) Easing of lockdowns resulting in people spending less time online. The first point relates to App Tracking Transparency (ATT). This makes it harder for advertisers to target consumers with specific interests, and harder for the company to prove that Facebook ads are effective. Facebook has repeatedly complained about the impact to its ad model, disingenuously claiming that it was concerned about small businesses, and not the multi-billion dollar impact to its own revenue. The memo, however, tells a different story. https://bit.ly/3yi0n0O
Media, Streaming, Gaming & Sports Betting
Epic and Microsoft team up on Fortnite web streaming for iOS and Android.
Fortnite makers Epic Games announced a partnership with Microsoft on Thursday that adds Fortnite as a free offering on Xbox’s Cloud Gaming mobile web service. The move makes Fortnite, which has brought in billions in revenue for Epic since 2017, widely available to gamers on Apple iOS and Google Android devices once again. Both tech giants removed Fortnite’s apps from their respective app stores in 2020 when Epic moved to circumvent Apple and Google’s standard commission on app revenues. Epic quickly filed lawsuits against both companies. Now, Fortnite players with a Microsoft account can stream the game on their phones via the web. By persuading Fortnite users to get a Microsoft account, the software giant would have the chance to sign the gamers up for its Xbox Game Pass subscription service. Meanwhile, Epic’s campaign against app stores has struggled in court. In the wake of Epic v. Apple, both companies have appealed the court’s decisions, and Apple was granted a postponement on making any changes in response to one count ruled in Epic’s favor. Epic and Google have yet to go to trial. Antitrust regulators around the world are continuing to pressure the likes of Apple and Google over steep app commissions and other exclusivity policies. Earlier this week, the European Commission released its preliminary view that Apple has abused its control over iOS to restrict competition on contactless payments, benefitting Apple Pay. On Twitter, Epic CEO Tim Sweeney celebrated today’s launch of Fortnite on Xbox’s mobile web service. “No subscription required, no 30% Apple tax,” he wrote. https://bit.ly/3wd8yIR
Paramount+ reaches 40 million subscribers.
Paramount Global revealed that its flagship streaming service Paramount+ finished the first quarter with “nearly 40 million” global subscribers, including 6.8 million added in the quarter. Paramount+ was launched in early March of 2021 as an overhauled version of the company’s older CBS All Access service. That meant Paramount+ started life with a significant number of subscribers. Paramount Global signed up 26.2 million streaming subscribers in 2021, most of whom were on Paramount+. Meanwhile, Paramount said its other streaming services, such as Showtime and BET+, lost a total of 500,000 subscribers in the quarter. Despite the subscriber losses, Paramount Global executives stood by the strategy of having multiple offerings, and shrugged off overall concerns about a slowdown in growth in the streaming market. “We see tremendous momentum here and we are very excited about the road ahead,” CEO Bob Bakish said. The company’s net profit dropped more than 50% to US$433 million year over year while revenue dropped around 1% to US$7.4 billion. However, revenue from its direct to consumer business was up 82% to US$1.1 billion. https://bit.ly/3P8EE15
Roku makes Apple Music app available on all of its devices.
Shares of Roku Inc. slipped 0.4% in premarket trading Monday, after the streaming video player company said Apple Inc.’s Apple Music app is now available on any Roku device. Roku said current Apple Music subscribers can access the app on Roku devices with their existing log-in credentials. In addition, Roku users can sign-up for Apple Music for a one-month free trial, and for US$9.99 per month after the free trial expires. Apple’s stock slipped 0.2% ahead of the open. Roku’s stock has plunged 59.3% year to date through Friday, while the S&P 500 has lost 13.3%. https://on.mktw.net/3yhw1vh
Adtech, Privacy & Regulatory
CDC tracked millions of phones to see if Americans followed COVID lockdown orders.
The Centers for Disease Control and Prevention (CDC) bought access to location data harvested from tens of millions of phones in the United States to perform analysis of compliance with curfews, track patterns of people, and specifically monitor the effectiveness of policy, according to CDC documents obtained by Motherboard. The documents also show that although the CDC used COVID-19 as a reason to buy access to the data more quickly, it intended to use it for more general CDC purposes. The documents contain a long list of what the CDC describes as 21 different “potential CDC use cases for data.” The documents reveal the expansive plan the CDC had last year to use location data from a highly controversial data broker. SafeGraph, the company the CDC paid US$420,000 for access to one year of data to, includes Peter Thiel and the former head of Saudi intelligence among its investors. SafeGraph is part of the ballooning location industry, and SafeGraph has previously shared datasets containing 18 million cell phones from the United States. Google banned the company from the Play Store in June. Generally, companies in this industry ask, or pay, app developers to include location data gathering code in their apps. The location data then funnels up to companies who may resell the raw location data outright or package it into products. https://bit.ly/3w7uvcr
UK antitrust body will be able to fine Apple and Google 5% of their global turnover per day.
The UK antitrust body, the Competition and Markets Authority (CMA), will be given legal powers enabling it to fine Apple and other tech giants billions of dollars. This is an apparent second U-turn in British government plans. The CMA’s powers will now go even further than originally announced, allowing it to fine companies 5% of their daily global turnover per The UK opened an antitrust investigation into Apple back in March 2021. The UK’s competition watchdog announced plans to determine whether the App Store restricts competition. The government announced that the Competition and Markets Authority (CMA) will be running the investigation. A second investigation followed, this time into both Apple and Google. That one concluded that both Apple and Google do indeed have too much power. In particular, Apple is able to impose whatever App Store terms and commissions the company likes, because anyone wanting to sell an iPhone app can only do so via Apple. This was a very worrying development for Apple, since the British government said that it would give the CMA the power to overrule the policies of tech giants, and to levy fines of up to 10% of their total global turnover. This is known as having statutory powers: the ability to impose penalties directly, without needing to involve parliament. However, it was reported earlier this week that the government had shelved plans to grant statutory powers to the CMA. This would mean that the antitrust body could recommend fines and other actions, but parliament would have to vote on those recommendations. However, the government has now said that the CMA will get the promised powers. https://bit.ly/3vSDH5y
Thrasio to cut employees, replace CEO.
Thrasio, the Amazon rollup firm, is replacing its CEO and laying off employees, according to an internal company email obtained by Insider. Founded in 2018, the Massachusetts-based company is one of the most high-profile Amazon aggregators, a trendy type of startup that acquires and consolidates Amazon marketplace merchants and other online sellers. The rollup model took off during the pandemic’s online shopping boom, leading to frothy valuations for larger consolidators like Thrasio, which was valued at US$3 billion just last year. But rollup firms, which drove up multiples as they raced to snap up Amazon sellers, are now coming under pressure as online sales growth slows amid inflation and supply chain disruption. Acquisitions are slowing and some rollups are even unloading recent purchases, The Information previously reported. In an email to staff Monday, Thrasio co-founder and CEO Carlos Cashman and President Danny Boockvar said that “four years of hypergrowth” had stretched the company thin, and it was time “to reduce the size of the Thrasio team.” It is unclear how many employees will be impacted by the cuts. Only one affected team member was called out by name directly in the email: CEO and co-founder Cashman. In August, he will be replaced as CEO by former Amazon executive Greg Greeley, according to the email obtained by Insider. https://bit.ly/3Fnqftw
China Covid lockdown reveals Alibaba and Meituan need.
The regulatory crackdown on Big Tech that started in China in late 2020 sent stocks reeling. Over the past year, tech companies have lost as much as US$2 trillion in market value, the equivalent of 11% of China’s gross domestic product, estimates Goldman Sachs Group Inc. Lately, Beijing seems to be relenting a bit. At an April Politburo meeting, the government vowed to support the healthy growth of platform companies. Is it time for investors to give Chinese tech another look? As the country races to contain the fast-spreading omicron variant with citywide lockdowns, the government is starting to find Big Tech useful. Companies such as Alibaba, JD.com, and Meituan have built efficient distribution systems, sourcing fresh produce from farmers and recruiting armies of migrant workers to make speedy deliveries. When millions of Chinese can no longer go out shopping, Big Tech comes in handy. According to the Shanghai government, internet companies have dispatched about 20,000 riders to fill 2.5 million grocery orders a day, on average, for its 25 million residents, who’ve been in a full lockdown since April 1. https://bloom.bg/37jYy8l
Fintech, Blockchain & Cryptocurrency
Crypto mortgages let homebuyers keep Bitcoin, put down nothing.
Milo Credit, a Miami-based startup that’s seeking to tap into the burgeoning pool of crypto loyalists who want to diversify their wealth while hanging on to their tokens. Milo, which started originating home loans in 2019 for non-U.S. citizens, is offering a product that looks more like a traditional mortgage. The company has issued pre-approval letters on US$340 million of mortgages in the last 30 days. Milo recently received US$17 million in Series A funding led by venture-capital firm M13 to help fuel growth. Milo is lending as much as US$10 million on homes and digitizing the process so closing takes two to three weeks. Instead of simply paying for property with tokens, borrowers pledge their digital holdings as collateral, with no down payments necessary. That enables the holders to keep their coins, avoiding taxes on capital gains and theoretically benefiting from rising values for both the tokens and the real estate. It also heightens risk by using a volatile asset to finance purchases at a time the heated U.S. property market faces a slowdown from the fastest jump in borrowing costs in decades. If its wait list of more than 8,000 people ready to buy property in states such as Texas, California and New York is any indication, the company’s crypto offering may dwarf its US$100 million of foreign national loans. https://bloom.bg/388uMUv
Microstrategy said it faces a margin call if Bitcoin falls to US$21,000.
MicroStrategy has amassed more than 129,000 bitcoins since the software company began buying the cryptocurrency with debt in 2020. But the strategy of raising more than US$2 billion in debt to buy a speculative asset has one big risk: it can trigger a margin call if the price of bitcoin falls below a certain level. 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 more than $5 billion and have an average cost basis of about $30,700. On Tuesday, MicroStrategy CFO Phong Le outlined in the company’s first-quarter earnings call that it would face a margin call if bitcoin fell to $21,000, which would represent a decline of 46% from current levels. But MicroStrategy is trading at a market valuation of only US$4.4 billion, meaning the stock is trading at a discount to its underlying crypto holdings, signaling that 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. For now, MicroStrategy’s stock price lives or dies based on the price of bitcoin, which is down 44% from its record high of US$69,000 in November. MicroStrategy stock is down 62% since bitcoin topped out in November and is down 37% year-to-date. https://bit.ly/3MRFehL
SEC boosts crypto enforcement staff to protect retail traders.
The Securities and Exchange Commission will add 20 positions to its Crypto Assets and Cyber Unit, the agency said in a press release Tuesday. The additions will bring staffing at the Wall Street regulator’s crypto enforcement unit, which was established in 2017, to a total of 50. “Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space,” SEC Enforcement Director Gurbir Grewal said in a written statement. The move comes as digital currencies and assets continue to grow in popularity. Retail firms and Wall Street are increasingly pouring cash into the space, with Fidelity saying last week that it would add bitcoin to its 401(k) retirement funds. The SEC said it’s aiming to rein in the US$1.7 trillion cryptocurrency market and is also investigating fraud related to non-fungible tokens, or NFTs. The agency has brought 80 enforcement actions against individuals and agencies related to fraudulent and unregistered crypto assets. https://bit.ly/385KAY8
Chips for chipmaking machines are affected by chip shortage, says TSMC and Intel.
Buying new chipmaking machines was never a speedy process, given their complexity and delicacy, but lead times before the pandemic were measured in months. Now, say chipmakers, that time can be as long as 2-3 years… The biggest issue is not with CPUs and GPUs, but far more mundane chips like display drivers and power management systems. These relatively low-tech chips are used in a huge number of devices, including Apple ones. Apple CEO Tim Cook revealed that supply constraints cost Apple $6B in two quarters and warned that the hit could be as high as US$8B this quarter. The industry is suffering from a vicious circle: the global chip shortage needs chipmakers to boost output, but that requires additional chipmaking machines which they can’t get because of the global chip shortage. Some chipmakers are prioritizing clients who produce chipmaking machines. Intel and Apple chipmaker TSMC are among those calling for this approach to be more widely adopted. https://bit.ly/3LR7Szx
Biden to provide US$3.1 billion to support domestic production of EV batteries.
President Joe Biden’s administration said it will provide US$3.1 billion in funding to support the domestic production of advanced batteries that will spur electric vehicle adoption. Proponents of the funding, which is part of the Bipartisan Infrastructure Law, say supporting local battery initiatives will alleviate fluctuations in global oil markets. The White House said on Monday it will also set aside a separate US$60 million in grants for battery recycling initiatives, both of which will support an effort to “reduce our reliance on competing nations like China that have an advantage over the global supply chain,” according to a Department of Energy statement. The announcement comes a month after Biden said his administration would trigger the Defense Production Act to secure U.S. sources of critical materials like lithium, nickel, cobalt, graphite and manganese that are used for EV batteries and energy storage. Most of those minerals are processed in Asia today. As of 2020, China alone controlled 80% of the world’s raw material refining, 77% of the world’s cell capacity and 60% of the world’s component manufacturing, due to its large domestic battery demand. The US$3.1 billion will help U.S. companies build new factories and retrofit existing ones to make EV batteries and related parts. https://tcrn.ch/3LR8LIn
Rivian wins US$1.5 billion tax incentive package to build an EV factory in Georgia.
The state of Georgia offered Rivian US$1.5 billion in tax incentives for the buzzy EV company to build a factory east of Atlanta, according to documents signed by the company and local officials in the state. The factory will cost US$5 billion to construct, and eventually produce 400,000 electric vehicles a year. In order to receive the money, Rivian agrees to create 7,500 jobs, with an average wage of US$56,000 a year, plus benefits, by the end of 2028. Georgia officials are portraying the agreement as the largest economic development deal in the state’s history. Rivian has said it will start construction of the $5 billion facility in the summer of 2022 and expects to start making vehicles there in 2024. In addition to its R1T electric truck, Rivian also is planning to mass-produce 100,000 electric delivery vans for its main investor, Amazon. The company is already building its first electric pickup trucks at a former Mitsubishi factory in Normal, Illinois. Critics of corporate tax incentives are calling it among the largest windfalls to a private company in US history. https://bit.ly/3FifyIC
Porsche joins US$400 million bet on lithium-silicon batteries to juice up future EVs.
With its first electric vehicle now outselling the quintessential 911 sports car, the German automaker is responding by upping its bet on EVs, in part via a hefty investment in lithium-silicon battery developer Group14 Technologies. Porsche injected US$100 million into Group14 as part of a larger US$400 million Series C funding round. Other investors that chipped in include Canadian pension fund OMERS, Decarbonization Partners, private equity firm Riverstone, Vsquared Ventures and Moore Strategic Ventures. Group14’s key technology is a silicon-carbon powder that can either replace or augment graphite anodes. Graphite is used in most of today’s lithium-ion batteries, and it’s a sensible anode because it’s stable and can store a reasonable amount of energy. For Group14, the new deal represents a big step up — by nearly a factor of 10. Prior to the raise, the Woodinville, Washington-based startup had reportedly secured a combined US$41.5 million or so in venture dollars and government grants. https://tcrn.ch/3NbfcXh
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