Last week, the Dow Jones closed up 4.9%, the S&P 500 was up 4.75%, and the Nasdaq composite closed up 5.2%. Google is reportedly in talks to invest US$200 million into Toronto AI startup, Cohere. Grocery delivery app Instacart has decided to push its highly anticipated IPO into 2023, believing the current stock market is too volatile, as first reported by The New York Times and confirmed by Axios. Only 65 companies have gone public on U.S. exchanges this year, which represents an 80.7% decline from last year, per Renaissance Capital. U.S. IPO proceeds are down a whopping 94.1%. Intel eyes a significantly lower valuation in the IPO of its Mobileye unit. Activist investor Starboard reveals stake in Salesforce. Meta says it will sell off Giphy following order from UK competition watchdog. US weighs security reviews for Elon Musk deals, including Twitter buy, and Elon Musk’s Twitter deal could tank the leveraged buyout market, according to the WSJ. Netflix stock jumped 16% on Q3 earnings beat, return to subscriber growth. Snap’s shares were down 27% after third-quarter sales missed expectations. Roblox stock popped 19% on September user growth. Strong EV sales in China boosted profit for BYD. iPhone 14 Plus production halted, Apple to reassess demand, iPhone 15 Plus still planned. Netflix to expand into cloud gaming, opens new studio in Southern California. Microsoft is building an Xbox mobile gaming store to take on Apple and Google. Uber rolls out ad business to reach more riders. Mastercard will help banks offer cryptocurrency trading. Redditors have created millions of crypto wallets to buy NFT avatars. Biden administration approves US$2.8 billion for EV battery production in the US. Sophic Client, Kraken Robotics (PNG-TSXV, KRKNF-OTC): Recent geopolitical events have accelerated Unmanned Underwater Vehicles’ adoption by several navies, and several companies such as Kraken continue to evolve their products and services to meet growing demand.
Canadian Technology Capital Markets & Company News
Sophic Client Swarmio Media (SWRM-CSE, SWMIF-OTC), Globe Telecom and Tencent Games collaborate to Launch two exclusive gaming tournaments with PUBG MOBILE in the Philippines.
The launch of the two tournaments follows the success of a previous collaboration between Swarmio, Globe Telecom and Tencent Games / Level Infinite to promote the Globe Gamer Grounds platform inside PUBG MOBILE in the Philippines. In April 2022 Globe Telecom rolled out Swarmio’s proprietary Ember gaming and esports platform to its 85 million customers under the brand name Globe Gamer Grounds. Revenues generated from subscriptions and transactions inside the platform are shared between Swarmio, Globe Telecom, and TM WHOLESALE. https://bit.ly/3CYh81K
Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) CEO, Thomas Rosander’s, recent panel from iGaming Next.
With esports being the only betting opportunity during the pandemic, more operators are exploring the market, boosting gaming revenue. Whilst at the same time, esports gambling is seeing a darker side with match fixing, fraud, cheating and players’ mental health. How can we improve the esports gaming reliability and stabilise the rapid growth? Will their become a time where esports hits a sports betting ceiling? https://bit.ly/3z4l93D
Mentorship startup Ten Thousand Coffees raises $75 million from US-based Five Elms Capital.
Toronto-based startup Ten Thousand Coffees has secured a $75 million (US$56 million) round in its first institutional raise since it was founded eight years ago. The financing came from United States-based growth equity firm Five Elms Capital. Ten Thousand Coffees names large brands like EY, IBM, RBC, and Thomson Reuters among its more than 200 customers. Five Elms Capital is a growth equity firm that invests in B2B software businesses. Its thesis can span early- to growth-stage financing, and Five Elms Capital notes that it will invest between US$5 million to $75 million in companies with US$2 million to $20 million in revenues, and take either a minority or majority stake. Ten Thousand Coffees did not disclose whether Five Elms Capital has taken a majority stake in the startup. https://bit.ly/3ShPemQ
ChainSafe closes $25.7 million Series A to build blockchain-agnostic Web3 tools.
Now, armed with $25.7 million in Series A funding, ChainSafe is ready for its next stage of growth. ChainSafe’s all-equity Series A round closed in September and brings the company’s total venture funding to nearly $27.5 million (US$20 million). Round13’s Digital Asset Fund (DAF) led the financing, with support from fellow new investors NGC Ventures, HashKey Capital, Sfermion, and Jsquare, and return investors Digital Finance Group, Fenbushi Capital, and ConsenSys, which was founded by Ethereum co-founder Joseph Lubin, who sits on ChainSafe’s board. The round comes amid a worsening macroeconomic environment and the crypto crash, which have made it more challenging for startups to raise capital. https://bit.ly/3gpHLoD
Mortgage startup Perch raises $4 million with continued backing from venture arm of National Association of Realtors.
Toronto-based mortgage startup Perch has secured a $4 million Series A round from backers that include the venture arm of the National Association of Realtors (NAR), America’s largest trade association for the real estate industry. The financing comes from Second Century Ventures, the strategic venture arm of the NAR. Other investors in the Series A round include the Ontario Centre of Innovation and Toronto-based alternative asset firm Best Funds. The Series A financing brings Perch’s total funding to date to $5.8 million. https://bit.ly/3VHkUVG
Google in talks to invest US$200 million into Toronto AI startup.
Cohere, which creates natural language processing software, also had talks with Nvidia about potential strategic investment. Founded in 2019, Cohere creates natural language processing software that developers can then use to build artificial intelligence applications for businesses, including tools for chatbots and other features that can understand human speech and text. Last November, the company announced a multiyear partnership with Google to have its cloud division supply the computing power needed for Cohere to train its software models. As a part of the negotiations, Cohere also held discussions with chipmaker Nvidia Corp. about a potential strategic investment, the people said. The talks between the companies are still ongoing and could fall apart, some of the people said. Cohere raised US$125 million in a new funding round led by investment firm Tiger Global Management in February, bringing its total funding at the time to over US$170 million. https://on.wsj.com/3CWOtdj
Databricks acquires Vancouver-born Datajoy.
Revenue intelligence startup Datajoy has been acquired by Silicon Valley’s Databricks. The startup emerged out of stealth last year when it secured a US$6 million seed round of funding led by Foundation Capital with participation from Quarry VC, Partech Partners, IGSB, Bow Capital, and Silicon Valley Bank. To date, Databrick has raised US$3.5 billion from investors like Franklin Templeton Investments and Andreessen Horowitz. The company most recently raised US$1.6 billion on a US$38 billion valuation in August 2021. Since then, with the economy leading to changes in company valuations, that value has dropped. https://bit.ly/3VMlaTp
Mercedes-Benz partners with Canadian mining company for CO2-neutral lithium hydroxide for EVs.
Mercedes-Benz AG will source carbon-neutral lithium hydroxide to build batteries for electric vehicles from a Vancouver-based mining startup. Starting in 2026, the agreement with Rock Tech Lithium will provide Mercedes-Benz AG with an average of 10,000 tons of battery-grade lithium hydroxide per year — enough for around 150,000 electric vehicles. Mercedes-Benz, which sells about two million vehicles worldwide annually, plans to go all-electric by the end of the decade. In September, Chinese EV maker Nio bought a 12% stake in Australian lithium mining company Greenwing Resources as it gears up to make its own battery packs beginning in 2024. Over a five-year term, the agreement represents roughly US$1.5 billion in sales and more than 40% of the expected annual production from the planned converter capacity in Guben, according to Rock Tech. https://tcrn.ch/3TfQRCV
Global Markets: IPOs, Venture Capital, M&A
Instacart postpones IPO.
Grocery delivery app Instacart has decided to push its highly anticipated IPO into 2023, believing the current stock market is too volatile, as first reported by The New York Times and confirmed by Axios. Only 65 companies have gone public on U.S. exchanges this year, which represents an 80.7% decline from last year, per Renaissance Capital. U.S. IPO proceeds are down a whopping 94.1%. Instacart filed confidential IPO registration papers with the SEC earlier this year, and as of a few weeks ago was still hoping to get out in 2022. But the San Francisco-based company recently changed course, in the midst of increased volatility. Instacart declined to comment on its IPO plans, but did provide Axios with the following statement: The big question, how employees take the news? Particularly those who’d been with the company for years and were expecting to sell shares into the IPO. https://bit.ly/3TxQByW
Intel eyes significantly lower valuation in IPO of mobileye unit.
Mobileye, which was originally expected to land a roughly US$50 billion valuation, is now set to target one that is under US$20 billion and sell a smaller number of shares than originally planned, the people said. By selling fewer shares at a lower price, the company and its advisers are hoping to drum up interest that will push up the shares after they start trading, some of the people said. Intel and its advisers were encouraged to proceed with the roadshow Tuesday in part by the surge in markets Monday, with the S&P 500 rising more than 2.5% on some positive earnings reports. Their hope is that the markets will improve at least somewhat and give way to a more hospitable environment by the time the shares debut. Intel, which last month filed publicly for an IPO of Mobileye, is expected to detail its new valuation expectations Tuesday. https://on.wsj.com/3Tzo1gD
Digital gaming company Snail to offer 5 million shares in IPO priced at US$5 to US$7 each.
Snail Inc., a digital entertainment company that offers gaming on a variety of platforms, set terms for its initial public offering on Monday with plans to offer 5 million shares priced at US$5 to US$7 each. The company would raise US$35 million at the top of that range at a valuation of US$350 million, based on the 50 million shares to be outstanding once the deal is completed. The company has applied to list on Nasdaq under the ticker ‘SNAL.’ US Tiger Securities and EF Hutton are underwriters on the deal. The company had a net profit of US$13.6 million in the first six months of the year, up from US$4.8 million in the year-earlier period, according to its filing documents. Revenue rose to US$58.8 million from $43.5 million. The California-based company said its flagship franchise is “Ark: Survival Evolved.” The Renaissance IPO ETF has fallen 54% in the year to date, while the S&P 500 has fallen 25%. https://on.mktw.net/3gmLzXv
Activist investor Starboard reveals stake in Salesforce, sees significant opportunity.
Starboard Value has taken a stake in Salesforce, with founder Jeff Smith saying a significant opportunity remains in the enterprise software maker, according to CNBC’s David Faber. Dow-component Salesforce jumped more than 4% Tuesday on the news. Still, shares of Salesforce have fallen nearly 40% this year. The company in August gave a disappointing forecast for fiscal 2023, partly due to a negative foreign exchange impact. Smith told Faber the stake is significant without specifying the dollar amount. The hedge fund manager said the valuation discount in Salesforce shares right now is largely due to a “subpar mix of growth and profitability.” Starboard also built a new stake in software name Splunk, betting that it could be a takeover target. Starboard Value manages about $6.2 billion in assets, according to filings through the first quarter of 2020. https://cnb.cx/3FiklMv
Meta says it will sell off Giphy following order from UK competition watchdog.
Facebook and Instagram parent company Meta says it will accept a ruling by the UK competition watchdog to divest itself of social media GIF library Giphy. A spokesperson for Meta, Matthew Pollard, told The Verge: “We are disappointed by the CMA’s decision but accept today’s ruling as the final word on the matter. We will work closely with the CMA on divesting Giphy.” When asked if the divestment would apply to all of Giphy’s international operations, Pollard said: “Yes, this applies globally.” Meta was originally ordered to sell Giphy last year but appealed the ruling. Today, the UK’s Competition and Markets Authority (CMA) announced that Meta had failed on five of the six objections raised in its appeal. The CMA said that the acquisition should be reversed on the grounds that it “could allow Meta to limit other social media platforms’ access to GIFs, making those sites less attractive to users and less competitive.” https://bit.ly/3eRsywc
Kanye West to acquire Parler.
Parlement Technologies, a company formed last month to house social networking app Parler, said it has agreed to sell Parler to Kanye West, now known as Ye, in what Ye said was part of a “bold stance against his recent censorship from Big Tech.” In a statement, Ye said the acquisition “will assure Parler a future role in creating an uncancelable ecosystem where all voices are welcome.” The deal is still tentative. Parlement said in the statement that it and Ye “intend to enter into a definitive agreement and expect to close during the fourth quarter.” Ye’s proposed purchase of Parler comes a month after Parler said it had acquired cloud company Dynascale and also raised a US$16 million round of funding. Parler was blocked by big tech platforms early last year, at the same time the tech firms kicked then-president Trump off in the wake of the Jan. 6 attack on the Capitol. https://bit.ly/3eU9uNP
US weighs security reviews for Elon Musk deals, including Twitter buy.
Biden administration officials are discussing whether the US should subject some of Elon Musk’s ventures to national security reviews, including the deal for Twitter Inc. and SpaceX’s Starlink satellite network, according to people familiar with the matter. Twitter shares fell as much as 16% in pre-market trading in New York. https://bloom.bg/3N6GKOJ
Elon Musk’s Twitter deal could tank the leveraged buyout market.
Elon Musk’s antics have made it hard for his banks — Morgan Stanley, Bank of America, and Barclays — to sell the debt required to do the Twitter deal. So they’re just going to hold it, all US$13 billion of it, The Wall Street Journal reports. Truly a next-level “hold-my-beer” move, because it threatens to bring leveraged buyouts to a halt. Typically, a bank sells the debt used to create a buyout, and moves on to the next deal. But since they’re holding Musk’s beers, they don’t have a free hand to hold anyone else’s. Or, as The WSJ puts it, “The Twitter move threatens to bring the faltering leveraged-buyout pipeline to a standstill by tying up capital that Wall Street could otherwise use to back new deals.” Part of the reason for holding Musk’s debt is because the appetite for it has decreased due to (waves vaguely at the Fed) financial conditions. But part of it is Musk’s mercurial approach to the deal: Mr. Musk and Twitter have until Oct. 28 to close his planned purchase, and there is still no guarantee the unpredictable billionaire will follow through or some other trouble won’t arise. (If the deal doesn’t close by that time, the two parties will go to court in November.) That means the banks wouldn’t have enough time to market the debt to third-party investors, a process that normally takes weeks, even if they wanted to sell it now. https://bit.ly/3Tmkpie
Elon Musk plans deep layoffs of 75% at Twitter.
Tesla Inc. Chief Executive Elon Musk plans deep cuts at Twitter Inc. should he end up with the embattled company, according to a report in The Washington Post on Thursday. The world’s richest man has informed prospective investors in his deal to acquire Twitter that he intends to slash 75% of Twitter’s 7,500 workers in the coming months, chopping the company’s head count to just over 2,000. And even if Musk’s deal falls through, massive cuts are planned as Twitter’s current management attempts to lop company payroll by about US$800 million by the end of next year. That would mean layoffs of about 25% of all employees, the Post reported. https://on.mktw.net/3TtO89e
Tesla stock: shares fall on demand destruction warning from Musk.
Tesla stock fell Thursday morning, a day after the company reported softer than expected third quarter earnings while chief executive Elon Musk noted demand concerns. Shares were down 5.75% shortly after the opening bell, after being down as much as 6.6%. Tesla’s third quarter sales were US$21.5 billion, below analyst forecasts of US$22.1 billion. Tesla told investors Wednesday that the company would fall short of its goal of 50% growth in vehicle deliveries, citing problems with getting cars from assembly to customers. Musk also told analysts that economic downturns in China and Europe were weighing on orders, as well as monetary tightening from the Federal Reserve. https://bit.ly/3Sl7U5m
Netflix stock jumps 16% on Q3 earnings beat, return to subscriber growth.
Netflix shares jumped as much as 16% on Wednesday, after the streaming giant’s third-quarter earnings beat Wall Street’s revenue and profit forecasts. The stock surge added about US$17 billion to Netflix’s market capitalization, lifting it to US$124 billion. The video-streaming titan beat Wall Street’s forecasts for revenue and profit in the third quarter. The online-video service posted a 5.9% increase in revenue to US$7.9 billion, but higher operating costs meant its net income shrunk by 3.5% to US$1.4 billion. Analysts polled by Refinitiv had expected US$7.8 billion and US$959 million respectively. Netflix added 2.4 million subscribers after shedding 1.2 million in the first half of this year. https://bit.ly/3VMvHOr
Snap’s shares down 27% after third-quarter sales missed expectations.
Snap Inc. shares slumped by almost 30% in after-hours trade, after the company reported its slowest quarterly revenue growth ever. The social media company on Thursday reported that its revenues rose 6% from a year to US$1.13 billion in the third quarter of 2022 — missing expectations of US$1.14 billion, according to IBES data from Refinitiv. Its net loss widened five times to US$360 million, compared to US$72 million in the same period a year ago. Snap Inc. shares slumped 26.7% to US$7.91 in premarket trade Friday after closing 0.64% lower at US$10.79 on Thursday. This means Snap has lost about US$4 billion in market cap, with the stock down about 77% this year so far. The Santa Monica, California-based company – which said in August that it was laying off 20% to 25% of its workforce – expects the operating environment to stay challenging in the months ahead. The company expects the restructuring would save US$500 million in annual costs. https://bit.ly/3sloqra
Roblox stock pops 19% on September user growth.
Shares of Roblox closed up 19% on Monday after the company released its September 2022 metrics report. Here are the numbers: The number of daily active users decreased from Roblox’s August 2022 report, when the company reported 59.9 million users. The number of hours engaged in September also decreased from 4.7 billion in August, and Roblox’s bookings in September fell from the US$233 million and US$237 million estimated bookings reported in August. The drop may have occurred as kids who play the game returned to school. Shares of Roblox are down about 65% from their highs. The stock was blazing hot in 2021 after Roblox’s direct listing in March. Its market cap neared US$80 billion before peaking in November 2021. The company saw bookings swell more than 200% during the pandemic when kids were spending more time on their screens while stuck at home. But this year’s economic slowdown has punished high-growth tech stocks. https://cnb.cx/3Sg0PTl
Microsoft becomes latest tech firm to cut staff.
Microsoft announced layoffs across multiple divisions on Monday, Axios has confirmed. The move is yet another example of large tech companies cutting jobs after earlier moving to slow or freeze hiring as the broader economy cools. Microsoft declined to say how many jobs had been cut, but a source said the layoffs numbered under 1000. The cuts occurred across a variety of levels, teams and parts of the world. Multiple laid-off workers turned to Twitter and Blind, among other online forums, to share that their job had been cut. Nearly all the major tech firms have slowed headcount growth, with many freezing all but essential hires. A number of companies have already moved to cut jobs, including Snap and, as Axios reported yesterday, Flipboard. Meta, which had already frozen hiring, plans to cut budgets in most divisions, with layoffs expected. https://bit.ly/3gh29rP
Tencent was China’s most valuable company for 6 Years, but the glory days are over.
Tencent’s nearly six-year reign as China’s most valued company may be over. Once worth nearly US$1 trillion, the gaming and internet giant now hovers at less than half of its peak market value. On September 30, Tencent lost its status as China’s most valuable company when its market capitalization dipped below that of Guizhou-based distiller Kweichow Moutai. That means its value fell from US$950 billion in January 2021 to around US$325 billion in less than 22 months, per Bloomberg. As of Tuesday afternoon, Tencent has regained a narrow lead over Kweichow Moutai, with a market capitalization of US$302.5 billion to Kweichow Moutai’s US$300.1 billion, per Bloomberg’s data. Kweichow Moutai is a household name in China. Its iconic Moutai Baijiu is a fiery 53% alcohol liquor that’s commonly consumed during business dinners. The drink was famously served to Richard Nixon on his historic 1972 trip to China. Harsh restrictions on tech giants spelled the end of Tencent’s glory days. That Kweichou Moutai’s market value could even be compared to Tencent’s shows how far the tech behemoth has fallen. https://bit.ly/3VHZg3H
Strong EV sales in China boost profit for BYD.
BYD, the Chinese automaker partly owned by Warren Buffett’s Berkshire Hathaway, said its third quarter profit likely quadrupled as robust sales of its electric vehicles helped lower production costs. Sales of BYD’s pure electric and hybrid plug-in vehicles rose 250% in the first nine months of the year to 1.2 million, faster than than the overall 110% increase for all electric vehicles in China, according to Reuters. That compares to Tesla, which sold about 318,000 vehicles in China in the same period, according to Reuters. BYD also beat out local competitors XPeng and Nio. BYD’s big output helped it achieve economies of scale that allowed it to keep costs down and boost profit margins, the company said. https://bit.ly/3TIRB3b
Shares of Korean internet giant Kakao slide after fire disrupts service.
The stock price of South Korea’s internet giant Kakao tumbled on Monday after a fire at a data center that cut off power on Saturday, causing several service malfunctions. The blaze at the SK C&C data center, which houses the servers of Korea’s two largest internet companies — Kakao and Naver — disrupted Kakao’s messaging, ride-hailing, payment and game apps, and Naver’s internet search and news services, over the weekend. On Monday morning, Kakao’s share price dropped more than 9%. Its peer Naver also slid 2% at the opening of trading before recovering. At the time of writing, Kakao said it had restored KakaoTalk, the country’s dominant messaging app — with more than 46 million monthly active users in South Korea as of September 2022 and 53 million globally. The second largest messaging app after Kakao in South Korea is FaceBook Messenger, but it has only 3.9 million MAU as of September 2022; Naver’s messenger app, Line, has about 1.6 million monthly active users. https://tcrn.ch/3EUxVW3
Kakao co-CEO resigns, company to invest over US$300 million to build data center after mass outage.
Whon Namkoong, the co-chief executive of Kakao, has resigned in a remarkable demonstration of corporate accountability after a fire incident at an SK C&C data center in the south of Seoul caused a mass outage over the weekend and disrupted Kakao’s several services, including messenger, ride-hailing, payment, banking and gaming. Namkoong, who joined Kakao in 2015, was elevated to the co-CEO role this March. At a press conference on Wednesday, Namkoong apologized for the mass outage “for such an extended period” and said that he feels “the heavy burden of responsibility” over the incident, adding that the company will do its best to restore the faith of users. KakaoTalk is the most popular messaging app in South Korea, reaching over 47 million of the nation’s 51.7 million population each month. The app is also used by government officials and businesses, including banks, ride-hailing services, and payment players. https://tcrn.ch/3TvHu1S
iPhone 14 Plus production halted, Apple to reassess demand, iPhone 15 Plus still planned.
iPhone 14 Plus should be a hit product by all accounts. It’s the lowest-priced big screen iPhone that Apple has ever sold, and smartphone buyers love big screens, yet reports have consistently claimed that the new model just isn’t meeting expectations. Citing supplier sources, The Information is reporting that Apple has called for iPhone 14 Plus production to pause “while its procurement team reevaluates demand for the product.” iPhone 14 Plus only hit stores on October 7, but pre-orders for the US$900 model were open for much of September. Apple prioritized shipping the iPhone 14, iPhone 14 Pro, and iPhone 14 Pro Max last month. iPhone 14 Plus is a new price segment in the flagship iPhone lineup, replacing the US$200 cheaper iPhone 13 mini that was also an under performer. iPhone 12 mini sales were reportedly so lackluster that Apple shifted gears toward selling a larger model long before the iPhone 14 Plus was announced. The Information is reporting that Apple is seemingly less certain about customer demand for the iPhone 14 with a larger screen. Supply chain sources tell Wayne Ma that two Apple suppliers “that rely on the parts and assemble them into larger modules” are lowering production by 70% and 90%. https://bit.ly/3z0xxRZ
Apple winning market share from Samsung.
Google has become increasingly worried about Apple winning market share from Samsung, with increasing numbers of Android owners switching to iPhones. Citing an internal document, The Information says that the search giant plans to double-down on Google hardware, including its Pixel phones. The document indicates that Google doesn’t plan to reduce its support for Samsung, but does believe that the once-dominant Android smartphone maker is struggling to compete with Apple, and that the best way to protect the platform is through more Google-made hardware. The company currently uses Pixel branding for phones, watches, and earbuds. The company had already responded to a reduction in ad revenue by budget cuts, and that these are being targeted at projects outside the company’s priority areas. This includes reducing work on Google Assistant support for third-party products – including cars. The strategy could be a risky one, given that Pixel hardware has so far barely made a dent in the market. The report notes that Pixel phone sales last year totalled just 4.5M, against 230M iPhones. The company seems to be pinning its current hopes on pricing, with its latest models cheaper than Apple’s current line-up. https://bit.ly/3yTDznC
Lam Research warns of up to US$2.5 billion revenue hit from U.S. curbs on China exports.
Under sweeping regulations announced by the Joe Biden administration earlier this month, U.S. companies must stop supplying Chinese chipmakers with equipment that can produce relatively advanced chips unless they first obtain a license. “We have taken the necessary steps to ensure full compliance with the rules and have ceased shipments and support as required,” Chief Executive Officer Timothy Archer said on an analyst call. Lam Research, which gets 30% of its business from China, is the latest company to flag a hit from the sales restrictions. Applied Materials last week estimated a US$250 million to US$550 million drop in net sales in the quarter ending Oct. 30, with a similar impact expected in the following three months. https://reut.rs/3DkExf2
Media, Streaming, Gaming & Sports Betting
A new social media app for high schoolers has dethroned TikTok and BeReal in the App Store rankings — and is surprisingly not toxic.
A new app for high schoolers is ranked #1 in the app store right now, beating out BeReal and TikTok. The app “Gas” lets users send anonymous compliments to their friends and classmates through polls. The creators are trying to dispel a human trafficking hoax they say is causing users to delete their accounts. https://bit.ly/3eSBp0u
Pinterest partners with record labels to bring popular music to its TikTok rival, ‘Idea Pins’.
Pinterest’s TikTok competitor is gaining new music. The company announced today its video-focused “Idea Pins” feature will now include the ability to add popular tracks from top artists, thanks to new licensing deals with Warner Music Group, Warner Chappell Music, Merlin and BMG. This will expand upon the music already provided through Pinterest’s royalty-free music library from 7Digital, the company noted. With the launch, Pinterest says there will be thousands of new tracks available from artists like Dan + Shay, Bruno Mars, Michael Bublé, Twenty One Pilots, Zach Bryan, Paramore, and others. To make it easier to browse and access this larger music catalog, the Pinterest mobile app will also introduce a new music experience on iOS and Android. https://tcrn.ch/3TCOUAh
Netflix to expand into cloud gaming, opens new studio in Southern California.
At TechCrunch Disrupt, Netflix VP of Gaming Mike Verdu dropped two bits of news about the streaming giant’s foray into games. The company will also open a new gaming studio in Southern California. Google’s Stadia and Amazon’s Luna have made the same play, attempting to peddle video games that people can play even if they don’t have an expensive gaming computer or coveted console. But these services have struggled to attain mainstream user adoption. Google recently said that it will shut down Stadia in January. Since it announced its foray into gaming, Netflix has 14 games in development in its own studios and has 35 games on the service now. In total, Verdu said it has 55 games “in flight” at present. https://tcrn.ch/3DfStXy
Microsoft is building an Xbox mobile gaming store to take on Apple and Google.
Microsoft is building an Xbox mobile store to directly offer games on mobile devices, challenging Apple and Google. The software giant first hinted at a “next-generation” store it would “build for games” earlier this year but has now quietly revealed details of the plans in filings with the UK’s Competition and Markets Authority (CMA). The CMA is currently investigating the $68.7 billion Activision Blizzard acquisition and has asked Microsoft for context. In its filings, Microsoft says a big motivation for the purchase is to help build out its mobile gaming presence. Its plans for this space apparently include creating an Xbox mobile gaming platform and store. Call of Duty: Mobile and Candy Crush Saga are two hugely popular mobile games published by Activision and King, respectively, and Microsoft could leverage these titles to help build out a game store to rival Google Play and the App Store. Given Apple’s policies blocking third-party app stores on iOS, it’s difficult to imagine Microsoft competing on iPhones anytime soon. But that’s clearly not stopping it from envisioning an Xbox mobile app store. Microsoft’s acknowledgment of a mobile gaming push comes as the company increasingly positions Xbox Cloud Gaming as an option for mobile gaming on emerging handhelds. Microsoft was quick to support Xbox Cloud Gaming on Valve’s Steam Deck, followed by a partnership with Logitech and Razer for their cloud gaming-focused handhelds. That means a push into mobile gaming could happen on multiple fronts — not just on phones and tablets. Beyond hardware, there’s a lot of revenue at stake here, too. Games are some of the most popular downloads on mobile and drive in-app purchases on app stores. Microsoft clearly wants a piece of that pie. https://bit.ly/3shFbUf
Adtech, Privacy & Regulatory
Uber rolls out ad business to reach more riders.
Uber has launched its global advertising unit with the goal of creating a US$1 billion business within the next two years by displaying promotions within its apps, on top of cars and on the back of seats. Uber’s chief executive Dara Khosrowshahi has said the company was targeting $1bn in gross ad bookings by 2024, on an annualised basis. In the second quarter of this year, the existing ad business had an annual gross bookings run rate of US$350 million, Khosrowshahi said during an investor conference last month. The new ad formats, which have been piloted in some markets, include displaying promotions within the Uber app to customers as they book or complete a journey. Brands will also be able to have emails sent to Uber’s 122 million active users globally, or place ads on the homepage of the Uber Eats app. The company is piloting a scheme in Los Angeles and San Francisco in which tablets attached to the back of car seats are used to display trip information and advertising. Riders would have “full control” over any ads with sound, Uber said. https://on.ft.com/3THhQXQ
Google sued by Texas AG for handling of biometric data of millions.
Texas Attorney General Ken Paxton on Thursday sued Alphabet Inc.’s Google, claiming it collected biometric data for millions of Texans without obtaining proper consent. “For more than a decade, Texas has prohibited companies from capturing Texans’ biometric data – including the unique characteristics of an individual’s face and voice – without their informed, advance consent. In blatant defiance of that law, Google has, since at least 2015, collected biometric data from innumerable Texans and used their faces and their voices to serve Google’s commercial ends,” the lawsuit charges. “Indeed, all across the state, everyday Texans have become unwitting cash cows being milked by Google for profits.” Google was not immediately available for comment. https://on.mktw.net/3yZTtwL
Klarna adds shoppable videos, creator features.
Installment lender Klarna is adding shoppable videos and other features aimed at boosting sales and user engagement on its app. The move, announced on Wednesday, comes as the Sweden-based lender is fighting to stem growing losses after an expansion in the U.S. and other markets. The company has also been grappling with a return to in-person shopping, and rising inflation and interest rates have prompted it to tighten its underwriting standards. Klarna’s valuation was slashed by 85% to US$6.7 billion in a July fundraising. Klarna’s app, which lets shoppers pay with the lender’s installment payments at any online retailer, will now feature a “watch and shop” option where users can buy products promoted in a video feed. Klarna is also launching a service to connect retailers with creators to make content for its app, as well as a search tool that tracks price history and suggests discount codes at checkout. Klarna isn’t just focused on its app to boost sales, though. In June, it launched a debit card that allows customers to pay with Klarna’s installment loans anywhere that Visa cards are accepted, not just retailers Klarna has struck partnerships with. https://bit.ly/3SoZJ83
Amazon launches UK portal for buying insurance.
Amazon is launching a portal for buying insurance in the UK, challenging established price comparison sites in the latest indication of Big Tech’s growing ambitions in financial services. Wednesday’s unveiling of Amazon’s home insurance comparison service comes a week after Apple announced a new high-yield savings account with Goldman Sachs. Amazon already offers online payments, co-branded credit cards, gift cards and instalment-lending services, including a buy now, pay later partnership with Barclays in the UK. In insurance, it offers extended warranties for some products purchased through its online store and, in India, car insurance via a partnership with Acko. But the launch of an insurance aggregator in the UK could pave the way for a more expansive push into personal finance products in one of its largest markets outside the US. https://on.ft.com/3sgZwJq
Fintech, Blockchain & Cryptocurrency
Mastercard will help banks offer cryptocurrency trading.
Mastercard is looking to bring crypto to the masses by making it easier for banks to get involved. Mastercard will act as a “bridge” between Paxos, a crypto trading platform already used by PayPal to offer a similar service, and banks, according to the company. Mastercard and Paxos will handle regulatory compliance and security – two core reasons banks cite for avoiding the asset class. Mastercard’s chief digital officer said polling still shows demand for the asset, but roughly 60% of respondents said they would rather test the waters through their existing banks. Large investment banks like Goldman Sachs, Morgan Stanley and JPMorgan have dedicated crypto teams but have largely avoided offering it to consumers. Just last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis” at an Institute for International Finance event. If banks do embrace this Mastercard partnership model, it may mean more competition for Coinbase and other exchanges operating in the U.S. https://cnb.cx/3TBp1Rh
Redditors have created millions of crypto wallets to buy NFT avatars.
In July, Reddit jumped on the NFT train, launching an NFT-based marketplace that allows users to purchase blockchain-based profile pictures for a fixed rate. Given the general sentiment around NFTs today, you might assume — like me — that the experiment ended poorly. But the opposite’s the case apparently. During a panel at TechCrunch Disrupt, Reddit chief product officer Pali Bhat revealed that over three million Redditors have used Reddit’s Vault blockchain wallet to create over three million crypto wallets to date. Most of those — 2.5 million — were created to purchase NFT avatars that can be used as profile pics on the platform, he said. Reddit partnered with roughly 30 artists to release around 40,000 NFT avatar designs a few months ago, which could be purchased via the Reddit mobile app at prices ranging from US$9.99 to $99.99. (They’re all sold out at the moment.) https://tcrn.ch/3THiSTL
Texas securities regulators probe FTX US, CEO Sam Bankman-Fried.
Texas regulators are investigating whether U.S.-based cryptocurrency exchange FTX US and its co-founder and CEO, Sam Bankman-Fried, violated state securities laws, according to a court filing in crypto lender Voyager Digital’s bankruptcy proceedings. In the letter, Texas State Securities Board enforcement director Joe Rotunda argued that FTX US should not be allowed to buy Voyager assets that it won in a bankruptcy auction until the state determines whether the exchange is complying with securities laws. At issue is whether FTX US improperly offered customers income-generating products on crypto deposits without first registering as a securities dealer with the state, Rotunda wrote. The letter also noted that FTX US has failed to register as a money transmitter with the Texas Department of Banking. “We have an active application for a license which has been pending, and believe we are operating fully within the bounds of what we can do in the interim. We look forward to continue working with Texas,” an FTX spokesperson said. The crypto industry is facing mounting regulatory scrutiny, particularly when it comes to whether certain tokens and other products should be considered securities. Coinbase, an FTX competitor, is being probed by federal securities regulators over staking, a similar practice whereby customers deposit cryptocurrency and generate a yield. https://bit.ly/3SjtQha
BMW to invest US$1.7 billion to build EVs in South Carolina.
BMW plans to invest US$1.7 billion to build at least six EV models in the U.S. by the end of the decade. The investment announced Wednesday includes US$1 billion toward BMW’s factory in Spartanburg, South Carolina and $700 million to fund a new battery cell plant nearby. The factory, which builds BMW’s portfolio of X utility vehicles as well as lithium-ion battery modules for two plug-in hybrid electric models, will be “a major driver” for BMW’s electrification strategy, Oliver Zipse, BMW Group Chairman of the Board of Management, said in a statement. Like other automakers, BMW is experimenting with alternate battery chemistries and powertrains, teaming up with Toyota to produce hydrogen fuel cell vehicles as soon as 2025. https://tcrn.ch/3THYX77
Biden administration approves US$2.8 billion for EV battery production in the US.
The US Department of Energy is awarding US$2.8 billion in grants from the Bipartisan Infrastructure Law to shore up domestic battery manufacturing and mineral production, the White House announced Wednesday. The Biden administration is also launching a new government-wide initiative to strengthen supply chains to support electric vehicle manufacturing. It was the latest move by President Biden to support the shift from polluting gas-powered cars to emissions-free electric vehicles, with the goal of making 50 percent of all new cars sold in 2030 electric. And it comes as automakers, mining officials, and environmentalists have sounded a warning about the US supply of key minerals needed to fuel the EV boom. The DOE grants will go to 20 manufacturing and processing companies for projects across 12 states. According to the White House, these projects will support the production of enough lithium, graphite, and nickel to supply millions of new electric vehicle batteries annually. https://bit.ly/3TlMBlb
Sophic Capital Client Insights
Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC): Unmanned Underwater Vehicles – The most challenging technologies to develop.
We are now past the inflection point we prophesized about in 2016. Geopolitical events have accelerated UUV adoption by several navies (including adversaries), and several companies continue to evolve their products and services to meet growing demand. The underwater drones market size is significant, estimated at about US$4.5 billion in 2021 and forecasted to reach approximately US$12.5 billion by 2030. Sophic Capital client Kraken Robotics [TSXV:PNG, OTCQB:KRKNF] is well positioned to capitalize on the growing defence and commercial marine technology markets. In fact, we believe that Kraken is THE leader in UUV components and systems and will explain “why” in a subsequent report in this series. However, we believe it’s important to understand why UUV technology is perhaps the most complicated and challenging to overcome. https://bit.ly/3gwZomg
The information and recommendations made available through our emails, newsletters, website and press releases (collectively referred to as the “Material”) by Sophic Capital Inc. (“Sophic” or “Company”) is for informational purposes only and shall not be used or construed as an offer to sell or be used as a solicitation of an offer to buy any services or securities. In accessing or consuming the Materials, you hereby acknowledge that any reliance upon any Materials shall be at your sole risk. In particular, none of the information provided in our monthly newsletter and emails or any other Material should be viewed as an invite, and/or induce or encourage any person to make any kind of investment decision. The recommendations and information provided in our Material are not tailored to the needs of particular persons and may not be appropriate for you depending on your financial position or investment goals or needs. You should apply your own judgment in making any use of the information provided in the Company’s Material, especially as the basis for any investment decisions. Securities or other investments referred to in the Materials may not be suitable for you and you should not make any kind of investment decision in relation to them without first obtaining independent investment advice from a qualified and registered investment advisor. You further agree that neither Sophic, its, directors, officers, shareholders, employees, affiliates consultants, and/or clients will be liable for any losses or liabilities that may be occasioned as a result of the information provided in any of the Material. By accessing Sophic’s website and signing up to receive the Company’s monthly newsletter or any other Material, you accept and agree to be bound by and comply with the terms and conditions set out herein. If you do not accept and agree to the terms, you should not use the Company’s website or accept the terms and conditions associated to the newsletter signup. Sophic is not registered as an adviser or dealer under the securities legislation of any jurisdiction of Canada or elsewhere and provides Material on behalf of its clients pursuant to an exemption from the registration requirements that is available in respect of generic advice. In no event will Sophic be responsible or liable to you or any other party for any damages of any kind arising out of or relating to the use of, misuse of and/or inability to use the Company’s website or Material. The information is directed only at persons resident in Canada. The Company’s Material or the information provided in the Material shall not in any form constitute as an offer or solicitation to anyone in the United States of America or any jurisdiction where such offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. If you choose to access Sophic’s website and/or have signed up to receive the Company’s monthly newsletter or any other Material, you acknowledge that the information in the Material is intended for use by persons resident in Canada only. Sophic is not an investment advisor nor does it maintain any registrations as such, and Material provided by Sophic shall not be used to make investment decisions. Information provided in the Company’s Material is often opinionated and should be considered for information purposes only. No stock exchange or securities regulatory authority anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. Sophic and/or its principals and employees may have positions in the stocks mentioned in the Company’s Material and may trade in the stocks mentioned in the Material. Do not consider buying or selling any stock without conducting your own due diligence and/or without obtaining independent investment advice from a qualified and registered investment advisor. The Company has not independently verified any of the data from third party sources referred to in the Material, including information provided by Sophic clients that are the subject of the report, or ascertained the underlying assumptions relied upon by such sources. The Company does not assume any responsibility for the accuracy or completeness of this information or for any failure by any such other persons to disclose events which may have occurred or may affect the significance or accuracy of any such information. The Material may contain forward looking information. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words and include, without limitation, statements regarding, projected revenue, income or earnings or other results of operations, strategy, plans, objectives, goals and targets, plans to increase market share or with respect to anticipated performance compared to competitors, product development and adoption by potential customers. These statements relate to future events and future performance. Forward-looking statements are based on opinions and assumptions as of the date made, and are subject to a variety of risks and other factors that could cause actual events/results to differ materially from these forward looking statements. There can be no assurance that such expectations will prove to be correct; these statements are no guarantee of future performance and involve known and unknown risks, uncertainties and other factors. Sophic provides no assurance as to future results, performance, or achievements and no representations are made that actual results achieved will be as indicated in the forward looking information. Nothing herein can be assumed or predicted, and you are strongly encouraged to learn more and seek independent advice before relying on any information presented.