Weekly Market Links - 02 Aug-08 Aug 2021
Apple flexes privacy controls, Facebook adapts, cheaper Spotify/Youtube on its way.
Macro
Japan has a major spike, but thankfully in vaccinations. A sluggish rollout in the year has ramped up.
Similarly, Vietnam has ramped up vaccinations, after securing vaccine supplies.
India, which previously were facing record-high cases, have brought them under control while raising vaccinations.
Philippines, Indonesia, Thailand, US and SG continue to execute at a steady pace.
The Buy Now Pay Later (BNPL) trend takes hold, where it is disrupting the credit card industry. As of now, 10% of Australia’s e-commerce transactions use BNPL.
Banks, credit card companies, and even e-commerce platforms are launching their own versions, alongside start-ups to compete against them, forming a plethora of BNPL options with attractive promotions.
Visa and Paypal have their own
Shopify invested in Affirm.
Apple is going into BNPL together with Goldman Sachs.
Regulation is likely to come swiftly, as 21% of BNPL users missed payments in the last 12 months. This is a really easy way to rack up debt, especially amongst young consumers or the elderly.
Countries
USA, Canada
A big Infrastructure bill was agreed on by senators, worth $1.2T (trillion!)
These are going towards roads and bridges to mitigate climate change, drinking water (replacement of lead), and EV charging stations, especially in the less densely populated areas.
The money is coming from unused COVID relief ($205B worth), $50B in fraudulent unemployment payments, and $28B from stronger enforcement of crypto taxes.
The bill moves on to the house, which will be reviewed/evaluated in September.
India
A 43.6 degrees celsius day was recorded in July, where work cannot be done outside. A consequence of global warming, impacts to agriculture and mining are likely to cascade in the domestic economy.
Cool roofs are being implemented in a bid to lower indoor temperatures by 5 degrees.
China
Supply chains may be snarled again, as delta spreads across China albeit, at low numbers, this could trigger harsh lockdowns to regain control.
At Yantian Port in May this year, exports were down 70%.
SEA
Vietnam:
Is ramping up their vaccination supply, with approval of Gilead’s Remdesivir, and 50M incoming vaccines from Pfizer in Q4 21.
So far, 6.4MM people have at least 1 jab, representing about 6% of their population.
Regardless, mobile transactions are expected to triple, as Vietnam’s high mobile penetration and app usage provides tailwinds to consumer spending, lending, and IT spending.
South America
Argentina: The Parana river has almost completely dried up. Argentina goes into a 6-month water emergency. Side effects: Crop prices are likely to increase further from lack of water, and lowered production due to drying.
Companies
Apple
Ads business are likely to grow even more, as Apple dishes out more ad spaces and platforms such as Apple Fitness, Garage Band, via both iPhones and Wearables.
Its walled garden approach to ringfence loyal users and entice marketers to have more ad spending within its ecosystem will also drive ad dollars from other platforms, onto Apple due to sticky user bases, high engagement, and conversions. <- TBC
Apple will also start scanning US iPhones/iCloud images related to child abuse, taking their moral responsibility to the next level. This is also surprising, as it could mean a start of “Big Brother” surveillance done on your/regulators’ behalf. The feature will be part of iOS 15.
Tech leaders aren’t too happy with this. Apple’s approach is rather concerning, as this shapes how governments think on their control over what images are, or are not acceptable to request that Apple add to their checks. I.e. Governments can easily use this as an entry for mass surveillance of devices.
Alphabet / Google
A class-action lawsuit kicks into action. Private data exposure of 52M users in 2018 from Google+ leads to Google paying out $2.15 per user. That’s $2 for your personal data folks.
Alphabet is taking policing of disinformation seriously, as YouTube suspends Sky News Australia due to alleged COVID misinformation.
Old Android versions (from 2.3.7), won’t be allowed to sign into Google. For context, these were devices released 10 years ago - though there are still people using these, as upgrades and new models aren't equally distributed worldwide.
YouTube tests a “cheaper” premium version, but you’ll still see ads on Youtube Music. You can’t play YouTube in the background either. Aww.. the 60% discount seems enticing though.
Alibaba / Ant
Quarterly revenue rose 34% - a bulk of contribution from cloud computing and e-commerce.
It's not just online - revenue from physical store chains grew by 80% YoY in 1Q22.
Seems like all cylinders are firing, but BABA missed earnings a little, and there are regulatory scares to be considered.
Although, more taxes are on the way, as tax breaks by the government for the internet industry is lifted. Expect tax rates to hike from 8-10% to 20%.
Bytedance
With China’s stance on edtech, Bytedance closes their online tutoring arm.
Disney
Gets sued by Scarlett Johansson for releasing “Black Widow” online, rather than just in movies.
Individual titles don't actually generate a profit or loss - they contribute by having more subscribers, and thus the platform (Disney, Netflix etc) benefits.
Microsoft
Launched their cloud PC Windows 365 service - and due to overwhelming demand, free trials had to be paused.
Microsoft is going very strong with the SaaS model, a large change from their blanket licensing in the past.
Pfizer
Is raising prices on their COVID vaccines in Europe. So is Moderna, and it looks likely that booster shots are necessary. For reference, Pfizer would make $26B in revenues from the vaccines alone.
Spotify
A new $0.99 subscription goes pilot, to at least remove those pesky ads and give unlimited skips.
Robinhood
This is roughly how much Robinhood gets for payment for order flow, compared to other US brokerages that do the same.
Does the higher rate for equity of Robinhood signify superior order flow i.e. information for market makers to use? Thoughts?
The social media giant is finding ways to use encrypted information to target advertisements. This is a win-win, as less, or maybe none of the users’ personal data needs to be shared while Facebook can still deliver accurate and effective advertising for partners.
NVDA
The UK is considering blocking the acquisition of ARM. Assessments have reported implications for the UK's national security.
If blocked, NVDA will miss a very strategic move that would cement its position in graphic cards for a wide array of use-cases.
Pfizer
FDA will give full approval for Pfizer shots by Labor Day (that’s 6 Sept for non-US folks!)
Instagram’s Stories team at Facebook can have a breather, as the Twitter version, called “Fleets” shuts down. It seems Twitter remains in its 140-character niche.
Rakuten
The Japanese e-commerce giant, with forays into 5G for their telco business, will export their tech to German telco 1&1.
Incumbent telcos may face significant costs to upgrade to 5G, while the landscape looks even more competitive as new players with shiny tech come online as 5G stability and quality becomes more feasible.
Samsung
Wind-free air conditioners will be expanded as it rises in popularity (Sales growth of 75%) in the stay-at-home-trend.
Square
AfterPay, a Buy Now Pay Later startup from Australia, gets acquired by Square for $29B in stock.
Square plans to integrate Afterpay into its existing Seller and Cash App business units, so that even “the smallest of merchants” can offer buy now, pay later at checkout. The integration will also give Afterpay consumers the ability to manage their instalment payments directly in Cash App.
This is in direct competition to Paypal, which were signalling higher growth targets previously
Also, amazing how a common start-up USP can be valued in double-digit billions.
Zoom
Their calls aren't fully encrypted after all. Zoom has to pay $85M due to a class-action lawsuit.
That’s about $15/25 per user - that’s about 10x their “Team” subscription plans.
Regardless, revenue is up to 2.7B due to the pandemic!
Tesla / SpaceX
At 90K users, Satellite coverage from StarLink is not 100%, and thus some users may encounter periods with no Internet connectivity.
Starlink will also cater to vehicles in rugged settings, being able to withstand extreme levels of heat and cold.