🐜 The biggest IPO, squashed again

Tuesday, April 13, 2021 by Robinhood Snacks |
_Cloudy with a chance of $16B healthcare cloud_

Cloudy with a chance of $16B healthcare cloud

Yesterday’s Market Moves
Dow Jones
33,745 (-0.16%)
S&P 500
4,128 (-0.02%)
Nasdaq
13,850 (-0.36%)
Bitcoin
$60,085 (+1.02%)

Hey Snackers,

It's banks' big week on Wall Street (even more so than usual): JPM Chase, Citi, Goldman, and others drop earnings tomorrow.

Stocks dipped yesterday as investors prepped for the busy earnings week ahead. And others got antsy...

Squash

1. Ant, the biggest financial app in the world, gets "squashed" again

The biggest IPO... that never was. Ant Group is the Chinese fintech giant that was supposed to have the largest IPO ever. In November, Ant was on track to raise $34B+ in its Shanghai and Hong Kong IPOs (at a huge $300B valuation). Ant's Alipay app offers every money service imaginable (think: payments, loans, insurance, and investing... all in one). It's massive, with 1B+ users.

  • Strike 1: Last year, Ant's billionaire founder Jack Ma publicly criticized Chinese regulators for stifling innovation in the financial industry.
  • Strike 2: Ant's blockbuster IPO was suspended due to vague regulatory reasons. Then Ma wasn't seen in public from November to January (odd).
  • Strike 3 (The News): Ant will now apply to become a financial holding company overseen by China’s central bank — read: stricter regulation.

Jack of all problems... China may have felt threatened by Ant's financial dominance ($17T in digital payment transactions per year). Now, Ant will have to shrink its assets under management, and break an “information monopoly” on its vast consumer data. Ant is falling in line: it "will spare no effort in implementing the rectification plan.” But it's not the only one getting heat...

  • Alibaba — aka: the Amazon of China — was just fined a record $2.8B by China’s anti-monopoly regulator. BTW: Alibaba was also co-founded by Jack Ma... and it owns 33% of Ant (#facepalm).
  • Other Chinese tech giants are also facing fresh regulatory pressure: China recently fined Tencent, Baidu, Didi Chuxing, SoftBank, and others over anti-monopoly rules.
  • Also: China just launched its own digital currency, which could hurt Alipay (ICYMI: we covered that here).
THE TAKEAWAY

China's power > company's growth... China wanted to “set an example” for regulation of the platform economy... and it did. Not even billionaire Ma or Alipay's 1B+ users could stop that. Now, analysts expect Ant’s profit potential to fall as it scales back. In China, these regulatory crackdowns could limit future innovation in tech. Abroad, they could make investors think twice before buying into Chinese companies. And other companies might think more carefully about building a presence there.

Listen

Did you say, cheesy fiction?... Close: acquisition. Microsoft is buying voice recognition company Nuance Communications for a loud $16B. If investors approve, it'll be Microsoft's biggest corporate shopping splurge since LinkedIn in 2016 (price tag: $26B). Nuance shares popped 16% yesterday. The 30-year-old company sells AI speech recognition tools for doctors' offices, customer service calls, and voicemails. And get this...

  • 77% of US hospitals and over half of US physicians use Nuance's solutions. Its tools listen to and intelligently transcribe your doctor‑patient convos.
  • Siri 1.0: Nuance was a Big Tech acquisition target for years. Its software formed the basis of Siri before Apple intro'd an in-house version.

(Doctor's) Office 365... Microsoft looked at industries ripe for technological innovation... and decided it's bullish on healthcare. That's why it'll use Nuance's tech in its cloud solutions for healthcare providers. The doctor-savvy AI tech level up its game in a fast-growing field: Nuance's healthcare cloud sales jumped 29% last year. And it'll double Microsoft’s total addressable market in the healthcare provider space to ~$500B.

THE TAKEAWAY

Max out the core competency... Microsoft is an enterprise software beast. But when it launched its old consumer voice assistant Cortana, it was competing with Apple's Siri, Amazon Alexa, and Google's Home assistant. When Cortana fell behind, Microsoft pivoted: instead of competing for consumers like us, it focused on businesses. With Nuance, it's investing in strengthening its key competency: enterprise. That boosts its competitive edge.

What else we’re Snackin’

  • Tragic: Protestors are rallying in Minnesota after a police officer fatally shot a Black man, Daunte Wright, in the state where the George Floyd murder trial is underway.
  • Chipper: President Biden called for a push to strengthen the US chip industry during a meeting with execs from Ford, GM, Google, and others.
  • Vaxing: China's top disease-control official admitted that its Covid-19 vaccines have low effectiveness. Now China's considering mixing them.
  • Arrived: Uber says its March bookings were the highest in company history as ride-hailing rebounded ("revenge riders" have arrived).
  • Shut: A top Biden admin health official said Michigan should “shut things down” as Covid cases surge there.
  • Puffed: Aphria shares plunged 14% after the Canadian weed giant reported a big quarterly loss on lockdowns.

Snack Fact of the Day

North American sales of savory snacks like chips and pretzels jumped 11% in 2020

Tuesday

Authors of this Snacks own shares of: Microsoft, Apple, Uber, JPM Chase, Google, and Tesla

ID: 1601240