đź‘‹ Binance walks away from FTX

Thursday, November 10, 2022 by Robinhood Snacks |
Binance CEO Changpeng Zhao takes center stage (Antonio Masiello/Getty Images)

Binance CEO Changpeng Zhao takes center stage (Antonio Masiello/Getty Images)

Binance CEO Changpeng Zhao takes center stage (Antonio Masiello/Getty Images)

Binance CEO Changpeng Zhao takes center stage (Antonio Masiello/Getty Images)

Yesterday’s Market Moves
Dow Jones
32,514 (-1.95%)
S&P 500
3,749 (-2.08%)
Nasdaq
10,353 (-2.48%)
Bitcoin
$15,854 (-14.31%)

Hey Snackers,

Last century we got spaceships. This century we’re getting space shipping. Japanese startup Ispace aims to become the FedEx of the moon and is shipping its first packages this month. But do they have a lunar return policy?

Stocks plunged yesterday as midterm results were too early (or too close) to call. Investors hoped for clear gridlock, which has historically resulted in less legislation. Crypto tumbled further after Binance said it would not pursue its plan to buy FTX. About that…

Whiplash

The best-laid plans… still require due diligence. About 24 hours after the world's largest crypto exchange said it would acquire its collapsing rival, Binance said the deal to purchase FTX was off. One possible reason: Binance got a look at FTX's books and spotted a reported shortfall of up to $8B. The about-face sent crypto markets tumbling (again):

  • Blockdrain: Yesterday bitcoin fell under $16K to a two-year low as the fleeting hope that FTX would get bailed out dissipated.
  • Faultcoins: Altcoins weren't spared from the FTX-odus. Ether, dogecoin, and XRP all dropped more than 14%.
  • It's unclear if (or when) FTX customers will get their money back. FYI: FTX’s US biz, which makes up 5% of its revenue, wasn't part of the planned deal.

Decentralized déjà vu… With Binance out, FTX could be on the verge of bankruptcy. Crypto followers might feel like they’ve seen this show before: over the past year, crypto lenders including Celsius have declared bankruptcy. Earlier this year FTX founder Sam Bankman-Fried (aka SBF) bailed out companies like BlockFi and Voyager that were felled by crypto winter. The industry once viewed SBF as its "white knight" riding in to save companies. Now SBF’s own company may need saving.

THE TAKEAWAY

The aftershock could be bigger than the quake… Plunging crypto prices turn heads, but SBF's and FTX's sudden unraveling presents a larger reputational problem for crypto. The 30-year-old CEO (and political mega donor) was the face of crypto lobbying efforts on Capitol Hill. With so much regulation up in the air, FTX's implosion might sour crypto-friendly lawmakers. But if it leads to clearer US crypto regulation, it could benefit investors and ultimately fortify the industry's reputation.

Peachy

The Mario-verse is growing… The world’s most popular plumber is making money moves: Nintendo lifted its annual earnings forecast this week after reporting a 34% increase in quarterly profits. The Japanese gaming icon said chip shortages were still cutting into sales of its popular Switch console, but revealed Super Mario-sized plans to expand beyond video games:

  • Flipping a Switch: This week Nintendo partnered with mobile-game biz DeNA to launch Nintendo Systems, a joint venture to smartphone-ize Nintendo’s console-focused biz.
  • Mario mania: Nintendo’s making Mario spin-offs to “build a relationship” with new fans: “The Super Mario Bros. Movie” (feat. Chris Pratt’s funny voice) debuts in April, and Super Nintendo World opens in Hollywood next year (one opened in Japan last year).

Game Boy Advance(ing)… Nintendo’s expansion comes as the broader gaming industry slows: Roblox and Take-Two shares tumbled this week after both reported unexpectedly big losses. As the lockdown gaming boom fades, EA and others are also struggling to keep momentum. But Nintendo has a cheat code: Japan’s weak yen means Nintendo is earning more yen from overseas sales, after currency conversions (think: 1 USD now = more yen). Honda has also benefited. It’s the opposite of what’s happening to US companies who do biz abroad.

THE TAKEAWAY

Mario is getting the Mickey treatment… because IP is a terrible thing to waste. Just ask Disney: the House of Mouse has proved that popular characters can successfully spin off into toys, sequels, merch, theme parks, and cruises. If Nintendo succeeds in transforming the Mario-verse into a park and media empire, it might be able to offset any gaming weakness — and pave the way for a Princess Peach sequel.

What else we’re Snackin’

  • Big: Meta shares jumped 5% after the company laid off 11K+ employees to cut costs. Its revenue has been sliding as ad sales sag, and profits have taken a hit after billions spent on the metaverse.
  • Score: Better late than never? Netflix is said to be interested in entering the arena of live sports streaming. It could target niche sports like cycling, surfing, and tennis as major-league streaming costs soar.
  • Left: Bumble shares sank 18% after the strong dollar hurt sales for its international dating apps like Badoo. Bumble gave a disappointing holiday forecast, which suggests slower swiping growth ahead.
  • Spat: The EU said that at least nine points in President Biden’s Inflation Reduction Act could violate international trade rules. Now the US and EU have formed a task force to iron out kinks so that they can keep doing biz together.
  • Robux: Roblox stock fell 17% after the tween-famous gaming platform posted a bigger loss than expected. Quarterly bookings were up 10% compared to 200% mid-pandemic, when kids were stuck at home.

Snack Fact of the Day

LA just experienced record rainfall of over 1.4 inches, beating the previous record set in 1998

Thursday

  • Jobless claims
  • Earnings expected from AstraZeneca, Nio, Toast, Ralph Lauren, Duolingo, WeWork, Six Flags, Warby Parker, Aurora Cannabis, and Brookfield Asset Management

Authors of this Snacks own: bitcoin, dogecoin, and ethereum and shares of Netflix, Aurora Cannabis, Take-Two, and Disney

ID: 2586121