Connect with us

Crunchbase

From The Editor’s Desk: Stopping To Smell The Tulips

It seems now that national politics has once again subsided into the dull affair it should be, America is in need of a new form of mass amusement, or outrage, depending on your outlook. The GameStop trading fiasco offered that in spades.

Published

on

It seems now that national politics has once again subsided into the dull affair it should be, America is in need of a new form of mass amusement, or outrage, depending on your outlook. The GameStop trading fiasco this week offered that in spades.

A very brief recap for anybody who somehow tuned it all out: This week, shares in video game retailer GameStop, AMC Theatres and other struggling brands soared as much as 400 percent as hordes of amateur stock traders coordinated on the Reddit forum r/WallStreetBets, TikTok and other online communities to drive the selected stocks higher — in some cases making a lot of money in a very short period of time, while also inflicting substantial financial losses on hedge funds that had taken out massive short positions on those stocks.

Subscribe to the Crunchbase Daily

Like one of the earliest known bubbles, tulip mania — the frenzied tulip bulb price runup and subsequent collapse that swept Holland in the early to mid-1600s — the r/WallStreetBets frenzy became a self-fulfilling prophecy, with more traders piling into stocks as their peers egged them on and prices soared ever higher. In the midst of it all, the day-trading app Robinhood temporarily blocked new purchases of GameStop and other stocks caught up in the volatility, drawing intense ire from retail investors as well as some political and business leaders.

By the time of this writing on Friday afternoon, Wall Street just closed out its worst performance in months and the large financial players are suddenly reckoning with the implications of the new “meme stock” phenomenon.

It’s hard not to view the GameStop fiasco as a classic David vs. Goliath fight: A group of little guys organizing en masse to stick it to some of Wall Street’s biggest and most sophisticated players.

In the midst of the fray, even arch-enemies Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz seemed to briefly agree on that point, with Cruz offering support to comments from AOC in which she said she wanted more information on Robinhood’s “decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.” (The consensus was short-lived: AOC swiftly reminded the senator of his role in the instigation of violence at the Capitol earlier this month and said she’d work with “almost any other GOP that aren’t trying to get me killed.”)

Chamath Palihapitiya, the billionaire tech investor, himself got in on the action this week, reportedly buying $125,000 worth of GameStop call options, turning a quick profit when his bet soared, then donating $500,000 to a fund to help small businesses struggling during the pandemic.

In an interview with CNBC afterward, he explained what he thought the movement was all about. He’d spent hours poring over the r/WallStreetBets forums, he said, and came to this conclusion: “What you’re seeing is essentially a pushback against the establishment in a really important way. … A lot of people, coming out of 2008, they took a lot of risk, and they left retail (investors) as the bag-holder. And a lot of these kids were in grade school or high school when that happened. They lost their homes, their parents lost their jobs, and they’ve always wondered, ‘Why did those folks get bailed out for taking on enormous amounts of risk, and nobody showed up to help my family?’”

Tesla CEO Elon Musk chimed in too, with a one-word encouragement to the traders on Tuesday: ”Gamestonk!!”

As for me, I’m with Chamath, AOC and Elon on this one. Yes, the r/WallStreetBets traders may largely be a crowd of lulz-seeking dudes engaging in risky day-trading. Yes, some people will undoubtedly lose their shirts as this roller coaster comes crashing back to Earth. The Reddit traders appear to be motivated by some dizzying combination of thrill-chasing and profit-seeking, a principled sense of schadenfreude about sticking it to crony capitalists, and a wistful nostalgia for relic brands like GameStop.

But you have to hand it to them: As Chamath also notes, many in the r/WallStreetBets crowd are actually doing more fundamental financial analysis on companies than many of the professional analysts who whisper in Wall Street’s ears. The Reddit traders were also savvy enough to see that some of the world’s largest hedge funds were leveraged to the hilt on certain stocks, and they figured out how to organize an army of traders to exploit that vulnerability.

As a result, Melvin Capital, one of the hedge funds that had shorted GameStop’s shares, was forced to get a bailout to the tune of $2.75 billion from other investors. D1 Capital Partners, reportedly one of 2020’s top-performing hedge funds, posted a 20 percent loss this month as its positions were hammered by day traders, according to Bloomberg reporting. Point72 Asset Management, a $19 billion hedge fund, is down as much as 15 percent since the start of the year, sources told Bloomberg, as a result of the meme stock trading.

Displaying a stunning lack of self-awareness, some of Wall Street’s wealthiest were quick to cry foul. Hedge fund billionaire Leon Cooperman went on CNBC to angrily lament the nerve of “people sitting at home, getting their checks from the government!” while trading stocks, a privilege that’s apparently reserved for him and his friends in the Hamptons. “It’s just a way of attacking wealthy people!” he yells.

Another clear loser in all this: Robinhood, the day-trading app where many of the Reddit traders make their trades. The platform incited outrage among users yesterday when it halted new purchases of shares in GameStop and about a dozen other volatile stocks. Further fanning the flames was speculation that the app had done so at least in part at the behest of Wall Street customers: Robinhood is able to offer free trades to retail users because it generates a large portion of its revenue from “order flow,” or the practice of essentially selling information about its user’s trades to hedge funds and other institutional investors before those trades are actually executed.

Robinhood CEO Vlad Tenev went on CNBC Thursday to explain the company’s reasons for halting trades — ”we absolutely did not do this at the direction of any market maker or hedge fund … The reason we did it is because Robinhood, as a brokerage firm, we have lots of financial requirements,” he said — but his comments did little to quell the outrage. The company went on to get a quick $1 billion funding infusion yesterday from prior venture investors including Sequoia Capital and Ribbit Capital to shore up its balance sheet.

Whatever Robinhood’s true reasons for halting those trades, the damage to its reputation and business will likely linger. An $11.7 billion unicorn that itself is moving toward a public listing, Robinhood took as its name a swashbuckling hero who took from the rich and gave to the poor. Its entire business is built on the (arguably misguided) notion that the common man should enjoy the same level of access to the public markets as sophisticated Wall Street institutions. And yet this week it undoubtedly tipped the scales back to the rich and powerful. It’s hard to see the heroism in that.

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Like one of the earliest known bubbles, tulip mania — the frenzied tulip bulb price runup and subsequent collapse that swept Holland in the early to mid-1600s — the r/WallStreetBets frenzy became a self-fulfilling prophecy, with more traders piling into stocks as their peers egged them on and prices soared ever higher. In the midst of it all, the day-trading app Robinhood temporarily blocked new purchases of GameStop and other stocks caught up in the volatility, drawing intense ire from retail investors as well as some political and business leaders.

Source: https://news.crunchbase.com/news/gamestop-wallstreetbets-robinhood-trading/

from-the-editor’s-desk:-stopping-to-smell-the-tulips

Crunchbase

Macrometa Locks Down $20M To Be The Amazon Prime Of Edge Computing

Palo Alto, California-based edge compute company Macrometa closed a $20 million Series A less than eight months after announcing its $7 million seed funding.

Published

on

Palo Alto, California-based edge compute company Macrometa closed a $20 million Series A less than eight months after announcing its $7 million seed funding.

Subscribe to the Crunchbase Daily

The round was led by Pelion Venture Partners, with participation from existing investors

DNX Ventures, Benhamou Global Ventures (BGV), Partech Partners, Fusion Fund, Sway Ventures and Shasta Ventures. Founded in 2017, the company has raised $29 million to date.

Macrometa allows developers to build and run data-heavy cloud applications using real-time information and analytics at the edge — speeding up the process by bringing it closer. Co-founder and CEO Chetan Venkatesh compared what Macrometa does for developers in edge computing to what Amazon Prime did for the retail space.

“Amazon Prime created local caches of local goods,” he said. “We are doing the same thing for data and applications.”

In edge compute terms, that means getting developers the data they need faster and in real-time.

“We are big data meets fast data,” he added.

Fast growth

The 62-person company began last year with a few hundreds-of-thousands of dollars in revenue, but by the end of the year saw several millions of dollars in sales, Venkatesh said. It was then he started to think about raising a fresh Series A to help scale up the company.

Chris Cooper, general partner of Pelion, already had expressed interest in leading such a series and jumped at the chance to invest in another infrastructure and cloud-related company — having prior investments in companies like Cloudflare, Red Hat and Riverbed.

“To me, this smelled like and sounded like the thing that helped build our firm,” he said.

Venkatesh said the company will use the money to continue to build its solution and go-to-market strategy. The company expects to grow revenue 3x to 4x this year, and add to its customer base that already includes about a half dozen large enterprises, he said.

Using other forecasts as guidelines, Macrometa estimates the market for data services in the cloud to be about $50 billion. However, many solutions, such as those offered by SAP, Oracle, AWS and Google, are cloud-centric, not edge-native, Venkatesh said.

That difference could help the company dominate an edge compute market just coming into focus, he added.

Cooper said there are aspects of Macrometa that remind him of Cloudflare early on.

“We didn’t know what Cloudflare could truly be back then,” he said “But these are companies that change the way we interact with data.”

Illustration: Li-Anne Dias.

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Macrometa allows developers to build and run data-heavy cloud applications using real-time information and analytics at the edge — speeding up the process by bringing it closer. Co-founder and CEO Chetan Venkatesh compared what Macrometa does for developers in edge computing to what Amazon Prime did for the retail space.

Source: https://news.crunchbase.com/news/macrometa-locks-down-20m-to-be-the-amazon-prime-of-edge-computing/

macrometa-locks-down-$20m-to-be-the-amazon-prime-of-edge-computing

Continue Reading

Crunchbase

Inside Didi’s Massive IPO Filing

Backed by investors including SoftBank and Toyota, Didi last raised venture financing with a $500 million round led by SoftBank in May 2020, per Crunchbase.

Published

on

Chinese ride-hailing company Didi Chuxing has filed to go public in the United States.

Subscribe to the Crunchbase Daily

Didi is more or less the Uber of China. In fact, the company bought Uber’s operations in China back in 2016. And now it’s looking to go public in a deal that could value it at more than $70 billion, according to The Wall Street Journal.

Backed by investors including SoftBank and Toyota, Didi last raised venture financing with a $500 million round led by SoftBank in May 2020, per Crunchbase. It also raised $1.5 billion in debt financing in April 2021.

SoftBank, Uber and Tencent are among the largest shareholders in the company, which is based in Beijing. Uber became a stakeholder in the company after selling its Chinese operations to Didi.

Didi operates in 15 countries and has 493 million annual active users, along with 15 million annual active drivers, according to its F-1. The company reported having 41 million average daily transactions on its platform.

In terms of numbers, the company reported $21.6 billion in revenue last year. Although that figure is down from the nearly $24.2 billion in revenue the company generated in 2019, it’s nothing to scoff at and can likely be attributed to the COVID-19 pandemic. Its losses came out to about $2.1 billion in 2020, up from about $1.25 billion in 2019. The company isn’t profitable, and has had losses every fiscal year since it was founded in 2012.

Didi detailed how the pandemic affected its business, reporting that operations rebounded in the second half of 2020.

“The demand for our mobility offerings, as well as the supply of drivers, decreases drastically under such conditions. Our Core Platform GTV fell by 32.8% in the first quarter of 2020 as compared to the first quarter of 2019, and then by 16.0% in the second quarter of 2020 as compared to the second quarter of 2019,” the company wrote in its filing. “Our businesses resumed growth in the second half of 2020, which moderated the impact on a year-on-year basis.”

Goldman Sachs, Morgan Stanley and J.P. Morgan are among the underwriters for the IPO.

The company applied to list on the New York Stock Exchange under the ticker DIDI.

Illustration: Li-Anne Dias

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Source: https://news.crunchbase.com/news/ride-hailing-giant-didi-chuxing-files-for-us-ipo/

inside-didi's-massive-ipo-filing

Continue Reading

Crunchbase

Card Issuer Marqeta Valued At More Than $17B in Nasdaq Debut

Chief Marketing Officer Vidya Peters tells Crunchbase News that the IPO “has been a wonderful validation of the modern card issuing industry.”

Published

on

Shares of Marqeta, an Oakland-based modern card issuing platform, popped on the first day of trading Wednesday, closing at $30.52 per share, up 13 percent from opening price of $27. Marqeta is listed on the Nasdaq Global Select Market under the symbol MQ.

Subscribe to the Crunchbase Daily

Marqeta now has a market value of $17.3 billion, according to Yahoo, which is based on 586 million of outstanding shares.

The company filed in May to go public via an initial public offering. Since its inception in 2010 by Jason Gardner, Marqeta has raised a total of $528 million in known venture capital, according to Crunchbase data. Its last disclosed round in May 2020 valued the company at $4.3 billion.

Vidya Peters, chief marketing officer for Marqeta, told Crunchbase News that the IPO “has been a wonderful validation of the modern card issuing industry and what we have done over the last decade.”

She went on to say that there is a “massive $74 trillion market opportunity ahead of us, which provides an endless runway.”

And, as a payments infrastructure company, being publicly traded enables Marqeta to be transparent on its financial health to stakeholders and customers.

“It also provides a massive arsenal to accelerate our product roadmap and fuel our global expansion,” Peters added. “We are already in 36 countries and now we can accelerate even faster.”

To complement prepaid and debit card offerings, in the past year Marqeta added credit, which Peters touted as being the first company to offer all three.

She also believes this is just the start for what Marqeta can enable with innovative offerings, such as open APIs so that developers can build their own card-issuing products.

“Marqeta is just scratching the surface with cards,” Peters added. “Imagine being able to have your check deposited onto your card, buy now, pay later, peer-to-peer payments and even monetize your cryptocurrency. The possibilities are endless, and in our next chapter we are in a position to unlock all of that with our card types.”

Among the S-1 statement disclosures, Marqeta touts customers, such as Affirm, DoorDash, Instacart, Klarna and Square, which it reported was its largest customer, accounting for 70 percent of its net revenue in 2020.

It reported $350 million in fourth-quarter 2020 annualized net revenue, operates in 36 countries, and has issued more than 320 million debit, credit and prepaid cards to date.

The company reported $107.9 million in revenue for the first quarter ended March 30, 2021, more than double from the same three-month period in 2020. It narrowed its net loss to $12.8 million during the quarter from $14.5 million last year.

Prominent backers include 83North II, Coatue, ICONIQ Capital, Granite Ventures and Discover Financial Services, according to its filings. With the exception of Discover, all of the remaining entities led investments into the company, according to Crunchbase data.

Illustration: Li-Anne Dias

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

The company filed in May to go public via an initial public offering. Since its inception in 2010 by Jason Gardner, Marqeta has raised a total of $528 million in known venture capital, according to Crunchbase data. Its last disclosed round in May 2020 valued the company at $4.3 billion.

Source: https://news.crunchbase.com/news/card-issuer-marqeta-begins-trading/

card-issuer-marqeta-valued-at-more-than-$17b-in-nasdaq-debut

Continue Reading

Title

ZDNET5 hours ago

Apple releases emergency update for older iPhones and iPads

If you're running iOS 12, this is an update for you.

Crunchbase7 hours ago

Macrometa Locks Down $20M To Be The Amazon Prime Of Edge Computing

Palo Alto, California-based edge compute company Macrometa closed a $20 million Series A less than eight months after announcing its...

Cointelegraph10 hours ago

Crypto miners eye cheap power in Texas, but fears aired over impact on the grid

Can Texas meet the electricity demands of migrating Chinese Bitcoin miners?

Coinpedia21 hours ago

Bitcoin Cash Price Prediction, Will BCH Hit Incredible Surges At $1000?

According to Coinpedia's formulated Bitcoin Cash price prediction, the coin's price may strike a maximum of $1417.33 by the year...

Blockchain news1 day ago

US Space Force Makes its Foray into the NFT Metaverse

The United States Space Force is launching an NFT series named after Neil Armstrong.

Reuters1 day ago

EXCLUSIVE Galp to hold off on LNG investment until Mozambique ensures security

Portugal's Galp Energia (GALP.LS), a partner in an Exxon Mobil-led gas consortium in Mozambique, will not invest in onshore plants...

Techcrunch1 day ago

Golden Gate Ventures forecasts a record number of exits in Southeast Asia – TechCrunch

Despite the pandemic’s economic impact, Southeast Asia’s startup ecosystem has proven to be very resilient. In fact, a new report...

Bioengineer1 day ago

Physical activity reduces cardiovascular risk in rheumatic patients

People with diseases such as rheumatoid arthritis and lupus are more likely to have heart attacks, angina, and strokes. A

Bioengineer2 days ago

An atlas of HIV’s favorite targets in the blood of infected individuals

Gladstone researchers have identified the blood cells most likely to be targeted by HIV during a real-life infectionCredit: Photo: Gladstone

ZDNET2 days ago

SSD market to reach $51.5 billion in revenue by 2025: IDC

The IDC is predicting that SSD unit shipments will increase with a CAGR of 7.8% in coming years.

Review

    Select language

    Trending