News:
UK lifts lockdown: Saturday marked our first day of open businesses across the country, and it will be interesting to see the effect over the next few weeks as the hospitality industry looks to recoup >6 months of losses. With TM Lewin, New Look and Cafe Rouge all having recently gone into administration, no doubt further casualties will come to light in the coming weeks.
Wigan Athletic Controversy: A number of sources this weekend corroborated to reveal a startling story surrounding the plight of English Championship football club Wigan Athletic. The club, who were bought in 2018 by Hong Kong based International Entertainment Corporation, again changed hands to a Cayman Islands shell company with whom they took out a huge loan with eye watering interest. Now unable to make the repayments, the club is going into administration. Furthermore, the EFL points deduction that situation would evoke sends Wigan neatly into the league’s drop zone, which insiders suspect would win a many-million pound betting win for IEC’s poker player owner. One big old mess. Link
Uber consolidates food delivery industry: In a move that will no doubt come under intense scrutiny from the market competition authorities, Uber was reported this week to be in talks to buy Postmates, the popular US food delivery platform. However, the company may also potentially be filing for IPO, a possibility which may make more sense given the predicted reticence of the US authorities to allow such flagrant monopolisation of an industry made up of only a handful of players. Uber will be desperate to push the deal through following their recent failed acquisition of GrubHub, which may be more likely before the US election than under a potential Trump successor. Link
SoftBank suing Wirecard: The behemoth investment firm’s curse continued this month with the downfall of payments giant Wirecard, an investee company whose owners supposedly made off with the $1.6bn that disappeared from the company’s balance sheet last year. The COO even stopped responding to colleagues when the company ran into trouble. However, this hit is one that the firm isn’t taking lying down, announcing plans to sue EY over negligence over the disappearance of the cash. Which begs the question: how poor must their system have been to lose that sort of figure from under their own noses. Link
Short Read:
A virtual TdF: For the first time ever, the Tour de France is being raced over 3 weekends on home virtual cycling platform Zwift. The first 2 stages, which were held this weekend, took place on Zwift’s fictional island of Watopia, which has been modified to vaguely represent the French town of Nice, the location for this year’s Grand Depart. After the gaping hole left in this year’s sporting calendar after the race’s postponement, the virtual counterpart will go some way to quenching sports fans’ thirst for live competition. Link
Long Read:
How a Great Power Falls Apart: To know how great powers end, one could do worse than study the last one that actually did. “When a terminal crisis comes, it is likely to be unexpected, confusing, and catastrophic, with the causes so seemingly trivial, the consequences so easily reparable if political leaders would only do the right thing, that no one can quite believe it has come to this.” by Charles King. Link
Interesting Things:
Elon’s Short Shorts: Tesla swept into the S&P 500 this week after announcing 4 straight quarters of profit, giving Elon cause to take to Twitter to taunt the SEC, quoting the acronym as being short for S___ Elon’s C___. No creativity required to fill in those blanks. Not quite finished, he then moved the target onto the company’s short sellers, releasing a pair of red satin Tesla short shorts which retailed for $69.420 and promptly crashed the site. It’s the latest in a string of jokes he’s made revolving around sending short shorts to investors who bet against Tesla’s shares, most notably fund manager David Einhorn. Link
The best VC bets of all time: 3.5 years ago, Sequoia invested $100m into Zoom at a $1bn valuation. If they still hold all of that stake, they will have returned 73x in 3.5 years. Arguably the best VC bet of all time? Take a look at some others. Link
Lululemon acquires Mirror: The Canadian athleisure giant this week closed on a $500m acquisition of home fitness coaching platform Mirror. It marks a diversification from apparel to a more holistic consumer experience, and hallmarks what has been a great last few quarters for the company despite the D2C pandemic concerns. Link
Valuation Bubble: In the latest in a long string of inflated valuations that show no sign of abating, Nikola this week overtook Ford’s market cap. The electric automaker, which hasn’t shipped a single car or made a single cent of revenue, is trading at 136x predicted 2024 EBITDA multiples. I mean Tesla’s valuation is silly, but this is just plain ridiculous. Although it raises a good point: as soon as you announce any revenue, you’re capping your valuation. So rack up some losses instead.