July 10, 2020
what we are watching...
empowering you with insights and information from the edge of today’s headlines
Business
Would you invest in a company with no business plan or stated purpose and whose only motivation for existence is to invest in (or merge with) an unidentified company at a future date? If you said yes, you are not alone. (If you said, no, we totally understand where you are coming from.)
This is essentially the description of a Blank Check Company or special purpose acquisition company (SPAC), and so far this year, 39 SPACs have raised over $12B in IPOs (vs $13.6B in all of 2019). SPACs raise funds through IPOs, and create a public shell company that will then look for a start-up or other private company to take public.
Some companies that have gone public through SPAC acquisition in the past include DraftKings and Virgin Galactic. (Mark Wahlberg’s F45 fitness company is in talks to go public through a blank check, although we’d like to see the six-pack first.)
Bill Ackman, the billionaire hedge fund investor, launched a SPAC with the intention of raising $4B for a “mature unicorn.” Ackman has stated that the pandemic and resulting economic disruption should result in investment opportunities for his blank check company.
On the flip side, however, many so-called unicorns have been taking advantage of the markets and filing their own IPOs. While small businesses and industries like aviation and food services are in need of government assistance, several industries have bloomed in the pandemic. Highly anticipated IPOs include Robinhood, Coinbase, Airbnb and Doordash. Lemonade (an insurance disruptor) and Vroom (e-commerce for cars) went public and saw their stock prices almost double after trading began.
Some IPOs, while highly anticipated, may have some problems at least in terms of public relations. Palantir, one of Silicon Valley’s oldest tech firms, filed to go public. Palantir is a data processing firm which values privacy, as it often works with defense contractors and other government agencies like ICE. Palantir will have to weigh the transparency of a being a public company vs its $20B valuation (the desire of its founders to exit at least financially after 18 years) and its often controversial clients.
Ant Financial, the fintech arm of Alibaba, is rumored to be planning an IPO at a valuation around $200B. However, the company plans to use the Hong Kong markets to go public. Ant is a Chinese company, but we’d expect some investors may have concerns over the Hong Kong financial markets in light of the new national security laws. Getting a taste of the tech world’s largest listing and most valuable unicorn may outweigh international tensions.
US Politics
Yesterday the Supreme Court ruled that about half of Oklahoma is Native American land. This ruling essentially held the US Government to its own promises when it granted the Creek Nation the land in perpetuity through a treaty following the Trail of Tears.
The Supreme Court case stemmed from a murder trial and whether the federal government or state authorities had any jurisdiction. Several other lawsuits (and executive orders) have been chipping away at the rights of tribal nations as the US government attempts to use their land for development, mining, fracking or oil exploration.
The main issue behind some of these cases is whether Native Americans are given separate protections as citizens of Native Tribes or due to their race. If the protections are due to race, that violates US law. But if the protections are due to their special status as Tribal Nations, then the US government has some explaining to do regarding its promise of protected reservations.
For a detailed primer behind this case and other Native American stories, have a listen to This Land.
Go Deeper:
Washington Post on Supreme Court Decision
International
Israel: July 1st was supposed to be the day when Israel began annexing parts of the West Bank. However, the process appears to be stalled. Apparently, internationally, only the Trump administration was in favor of this plan, and its public support has been stalling. (The White House’s Middle East Peace Plan included annexation if the Israeli government would coordinate with the Palestinians.) Israel’s Prime Minister, Netanyahu, has had a difficult time internally as well — he’s facing corruption charges and was forced through several elections to create a coalition government. Externally, the governments of France, the UK and several Arab nations have rejected the annexation. Boris Johnson even penned an op-ed warning against the move. All eyes are on Netanyahu, and when or if annexation will begin. Then we will see how other nations respond whether with more words or sanctions.
START Treaty: The only remaining nuclear treaty between the US and Russia is set to expire next year, and odds of an extension are not looking promising. The US wants China to join in on the talks, but elevating China to a “nuclear superpower” seems counterintuitive to us. The US and Russia have around 5,000 warheads each, while China has about 300. China wants the US to drop its arsenal to match their own in order to enter into the talks. Unfortunately, the US has already walked out on several long-standing arms control treaties with Russia over transparency concerns. We are of the opinion that we’d rather have a seat at the table and some transparency rather than zero accountability. The current treaty expires in February 2021.
UK Back-to-Work: The UK has been putting its money where its mouth is when it comes to pandemic support. Last week the UK announced funding for the arts, and this week it unveiled a plan to give discounts to citizens who are eating out: $625M to “eat out to help out.” The plan also includes bonuses for rehiring workers, a temporary reduction in sales tax and a property tax holiday. Bring on the fish ‘n chips! (Unfortunately, the discount doesn’t apply to alcohol, so the Guinness is on us.)
Media
While TikTok attempts to distance itself from its Chinese parent company and avoid being banned in the US, many of the app’s most famous creators are shopping around for their own reality shows. Haven’t heard of the Sway House or the Hype House? (Ask your children.) These collectives, made up of teenage influencers, made their mark by creating viral dance videos and have been melting down due to the upcoming TikTokalypse. We suspect these shows will be a combination of Fear Factor, Big Brother and So You Think You Can Dance, but we’re not sure if creators who are used to a 1 minute medium will compel us to watch an hour on tv.
What we are watching: Remember Quibi? Probably not. The mobile video platform was started by Jeffrey Katzenberg and Meg Whitman earlier this year and promised to reinvent our viewing habits by serving us content in small, digestible chapters. Quibi should have exploded during the pandemic as most of us have reached the end of Netflix. And yet, the service has had difficulty attracting paid users — only 72,000 of its 1M free users actually signed up. Why pay for short bites when you can watch TikTok for free (at least for the time being)?
We can’t wait: Amazon has secured the rights to produce a project based on the New York Times’ The Jungle Prince of Dehli. The story details the lives of an eccentric family who claims to be of royal descent and lived, isolated in a remote jungle mansion outside of New Dehli (although at first they took over a VIP waiting room at a train station). To get acquainted with the story, we recommend the Podcast or the NY Times original reporting.
Space
If you happen to be awake in the pre-dawn hours, have a look into the night sky for a view of the recently discovered Comet Neowise. In the morning, try and find Venus (most likely the brightest star in the sky), and it should be to the left of it. Later in the week, it should be visible after sunset, but best to use to your binoculars. For help looking at the night sky, our favorite app is SkyView Lite — just point your phone’s camera up and a the app will identify constellations, planets and more.
— Lauren Eve Cantor
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