The Week in Digital Wealth (11/30/21)

598

By: Gerelyn Terzo 

Jack Dorsey is shaking things up at Twitter. Ready or not the holiday season has kicked off, and the threat of yet another COVID variant coupled with the supply chain disaster has American shoppers shifting gears. BNPL firms are enjoying the spotlight, and Mark Cuban shares how he sees crypto maturing.   

Executive Shakeup  

Tech entrepreneur Jack Dorsey is reportedly stepping down from his post as CEO of Twitter. Shares of Twitter rose by a double-digit percentage in response. Dorsey, who has been dedicating more of his time to work on Bitcoin, is also at the helm of payments startup Square, but there is no sign that he is leaving that role.

Black Friday Trends 

Black Friday trends are shifting. This year, brick-and-mortar store foot traffic fell 28% vs. 2019 pre-pandemic Black Friday results, according to early data from Sensormatic Solutions. It appears that consumers started their holiday shopping earlier than usual this year in an attempt to thwart the one-two punch of COVID variants and supply chain issues. Compared with 2020 levels, retail store traffic rose by more than 47%. E-commerce businesses generated just shy of $9 billion in sales on Black Friday this year after attaining the $9 billion level in 2020, according to Adobe Analytics data. Now it is up to Cyber Monday to take the ball and run with it. 

Bitcoin Bytes 

ETF firm Invesco has set its sights on launching a spot market bitcoin exchange-traded product (ETP) in Europe. Invesco plans to launch the Invesco Physical Bitcoin ETP (BTIC), which is “100% backed by holdings in the underlying digital assets,” on the Deutsche Boerse. As a result, investors get direct exposure to bitcoin’s price performance, minus a 0.99% yearly fixed fee. According to reports, BTIC is designed for institutional investors and tracks the CoinShares Bitcoin Hourly Reference Rate index. 

Speaking of bitcoin, MicroStrategy chief Michael Saylor has gobbled up another 7,000-plus bitcoins for $414 million, bringing the total to approximately 121,000 bitcoins on the enterprise software company’s balance sheet. 

BNPL Roundup  

Buy now pay later (BNPL) startup Klarna reported its results year-to-date through September. The company experienced a pre-tax loss of $344 million in the nine-month stretch, widening its loss fourfold vs. year-ago results. Klarna has faced significantly higher costs as demand for BNPL services among consumers has soared. Much of the losses stemmed from administrative expenses, which nearly doubled, while credit losses also grew. The company has been expanding at a rapid rate, having gained a presence in close to a dozen new markets since early 2020. Klarna boasts a valuation of $46 billion and has captured 18% of the US BNPL market pie, according to YipitData cited by CNBC.  

BNPL rival Afterpay is shaking things up and making a push into the subscription business. The San Francisco-based company will offer its U.S. customers the opportunity to pay for subscription services, which is a $1.5 trillion market globally, in installments. Afterpay says it could potentially spread consumer payments for “gym memberships, entertainment subscriptions, online services, and more.” The following merchants are the first ones to dip their toes into the BNPL subscription waters: 

  • IPSY 
  • BoxyCharm 
  • Savage X Fenty 
  • Fabletics 

Payments Push  

Visa has a bone to pick with India. The card giant has gone to the U.S. government to air its grievances about the way that India promotes payment service RuPay, allegedly giving the local rival an edge in India’s competitive landscape, according to Reuters. Visa is seeking a “level playing field” after RuPay has been basically endorsed by the likes of Prime Minister Narendra Modi. Visa is not alone, as Mastercard has had similar gripes about the Indian government suggesting that local players were national services.  

In keeping with the India theme, we thought we would mention that the country’s fintech startup Slice has reached unicorn status after a $220 million funding round that was led by Tiger Global. 

Tech billionaire Mark Cuban is chiming in on how the VC industry sees crypto, defending Dapps, smart contracts, and DeFi. In a Twitter thread, Cuban recalls, “It wasn’t TCP/IP that drove the Net, it was the applications on top of it.” He predicts a similar theme for the blockchain, saying, “It won’t be blockchain 

that drives usage, it will be the Dapps written on top of it.” Cuban goes on to say that stablecoins will be regulated and offers use cases for Dapps, DeFi and NFTs to the critics. 

Source: Twitter 

Capital Markets 

Fintech stocks have been volatile, and payments company Stripe has no plans to enter the publicly traded fray anytime soon. Stripe co-founder John Collison told CNBC that the company is content being a privately held entity and staying that way for the time being. He believes it is early innings for the fintech company, which has its sights set on expanding in the Middle East. Collison’s remarks rebuff earlier reports suggesting Stripe, which is valued at $95 billion, was entertaining investment bankers for a possible IPO in 2022. 

One fintech related stock that has benefited from the public markets is Lending Club. Shares of the peer-to-peer platform have skyrocketed close to 400% over the past 12 month-period as investors have rewarded Lending Club for beating consensus estimates for several consecutive quarters. Lending Club chief executive Scott Sanborn believes it’s still early days for the company’s turnaround story, according to CNBC. 

Banking  

JPMorgan has already tipped its hand to the bank’s strategy to combat rising competition from fintech companies, having gone on an M&A spree. Now the bank is eyeing a potential investment in European cloud-based startup Viva Wallet, according to a report on Bloomberg. Viva is behind a POS app and a smart checkout solution for merchants. JPMorgan CEO Jamie Dimon has previously said that fintech poses “enormous competitive threats” to financial institutions.  

JPMorgan has also participated in a funding round for UK-based cloud-fueled fintech company Thought Machine, which amassed $200 million in the capital raise. Nyca Partners led the round, which places a $1 billion valuation on Thought Machine. Standard Chartered and ING also participated. Thought Machine is behind technology that helps traditional banks move away from archaic tech to the cloud.