Weekly TLDR - Can the Market Spare a Nickel?
In this week’s TLDR, we talk about Ryan Cohen & Bed Bath and Beyond, Nickel's epic and historic short squeeze, Semiconductor “Hack and Act”, as well as the Ukrainian government's NFTs.
The TLDR
In this week’s TLDR, we talk about Ryan Cohen’s investment in Bed Bath and Beyond, Netflix and Amazon’s involvement in gaming, Semiconductor “Hack and Act”, as well as the Ukrainian’s government’s plan to sell NFTs to fund its defense against Russia.
Chart of the Week:
Source: Axios
Inflation is here, if it wasn’t already. Prices of key commodities like oil and gas, wheat, metals etc. are trending even higher due to the Russia-Ukraine conflict. These materials are often inputs into everything else you buy so expect costs to continue to increase, likely gobbling up much of the wage growth we’ve seen in the beginning of the year.
Well just as we finished this article a couple days ago, Nickel just experienced a massive and historic short squeeze, from under $20,000/ton to over $100,000/ton in a few days on the London Metal Exchange, from fears of a Nickel supply shortage given that Russia produces about 10% of the world’s Nickel. We live in fun times.
Stock Market TLDR
Ryan Cohen (GME) takes activist approach to Bed Bath and Beyond. Gamestop Chairman and Ex Chewy founder, Ryan Cohen is taking his activist activities to Bed Bath and Beyond with a 10% stake and an open letter for BBBY management to explore strategic options. BBBY has the classic profile of a heavily shorted retail stock so the WallStreet Bets crowd may be raring to get in. Time to put BBBY on your radar if we see additional rounds of stimulus checks or as tax refunds start trickling into retail investor’s accounts.
Amazon Launches Luna, A Cloud Gaming Platform. Cloud gaming has been wildly unsuccessful from the days of On.Live and Gaikai. Failure has been as recent as Google’s Stadia platform, which launched in 2019. Amazon quietly launched its cloud gaming platform, Luna, which shows no real innovation when compared to previous offerings. However, there is a major difference in price. Luna is free for Amazon Prime subscribers, all 157 million of them. Expect Amazon to be in it for the long haul and for the product performance as well as catalog to improve over time. Amazon Prime Video took years to get to where it is today and I expect a similar path for Luna.
Google in talks to acquire Mandiant. Google is reportedly in talks to acquire cybersecurity firm Mandiant for $4.5 billion. The stock increased 16% to $5.3 billion on that news. What gives? Well, Microsoft is also reported to be interested in MNDT and is bidding against Google, which may drive up the eventual price. By letting news leak, there is a chance a third party like Amazon or Oracle may submit an even higher bid. Cybersecurity is very in focus during the Ukraine-Russia conflict with hacking activity playing a key role in controlling news flow and impacting at-risk infrastructure.
Nvidia Source Code Hack. Hacking group Lapsus$ is holding Nvidia ransom and has released evidence of their access to Nvidia’s DLSS source code. Nvidia has admitted that a “cybersecurity event” had occurred but downplayed the severity. Of note is Lapsus$ is claiming that they have a hack that will remove the Lite Hash Rate limiter, a feature Nvidia put in place to discourage crypto miners. Funnily enough, I imagine removing this limiter would actually benefit Nvidia stock. If Nvidia source code is shared, I imagine that would mean hundreds of millions of R&D that would fall into competitor’s hands but no immediate impact to Nvidia’s business.
Biden praises Intel and pushes the CHIPS Act. During the State of the Union address, President Biden applauded Intel for its $20 billion investment in domestic semiconductor manufacturing and mentioned that the $52 billion CHIPS act subsidy would be key to unlock $100 billion in Intel spending. Spending $100 billion to get $52 billion would be a huge win for Intel and they are really playing up the patriotic angle. With only Samsung, TSMC, and Intel being leading edge semiconductor manufacturers, I imagine a lion's share of the $52 billion subsidy would go to Intel if passed.
Netflix is looking to invest more in gaming to extend IP value. Netflix announced its intent to purchase mobile game developer, Next Games, for $72 million. While many scratch their head at why Netflix is investing in mobile games, it's pretty clear to us that Netflix is trying to emulate Disney in extending the lifecycle and value of its popular IP. Instead of merchandise and theme parks, Netflix is looking into mobile games. Netflix needs to be able to monetize its IP better to compete against Disney, who is currently creating hit after hit from a seemingly never ending stockpile of Marvel IP. However, movie and TV show adapted mobile games are some of the worst out there in terms of gameplay so lets hope Netflix does something more innovative than low development cost, cookie cutter games that have middling ROI. That's not going to change the game against Disney.
Crypto TLDR
Ukrainian government to sell NFTs to fund war. Despite the NFT frenzy over the last year, this is one headline no one would’ve expected just a few months ago: “Ukraine conflict: Government to sell NFTs to fund war against Russia” from the BBC. The announcement was made by deputy prime minister Mykailo Fedorov, who had originally announced a crypto airdrop but canceled it in favor of the NFT plan. This announcement comes just as Ukraine raised more than £200m from the sale of war bonds as well as receiving millions of crypto donations from private citizens all over the world (including a $5.8 million DOT donation from Polkadot founder Gavin Wood). The World Bank and IMF are also working on a multi-billion dollar aid package for Ukraine.
Biden expected to sign an executive order on crypto this week. Several credible news outlets including Bloomberg and Reuters reported earlier this week that Pres. Joe Biden is preparing to sign an executive order on cryptocurrency policy this week. The highlight of the order is the appointment of an individual with regulatory authority to oversee the crypto market. The executive order will also outline the admin’s view of digital assets and direct further study of economic, regulatory, and national security issues. The FinanceTLDR take is that this is likely bullish. The executive order not only removes regulatory uncertainty from the crypto market but also further legitimizes crypto. However, we cannot ignore the chance that the executive order’s contents could be bearish (e.g. the appointment of a hawkish crypto regulator).
Private equity euphoria continues? Immutable raises $200 million. It seems like, despite the ugly markets, the private equity market is still willing to write huge checks for promising Web3 companies. Australian NFT trading platform Immutable recently completed a $200 million Series C funding round led by Singaporean state-owned investment firm Temasek. This latest round values the company at $2.5 billion. Immutable is developing Immutable X, a layer 2 blockchain on Ethereum for NFTs. The company has already built two games leveraging Immutable X (Gods Unchained and Guild of Guardians) and is no doubt attracting other companies to come onboard as well.
Shake Shack embraces crypto. Popular burger chain Shake Shack announced last week Thursday that it’s partnering with Cash App to offer cash-back rewards in the form of Bitcoin to customers. This is a temporary promotion that will last through mid-March, and customers who made qualifying orders will receive 15% of the cost of their order back in Bitcoin if they pay with Cash Card. Shake Shake is yet another mainstream corporate giant that has embraced crypto in a business plan.
Music meets crypto. Billboard + Universal Music Group + NFTs. Speaking of corporate crypto adoption, major music companies Billboard and Universal Music Group announced last week the launch of ChartStars, an NFT project that both companies collaborated on to create. ChartStars will be a collection of artist-focused digital artwork that commemorates achievements and milestones on the Billboard Charts. These collectibles will feature officially licensed art and creative including short visual clips from music videos, album photography and more. The first ChartStars products are expected to be available for purchase in May. ChartStars marks yet another giant corporate leap into Web3, a trend that as of yet, doesn’t seem to be slowing.