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Hey Snackers,
So much for that ocean view: Billionaire Charlie Munger is facing criticism for bankrolling the design of a $1.5B windowless dorm building at UC Santa Barbara. Wonder why.
Stocks fell today as investors digested the news that consumer prices rose 6.2% in October from last year — the biggest jump in over 30 years.
Corporate icon GE breaks into three, underscoring the decline of OG conglomerates
GE becomes G3… General Electric is the 129-year-old electricity giant founded by Thomas Edison, who invented the commercial light bulb. Over the years GE expanded to produce everything from microwaves to financial products, becoming the world’s most valuable company by 2000. But GE’s biz has declined since then. Now it’s worth less than a quarter of what it was 20 years ago. The plan: Yesterday GE said it would split into three smaller public companies to allow more focused growth. Shares jumped 5% on the news.
- Aviation: GE’s aviation biz, which makes jet engines for Boeing and brought in $22B in sales last year, will keep the GE name.
- Healthcare: GE Healthcare, which makes MRI and other medical machines, and earned $17B last year, will spin off as a new biz 2023.
- Energy: GE’s power, renewables, and digital divisions — which contributed $33B in revenue last year — will spin off in 2024.
The light bulbs went out… but GE isn’t done yet. It pioneered the conglomerate model: It developed disciplined management practices in one industry — manufacturing — and applied them to others: insurance, finance, TV. But as industries grew more complex, they required more specialized leadership, and the old-school conglomerate model fell apart. So GE faced pressure from investors to “deconglomeratize:”
- Selloff: In the past six years, GE sold off its finance, appliance, lighting, and train businesses, which has put it on track to pay off $75B in debt by year’s end.
- Fresh start: GE’s new companies will have industry-specific boards and execs, which could attract investors eager to invest in big wind turbines but not MRI machines.
There’s a new kind of conglomerate in town… and it’s techy. Today tech conglomerates have taken the place of industrial conglomerates. Amazon is no longer just an ecomm platform — it’s a cloud computing, streaming, and ad powerhouse too. Microsoft has its OG business software, but also big gaming, cloud, and networking businesses. While tech giants expand into new industries, aging industrial behemoths GE, Siemens, and DuPont are focusing on fewer industries.
Digital payment giant Paytm could be the largest IPO in India’s tech boom
“Paytm me for that”... India's largest payments service, Paytm, went public Monday in India through its parent company, One97 Communications. The Venmo-like app lets you send money online, buy coffee via a QR code, and even purchase a new car. It has a whopping 330M customers (the size of the US), and represents 40% of India’s payment market.
- Big money: Paytm aims to raise $2.5B in an offering that ends today. The IPO’s expected to give Paytm a $20B valuation, making it one of India’s most valuable tech companies.
- Big backers: Massive Chinese fintech Ant Group, Japanese investment firm SoftBank, and Warren Buffett’s Berkshire Hathaway together own a third of Paytm.
E-cash is king… In 2016, India banned the most widely circulated currency notes to combat money laundering, wiping out 86% of the country’s cash overnight. That crushed businesses and family savings, but accelerated India’s move toward a cashless economy. Since then, mobile payments in India have skyrocketed, accounting for 26B transactions last year. Fintechs like Paytm benefited from the boom, which accelerated during the pandemic. That’s partly why:
India’s e-opportunity is huge… and growing. India is the second most populous country after China, but roughly half of its 1.3B population have yet to get online. While China’s mobile market is saturated and regulators are cracking down on tech, India’s e-market is growing fast: India’s IPOs have raised a record $9.7B this year. And while the web economy accounts for only a tenth of its GDP, the internet ecosystem could add up to $400B in market-cap creation for India in five years.
What else we’re Snackin’
- Boosted: Pfizer asked the FDA to allow all adults in the US, not just high-risk groups, to get Covid booster shots.
- Global: DoorDash shares spiked as much as 24% after the delivery giant announced plans to buy international delivery platform Wolt for $8B.
- Retarget: Meta (aka Facebook) said it would stop allowing advertisers to target users based on data about their race and ethnicity, political affiliation, sexual orientation, and thousands of other topics.
- Ship: Biden outlined multibillion-dollar plans to upgrade US ports as part of his $1T infrastructure bill, in a bid to address brutal supply-chain backlogs.
- Secured: Home-security juggernaut ADT reportedly plans to buy solar-panel company Sunpro Solar for $825M to offer rooftop energy to residential and commercial customers.
- Souper: Panera will return to public markets for the first time since 2017 by merging with Shake Shack founder Danny Meyer’s SPAC, during a busy restaurant IPO season.
Wednesday
- October Consumer Price Index drops
- Earnings expected from: Disney, GoodRx, Monday.com, Bumble, Duolingo, Beyond Meat, Remitly, Wendy's, and 23andMe
Authors of this Snacks own shares of: Disney, Amazon, Microsoft, Walmart, Tesla, Google, Twitter, Berkshire Hathaway, Ford, and Pfizer
ID: 1915426