An Epic fail For Great Learning
Also in today’s edition: Snack wrap; Independents' Day; Altman's ambition; Booster shot for Hotstar
Good morning! Gen Z is possibly the most influential generation of all time. Just ask the Government of India. The Economic Times reports that the Centre will soon announce a national creators’ award, targeted at influencers and content creators in their 20s. Proposed categories for the award include "green champions", "swachhta ambassadors", "agro creators", "tech creators" and one for spreading India's soft power and culture internationally. What next? A winners roundtable hosted by BeerBiceps? 🙃
🎧 The Indian government rolls out awards for influencers. Also in today’s edition: In other news, Pakistan's 2024 election results are a shocker. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Roshni Nair and Adarsh Singh also contributed to today’s edition.
The Market Signal*
Stocks & Economy: Relative calm pervaded globally as no new disruptions were reported except former US President Donald Trump heckling Nato, saying if members do not pay for security, they should not expect US help and protection. He might even egg on Russia to attack European allies, Trump reportedly suggested.
Oil prices cooled as a diplomatic solution to the Israel-Hamas conflict appeared on the horizon.
US stock indices had closed on a high last week with the S&P 500 ending above the 5,000 mark for the first time. Investors are now figuring out whether valuations are too high or there could still be money-making opportunities.
Most of Asia has slipped into holiday mode for the Lunar New Year. China is closed for the entire week. Japanese stocks advanced. The GIFT Nifty indicates a positive opening for Indian equities.
The roller coaster ride that’s the drama unfolding within BYJU’S is a never-ending one. Less than two months into 2024, what was once India’s most valued startup has weathered diluted control of its lone valuable asset, lender-induced insolvency proceedings, cutting its valuation ask by 99% for a rights issue, US arm Alpha filing for bankruptcy, and investors’ attempts to remove the founders and change company leadership. Jesus.
Now, The Economic Times reports that BYJU’S is struggling to find buyers for two assets it’s been trying to divest since September 2023, to repay a $1.2 billion loan. It’s received no binding offers for Great Learning and Epic, for which BYJU’S is seeking $600 million and $400 million, respectively.
Why?: The crux is that lenders aren’t keen on a cash-and-stock deal, while prospective buyers are wary about doling out all-cash when “there are cheaper alternatives”, to quote one of the sources.
(No) Food For Thought
We’ve told you for months now that while the rich are getting richer, ordinary Indians are struggling to make ends meet. Now, even FMCG conglomerates are complaining. Nestle India chief Suresh Narayanan said tepid festive sales hurt sales, as food inflation rises and people lose jobs. Nestle India’s revenue and profit both fell sequentially in the December 2023 quarter.
Short-snacked: Fellow FMCG multinational PepsiCo is also struggling in India. While its beverages business grew, the snacks vertical declined year-on-year.
Regulators can see the pinch. The RBI’s monetary policy committee kept key interest rates unchanged. RBI governor Shaktikanta Das said the MPC is carefully monitoring rising food inflation.
Taking a bite: Not everybody’s pessimistic. Reliance Industries’ FMCG arm acquired vintage candy brands Pan Pasand and Coffee Break for ₹27 crore (~$3.25 million). Last year, it relaunched the ‘80s classic soft drink Campa Cola.
A Memorable Innings
Imran Khan could not run, but his runners scampered enough to nearly score a century in singles.
Surprise: The jailed former prime minister’s Pakistan Tehreek-e-Insaf (PTI) party could not contest the February 8 elections as one unit because its election symbol—the cricket bat—was taken away. Yet, its candidates fought as independents and found enough popular support to collectively emerge as the largest bloc in the 265-member National Assembly.
The scenario: At last count, PTI-affiliated independents won 94 seats, with the Pakistan Muslim League-Nawaz (PML-N) led by Nawaz Sharif and the Pakistan Peoples Party led by Bilawal Bhutto Zardari coming second (75) and third (54), respectively. Another nine independents also won. About 47% among 129 million registered voters are estimated to have voted in the elections, held amid widespread allegations of engineering by the state apparatus backed by the powerful military. PTI has called for protests against rigging and begun efforts to form a government, while PML-N and PPP are exploring a coalition government.
Pakistan’s citizens have always known that Thomas Jefferson, one of the founding fathers of the United States of America, was wrong when he said: “The government you elect is the government you deserve”. They can never be sure if those who will eventually rule them are the ones they desired or deserved. One message, however, is loud and clear. People are fed up with poverty and political skullduggery. Whoever gets the wheel better fix the economy. Else the country risks civil strife.
Trillion Dollar Baby
Chatbots were the baby step. OpenAI is now developing
creepy complex AI agents, meaning the company needs more computing power going forward, especially for generative AI, meaning chief executive Sam Altman is courting investors across the world to dole out trillions—yes, trillions—of dollars. According to The Wall Street Journal, Altman’s quest to “reshape the global semiconductor industry” by building a foundry ecosystem comprising energy providers, chipmakers, investors, and OpenAI may require raising $5-7 trillion. That’s larger than the national debt of some major economies.
In other news: Google’s in-house, multimodal AI model Gemini (formerly Bard) will have its own Android and iOS apps. The most advanced version will be part of the $20-per-month Google One subscription bundle. Chief Sundar Pichai envisions Gemini as the new search. We’ll see how that goes.
Btw, Apple acquired up to 32 AI startups in 2023, the most of any Big Tech company.
Now Streaming: Profit & Loss
Hold those Hotstar obituaries: the streaming platform is showing signs of life. In the December 2023 quarter, Disney+ Hotstar added subscribers for the first time since losing the IPL, growing 2% sequentially to 38.3 million (pdf).
Average monthly revenue per paying subscriber also rose 83% to $1.28 with more ad revenue and costlier subscription plans. Meanwhile, Disney+ lost 1% of its US and Canadian subscribers. But, it’s promising double-digit operating margins for streaming within a year.
Heated gameplay: BigTech wants more sports. After Netflix’s landmark WWE deal, Elon Musk’s X (formerly Twitter) will air a new weekly WWE series for two years in a bid to push into video.
Amazon Prime Video will exclusively air a National Football League playoff game next season. Last week, the NFL was taken by surprise when Fox, ESPN, and Warner Bros. Discovery announced it will launch a joint live-sports streaming service.
Boost: Israel’s Tower Semiconductor could set up a fabrication plant in India worth $8 billion, according to a report in The Indian Express. The company’s proposal to the Indian government includes manufacturing 65-nanometer and 45-nanometer chips.
Shoring up: Under-fire fintech company Paytm has appointed former Sebi chairman M Damodaran to a three-member “group advisory committee“ as its chair. The move comes amid reports that the Indian government is inspecting Chinese investments in Paytm Payments Bank.
Free to go: Qatar has released the eight former Indian Navy personnel, who were arrested, and at one point sentenced to death, on charges of espionage.
Going south: Sri Lanka will likely host the Indian Institute of Technology’s (IIT) third offshore campus, in partnership with IIT Madras. A campus in Sri Lanka would be IIT Madras' second, after Zanzibar in Tanzania.
Moving on: Elon Musk will shift his brain implant venture Neuralink’s headquarters from Delaware to Nevada. The move comes a week after a Delaware judge voided Musk’s record Tesla pay package.
Setting up base: Billionaire Sajjan Jindal-led JSW Group, which recently bought a 35% stake in Chinese SAIC-owned MG Motor India, will spend ₹40,000 crore (~$4.82 billion) to set up electric vehicle and battery manufacturing units in Odisha.
BFD: In yet another mega oil deal, Diamondback Energy is about to snap up Endeavor Energy Resources for $25 billion, almost as much as its own market cap of $27 billion.
THE DAILY DIGIT
The money Spotify paid the music industry in 2023. Since its founding, the music streaming giant has paid over $48 billion to the industry. The payouts are typically given from Spotify’s revenues from subscriptions and advertising. (Loud and Clear Report)
God is a woman: And that woman is Taylor Swift. We’re not kidding. The singer/songwriter is now the face of the feminist movement in China. The country has had more social controls for women ever since the rise of Xi Jinping as President. He’s urged women to cultivate a “culture” of childbirth and take on more domestic roles. Xi also removed all women from China’s Politburo and also quashed China’s #MeToo movement. It’s in this environment that Swift’s concert film, The Eras Tour, has been released. The film is a smash hit, with women lining up to learn how to shake things off from the OG Anti-Hero.
Collab: A rag-tag team of three college students has done the impossible. The trio unveiled the 2,000-year-old Herculaneum papyri through ‘virtual unwrapping’, a technique that involves a heavy use of machine learning and AI. The students were winners of the Vesuvius Challenge, started by Nat Friedman, former chief executive of GitHub, with a cash prize of $1 million. Found in the ruins of Pompeii, the scrolls are covered under a thick layer of volcanic ash and contain essays on how to lead a happy life. Don't know about the papyri, but the students definitely must be happy.
Age-old dilemma: Who should foot the bill on a date? Man or woman? Is it a gendered construct? These questions have long puzzled the most articulate among us but there’s no universal answer. Now, the buck has been passed to Gen Z and they’re as clueless about this as the generations before them. For most heterosexual couples, the norm remains. Reasons like lower wages for women stipulate the need to stick to the norm. For queer couples, it depends on the dynamics of the relationship. But many researchers believe that while this tradition is simply understood as ‘chivalry’, it can slowly morph into visceral gendered beliefs. Yikes!