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- Market Munch 🍎 | 11 July 2023
Market Munch 🍎 | 11 July 2023
US banks saw defaults spike, Threads hit the 100 million mark, and Black Sesame gears up to go public. 🔥
Aryaansh Rathore
July 11, 2023
Happy morning, Munchers! 🙏
As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 49 seconds.
Yesterday, US banks saw their loan losses spike, Threads became the most successful app in history, and a Chinese Nvidia rival caught on steam. 🔥
Let’s dive in.
What’s hot, what’s not?
Story Roundup
Heads up folks - the big boys of the US banking world are bracing for a little bit of turbulence.
This week, they’re expected to reveal their largest loan losses to date since COVID.
Banks have had a little bit of a boost from high rates, but after 3 years of relatively low defaults, they’re starting to feel the same pinch that their borrowers are having.
The big 6 (JPM, BoA, Citi, GS, WF, and MS) are gonna have to write off $5 billion in loan value and are gonna set aside another $7.6bn to cover loans that might go bad.
The biggest headache for these bank are credit cards - JP Morgan alone is getting ready to charge-off $1.1 billion this quarter in credit card debt (insane compared to just $600mn this time last year).
Squeeze. 😬
Hold onto your hats…
Mark Zuck’s Twitter rival is breaking records as an infant app - they’re officially the fastest-ever social media platform to scale this quick.
Threads is sitting at ~105 million users, all in 5 short days.
This growth is even more impressive when you consider that the app hasn’t even launched yet in the EU due to privacy concerns.
No email, no date of birth, no name, no age - just two buttons to sign up. You can log onto Threads faster than you can say Zuckerberg.
The app’s growth has been wonderful, but it’s still missing a few important features like -
- post search
- direct messages
- hashtags
- a “following” feed
Nice way to make everyone forget that you lost $12 billion on the metaverse last year. 😏
As the AI boom slowly devours the deal-flow of every VC, it’s interesting to keep an eye on the companies that are winning.
Today’s hero is a company called Black Sesame.
They make chips for autonomous cars - a niche which forces them to have excellent computing capabilities (almost real-time) with a slim form-factor all while minimizing energy use.
Their revenue tripled between 2020 and 2022 - going from $7.5mn to $23mn.
But at the same time, their losses skyrocketed from $35 to $140 million.
The difficult part of cracking any tech-heavy business is how deep you have to go into R&D.
In Black Sesame’s case, the reason they’re able to bring such market-leading tech to the public is because of their massive spending.
But this massive spending makes their investors angry.
It’s all a balancing act… 🤔
They did it in America - and they’ve done it again.
Foxconn just walked out of a $20 billion JV with Indian mining magnate Vedanta.
In 2016, they announced a massive investment into a liquid screen display producer in Wisconsin.
But they never broke ground on that project.
And this time, they’ve left behind a long list of large semiconductor manufacturing plants in Gujarat.
Vedanta has acted quickly - they still retain the license to product 28 million semiconductors and will probably have to acquire the tech from France/Germany.
Guess all’s fair in business. 🙄
The crypto bros are out, and the AI bros are in.
Both are gonna give a massive boost to Taiwan Semiconductor’s bottom line.
Q2 revenue hit a total of $15.3 billion - surpassing both their internal expectations AND those of Wall Street.
TSMC is the main contract manufacturer of Nvidia’s AI chips - which are the ones that power ChatGPT.
Sign of the times.
Hope you enjoyed this issue of the Market Munch. If you've got any feedback - good or bad (😏) you can hit reply to this email. Thanks a ton for reading!
Cheers, and have a lovely day. 🙏
Aryaansh