US tech stocks currently look like snapping a three-session losing streak, but shares in Japan’s SoftBank, which has been implicated in stoking this year’s big rally, fell as much as 7 per cent in Tokyo today.
Its shareholders are now calling on the tech conglomerate to reveal who is running the asset management unit that it first disclosed the existence of last month. The in-house hedge fund is at the centre of its large US equity options trades in tech stocks, where bets on further price gains in some big names have meant taking on an options exposure with a notional value of $30bn.
Rajeev Misra, who heads SoftBank’s $100bn Vision Fund, and Akshay Naheta, a former Deutsche Bank trader and a close ally of Mr Misra, are closely involved in the huge derivatives bets, but founder Masayoshi Son has driven the decisions behind the trades, people with direct knowledge of the matter have told the Financial Times.
“The idea that Son is taking a kind of personal interest in the micromanagement of a hedge fund is a bit crazy when he’s also the head of a huge company,” said a person briefed on the views of one institutional shareholder.
The FT View is that the recent drop in the valuations of tech stocks may have been enough to take some of the heat out of the market for now “but a concern must be that SoftBank could be the snowflake” that starts a market avalanche.
Speaking of snowflakes, Berkshire Hathaway is set to plough more than $570m into the cloud database company Snowflake, marking a rare venture into the enterprise technology market by Warren Buffett. The news came as Snowflake published an indicated price range for its upcoming initial public offering that valued the company at up to $23.7bn. Lex says the top end would be almost double its notional worth earlier this year and larger than both Palantir and Airbnb’s last private valuations. Clearly cloud companies are among the high floaters resistant to any falling back to earth by tech in the current Covid climate.
The Internet of (Five) Things
1. Kakao, Guild IPOs, Apple fires back at Fortnite maker
In gaming IPO news, the $323m float of Kakao’s gaming unit in South Korea has smashed records for demand, attracting orders of about 1,500 times the stock available. In London, former footballer David Beckham’s esports team Guild Esports is planning to list to fund its expansion. Lex warns investors looking for returns should treat its float as a spectator sport. Meanwhile, Apple has countersued Epic Games and accused it of masquerading as a “modern corporate Robin Hood”, marking a new escalation in its legal dispute over the Fortnite game and its App Store.
2. Netflix’s Bajaria is the new Holland
Netflix founder Reed Hastings is living up to the “Keeper Test” management philosophy in his new book by showing the door to Cindy Holland, a near 20-year veteran who was instrumental in developing and greenlighting original shows such as House of Cards, Orange is the New Black and Stranger Things. Bela Bajaria is the new head of global television. We’ve a look at how Netflix, Disney and Amazon are muscling their way into the Indian market and its effect on Bollywood.
3. Slack revenue growth to slack off
The workplace messaging app Slack is benefiting from the remote working trend, but it is no Zoom. Last night, it forecast a sharp revenue-growth slowdown in the current quarter from the loss of customers due to the economic downturn. Sales of $222m to $225m are expected, which represent growth of 32-33 per cent compared to the 49 per cent of the last quarter.
4. China looks to make chipmaker tools
China lacks its own suppliers of the equipment needed to make semiconductors, but that could be about to change, according to this story in the Nikkei Asian Review reported in this week’s #techAsia newsletter. Also, Huawei’s procurement from Japanese suppliers grew by more than 50 per cent last year as the US imposed trade restrictions.
5. Robot writer’s variety of opinions
OpenAI’s language generator GPT-3 was asked by The Guardian to write an essay to convince us that robots come in peace . . . and that AI can make a decent stab at what students and opinion writers do every day. It produced eight essays with different points of view and here’s a subedited amalgam.
Tech tools — Water cooler services
The FT’s CEO and editor held a Google Meet town hall today. They were in the office, we were still mostly at home. That’s not ideal in terms of newsrooms and how we spark ideas off one another in chance encounters. The Wall Street Journal has looked at services that can mimic the water cooler experience in this time of working from home.
Examples: the Donut service uses an algorithm to introduce employees to people on other teams or in other departments every few weeks. An app called Hallway uses Slack to foster impromptu interactions, by posting a video-chat link every couple of hours. Not for everyone, but Sidekick is a tablet-based video portal that is always on. Co-workers tap on one another’s video feeds, unmute themselves, and then just start chatting.
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