The Daily Ten – Robinhood Raises $1 Billion in Dash for Cash After Trader Revolt, WeWork to go public via SPAC, First private space screw…
The Daily Ten
1. Robinhood Raises $1 Billion in Dash for Cash After Trader Revolt | Bloomberg
New York markets had just fired up, and the investing world was tuning in for Thursday’s episode of the continuing drama: Legions of Robinhood Markets investors versus hedge-fund Goliaths.
But within minutes, a shock wave invisible to the outside world rattled the mechanics of Wall Street — sending Robinhood rushing for more than $1 billion of additional cash. The stock market’s central clearing hub had demanded large sums of collateral from brokerages including Robinhood that for weeks had facilitated spectacular jumps in shares such as GameStop Corp.
The Silicon Valley venture with the wildly popular no-fee trading app came to a crossroads. It reined in the risk to itself by banning certain trades and unwinding client bets — igniting an outcry from customers and even U.S. political leaders. By that night, word was emerging that Robinhood had raised more than $1 billion from existing investors and drawn hundreds of millions more from bank credit lines to weather the storm.
“Look, it is not negotiable for us to comply with our financial requirements and our clearinghouse deposits,” Robinhood Chief Executive Officer Vlad Tenev said in defending his firm’s decisions on Thursday in a Bloomberg Television interview. “We have to do that.”
2. Robinhood, Other Brokerages Restrict Trading on GameStop, AMC | WSJ
Move comes amid extreme volatility this week as once-unpopular stocks have soared
Popular online brokerages restricted trading in highflying stocks including GameStop Corp. GME -44.29% and AMC Entertainment Holdings Inc., AMC -56.63% sapping some of the euphoria around shares of companies that individual investors have sent skyrocketing in recent days.
The restrictions, from brokerages including Robinhood Markets Inc., Webull Financial LLC, E*Trade Financial Corp. and Interactive Brokers Group Inc., left traders hoping to capitalize on this week’s eye-popping gains with only two options: hold or sell. They also fueled a firestorm of criticism among users and even some members of Congress who have called for hearings on the matter.
The rally in the shares fizzled Thursday: GameStop dropped 44%, and AMC lost 57%. Other popular stocks among individual investors including BlackBerry Ltd. , Bed Bath & Beyond Inc. and headphone-maker Koss Corp. lost 28% or more. All five are still up 89% or more year-to-date. Thursday’s losses came amid an otherwise upbeat day for markets, with the S&P 500 rising 1%.
3. Reddit frenzy pumps up Dogecoin, a cryptocurrency started as a joke, by over 800% | CNBC
Move comes amid extreme volatility this week as once-unpopular stocks have soared
Popular online brokerages restricted trading in highflying stocks including GameStop Corp. GME -44.29% and AMC Entertainment Holdings Inc., AMC -56.63% sapping some of the euphoria around shares of companies that individual investors have sent skyrocketing in recent days.
The restrictions, from brokerages including Robinhood Markets Inc., Webull Financial LLC, E*Trade Financial Corp. and Interactive Brokers Group Inc., left traders hoping to capitalize on this week’s eye-popping gains with only two options: hold or sell. They also fueled a firestorm of criticism among users and even some members of Congress who have called for hearings on the matter.
The rally in the shares fizzled Thursday: GameStop dropped 44%, and AMC lost 57%. Other popular stocks among individual investors including BlackBerry Ltd. , Bed Bath & Beyond Inc. and headphone-maker Koss Corp. lost 28% or more. All five are still up 89% or more year-to-date. Thursday’s losses came amid an otherwise upbeat day for markets, with the S&P 500 rising 1%.
4. WeWork in Talks to Combine With SPAC or Raise Money Privately | WSJ
A deal could value the company at some $10 billion
WeWork is in talks to combine with a special-purpose acquisition company, according to people familiar with the matter, a deal that would usher the office-leasing company into the public markets more than a year after its high-profile failure to stage a traditional initial public offering.
WeWork’s board and its Chief Executive Sandeep Mathrani have been weighing offers from a SPAC affiliated with Bow Capital Management LLC and at least one other unidentified acquisition vehicle for several weeks, the people said. A deal could value WeWork at some $10 billion, some of the people said. It couldn’t be learned whether that includes debt.
The company also has received separate offers for a new private investment round, and it may well take that route instead, one of the people said. If it were to do so, WeWork would stay private and use the money to support its growth initiatives.
The talks are complicated and there is no guarantee WeWork will end up striking any dealsoon, the people cautioned.
5. Reddit Ignites Mall Stock and Fund Cashes Out $500 Million | Bloomberg
The largest shareholder in high-end mall owner Macerich Co. sold its entire holding for nearly $500 million when the stock soared after being touted on Reddit.
Ontario Teachers’ Pension Plan sold 24.56 million shares on Wednesday at an average price of $20.25 a share, according to details in an amended 13D. The Canadian fund had owned 16.4% of the company, according to data complied by Bloomberg.
Macerich, a real estate investment trust based in Santa Monica, California, has been struggling for years and was battered by a pandemic that forced malls to shut down and pushed consumers toward e-commerce. The stock lost 84% of its value over a three-year period ending Dec. 31, 2020.
Then comments began appearing on Reddit boards including r/wallstreetbets, the subreddit now famous for helping to fuel an astonishing rise in GameStop Corp., AMC Entertainment Holdings Inc. and other heavily-shorted or out-of-favor stocks.
6. SoftBank earmarks $100 million for Miami-based startups | TechCrunch
Miami, an emerging startup hub, has a new check-writer in town: SoftBank. The Japanese multinational conglomerate announced plans today to invest $100 million, drawn from across its funds, into Miami-based startups. Notably, SoftBank’s $5 billion Latin America fund is headquartered in Miami, as well.
The initiative is led by SoftBank CEO Marcelo Claure. The fund will back companies who are in Miami or plan to move there.
A SoftBank check is somewhat of a Silicon Valley rite-of-passage, so the firm’s involvement in the scene will likely signal to others that the growth of Miami is something to be taken seriously. The tax-free haven is attracting swathes of investors and founders from around the country looking to join the growing scene. Relocators include Keith Rabois of Founders Fund, David Blumberg of Blumberg Capital, Chris Dixon of Andreessen Horowitz and David Sacks of Craft Ventures.
Miami Mayor Francis Suarez, who has been on a Twitter tear asking techies to move to Miami, has spearheaded much of the efforts to turn the city into a startup epicenter.
7. Microsoft cut carbon emissions 6% last year, predicts climate investments will pay off in long run | GeekWire
In the first year since it set the goal of becoming carbon negative by 2030, Microsoft announced Thursday that it has reduced its carbon emissions by 6%, dropping from 11.6 million metric tons to 10.9 million metric tons. It also paid for the removal of an additional 1.3 million metric tons of carbon from the atmosphere.
If the Redmond, Wash-based company maintains and possibly improves on the progress made in these first 12 months, it’s on track to reach its target — which is among the most aggressive corporate climate goals. The company said a “small part” of the reduction in its greenhouse gas emissions was due to COVID-19.
To curb its emissions, Microsoft is investing in electric vehicles, battery systems to replace diesel generators used to back up its data centers, and renewable power. Since July, the company has levied an internal carbon tax on emissions created by its suppliers and by its customers’ use of its products, dubbed “scope 3 emissions” by those who tally carbon footprints. Microsoft was already charging itself for scope 1 and 2 emissions associated with its own business operations, including travel and electricity.
The taxes help pay for its sustainability programs.
8. Transportation’s next big thing: flying taxis | Axios
The next big thing in transportation could be electric flying taxis — think of a drone crossed with a helicopter — that would ferry people and goods high above congested roadways.
Why it matters: Air taxis are billed as a cheaper, faster, cleaner mode of transportation, and an important link between remote areas and population centers. But there are still technical and regulatory challenges to overcome — not to mention public skepticism.
While test flights could begin as soon as 2023, don’t expect to see them criss-crossing the skies in large numbers until the middle of the next decade.
Reality check: Flying taxis are approaching the “peak of inflated expectations,” on Gartner’s annual “hype cycle” for connected vehicles and smart mobility.
9. First private space crew paying $55M each to fly to station | New York Post
CAPE CANAVERAL, Fla. — The first private space station crew was introduced Tuesday: Three men who are each paying $55 million to fly on a SpaceX rocket.
They’ll be led by a former NASA astronaut now working for Axiom Space, the Houston company that arranged the trip for next January.
“This is the first private flight to the International Space Station. It’s never been done before,” said Axiom’s chief executive and president Mike Suffredini, a former space station program manager for NASA.
While mission commander Michael Lopez-Alegria is well known in space circles, “the other three guys are just people who want to be able to go to space, and we’re providing that opportunity,” Suffredini told The Associated Press.
The first crew will spend eight days at the space station, and will take one or two days to get there aboard a SpaceX Dragon capsule following liftoff from Cape Canaveral.
10. Coinbase opts to go public with direct listing and a rumored share target of $200 | Fortune
The cryptocurrency giant Coinbase, which announced plans to go public in December, intends to sell its shares by means of a direct listing, according to an internal company memo seen by Fortune.
“We believe a direct listing more closely follows the ethos of crypto and Coinbase because it democratizes access and opportunities for all investors,” wrote CFO Alesia Haas in the memo sent to employees. The company also wrote a blog post announcing the decision.
A direct listing means a company forgoes the traditional process of relying on investment banks to set the price and line up for buyers for their shares. The process, which has been employed by the likes of Spotify and Slack, has grown in popularity in part because it means firms can forgo bankers’ fees and avoids letting deep-pocketed early buyers from profiting on opening day price “pops.”