February 9, 2023

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0. Data and calendar

All values as of 3 AM PT / 6 AM ET, other than S&P500 close (1 PM PT / 4 PM ET).

1. Google's AI flops, stock down 7%

  • No major news in Google's AI event. After Microsoft's event on Tuesday showed the new Bing and featured CEO Satya Nadella, markets were expecting Google to follow suit. Instead, its AI event just briefly showed Chat AI Bard and instead focused on improvements for Google Lens "multi-search" and Google Maps' Immersive View. - Mashable recap

Reuters alleged that its AI made a mistake in an ad

Screenshot of Google ad with alleged mistake.

  • Google said something that the NASA website disagrees with. One of the replies from Bard was that the James Webb Space Telescope was the first telescope to take pictures of planets outside our solar system. But, according to NASA, it was the Very Large Telescope (VLT) in 2004. - Reuters

The problem is that this answer is controversial

  • A regular Google search shows that many websites agree with Bard. That includes very reputable sources like Cornell, as per the image below.

Screenshot of Google citing other sources that agree with Bard.

Markets were still unforgiving; stock down 7.4%

  • Still unclear whether Bing can beat Google. When we try the new Bing, we see: yes, it has Chat, which is basically ChatGPT + sources. However, its normal search is still much inferior than Google's, misinterpreting queries and giving wrong snippets and results. - Techcrunch review, The Verge review

  • Google says AI content is not against guidelines. "Appropriate use of AI or automation is not against our guidelines. This means that it is not used to generate content primarily to manipulate search rankings, which is against our spam policies." - 9to5Google

  • OpenAI has been hiring former Google engineers. At least 5 former Google AI employees, who were "instrumental" in building ChatGPT. CEO Sam Altman implicitly confirmed this on Twitter. - The Information, Sam Altman's Twitter

2. Disney struggles with media profitability, fires 3% of staff

  • Good results + cost-cutting mode. - WSJ, press release

    • Revenue +8% to $23.5B

    • Net income +18% to 1.3B

    • Disney+ subscribers -1% to 162M

    • Cutting 7K jobs, around 3% of total staff

    • Slashing $5.5B in costs

    • Stock +6%

3. Uber reports 49% revenue growth

  • Gross bookings +19% yoy, meaning their take rate has gone up significantly, like a one-off. - WSJ, press release

  • Adjusted EBITDA: $0.6B, net income $0.6B (because of $0.8B revaluation of equity investments.

  • Software is eating the world indeed. Even with the stalled GDP, marketplace tech companies like Uber continue to grow at a rapid pace. In contrast, companies like Alphabet and Meta, which mostly rely on advertising, have more beta in relation to GDP movements, as ads are seen as a cost-cutting opportunity.

4. Twitter introduces 4K character tweets

  • In line with Twitter becoming a super-app. We see video as the next obvious move, targeting TikTok and Youtube. - Techcrunch

  • Trump White House also asked Twitter to remove content. That's according to former employee Anika Navaroli. Former Trump officials and Twitter employees "familiar with the matter" say the same thing. Not surprising, as support for free speech seems to be more for culture wars than actual policy in the U.S. - Rolling Stone

  • Twitter free API to limit to 1.5K tweets per month. This is good enough for bots run by individual accounts, but certainly not for apps built on top of Twitter, like TweetDeck. - @TwitterDev tweet

5. FTX judge authorizes subpoenas of SBF and other insiders

We broke the news on Twitter, citing court filings:

  • Likely to lead to a higher recovery rate. FTX lawyers have said they already recovered $5.5B in liquid assets, not including the billions in illiquid assets such as the $500M Anthropic AI investment. Assuming a $9B deficit, this would suggest a recovery rate of around 60%. These subpoenas will likely lead to more cooperation between insiders and the new management, which could help with the identification and recovery of other assets.

  • Robinhood board authorizes the repurchase of 55M shares owned by SBF. These shares are worth $0.6B today, and Robinhood has around $6B in cash, so it makes sense for everyone. They might be able to get some discount versus market price, but we don't expect much. Regarding its quarterly performance, Robinhood continues to be a bad business: net loss was $166M on $380M of revenue. MAUs also went down 7% to 11.4M. - Press release

6. Rumors: SEC fines and prohibitions coming to Coinbase, Kraken

  • No staking for U.S. users: Coinbase CEO Brian Armstrong said the SEC wants to get rid of staking for Americans.His main counterargument is that staking is not a security, citing Paradigm. - Coindesk

  • Staking was 11% of Coinbase's revenue in Q2. Which might explain Armstrong's stance.

  • Kraken will likely settle with the SEC for offering unregistered securities on the platform. - Bloomberg

  • We are seeing fines and settlements, not more safety. We still don't see the SEC implement measures that could prevent another FTX collapse, such as mandatory proof of reserves or the separation of exchange from custody operations.

7. DeSantis leads head-to-head, Trump leads in a multi-way race

One reason why Trump is the current favorite

Trump continues strong attacks on DeSantis. "Ron DeSanctimonious" -- pretty bad, we expect a better nickname soon. DeSantis is trying to ignore Trump and respond indirectly, but as per above, neither voters nor markets are liking his defense. - CNN

8. Other headlines

  • Credit Suisse loses $1.5B in Q4, warns of large 2023 losses.

  • NYT revenue up 11%, has 9.6M paying subscribers.

  • Netflix announces paid sharing in more locations.

  • Microsoft says Adobe Acrobat PDF coming to Edge browser.

  • AWS continues its push in Web3.

  • FTX's final days, behind the scenes.

  • 3AC liquidators say co-founder is "withholding information."

  • Adani empire bonds yielding more than 10%.

  • Third Point is 5th mega fund with stake in Salesforce.

  • Seven Seven Six raising $776M for new venture fund.

  • Inflation in used cars could be worrisome.

  • Digital pound is a possibility in the future: BoE paper.

  • Hunter Biden's lawyers ask Trump allies to keep laptop records.

  • McCarthy raises $12.3M in first major fundraising.

  • Michael Cohen talking to NY prosecutors investigating Trump.

  • UK considering sending fighter jets to Ukraine.

  • Xi told Japan's Abe he wouldn't have joined the CCP if he had been born in the U.S.

9. Interesting tweets, memes, and images

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