On Our "Virtual Route 66" This Week: On the Week That Was

 

It has been quite a week in Our World.  Our team pulled together a snapshot of the week that was with an eye towards the future courtesy of Virtual Peter, on the commentary by the Information and on Inside Tech on Apple and Elon Musk: 

California Startup Aims to Build Space Hotel With Artificial Gravity by 2025 Orbital Assembly Corporation announced plans to develop a space business park, complete with artificial gravity, that’s designed to accommodate 28 guests in five modules built around a rotating gravity ring.

Selected By Virtual Peter Buenos Aires to accept crypto for tax payments, launch DLT-backed citizen profiles The capital of Argentina and an agglomeration with more than 12 million citizens, Buenos Aires will make blockchain a vital part of its digitalization drive. Specifically, the city will accept public financial transactions in crypto.

Selected By Virtual Peter Snap announces ‘Pixy’ mini AI drone along with augmented reality shopping Snap Inc will roll out new features to make it easier for brands to create augmented reality shopping experiences on its Snapchat app as well as a flying camera, the company said on Thursday at its annual presentation to showcase new technology. More than five years after it released Spectacles, Snap is back with a second hardware product. And this time it flies.

A lot of tech companies went public in 2021, and many if not most of them are trading below their IPO prices. That’s OK—markets rise and fall, and with any luck, the shares will recover eventually. But if you’re a shareholder in one such company, Chinese ride-hailing firm Didi Global, you may be out of luck. Didi revealed today that it plans to hold a shareholder vote on May 23 to approve its delisting from the New York Stock Exchange. It has no plans to relist anywhere else right now. It’s also not buying any of the U.S. shares back. If this proposal is approved, American shareholders in Didi will be trapped inside a private company. 

Didi shares, which sold for $14 each last June in the offering, are today fetching just $2. That performance makes Uber and Lyft look like stock market stars. To be sure, the proposal isn’t a slam dunk. Didi’s two co-founders, Cheng Wei and Jean Liu, won’t vote using the supervoting shares they hold, which give them control. Instead, all shareholders will have an equal vote. That gives SoftBank and Uber, which between them own 33% of Didi, a significant voice in what happens. Maybe they could bargain for some kind of buyout deal for foreign investors in exchange for their yes votes. But don’t count on it.

For one thing, both companies were pre-IPO investors, so neither would necessarily benefit from such a deal. And given that the delisting is occurring as a result of pressure from the Chinese government—which famously tried to tell Didi not to go ahead with the offering—none of the investors may feel they have any choice but to approve the proposal. Which is kind of the point. There may be no better example of the perils of investing in a Chinese company than this one. Sure, the circumstances are extreme—but nothing can justify how Didi has handled this. 

Having ignored the Chinese government’s warnings against the IPO, Didi should have figured out a way to buy back the U.S. float before the delisting. Its financial statements, filed with the SEC over the weekend, show it had more than the $4 billion raised from the IPO still on its balance sheet, so it could have afforded to repurchase the shares at the IPO price. And yet all Didi will say is that its board will “continue to explore appropriate measures in the interest of the company and its shareholders, including exploring potential listing on another internationally recognized exchange.” Next time a Chinese firm offers to sell its shares to the U.S. public—even if it’s TikTok owner ByteDance, an appealing prospect—remember what happened with Didi.

Elon Musk sold roughly $8.5B worth of Tesla shares this week that could help him fund his purchase of Twitter. The Tesla CEO sold 4.4 million shares on Tuesday and Wednesday followed by more than 5 million shares on Thursday, regulatory filings show. More: The 9.6 million shares sold this week equate to 5.6% of Musk's stake in Tesla. Following the disclosures on Thursday, Musk tweeted: “No further TSLA sales planned after today.” To complete his purchase of Twitter, Musk needs $21B in cash. The remainder will be financed with debt and a margin loan. Musk has now offloaded more than $24B worth of Tesla stock in six months. Zoom-out: The news comes after Musk reportedly told banks that he plans to cut costs at Twitter by lowering executive and board pay and finding new ways to monetize tweets. Twitter on Monday accepted Musk's $44B buyout offer to take the company private. On Thursday, Twitter reported quarterly revenue of $1.2B, up 16% YoY, and a 16% rise in monetized daily active users in its Q1 2022 earnings.  REUTERS

After reporting one of its strongest quarters in history, Apple warned that supply constraints will be "substantially larger" in the current quarter due to COVID disruptions and silicon shortages. The company expects to take a revenue hit of $4B to $8B this quarter as it struggles to meet customer demand for its products. More: The constraints "will affect most of the product categories," CEO Tim Cook told analysts. The forecast comes after Apple reported financial results above analyst estimates. Apple reported revenue of $97.3B in the January-March period, up 9% from the same time last year.  Its profit was $25B. Broken down by category, the company set March quarterly revenue records for iPhone, Mac, and Wearables/Home/Accessories divisions. iPhone sales grew 5% to $50.6B. The last seven quarters have been the best ever for Mac, according to CFO Luca Maestri. Apple reported growth in almost every category except for iPads, where supply chain issues caused sales to fall by 2% from last year. Zoom-out: Apple services business, its second-biggest after iPhones, also rose 17% to nearly $20B.  Services include subscriptions to TV+, Music, and Fitness+. It expects Q3 revenue to be lower due to component shortages, China COVID-19 disruptions, inflation reducing consumer spending power, and other issues.  Ai-Da at work. EPA Meet Ai-Da | The world’s first AI-powered humanoid robot artist is set to present a solo art exhibition at the Venice Biennale this month. No two works are ever the same, according to creator Aidan Meller, a former gallerist and academic based in the UK. Moneymaker | Dubai will roll out a $100 million new venture capital finance fund in June to bolster start-up projects in the emirate and promote its ambition of becoming a global FinTech hub. Not-so-Boring Company | The Boring Company, one of the lesser-known of Elon Musk's ventures, announced it would begin full-scale testing of its hyperloop by the end of this year. Dubai, whose government went paperless at the end of last year, is bringing all public services for employees, citizens and residents online. Getty In brief | The UAE is making strides in building a single digital identity platform for residents and citizens to securely obtain access to government and private sector services online. More than two million people have been registered for the UAE Pass, representing more than a fifth of the population. Quoted | "The number of partners quickly rose to become a combination of [government] and private sectors. We are proud that more than 180 federal, local and private entities use UAE Pass today, across more than 400 digital channels." - Mohammed Al Zarooni, deputy director general at the Telecommunication and Digital Regulatory Authority. Why it matters | The evolving demands of a digital economy increasingly require that individuals be able to prove their identity in order to participate. Proponents say that such digital ID systems can improve inclusivity to things like financial and government services. Singapore is among the world's leaders on this front, with more than half of its population using a digital identity. Elsewhere, countries are grappling with the security and privacy implications of centralising population data on a single platform. Last year, the Kenyan High Court ruled that the introduction of a country-wide biometric ID scheme was illegal. Efforts to create digital ID schemes have similarly been delayed in the EU and US. What Does Musk's Purchase of Twitter Mean for Disinformation? By Patrick Tucker Elon Musk just bought Twitter; his ideas on free speech suggest the social-media platform might soon do less to moderate content, track extremism, monitor hate speech, and block domestic and foreign disinformation.  Read more »