Americas

Coinbase adds more wobbly legs to stool

16 Feb 2024

Coinbase posted its first annual profit since 2021, sending its shares up 12%. But the $46 bln digital currency exchange is moving from volatile trading fees to even shakier revenue streams, such as interest on deposits and legally ambiguous staking.

Cloudflare risks a lesson in giants’ AI advantage

16 Feb 2024

At 23 times expected sales, the $34 bln cybersecurity firm is one of the most richly valued software companies. Using its network to power AI holds promise, but enormous spending and the risk of being overshadowed by titans like Microsoft makes investors look overambitious.

Europe defence requires more than a $75 bln boost

16 Feb 2024

Non-US NATO members will spend 2% of GDP on their militaries in 2024. Yet the extra $75 bln a year it entails remains below what Europe will need. Ukraine, technological advances and US wavering mean their true requirement is more like 3% of their output.

Banks win hollow victory over would-be disrupters

16 Feb 2024

Supermarket giant Tesco’s ditched effort to build a UK retail bank follows similar abortive attempts by telecom groups and fintech startups. Regulation and rising technology costs are partly to blame. But banks’ persistent poor returns are the most effective barrier to entry.

Nvidia’s AI mini-bets set an example not to follow

15 Feb 2024

SoundHound AI shares surged 76% thanks to a $3.7 mln investment from the giant chipmaker. Not bad for a company likely to miss projections it set before going public in 2022. The colossal Nvidia will be fine even if SoundHound proves a dud. Coattail riders can’t say the same.

Deal famine is driving private equity evolution

15 Feb 2024

M&A activity fell 30% in 2023 and this year is off to a relatively slow start. In this Viewsroom podcast, Breakingviews columnists discuss how a dearth of deals is spotlighting a shift of focus among traditional buyout houses like KKR and Carlyle into areas like private credit.

US real estate is a micro-drama set to turn macro

15 Feb 2024

So far, loans on isolated buildings by individual banks and funds have gone bad. As mortgages worth $1.5 trln come due in the next two years, strains will also spread from offices to apartment blocks. A correction is inevitable, but its impact can still be contained.

Capital Calls: Volkswagen in Xinjiang

15 Feb 2024

Concise views on global finance: The German carmaker is discussing its future in the troubled Chinese province with state-owned partner SAIC. A slowdown in the domestic auto market and the rise of exports could make the pair’s potential retreat from Xinjiang easier to bear.

Uber gets the hang of navigating multiple lanes

14 Feb 2024

An inaugural stock buyback, at $7 bln, helps validate the hybrid business model under CEO Dara Khosrowshahi. The company commands a premium to ride-sharing rival Lyft, but a discount to food-delivery specialist DoorDash. It’s safe for investors to let go of the grab handle now.

Infrastructure may take toll on big asset managers

14 Feb 2024

Investors have sunk $1 trln in safe, stable assets; BlackRock just made a $13 bln bet on the sector. But success has been spotty and higher rates make investing harder. Plus the definition of infrastructure – which includes laundry and Scandinavian fish farms – is stretching.

Capital Calls: Lyft

14 Feb 2024

Concise views on global finance: The US ride-hailing firm mistakenly forecast 500 basis points of margin improvement for 2024, causing its stock to surge some 60% before it came back to earth.

JetBlue’s turbulence gives Carl Icahn an easy ride

13 Feb 2024

The corporate rabble-rouser took a stake in the airline as it struggles with a defunct deal and business turmoil. That resembles Illumina, where Icahn won a 2023 campaign. Quick-fix activism can’t mend a panoply of issues. But striking at a weak moment can help activists anyway.

Peter Thiel’s latest bitcoin bet is a coronation

13 Feb 2024

The billionaire’s Founders Fund pocketed $1.8 bln in 2022 on crypto investments before dipping back in last fall. Bitcoin has since been anointed with an ETF and technology that furthers its use. The currency isn’t yet legitimate, but Thiel’s return marks its growing status.

US markets grapple with mysterious contradictions

13 Feb 2024

The S&P 500 Index hit new heights, led by tech stocks. At the same time, derivatives traders expect the Federal Reserve to slash rates. The latter will not happen without a recession. One of the camps is destined to be wrong. Equity investors should root for slower rate cuts.

Capital Calls: TUI decamps

13 Feb 2024

Concise views on global finance: Europe’s largest travel firm is encouraging investors to vote in favour of cancelling its London listing, but the UK need not mourn the loss.

Gaming suitors have a window in which to pounce

13 Feb 2024

After a ropey 2022, the $180 bln sector grew less than 1% last year. Former stars like Ubisoft have been cutting staff, and their shares now look cheap. That gives perennial suitors who think gaming can recover – like Netflix, Disney and Saudi Arabia – a chance to bulk up.

Capital Calls: Temu’s spending

12 Feb 2024

Concise views on global finance: The Chinese shopping app’s Super Bowl commercial is part of a broader effort to win market share. It’ll help companies like Meta, but Temu now has a chance to muscle in on Amazon’s turf and force the e-commerce giant to compete.

Shale twins’ $26 bln deal can afford to be pricey

12 Feb 2024

Permian producer Diamondback is buying a smaller version of itself in Endeavor, from overlapping acreage to neighboring offices. That implies the price is maybe $1 bln over the odds. Given unique savings the duo can reap in the heart of the US oil boom, the buyer can afford it.

PGA political golf drama is Saudi’s Trump card

12 Feb 2024

Senators accused former Citi banker Michael Klein and other consultants of siding with PIF over an agreement with the PGA and its investments in the US. While the golf tie-up remains in flux, political scrutiny is intensifying. A delay could work in the Saudis' favor.

Ignoring migration’s roots will cost the West dear

12 Feb 2024

Politicians in the US and Europe are devoting much energy to stopping illegal migrants. But this will achieve little unless they also tackle the drivers of migration: poverty, conflict, and climate change. Otherwise, politics in the rich world will become increasingly toxic.