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Software

Private credit funds take page from start-up book

23 Mar 2022

Lending to deals like Thoma Bravo’s $11 bln purchase of Anaplan – which has no operating cash flow – is toxic for big banks. But private credit funds are signing up. They may be trying to disrupt lending markets while gaining clients. That sounds a lot like a risky tech model.

EU’s faster, harder stick will whack U.S. big tech

22 Mar 2022

Existing antitrust law is too slow to prevent digital monopolies and too weak to create competition. New European rules, with a focus on prevention, will remedy that. The market is big enough and potential penalties so damaging that Apple and others need to take notice.

Anaplan deal hints at floor under cloud valuations

21 Mar 2022

The business software company is selling to Thoma Bravo for $10 bln. Recent market carnage had trashed once high-flying cloud stocks - Anaplan's by a third or more. If cash-rich private equity firms start picking up companies in the sector, it could stem the decline.

VCs are victims of their own success

8 Mar 2022

That’s an argument author Sebastian Mallaby makes in his new book on the financiers behind the world’s technology giants. He also discusses the role of luck, founders’ increasing power, late-stage investment pile-on risks and Chinese tech in this episode of The Exchange podcast.

Russia crisis is Big Crypto’s coming-of-age moment

3 Mar 2022

Major exchanges like Coinbase and Binance are still open to Russians despite the risk of sanctions evasion. If they fail to spot illicit transactions, regulators will crush the life out of them. If they pass the test – and they might – it may be their ticket to the mainstream.

West’s best cyber move is to stick to defence

3 Mar 2022

Malware attacks on Ukrainian banks and state agencies make better protection for governments and companies essential. Western nations may consider retaliation. Given the shortage of cyber experts and the risk of badly targeted strikes, they’d be better off focusing on defence.

Trump’s Truth Social is an overvalued threat

25 Feb 2022

The former U.S. president launched his social media app after Twitter and others booted him from their platforms. Twitter’s slowing growth suggests he might be able to capture a unique following. But based on its users, its $20 bln market cap is at least double fair value.

Palantir needs profit, not pomposity

17 Feb 2022

CEO Alex Karp says he built the software firm for the U.S. war-fighter, and secondarily for the “glory of humanity”. Rhetoric and revenue growth might have been sufficient when animal spirits were high. Now investors just want to know when the 18-year-old firm will turn a profit.

Shopify plays to one trend, bucks another

16 Feb 2022

The Canadian e-commerce firm’s shares fell after it said it’s shifting towards a more Amazon-like model of operating warehouses. Having surfed the online shopping wave, Shopify risks losing investors who have chased the asset-light tech craze too.

Roblox metaverse premium gets real-world downgrade

16 Feb 2022

The gaming platform attracted more users in January, but nearly flat bookings of virtual currency knocked 25% off its shares. Video games can be faddish, and kids’ obsessions even more so. Doubt about Roblox’s ability to turn attention into cash merits a more mundane valuation.

Tech investors ignore stock comp at their peril

15 Feb 2022

Companies like Uber adjust for awarded share grants in favorite figures that show increasing profitability. But unlike tech firms of yore that had sizable net incomes, like Facebook, stock compensation is a big part of those earnings. It’s a skewed representation of expenses.

Canada’s tech darling may be headed for a fall

14 Feb 2022

Shopify already fell off its perch as Canada’s most valuable listed company, but the e-commerce giant’s $105 bln valuation is still in the stratosphere, at over 100 times forecast EBITDA. With tech investors jittery, even a minor slipup could lead to a sizeable correction.

Zendesk’s best M&A strategy starts with failure

14 Feb 2022

The software firm’s unpopular $4 bln bid for SurveyMonkey’s parent has pushed down its stock, irked activists and provoked a $16 bln opportunistic private equity bid. Zendesk’s shareholders can still vote down its deal. Doing so might secure a higher price for their own shares.

Twitter share buyback is an odd way to take flight

10 Feb 2022

New CEO Parag Agrawal plans to repurchase $4 billion in stock. He will also spend more to improve tepid revenue growth. But tough competition and the $30 bln company’s slim slice of the ad market mean Agrawal could do with keeping more in the coffers to help him hit his targets.

Viewsroom: Spotify, Peloton and failed chip deals

10 Feb 2022

Neil Young’s podcast protests have shone a light on a potential flaw in Spotify’s business model, says Liam Proud. Peloton highlights the danger of giving company founders too much voting power, Rob Cyran argues. And semiconductor M&A gives global antitrust regulators agita.

Uber looks like a tech stock in the worst ways

9 Feb 2022

The ride-hailing firm is expected to grow sales rapidly. But that isn’t coming easy – or cheap - and the valuation is now in line with Netflix. As investors decide to look more closely at the fundamentals of tech darlings, Uber has more troubling attributes than the good ones.

Facebook’s future rests on Reels, not metaverse

9 Feb 2022

Mark Zuckerberg’s iffy bet on virtual reality cost Meta Platforms $10 bln last year. But the $600 bln social network has gotten higher returns for investors by improving on ideas that already exist. The best way to stop its decline is to copy its biggest competitor TikTok.

Dutch $64 bln payments star is cure for tech gloom

9 Feb 2022

Adyen’s stock surged 10% after its results showed accelerating revenue. Following the rout in shares like PayPal and Netflix, it’s a reminder that piggybacking on the digital economy is a good bet. The catch for investors is that the best firms still trade at crazy valuations.

Facebook $250 bln slump punctures antitrust case

7 Feb 2022

That’s how much Mark Zuckerberg’s firm Meta Platforms lost in value after growth stalled. Competition from TikTok specifically is getting tough, but U.S. antitrust regulators who are fighting Facebook have said the Chinese-owned app isn’t a rival. The market begs to differ.