Monday, May 9th 2022

Three Things (5/9)

Commentary

“All that I am, or hope to be, I owe to my angel mother.”—Abraham Lincoln

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Stripe launches a new product to let their customers connect directly with the end consumer's bank account

  • The new product is called Financial Connections and provides the bank connectivity needed for sellers to verify accounts for payments, check balances ahead of payment and confirm account ownership.
  • This data can be used to help underwrite risk for loans, track spending patterns, reduce fraud, and more. 
  • Fintech giant Plaid offers a very similar product, and this move turns the previous partners into competitors for the first time.

Titan’s Takeaway: Stripe was last valued at $95 billion a year ago and reports indicate they are inching towards an IPO. In an increasingly crowded fintech and payments market, we suspect the trend of companies launching products that overlap with partners’ offerings will be a recurring theme.

2) Elon Musk’s investor deck reveals aggressive growth goals for Twitter

  • Musk plans to quintuple revenue from $5B last year to more than $26B in 2028
  • Advertising will make up 45% of sales, down from 90% today, according to his presentation.
  • He plans to hire an additional 4,000 employees by 2028; according to Glassdoor, interest in Twitter job openings is up 263% since Musk began his foray.

Titan’s Takeaway: Elon has made clear from the start that restoring the platform’s integrity is the driving force behind buying Twitter. But all signs indicate that Musk’s changes are designed to create meaningful value for investors in tandem.

3) Formula One racing arrives in Miami as interest in the sport spikes across the U.S.

  • The inaugural Miami Grand Prix happened this weekend in Miami, marking the first of two races stateside in the same year for F1 since 1984.
  • Amid the rise in U.S. popularity, Liberty Media Formula One (FWONK) shareholders have seen gains in excess of 40% over the last year.
  • Formula One’s TV deal with ESPN expires at the end of 2022, and early reports suggest that the CEO is seeking $75m a year, up from $5m a year.

Titan’s Takeaway: With a global fanbase that is ~3x larger than the NFL, the NFL brings in ~8x more revenue annually than F1. Despite a slowing business in Europe, the potential upside of lucrative partnerships in the U.S. drove the stock to all-time-highs in April.

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