MicroStrategy is a Bitcoin company 😬; The Squid Game token scam 🤷♂️; Klarna’s quest to become the ‘Google for Shopping’ 👀
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Good day Everyone,
And happy Saturday! You have deserved a rest. But before you go to the chill mode, I invite you to take a look at the three stories that were moving the headlines this week in the financial technology world. You can uncover other stories, keep the FinTech pulse daily and get at least X5 more by becoming a subscriber. Join the community here:
And here’s a mix of 3 great stories from this week:
MicroStrategy is a Bitcoin company 🤷♂️
Big bags💰 MicroStrategy, the business-intelligence software company holds so much Bitcoin on its balance sheet that it has recently become something of a proxy for the world’s biggest cryptocurrency.
But it’s not going to stop anytime soon as the firm has said it added almost 9,000 Bitcoins to its holdings in the third quarter this year, bringing its total to a whopping 114,042 🤯
The paradox 🤷♂️ Microstrategy said it purchased the bitcoin by “successfully raising capital in the quarter through our at-the-market equity offering.”
At current prices, the value of its Bitcoin holdings is just over $7B while MicroStrategy’s entire market capitalization is less than $7B 😬 This makes it more of a Bitcoin holding company rather than a business intelligence firm…
Don’t stop even at a loss! 😎 One must note that the carrying value of MicroStrategy’s bitcoin was $2.4B, which reflects cumulative impairment losses of $754.7M. Under accounting rules for digital assets, companies must report an impairment if the asset’s price goes below the company’s purchase price at any time during the quarter.
Yet, the company said it will “continue to evaluate opportunities to raise additional capital to execute on our bitcoin strategy.”
✈️ THE TAKEAWAY
Keeping all eggs in one basket🥚 MicroStrategy is a Bitcoin company, and thus far this strategy has paid off. Especially given that its Bitcoin holdings are worth more than the company’s entire stock. But that didn’t seem to please investors a lot as MSTR have fallen immediately after the Q3 earnings. This might become even more worrisome given that its stock is down around 30% since its latest peak in mid-February this year. On the other hand, recent developments have been very positive for Bitcoin - more institutional adoption, continuing regulatory discussions, Bitcoin-linked ETF’s, among others - hence fueling its price to reach new highs.
The Squid Game token scam 🤷♂️
The crash 💥 The price of the Squid Game token crashed to near-zero as the developers behind the project sold their tokens on the market for 22,328 BNB ($11.9M).
The price of the token fell from $2,856 to $0.00079 instantly as 70M tokens were dumped on the market.
Easy come - easy go 🎢 As I’ve written just yesterday, SQUID popped onto the scene on October 20, purporting to be a pay-to-earn currency for an upcoming online game based on Squid Game. But, there were several red flags: grammatical and spelling errors in the white paper, the fact that the project’s website was registered less than a month ago, and users’ inability to reply to its Telegram and Twitter posts.
By Friday, the coin had skyrocketed in price and was widely covered in the media for its huge gains and (unofficial) tie to the wildly popular Netflix series. The token’s price peaked Sunday night at $2,861.80 before dropping 100% to lose virtually all of its value.
✈️ THE TAKEAWAY
Paying the price for the risk. In retrospect, this seems like a classic scam. Various sources say that there was a lock-up function in the smart contract that was designed to prevent sales, which meant that whenever money was poured into the market on the decentralized exchange PancakeSwap, it was locked up. Since there was little to no selling pressure, the price of SQUID rose astronomically. Mainstream news articles only put more fuel to the fire. Once there was enough money in the pot, the developers behind the project who held a large number of tokens in a single wallet, decided to dump them on the market, taking nearly all the liquidity and driving the token’s price to $0. Was it worth it? If you were early, you could have made some $$$, but apart from the scammers, everyone else was left holding the empty bags…
Klarna’s quest to become the ‘Google for Shopping’ 👀
The deal 🤝 BNPL heavyweight Klarna is continuing its acquisition spree with the buy-out of Nordic price comparison service PriceRunner.
FinTech giant reportedly snagged PriceRunner for a whopping €930M. Klarna is said to pay 40% of the price in cash and the rest with Klarna shares.
The USP 🥊 Founded in 1999 and having businesses in Sweden, Denmark, Norway, and the United Kingdom, PriceRunner compares 3.4 million products from 22,500 retailers in 25 countries.
As of today, it has 18 million monthly users worldwide. During the 12-month period ending on September 30, 2021, the firm had revenues amounting to SEK460M and an adjusted EBITDA margin of 52%.
The value add 👉 PriceRunner will bring new features in the form of product reviews, product discovery, and price comparisons to the Klarna app while providing merchant partners with behavioral insights and marketing opportunities to increase Website traffic.
The ROI 🤯 It must be noted that one of the biggest winners in this deal is a little-known firm called eEquity AB. Stockholm-based growth investor focusing on investments in digitally-enabled businesses has invested in PriceRunner in early 2020. Klarna’s acquisition of PriceRunner brings eEquity’s total return on investment to over 15 times, in circa one year. Not too shabby!
✈️ THE TAKEAWAY
The Google for Shopping. Klarna has been on a shopping spree lately and this is the 5th acquisition that FinTech has made since the beginning of July this year. The BNPL firm has acquired social shopping outfit Hero, German shopping app Stocard, influence marketing provider APPRL, and travel planner Inspirock. When you zoom out, it’s clear that Klarna is no longer a payments company only, and it’s clearly transitioning to become the Google for shopping. This means helping people discover new products instead of just helping them buy them, with further strengthening their positions against leading marketplaces like Amazon and Facebook.
🔎 What else I’m watching
Live in UK🇬🇧 UK consumers can now open a current account with JPMorgan Chase’s new digital bank in minutes and without needing a code. Chase officially launched its UK digital bank in September, offering a fee-free current account that combines money management features with cashback rewards. Chase has been taking a controlled approach to onboard people, initially inviting users to sign up online. New customers can now download the app straight to their phones and sign up in a few minutes.
The shutdown 🛑 ING is to shut down Payvision, the controversial international card acquirer and payments platform that the Dutch bank acquired in 2018 for €360M. A competitor to Adyen and Worldline, Payvision has been mired in controversy relating to dubious business practices undertaken prior to its acquisition by ING. Dubbed the "Wirecard of the Netherlands" by the European Funds Recovery Initiative, Payvision has been held responsible for processing hundreds of millions of euros in payments that were generated from investment scams. Last year ING sold half of Payvision’s operations for a nominal 1 euro - the part of the business that included payments processing for gambling and pornography customers including PornHub - leaving it with less profitable online payment processing activities. Now it has come to an end to get rid of the rest of the biz…
Eco-conscious debit card? ♻️ As the world’s leaders gather in Glasgow for COP26, a new green debit card has hit the scene. Ekko is a climate-friendly debit card, app, and platform that is helping consumers fight climate change one step at a time. For every 5 transactions, the new FinTech pays for an ocean-bound plastic bottle to be collected and every 50 transactions it pays for a tree to be planted and maintained. Now that’s something different!
💸 Following the Money
Ardana, a decentralized finance (DeFi) protocol built on the Cardano blockchain, has raised $10M in strategic funding.
Tifin, an umbrella group operating a host of AI-powered fintech businesses in the asset and wealth management industry, has hit a $447M valuation off the back of a $47M Series C funding round joined by Hamilton Lane and existing investors JP Morgan Asset Management, Morningstar and Broadridge.
Fi, a neobank that offers digital bank accounts and financial guidance to working professionals, has raised $50M in a new funding round. This is its second funding round, valuing it at $315M. Fi aims to redesign some of the traditional savings products like fixed deposits or recurring deposits with its customized solution for working millennials. It also offers a debit card to users. Currently, the bank accounts are powered by Federal Bank.
👋 That’s it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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