There was a lot of exciting stuff in the crowdfunding and crypto spaces this week. But let’s start with the pre-requisite business before we get to the (arguably more interesting) alternative markets.
The Business Buzz
All around the clock. TikTok was front and center in many headlines this week. (So, so many headlines.) The week started with news that TikTok was officially suing the US government. This saga began when President Trump signed an executive order that would ban transactions with TikTok’s Chinese parent company ByteDance — unless TikTok was bought by an American company. Whether the president can actually enforce such an order has been up for debate from the start. But TikTok is taking matters into its own hands. The app is disputing the executive order and whether it’s rooted in legitimate legal concerns or just politics.
But the news didn’t stop there. On Wednesday, chief executive Kevin Mayer resigned. That was big news because A) Mayer had only been with the company since May, and B) the general consensus was that TikTok brought Mayer aboard to smooth over American relations. That Mayer left so abruptly doesn’t seem to bode well for the app.
Lastly, there’s the massive question of who (if anyone) will buy TikTok. Two companies have dominated the debate over TikTok ownership: Microsoft and Oracle. Seems reasonable, right? They’re both tech companies with massive money wells. Then came the news that Walmart is interested in TikTok — and it’s teaming up with Microsoft. Why Walmart? The retail giant is looking to expand its e-commerce capabilities. And it seems to think owning TikTok would be a good first step. News of who TikTok will sell to — for a value that’s expected to be around $20 billion — could come anytime in the next week or so. I’m sure I’ll be covering that too, if only to celebrate the end to (some of) the drama.
Not quite as grand as the Tetons, but it will have to do. The Fed announced that it is making significant updates to its monetary policy. The biggest change is how it handles and views inflation. Previously, the Fed aimed to keep inflation low — high inflation was believed to negatively impact the unemployment rate. And since inflation stayed far below 2% since the policy was set, it seemed to have achieved its goal. As the US faces a pandemic and major recession, though, the Fed is somewhat reversing its position. Basically, it isn’t as concerned with rising inflation because that’s not the biggest threat to the economy anymore. The big takeaway from this change is that interest rates are likely to remain very low for the next few years at the very least.
The slow death of malls. Although consumer spending continued to improve in July, those dollars were not being spent evenly. Sales at big box stores — like Walmart, Target, and Home Depot — have far exceeded Wall Street estimates in recent months. Meanwhile, dozens of smaller retailers have filed for bankruptcy this year, including well-known names like J. Crew, J.C. Penney, and Lucky Brand. And much like the possibility of a second coronavirus wave, analysts are saying there could be further waves of bankruptcy declarations in the fall. It’s really not a good time to be a mallrat.
The Alternative Side of Things
You get an IPO, and you get an IPO, and you get… It was a big week for IPOs. There’s video game engine Unity, workplace software maker Asana, and data-warehousing firm Snowflake, among others. There’s also Palantir — co-founded by PayPal veteran Peter Thiel — but the IPO itself wasn’t the most interesting part of the story. Palantir was founded to help the intelligence community in counterterrorism efforts. And in its IPO filing, CEO Alex Karp let loose on other Silicon Valley tech companies. He talked about the hypocrisy of firms who mine customer data for profit refusing to work with governments for fear of privacy transgressions. You can read Karp’s full letter here.
Maybe they should change the name to “certified investor.” In big news for the private markets, the SEC announced its plans to change the definition of accredited investors. Previously, being accredited was about wealth. You either had to earn over $200k a year ($300k if married) or have a net worth over $1 million — fit either of those qualifications and you were considered an accredited investor. And being an accredited investor opens up a lot of investment opportunities.
The new definition widens the pools a fair amount. For individual investors, the biggest change is that there are certain certificates you can have which will make you an accredited investor regardless of your income. I’ll be covering this topic more in-depth next week, so keep an eye out for that article.
The bitcoin adoption continues. The crypto world was abuzz with the news that Fidelity is going to create its first bitcoin-based fund. And with a $100,000 minimum investment, the fund is nothing to sneeze at. With large players like Fidelity and Grayscale diving into bitcoin, the cryptocurrency continues to show strength.
And Now For Something Entirely Different
But what does the fox say? If you’re looking for a fun auditory diversion, check out these sound-based matching games. Try to figure out the waveform of a hiccup and find out what they used to create the roars of velociraptors in Jurassic Park. Just whatever you do, don’t forget to mute yourself on that Zoom call.
Is there a news story you want me to cover? Do you have ideas for new KingsCrowd articles? Send it my way at email@example.com. I’d love to hear from you.
Edited Sept. 2: My reference to our president has been corrected to reflect his position.