ALTIOTAKE FROM 14-17 DECEMBER
Each week, we review the press, highlighting and responding to interesting and relevant articles in the news.
Bursting your bubble
Tech companies are rushing to go public before 2020 ends. After Airbnb's IPO last week, the company concluded their first day of trading on Thursday with shares up 112.8% from $68 to $144.71. DoorDash started trading at $102 last Wednesday and ended the day up 86% to $189.51. The gig economy is fuelled by tech, contributing to their flexible resilience that allows these disruptors to soar beyond established players. For instance, Airbnb's market cap reached $100B, about 2.5x that of the largest hotel group, Marriott International ($42.99B). In a pandemic, such tech startups have thrived, as people turn to alternative, socially distanced solutions. The effects of these soaring market caps and inflated valuations offer insight into a disruption within the traditional economy. However, this is where our confidence in speculative stocks stops. It is merely a matter of time before this red-hot market will collapse under its own weight. Already, we have seen these two speculative stocks decreasing as they begin their second public week. Altio sees these high IPOs and valuations as merely speculative, not indicative of secular trends.
Meet Uber, Your New Grocer
Uber has officially cleared all regulatory hurdles in its major stake acquisition of the digital supermarket platform, Cornershop. The $459M purchase of the Chilean-Mexican startup was announced back in 2019, well before the pandemic-level demand for grocery and delivery services. Previously, Uber dabbled in grocery delivery by forging partnerships with over 9,500 local grocers for its UberEats platform. Already, Uber has seen a significant rise in its revenue from delivery due to COVID-19. In Q3 2020, Uber’s Delivery revenue surpassed that of its Mobility revenue, 46% to 44%, respectively (see above chart). The purchase of Cornershop, combined with the company’s $2.65B acquisition of Postmates in June, solidifies Uber’s expansion into on-demand delivery across the Americas. This official purchase of Cornershop also ups the ante amongst other delivery services. Altio thinks that, in capitalising on this profitable Delivery arm, Uber is productively pivoting in response to the market. However, what may be more telling is post-pandemic performance and strategy for delivery services, though this is yet to be seen.
Tax Compliancy without Borders
Navigating the complexity of different regulations around the world is enough to deter some companies from expanding beyond home. However, disruptors like Taxdoo break down these imposed barriers for both startups and large cap tech companies. German startup Taxdoo recently announced a $21M Series A funding round to pursue its mission of automating tax compliancy in the international digital economy. International tax compliancy is increasingly relevant and necessary, as the EU Digital Market and Digital Services Acts, Brexit negotiations, and changing leadership introduce new regulations. Tax compliancy should never be considered a barrier to expansion in an increasingly globalised world. Altio aligns with Taxdoo in the employment of technology to automate and simplify seemingly complex financial processes. We believe that neither tax nor investing should be a headache, developing tools in order to deliver this credo.
Go with the Flow
Flow Neuroscience, the first at-home brain stimulation headset used to treat depression, announced a 247% increase in sales for 2020. Flow is the only device of its kind to be medically-approved in the UK and EU. Not only was it approved, it was promoted by the NHS as it was listed on the NHS ORCHA app library this year, so physicians can recommend it to patients. Flow combines behavioural therapy (via mobile app) with transcranial Direct Current Stimulation (via headset), tackling depression without medication. Altio finds Flow’s recent success to be indicative of a demand for reliable at-home healthcare. COVID-19 has forced healthcare to move into virtual ecosystems, in turn, making it more accessible, especially for mental health. Investors have seen this too, as they have poured considerable investments into digital health and wellness startups this year. The digital health revolution places empowering technology into patients’/consumers’ hands.