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Didi Set to Make US Stock Market Debut, Files for IPO

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Anticipated to be one of the biggest tech IPOs of 2021, Didi IPO could fetch the company a $100 billion valuation while raising $10 billion.

Didi Chuxing, founded in 2012 by Cheng Wei, filed for an Initial Public Offering (IPO) under its formal name Xiaoju Kuaizhi Inc. It has become a market leader in the mobility technology industry in a short time, having acquired its biggest competitor, Uber’s China unit, in 2016. In return, Uber now has a 12.8% stake in Didi. Other high-profile investors include tech giants SoftBank Group Corp with a 21.5% stake in the company, and Tencent Holdings Ltd, which holds 6.8% of the company. Despite constant competition in the ride-hailing industry, Didi has managed to stay dominant through its continuous expansion in providing related services using top-notch technology.

Like other industries disrupted by the pandemic, Didi, too, suffered huge losses estimated at $1.6 billion for 2020. Its net profit contracted by almost 10% between 2019 and 2020, thanks to the pandemic that reduced passengers and affected business across countries. However, the first quarter of 2021 brought good news as it saw an astounding 107% growth and doubling of revenue, earning a profit of $30 million. Like major tech startups, Didi has seen losses in its 8 years of existence, however, it still reins the country’s ride-hailing industry.

Didi Chuxing has its operations in 15 countries across Africa, South America, Asia and Europe, including China, although a vast customer base comprises the Chinese population. In addition to providing app-based transportation facilities, Didi also offers food delivery, financial and automobile services. The Beijing based company has also worked in partnership with BYD Co. Ltd., a Chinese automobile manufacturer, to develop electric cars, specifically engineered for their ride-hailing business. Not just that, the company has also been a part of the strategic partnership with Guangzhou Automobile Industry Group to design, develop and manufacture autonomous electric vehicles.

In the Founder’s Letter submitted alongside the filing, CEO Cheng owned the company’s mistakes and failings, notably the rape and deaths of two female passengers and the plight of drivers who face unfair treatment. The letter mentions the solutions adopted to overcome the shortcomings that include redesigning over 200 app features, installation of safety-enhancing mechanisms and devices and the establishment of a SWAT Team that would respond to all safety incidents on a real-time basis.

With such a revaluation and improvement of existing services, Didi is all set to take advantage of the vast investment market in the US With the Covid effects diminishing and the universal rollout of vaccinations, the ride-hailing services have already hit the market like never before and Didi plans to make the most of it through the strategic use of its IPO proceeds. More than a quarter will go towards developing technological competencies while an equal share will be put on international expansion efforts. Roughly 20% of the proceeds will be used to develop new offerings, and the rest will be put to use for corporate activities.

Goldman Sachs, Morgan Stanley and JPMorgan are chosen as the lead underwriters for the IPO.

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Visa to Acquire Payments Startup Currencycloud

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CEO of Currencycloud, Mike Laven stated that the combination of Currencycloud’s fintech expertise coupled with Visa’s network will enable both parties to deliver greater customer value to the businesses moving money across borders.

Visa Inc (NYSE: V) has announced that it has agreed on a deal to purchase Currencycloud, a British payments startup. Reports from Visa revealed that Currencycloud is valued at $962 million, (£700 million) and will become the second major fintech acquisition by the payments giants in 2021.

Visa added that it will reduce the sum to be paid for the British start-up firm as it already owns outstanding equity in the firm, leading an $80 million investment round in Currencycloud in the early stages of 2020.

Colleen Ostrowski, Visa’s global treasurer speaking after the announcement stated that the acquisition of Currencycloud will enable Visa to support their clients and partners to further reduce the stress of cross-border payments as well as develop great user experiences for their customers. “Consumers and businesses increasingly expect transparency, speed, and simplicity when making or receiving international payments,” she stated.

Currencycloud was founded in 2007 and has its headquarters situated in London and is regulated in the UK, Canada, the US, and the EU. The company’s cloud-based platform offers a wide array of APIs which enables banks, financial service providers, and fintech firms to process cross-border payments, offer currency exchange services, including real-time notifications on foreign exchange transactions, virtual account management, and multi-currency wallets.

The company has offices in Amsterdam, Cardiff, New York, and Singapore, and delivers simple, clear cross-border infrastructure solutions for clients, working with partners including GPS, Visa, Dwolla, and Mambu.

The British firm boats of a long list of clients including popular banking and payment apps, Starling, Monzo, Revolut, Lunar, and Penta. The payments start-up has raised over $160 million in total from investors including Japanese financial services firm SBI Holdings, French bank BNP Paribas and Google parent company Alphabet’s venture capital arm GV.

Currencycloud currently has 500 banking and technology clients in over 180 countries across the globe. Visa is a statement stated that the company will continue its operations from its headquarters in London as well as retain its currency management team. The deal is however subject to regulatory approvals and other customary closing conditions, according to Visa.

The payment start-up has processed over $100bn to over 180 countries since 2012 working with banks, financial institutions, and fintechs around the world, including Starling Bank, Revolut, Penta, and Lunar.

CEO of Currencycloud, Mike Laven stated that the combination of Currencycloud’s fintech expertise coupled with Visa’s network will enable both parties to deliver greater customer value to the businesses moving money across borders. “At Currencycloud, we’ve always strived to deliver a better tomorrow for all, from the smallest start-up to the global multi-nationals. Re-imagining how money flows around the global economy just got more exciting as we join Visa,” he said.

Visa agreed to buy Swedish firm Tink last month in a deal worth $2.1 billion after it attempted to acquire Plaid, a US rival, a move which was foiled by US regulators.

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Wall Street Keeps Up with Upward Momentum for Second Consecutive Day, Dow Jones Up 280 Points

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Dow Jones recovers all losses from Monday with two-day consecutive rallies. Interestingly, the bond market is also fuelling optimism on Wall Street.

On Wednesday, July 21, Wall Street cheered with US stocks climbing for the second consecutive day. The Dow Jones Industrial Average (INDEXDJX: .DJI) was up 0.83% or 286 points recovering the early-week losses of Monday. Now, Dow Jones is just another 1% away from its record-high levels.

This happens as Dow-listed Coca-Cola Co (NYSE: KO) and Johnson & Johnson (NYSE: JNJ) reported better-than-expected earnings.

Earlier on Monday, July 19, Dow Jones tanked 725 points as Wall Street investors feared the growing number of COVID-19 delta variant cases. But the two-day consecutive rally has helped Dow restore its previous levels. In a report on Wednesday, Thomas Essaye of Sevens Report Research said:

“Tuesday was a textbook oversold bounce following Monday’s collapse. Beyond short-term gyrations, however, for value and cyclicals to reassert leadership, we will need to see yields bottom and economic growth beat estimates (two things we think will happen).”

Stocks linked to the growth aspect associated with the reopening of the economy bounced the most. Cruise company Carnival Corp (NYSE: CCL) was up 9% on Wednesday. Similarly, shares of Las Vegas Sands (NYSE: LVS) were up by 3.4%.

Energy stocks also continued to rally as oil prices were up after falling to less than $70 per barrel on Monday. The Energy Select SPDR jumped 3.4%.

Bond Market Fuelling Optimism

As per the CNBC report, the 10-year Treasury yield is currently driving the equity market. On Wednesday, July 21, the yield surged by 8 basis points to 1.29%. Earlier on Monday this week, the yield dropped to a five-month low.

But despite the recent bounce back, the trend is still down. Back in February 2021, the 10-year Treasury Yield was above 1.7%. On Wednesday, Goldman Sachs’ Chris Hussey said:

“The catalyst for why investors have become comfortable with risk assets over the past two days is admittedly elusive. Perhaps investors have just come to embrace the notion that the reaction function to a new wave of the virus is unlikely to be the same as the reaction function employed in the spring of 2020.”

However, some strategists have also warned that markets would stay more volatile going ahead. Thus, they expect deeper pullbacks as investors juggle between inflation fears and rising COVID cases. Matt Maley, equity strategist at Miller Tabak said:

“I think what we’ve seen here are the early warning shots of a correction that we’ll see probably… in late August, September, October”.

But in the last 14 months, the spike in the Covid cases hasn’t much impacted the stock market. On the other hand, rising vaccination is a big positive. Thus, analysts believe that investors will continue to buy the dips.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.



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IBM Stock Up 4% in Pre-market, IBM Reports Better Than Expected Q2 2021 Earnings

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The second-quarter revenue was the largest IBM had ever recorded in three years.

International Business Machines Corp (NYSE: IBM) stock jumped over 4% as of July 20, 2021, at 5:02 a.m. EDT to trade around $143.25. The tweak in IBM stock during today’s premarket trading session was attributed to news that the company reported better than expected second-quarter earnings. During Q2, IBM reported adjusted earnings per share of $2.33 against $2.29 expected by analysts according to research by Refinitiv. Additionally, the company recorded a revenue of $18.75 billion versus $18.29 billion expected by analysts according to Refinitiv.

“The overall spend environment continues to improve,” CEO Arvind Krishna said on a conference call with analysts. “With the economy reopening in many parts of the world, many markets and industries are getting back on track. We see this in North America and select industries.”

Notably, the second-quarter revenue was the largest the company ever recorded in three years. The spike was attributed to a huge demand for cloud computing services as companies push to reach the global market and rebound from the Covid pandemic.

IBM Stock and Q2 2021 Earnings

As a technology-based company, IBM has seen its products gain popularity globally during the coronavirus outbreak. According to market analytics provided by MarketWatch, IBM shares are up 9.41% and 9.56% in the past year and year-to-date respectively through Monday.

However, they are down approximately 5.77%, and 1.68% in the past month and five days respectively through Monday.

Having reported the strongest quarter in revenues, IBM investors anticipate the foreseeable future to be in favor of them. Furthermore, the demand is expected to maintain or heighten as more countries open up their economies.

During the past year, IBM has seen its market valuation sustained over $124 billion. Wall Street analysts are convinced the company can deliver more in the coming quarters. According to a survey conducted by MarketWatch, IBM stocks received an average of a Hold rating from 18 ratings.

Although the company experienced one of its best quarters, the competition is growing in the cloud computing industry. As a result, IBM spent $1.75 billion on acquisitions, the highest in a single quarter since it closed the $34 billion Red Hat deal in the third quarter of 2019.

During Q2, IBM total cloud revenue grew by approximately 13% compared to the same time last year.

”The growth we’re seeing is very encouraging,” Chief Financial Officer Jim Kavanaugh said in an interview. “It’s proof our clients are adopting the hybrid-cloud platform.”

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A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies.
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