🧯 Banks are collapsing!

Good morning Investor. “Look at what caused people to make a lot of money and you will see that usually it is in proportion to their production of what the society wanted.”

— Ray Dalio, Founder of Bridgewater

MARKET UPDATE

Shares of credit ratings darling Fair Isaac Corp (FICO), dropped 7% on friday after releasing earnings results which beat estimates and saw profits grow by 28%. The drop was likely due to a decline in B2C revenues combined with the stock’s extreme valuation, effectively pricing it for perfection.

TODAY’S BIG HEADLINES

• The next banking collapse is here

• Xbox is in serious trouble

• Stripe is coming for Crypto

• Mercedes beats Tesla to self-driving

FINANCIAL SECTOR

The next banking collapse is here🧯

Echoes of the Past: On Friday afternoon, news emerged that US regulators have seized the troubled Philadelphia-based bank, Republic First Bancorp (FRBK.PK). It’s a flashback to 2023’s bank bust bonanza, a year in which we saw the most bank failures since the 2008 financial crisis, with big names like Silicon Valley Bank and Credit Suisse taking the plunge.

The Collapse: Republic First’s been walking the financial tightrope, with the bank cutting jobs and even exiting its mortgage origination business early last year as it suffered significant losses. Higher costs and a profit allergy didn’t help, even as rising interest rates were like financial spinach to other banks.

Here’s the Rundown: The FDIC’s playing superhero, swooping in to save the day for Republic First’s depositors. Fulton Bank (FULT.O) gets the sidekick role, bagging all $6 billion in assets and $4 billion in deposits. The price tag for this heroics? A whopping $667 million from the FDIC’s vault. It really hasn’t been a good time for regional banks over the past few years. Fulton’s shares are riding the after-hours wave, up 10% as this transaction significantly improves their standing within the Philadelphia market, by effectively doubling their deposits to a sum of approximately $8.6 billion. Talk about a growth spurt!

Wall Street Whispers: Republic First’s shares have had a truly horrendous year, dropping from $2 a pop at the beginning of the year to the current price of a penny per share. Things have been on a downward trend for sometime, with its share being delisted from the Nasdaq in August and only available for trading over the counter.

sources: (WSJ), (CNN), (Reuters)

GAMING INDUSTRY

Xbox is in serious trouble 🎮

Console Conundrum: Microsoft (MSFT) may have smashed earnings expectations like a piñata last week, but not all the candy’s sweet. Azure, LinkedIn, and Bing are partying like it’s 1999, but the Xbox division seems to have lost its invitation to the fiesta.

Sales Slump: The Xbox, now in its fourth year of console adolescence, is facing a bit of an identity crisis. Hardware revenue took a 31% nosedive this quarter, following a 30% belly flop the year before. It’s trailing behind Sony and Nintendo like a kid brother in a three-legged race.

Gaming Landscape: Xbox isn’t alone in the gaming prom’s slow dance Sony’s (SONY) cutting in with a 4 million-unit downgrade in Playstation 5 sales forecasts for the year. The industry’s eyes are all on Take-Two Interactive (TTWO), eagerly awaiting the grand entrance of Grand Theft Auto VI. The rumoured delay of this title could cause further pain in the industry.

But Wait, There’s Growth?: Surprise! Despite the hardware hiccup, Xbox’s piggy bank is getting fatter. This quarter, they’ve set new high scores in game streaming hours, usage of its consoles and the monthly active devices playing its games. Gaming revenue’s up a whopping 51%, and Xbox Content and Services have ballooned by 62% YoY. Although its important to note that this growth is largely thanks to the acquisitions of game publishers Bethesda and Activision Blizzard which has given them the rights to hugely popular titles available even on playstation such as Fallout and Call of Duty.

sources: (Fortune), (Results), (Forbes)

CRYPTOCURRENCY

Stripe is coming for Crypto👑

Zebra Crossing: Stripe, the fintech world’s darling, is strutting down the crypto catwalk with some major makeovers to its business wardrobe. The headline act? They’re now accepting crypto payments. But before you unleash your meme-coin piggy banks, let’s not get ahead of our skis, or should I say, stripes

Digital U-Turn: In a digital pivot that’s got everyone’s wallets in a twist, Stripe’s playing it cool with cryptocurrencies, as they’ll be allowing customers accept cryptocurrency payments, using only one currency initially. They’re starting with Circle’s USDC stablecoin, because who doesn’t love stability? And they’re keeping it exclusive to the Solana, Ethereum, and Polygon networks. It’s a 180 from their Bitcoin breakup in 2018, citing the coin’s volatility and mood swings as a dealbreaker.

The Motive: Why the sudden change of heart? Co-founder John Collison stated that the reason for this change was that “Transaction settlements are no longer comparable with Christopher Nolan films for length”, “And transaction costs are no longer comparable with Christopher Nolan films for budget.” Seems like he’s got a bit of a fanboy moment for the man behind the infamous dark knight trilogy! The full announcement was posted on twitter/X.

sources: (TechCrunch), (Blockworks), (CoinDesk)

AUTO SECTOR

Mercedes beats Tesla to self-driving🚗

No Hands, No Hands!: Mercedes-Benz (ETR: MBG) have been crowned the title of first automaker to sell autonomous cars in the US that don’t require drivers to watch the road and babysit the vehicle. The Daimler-owned automaker has zoomed past Tesla (TSLA) to this feat. Yes, you can now legally daydream while your Benz does the heavy lifting. Tesla, on the other hand, still expects you to chaperone your car like a nervous parent at prom. Talk about German engineering!

A New Era: While we’ve already seen fully autonomous driving services such as Waymo and Cruise, Mercedes is going full rebel, selling its Drive Pilot tech direct-to-consumer with this technology through its Drive pilot technology which was launched back in 2022 in the European market. It’s the perfect excuse to multitask, because who wants to actually pay attention in traffic when there’s Tickergeek to catch up on?

Devil in the Details: Mercedes’ self-driving tech is playing hard to get, and initially will only be sold in California and Nevada, and it’s pickier than a toddler at dinner time. It only works on certain freeways, in daylight, and under 40 mph. And just like your favorite streaming service, it’s subscription-based add-on currently priced at $2,500 a year, which is available for both the EQS sedan and S-Class models. This is a similar business model as Tesla’s FSD package. As for full autonomy? Mercedes thinks we’re a half-decade out from our cars turning into level-4 autonomous chauffeurs, so keep those driver’s licenses handy. Otherwise, better take the bus.

sources: (Fortune), (The Verge)

MORE NEWS

Additional market-moving events🌎

• Give us Your Crypto: UK authorities now have the power to seize crypto assets more easily thanks to a crime bill which was passed last year. (CoinDesk)

• Major League Money: A minor stake in San Francisco-based MLB team the Giants is up for sale at a price which gives the team a valuation of roughly $4 billion. (Bloomberg)

• More AI Money: Elon Musk’s AI startup branding the same name as his social media platform, X.AI is nearing a deal to raise a $6 billion in a private funding round at an $18 billion valuation with participation from Sequoia Capital and various other investors. (Bloomberg)

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