🍋 Deal of the Year
Good Morning! After Serena's recent retirement, another GOAT has decided to hang up his boots... Congrats to Roger Federer on all his success. Tennis and its fans will miss the legend. Mortgage rates have also hit legendary status, reaching 6% for the first time since the 2008 housing crash. Goldman's Christian Mueller-Glissmann says that as real rates rise, Wall Street's struggles will only get worse.
On the bright side, BofA will offer up to six weeks of paid sabbatical leave for employees that have been around for at least 15 years. In other good news, the US railroad strike has been averted as a tentative deal has been reached between unions and companies. This prevents what would have been the first nationwide rail strike in 20 years.
For those looking to invest in private companies, check out today's sponsor, Ally Robotics, the startup pioneering the golden age of robotics.
1. Story of the Day: Deal of the Year
In one of the more unexpected events of the year, which is saying something as it's been a wild one, Adobe is acquiring Figma for $20 billion. Silicon Valley is stoked, while Wall Street is not a fan.
Aside from the obvious headwinds of the current market conditions, one thing that makes this particularly wild to me is Adobe basically said it overpaid. In an announcement, Adobe said it would acquire Figma for approximately $20 billion in cash and stock, and then went on to say that Figma will have a total addressable market of $16.5 billion by 2025.
Wait what? So, in 3 years, the total market that Figma can provide solutions for, will still be $3.5 billion smaller than what you paid for it today? With rates going up, and growth/tech companies getting clobbered and cheaper? No wonder the deal-deprived Wall Street crowd is upset.
In a year without any major IPOs, and revenues are down so bad that layoffs are back, a deal without any other bidders has become an annoying reminder of how outlandish Silicon Valley deals can be. That logo might as well add a brightly colored "U" next to it.
Lo Toney, founding managing partner said of Figma's cloud-based design software, "this was a significant threat to Adobe. This was very much both a defensive move but also an eye towards this trend where design rules and design matters."
Short Squeez Takeaway: Just last year, Figma raised private capital at a $10 billion valuation, when software mania was peaking. Fast forward to this year and other cloud companies like Snowflake, Atlassian, and Cloudflare are down 41%, 33%, and 51% respectively. Maybe the best offense is a good defense? Or maybe it's another thing that doesn't make any sense.
2. Markets Rundown
Stocks mostly traded sideways before ultimately finishing the day in the red. Even "The Merge" which was completed this morning, couldn't save crypto from the flight from risk assets.
Movers & Shakers
- (+) Humana ($HUM) +8% after upping its earnings guidance for the fiscal year.
- (+) Netflix ($NFLX) +5% because Evercore ISI upgraded it to an outperform rating.
- (–) Adobe ($ADBE) -17% after announcing it would acquire Figma.
3. Top Reads
- The business of food delivery (Short Squeez)
- Number of people working remotely tripled during Covid (Axios)
- Cathie Wood goes on biggest dip-buying spree since February (CNBC)
- How central banks are risking a global recession (Axios)
- 16 things execs said at Goldman’s tech conference (YF)
- Housing problem is also an inflation problem (Axios)
- FedEx CEO says he expects the economy to enter a ‘worldwide recession’ (CNBC)
- Elon Musk reiterates worst nightmare for economy (YF)
- CEO optimism levels decline amidst market turmoil (Axios)
A Message from Ally Robotics: Invest In The Startup Pioneering The Golden Age Of Robotics
Thanks to Ally Robotics, you might start seeing robots in places you’ve never seen them before.
Businesses once struggled to find an affordable robot that was also effective and easy to use.
Then, Ally harnessed “imitation learning” to design a robot that requires no coding expertise – instead, it learns by simply watching and imitating human movement.
Today, they have a $30 million non-binding letter of intent to automate kitchens.
Tomorrow, it’s airports, farms, and factories.
4. Book of the Day: The 2-Hour Cocktail Party
You know that well-connected friend who only exists in the movies? The one who throws the best parties and can set up any introduction you need?
Everyone wants to know someone magical like this who brings people together. The secret is: you can be that person. You should be that person. The 2-Hour Cocktail Party will show you how.
Discover a simple formula with step-by-step instructions to host parties that help you meet new people, strengthen your existing relationships, and make you the person everyone wants to know.
You’ll learn which days are the best (probably not the ones you think!) and what to say to the first people who arrive.
Read how to ensure your invitations get responses and your guests show up excited to mingle. Plus, get helpful pre-party checklists and a breakdown of activities to encourage new connections.
With The 2-Hour Cocktail Party, you’ll make new friends, boost your career, and leave everyone asking, “When’s your next party?”
“Don’t hold bad events, host great parties instead.”
5. Short Squeez Picks
6. Daily Visual: Change in Consumer Price Index for Select Metro Areas
August 2021 to August 2022
7. Daily Acumen: Everyone's a Dreamer
"What was the happiest day of your life?
The documentary How to Live Forever asks that innocent question to a centenarian who offered an amazing response.
“Armistice Day,” she said, referring to the 1918 agreement that ended World War I.
“Why?” the producer asks.
“Because we knew there would be no more wars ever again,” she says.
World War II began 21 years later, killing 75 million people.
There are so many things in life that we think are true because we desperately want them to be true. People do this with their relationships, careers, investments, political views – anything forward-looking is subject to being swayed by your desire to have a pleasant life.
Everyone is a dreamer because it’s hard to go about your day when you genuinely believe the future will be difficult.
The same thing happens in investing, when people eagerly listen to forecasters whose track record is indistinguishable from guessing. Same in politics.
The more uncertain the endeavor, and the higher the stakes of the outcome, the more you are persuaded by the most pleasing answer. And if you tell people what they want to hear you can be wrong indefinitely without penalty.”
Source: Collaborative Fund
8. Crypto Corner
9. Memes of the Day
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