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"You only have one thing to sell in life, and that's yourself." â Henry Kravis
Good Morning and Happy Friday! Hope y'all were able to enjoy a nice Thirsty Thursday/Cinco de Mayo 2-for-1 combo. Stocks did not have a good Thursday, taking a dive as jitters around Fed policy murked the market. Also likely taking a dive are Wall Street bonuses this year. Unlike in 2021, when bonuses (and pretty much everything) went up, 2022 bonuses are expected to fall back to Earth, based on a slower "war for talent" and expense watching. Elon Musk isn't worried about bonuses of course. He's preoccupied with being the CEO of two (or five?) of the world's biggest companies. Musk agreed to be the temporary CEO of Twitter if the deal closes, and investors in his other companies say "distraction worries" are very real. Y'all sort it out because he raised another $7 billion from the likes of Larry Ellison, Sequoia Capital, Andreessen Horowitz, Binance, and VyCapital in equity commitments for the deal.
1. Story of the Day: Tinder Travesty in Texas
Getting ghosted on a dating app sucks. Being catfished is even worse (DEFINITELY not speaking from experienceđ©). Having $8 million stolen from you through a dating app though, that's a whole different level.
Divya Gadasalli, a 25 year old Texan Tinder user, was apparently fleeced by someone she never met for a ridiculous $8 million. This particular type of theft is colloquially known as "pig butchering," where victims' are manipulated by having their crypto accounts grown, and then having the rug pulled from under them. (tbh sounds a lot like every cryptocurrency)
Jerry Bulasa, the person she thought she was getting to know, began chatting up Gadasalli on WhatsApp (red flag #1), after matching on Tinder, while she was in a very vulnerable state. She was taking a break from school at University of Texas Permian-Basin, and thinking about how nice it would be to be financially independent. She reached out to her mother who controls the estate of her father, who was murdered by an ex-business partner and asked for some money to "invest" with Busala.
Busala said she could be a "financial hero" for her family, which honestly doesn't sound like something they really needed. Being the good daughter she is though, Gadasalli wired $10k to a TD Bank account held by a Dong Lian (someone Busala frequently traded crypto with). The transfers continued with $86k, $100k, $200k. The "returns" were impressive and she was able to withdraw $30k a month, with which she said, "Here you go, Mom!"
Busala convinced her to go deeper, with a new account that would give her dividends on top of appreciation. Initially $3 million in Tether, then $6 million, which seemed to grow to $10 million. All seemed great as she was able to withdraw $60-70k a month, but then there were "taxes." These "expenses" caused her exposure to reach $8 million, which finally made her suspicious.
She reached out to the FBI and a lawyer, while learning more about crypto scams, and eventually sent Busala a lawsuit via WhatsApp. His response? "LOL," before deactivating his account.
Short Squeez Takeaway: This Busala guy makes the Tinder Swindler look like an amateur. While that guy got $10 million, it took him several victims to get there. Busala basically did it in one fell swoop. Gadasalli is doing her best to recoup the funds she's lost, suing the crypto exchanges involved, but it's a fairly novel situation she's in. Her case will likely set some precedent in how crypto scams go through our legal systems, and it doesn't seem like many people are very interested in making her whole. Binance, one of the exchanges involved, even moved to dismiss her suit entirely. Lesson of the day is be careful who you meet on the internet. (& pls don't wire them $8 million)
Source: Bloomberg
2. Markets Rundown
All markets finished sharply lower, with the Nasdaq clocking in its worst one day move since June 2020. Higher yields, like the 10 year Treasury, at a year high 3.04%, were the instigators.
Movers & Shakers
- (+) EPAM Systems ($EPAM) +11% after posting better than expected Q1 results.
- (+) Twitter ($TWTR) +3% on news that Elon Musk may serve as temporary CEO after the takeover is completed.
- (â) Shopify ($SHOP) -14% after reporting Q1 results that missed analystsâ estimates.
Private Dealmaking
- Silicon battery materials firm Group14 Technologies raised $400 million in Series C funding
- Voyage Foods out of Oakland raised $36 million in Series A funding co-led by UBS O'Connor and Level One Fund
- OurFamilyWizard buys Cozi, a family organizing app
- Nordic Capital to buy a majority stake in ProGlove
- Avista Capital Partners is looking for a buyer for National Spine & Pain Centers
- Madrid based life insurance startup, Getlif, raised $6 million in seed funding
3. Top Reads
- Anyone want to buy a Peloton? Or 20% of the company? (BB)
- Baby formula shortage is at "crisis" level (Fox)
- Yuan could fall with upcoming $86 billion dividend bill (BB)
- ARK Innovation Fund falls almost 9% in selloff (Reuters)
- Boeing moving HQ to Arlington, VA (MW)
- Goldman launches $900 million Spanish football junk bond fund (BB)
- Bausch + Lomb prices IPO below expectations (WSJ)
- Mortgage rates hit highest level since 2009 (WSJ)
- Bernie Ecclestone part of UK money laundering case (BB)
- Fears of stagflation end stock markets' one day party (BB)
A Message from Polymarket: ETH Price on Saturday (May 7th)
The price of Ethereum (ETH) has fallen over the last few weeks (-20% over the last month) with rising interest rates and growing inflation causing some investors to move out of riskier asset classes like cryptocurrencies.
At the time of writing, ETH was trading at $2,720 but will it be over the $2,900 mark tomorrow?
Will $ETH be above $2,900 on May 7, 2022?*
With a recent price shift in shares on Polymarket, traders are currently predicting a 11% probability that ETH will be above the $2,900 mark on Saturday, May 7th. What do yâall think? Follow the odds now on Polymarket!
4. Book of the Day: The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors
During one crazy week in January 2021, a motley crew of retail traders on Redditâs r/wallstreetbets forum had seemingly done the impossibleâthey had brought some of the biggest, richest players on Wall Street to their knees. Their weapon was GameStop, a failing retailer whose shares briefly became the most-traded security on the planet and the subject of intense media coverage.
The Revolution That Wasnât is the riveting story of how the meme stock squeeze unfolded, and of the real architects (and winners) of the GameStop rally. Drawing on his years as a stock analyst at a major bank, Jakab exposes technological and financial innovations such as Robinhoodâs habit-forming smartphone app as ploys to get our dollars within the larger story of evolving social and economic pressures.
The surprising truth? What appeared to be a watershed momentâa revolution that stripped the ultra-powerful hedge funds of their market influence, placing power back in the hands of everyday investorsâonly tilted the odds further in the houseâs favor.
Online brokerages love to talk about empowerment and âdemocratizing financeâ while profiting from the mistakes and volatility created by novice investors. In this nuanced analysis, Jakab shines a light on the often-misunderstood profit motives and financial mechanisms to show how this so-called revolution is, on balance, a bonanza for Wall Street. But, Jakab argues, there really is a way for ordinary investors to beat the pros: by refusing to play their game.
âGameStop became the most-traded security in the world, appreciating more than 20,000 percent from what it had been worth months earlier.â
5. Short Squeez Picks
- $9.3 million "Hand of God" shirt
- We wrote about alternative energy sources in Insiders â the efficacy of the solar industry and the dilemma of nuclear energy. Find out the top stocks to invest in solar and nuclear sectors
- How "Top Chef" changed the meaning of culinary success in America
- What really is a digital nomad these days?
6. Daily Visual: Modern Day Mad Men
Annual annual advertising revenues for top companies that have reported earnings in 2021
Source: Axios
7. Daily Acumen: Vanderbilts
Vanderbilt left his heirs a hefty inheritance of approximately $300 billion when adjusted for inflation. Within 50 years, it was all gone.
In between, sat three generations whose primary purpose was to compete on who could build the largest house or spend the most on lavish things.
As one of the last Vanderbilt heirs to inherit significant wealth, Reggie had inherited a great deal. As a 21st birthday gift, he received $12.5 million, about $350 million today.
Family biographer Arther Vanderbilt writes:
âSelf-indulgent, lazy, lackadaisical, Reggie had absolutely no sense of responsibility or purpose other than to keep himself from being bored ⊠[he was] never employed and never did a lick of work. Somewhat at a loss when asked his occupation, he usually responded, âGentleman.â ⊠The only way Reggie could distinguish himself was to live the life of a rich playboy. And this he did with dedication and consummate skill.â
Reggieâs two loves were brandy and gambling. The first left him dead at age 45, with cirrhosis so severe, the blood flow from his liver was cut off and pushed up to his esophagus, where the veins abruptly ruptured and left him choking in a pool of blood.
Source: Collaborative Fund
8. Crypto Corner
- Bitcoin hits lowest level in over two months
- CFTC commissioner appoints crypto-experienced director as chief counsel
- Crypto reaction to rate hike
- Block reports $1.73 billion in Cash App bitcoin sales for 1Q 2022
- Argentina's central bank blocks crypto offerings
- Mixing reality with the Metaverse, fashionably
9. Memes of the Day
*Trading is not available to people or companies who are residents of, or are located, incorporated or have a registered agent in, the United States or a restricted territory.