What we’re reading (4/21)
“Silicon Valley’s Deal Machine Is Cranking: ‘I’ve Never Seen It This Frenzied’” (Wall Street Journal). “Investors are offering startups five times—or more—the amount of money they are asking, and deals that used to take months now sometimes close in days, according to venture capitalists, deal makers and founders. Startups are raising cash every few months rather than every couple of years, and valuations are soaring with each new check, these people say.”
“Robinhood's ‘Costless’ Trading Can Be Very Expensive” (Real Clear Markets). “Essentially, Robinhood’s business model is in conflict with its customers. Robinhood has a regulatory duty of “best execution” of its customer trades at the best buy and sell prices available. In actuality, the SEC found Robinhood ran its customers’ trades to get the best payment for itself by directing order flow. Robinhood did this to such an extent its customers paid $34 million more than if they’d paid commissions to competitors because of inferior price execution – a fact the SEC determined Robinhood knew, at the time, but made misrepresentations to its customers nonetheless.”
“Weekly Mortgage Demand Jumps 8.6% After Interest Rates Fall To A Two-Month Low” (CNBC). “A sharp drop in mortgage interest rates sent homeowners and potential homebuyers to their mortgage lenders. Total mortgage application volume surged 8.6% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the first overall increase in weekly applications since the end of February.”
“Wall St Fears Netflix Fatigue As Subscriber Growth Slumps” (Reuters). “Wall Street cast doubt on Wednesday on Netflix Inc's ability to bounce back strongly from a first-quarter slowdown in subscriber growth that pointed to fatigue among viewers after a year of COVID-19-driven binge streaming. Several analysts said the streaming giant would need fresh and interesting new content along with a creative approach to pricing going forward as it faces a slew of improving competitors.”
“Shockingly, Guy Behind $100 Million South Jersey Deli Has A Shady Past” (Dealbreaker). “So you’ve probably heard of the deli across the river from Philadelphia International Airport that sells about $18,000 a year worth of sandwiches and the like (except when it doesn’t) and which is nonetheless worth about $100 million. This, of course, raises a number of questions, although the main one seems to be, ‘What the hell are you talking about? How can that be?’ Another question that seems worth asking is, ‘Why the hell does a South Jersey deli with a gravel parking lot alongside a freight rail line sharing a building with something called the ‘New Jerseys Got Talent School Of Performing Arts’ have 7.8 million publicly-traded shares, a Nevada incorporation, a Hong Kong-based chairman, and shadowy shareholders in that city and Macau in the first place?”
