| |  | TOGETHER WITH |  | | | Good morning.
The world's richest man agreed Monday to buy Twitter. Elon Musk will pay $44 billion to take the social network private in a deal unanimously approved by the company’s board.
The New York Times reported that, in a survey of 200 Twitter employees on the anonymized workplace review app Blind, 44% said their feelings towards Musk were neutral, 27% said they loved him, and 27% said they hated him. Three weeks ago, on the day Musk disclosed a large stake in the company, Twitter shares rose 27%. Maybe it’s his lucky number. | | | • | | Startups should expect less funding from SoftBank. | | • | | Wind power manufacturing is having the wind knocked out of its sails. | | • | | The king of classic soft beverages reports strong earnings. | | | | |  | Private Equity | SoftBank Slows Down its Tech Investments | | You don’t need a reminder: Silicon Valley has hit an epic low recently. While spectacular stock collapses at Netflix and Meta grab headlines, would-be high-profile startups are taking the latest body blows.
That’s in part because SoftBank, the investment juggernaut that’s served as a free-flowing spigot of money for tech startups, is beginning to slow its spending to a comparative dribble. | Green Light, Red Light | | Founded by Japanese billionaire Masayoshi Son, who amassed most of his fortune via ground-floor stakes in Yahoo and Alibaba, SoftBank helped put startups like Uber and WeWork on the map thanks to its founder’s penchant for recruiting maverick entrepreneurs with visions of industry disruption and tech-enabled economies of scale. The Vision Fund — a $40 billion tech-focused venture backed by billions from the sovereign wealth funds of Saudi Arabia and Abu Dhabi — has garnered particular fame for adhering to a strict rule of $100 million investment minimums.
SoftBank invested at a breakneck pace last year, completing 195 deals, according to the Financial Times. Yet the recent tech downswing, particularly among Chinese companies, has SoftBank sweating. China's crackdown on the tech sector has sent its stake in Alibaba from $208 billion in November 2020 to $69 billion this March. On Monday, Bloomberg reported that Son is advising his executives to slow the pace of investments: | • | | Nearly all of the listed Chinese companies in which SoftBank has invested are trading below their purchase price, according to FT. The billions SoftBank invested in online education firms are especially at risk after the Chinese government banned them from making profits last summer. | | • | | SoftBank’s stake in ride-hailing app Didi, its largest investment in China, is roughly $9 billion in the red after Beijing launched a national-security-tinged investigation of the company. | | | | Personal Stakes: SoftBank’s stock is down over 50% in the past year, and its estimated writedown this quarter is between $20 and $30 billion, sources tell the FT. Some analysts believe the firm can right the ship, but Son, who owns roughly a third of the company and has taken out personal loans against his stake in SoftBank to invest in the Vision Fund, is growing “very concerned” about the rising collateral. Perhaps the billionaire Son has flown a little too close to the… sun. | | | | | | Renewables | Wind Energy Companies are Facing a Gust of Cyberattacks and Cost Pressures |  | | It was never going to be a breeze for wind energy firms. They are only charged with helping wean the world off power sources that have charged grids for decades, finding the margins to make that happen, and getting it all done quickly in a frenetic race to prevent climate change from turning the Earth into a giant windblown post-apocalyptic wasteland. Easy peasy, right?
The latest challenges for the industry — a two-pronged blitz of cyberattacks and rising material costs — have analysts worried that, even with gale-force demand, the renewable energy sector may be losing the wind in its sails. | Which Way the Wind Slows | | Today’s tempest has been brewing for years. After offering generous support earlier in the century, governments from Germany to Spain and from Japan to China began winding down wind power subsidies in the late 2010s, which in turn made renewable energy tenders more expensive. The pandemic jolted materials and shipping costs, leaving turbine manufacturers with razor-thin bottom lines: | • | | Spain-headquartered Siemens Gamesa, the world’s second-largest turbine manufacturer, warned last week that its profit margin this year will be negative 4%. GE Renewable Energy, America’s biggest turbine maker, is set to post an operating margin of negative 16% in the first quarter, according to Citigroup. It’s also piled up $2.3 billion in operating losses since 2019. | | • | | Increasingly non-existent margins have wind-power manufacturers shortening sails on their output. The International Energy Agency says that, to keep the climate from rising more than 1.5 degrees Celsius by 2030, the world should be adding 390 gigawatts of wind capacity annually. A mere quarter of that was added in 2021. | | | | “You absolutely need to see some of these profit pictures turn around for the decarbonization goals to be achievable,” said Aaron Barr, global head of onshore wind at consultancy Wood Mackenzie.
Shields Up: Energy companies, whether in the renewable space or not, have emerged as a favorite target of hackers, state-affiliated or otherwise. Per an IBM report, after finance and manufacturing, the energy sector was the third most targeted in 2020, up from ninth in 2019. Three German wind firms — Deutsche Windtechnik, Nordex, and Enercon — have been hacked in the two months since Russia invaded Ukraine. A 2021 report by Black Kite found that roughly half of US energy companies have out-of-date systems that put them at increased risk of being hacked. | | | | | | SPONSORED BY vinovest | What Tastes Great and Performs Even Better? | Fine wine. But if you’ve been paying attention, you shouldn’t really be surprised – fine wine has outperformed the MSCI Global Equity Index for the past 15 years (including during downturns). That’s thanks in large part to a few distinct features of the vino game: | • | | Scarcity: Wineries often make expensive wines in limited quantities. That means every time one bottle gets popped on date night, the rest of that batch gets more valuable. | | | | • | | Brand Equity: Prestigious estates can command six figures for a single bottle of wine. Get one of those in your portfolio, and that equity can go a loooong way. | | | | | | | | Soft Drinks | Coca-Cola Posts Strong First-Quarter Earnings | | Does recent slumping stock performance have you down? Relax and grab some Coca-Cola — both the beverage and its parent company’s shares.
Amid a rollicking earnings season, the classic beverage heavyweight reported positively bubbly results on Monday. | Soda Popping Off | Through Friday, Coke shares were already up by some 10% for the year — even as the overall S&P 500 has fallen by roughly the same percentage over the past four months. Meanwhile, competitors such as PepsiCo, Campbell’s Soup, and Conagra Brands have struggled to keep up with rising costs. Breaking Bad’s chief antihero Walter White once asked, “Do you really wanna live in a world without Coca-Cola?” Even with inflation popping, consumers have apparently responded with a resounding no: | • | | Coke’s net sales grew 16% year-over-year to $10.5 billion, beating Wall Street’s estimates of $9.8 billion. | | • | | First-quarter profit margins rose from 31% to 31.4% year-over-year. Although it has passed on its higher costs to consumers in the form of higher prices, the company said it has sought to avoid sticker-shocking its faithful customers, in part through a focus on offering affordable single-serving beverages over bulk packages. | | | | Covid-Cola: The soda pop purveyors’ out-of-home sales to venues like restaurants, stadiums, and theaters are still languishing. Numbers have yet to return to the glory days of 2019, possibly due to widespread restaurant closures, according to CEO James Quincey. Apparently, everyone is cracking a Coke and letting the good times roll, just in the comfort of their own homes. | | | | | | Extra Upside | • | | One final time, Warren Buffett will hold a charity auction for a chance to have lunch with him (the winning bid in 2019 was $4.5 million). | | • | | Attention, cool uncles of the world: an electrified Chevy Corvette is coming next year. | | • | | What if you could bolster your family’s financial security as fast as you can fry up some eggs? Bestow is making it possible with hassle-free, completely online applications for term life insurance. So finish up breakfast, check out policies from an A+ rated carrier, and lock in premiums as low as $10/month. Voila! *Chef’s Kiss* Apply online in as little as 5 minutes, with no medical exam 一 ever. *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
