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Our work this week started in China, excavated in the activity of African startups, distributed with China once again, took a really deep dive in the Latin American startup ecosystem and wrapped with a second look at Robinhood’s IPO. In other words, not much was happening at all!
You may have been surprised to see Amazon stocks tumble off a cliff on Friday. After all, the company posted huge revenue gains to just over $ 113 billion during the quarter. And AWS, its public cloud business, seemed to do well.
But investors were expecting more growth, and had priced the Seattle-based e-commerce player accordingly. When Amazon did not meet revenue expectations and projected growth for the third quarter of 2021 of “between 10% and 16% compared to the third quarter of 2020”, investors abandoned their shares.
But as some in the financial press point out, it is not just Amazon that is taking the investor stick. Etsy and eBay also fell this week. Investors appear to anticipate that a period of accelerated growth in e-commerce thanks to the COVID-19 pandemic is at least slowing down and may in fact be over. That means valuations will reset across a large number of companies, including new ones.
Not that all companies that slow down after the early stages of the pandemic are suffering, Duolingo. achieved a solid opening week as a public company Despite slow growth. But delta variant or not, the investor classes are changing their market structure. It would be smart to take that into account.
It’s the products, stupid
One thing that has stuck with me this week is how much Robinhood has changed the game when it comes to consumer investment. Sure, this week it was mostly about the company’s IPO And it is somewhat relaxed early trading performance. But, buried in his final S-1 / A submissions is new evidence of Robinhood’s cultural impact.
At the top of the US consumer investment unicorn filings is a couple of statistics. They look like this:
Dang, you’re thinking, it’s a lot of funded accounts and monthly active users. But again, those are the numbers for March 31, 2021. They are out of date. In the same filing, Robinhood indicated that its June 30 quarter saw its funded account count grow to 22.5 million. That’s 25% growth in a single quarter!
Naturally, some things happened in the second quarter of this year that will not happen again, but it is still a far-fetched result.
Early Robinhood Investor Jan Hammer from Index sent a comment following the public investment offer of its investment, arguing that the company is part of the work that technology companies are doing to revolutionize financial services. Companies like Robinhood, he wrote, “are not just a new coat of paint for the same old financial products.”
I think that is correct. And the point is pretty damning for incumbent players who are still in the market with outdated websites and mid-grade mobile experiences. Can you imagine getting a Gen Zer to trade Robinhood or eToro or M1 Finance for, I don’t know, John Hancock? The toothpaste, as they say, does not go back into the tube.
How could Fidelity and Vanguard convince Robinhood users to switch to their services? Will they be able to do it, or has a whole generation of investors completely bypassed traditional financial players? Robinhood bulls must think so, and I really can’t find myself to fight the prospect.
I don’t know how Robinhood will perform in the next few quarters, but it feels, given Robinhood’s MAU numbers, M1 AUM figures And so on, that fintech startups stole multiple gears on their trusted 401 (k) provider. A market in which I am sure fintechs will soon delve deeper.
More about Africa
Going back to Africa, how about some data for July? Our exploration of the continent’s strong performance in the first half of 2021 stopped in June, so let’s add some data. According to the Africa watch publication The Big Deal, African startups raised $ 308 million in 71 deals in the quarter. That’s a run rate of around $ 3.7 billion. Or in simpler terms, African startups are still on track for their best year when it comes to raising venture capital.
Hugging and getting vaccinated.