01st July 2023 – 07th July 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,398.95 | 13,660.72 | 14.83 | 33,734.88 | 2,409.69 | 15,671.63 |
| -1.16% | -0.92% | 9.12% | -1.96% | -1.12% | -1.29% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 19,331.80 | $1,930.50 | $23.29 | $78.17 | 82.65 | 90.68 |
| 0.74% | 0.14% | 1.31% | 3.96% | 0.68% | 1.21% |
Source: MarketWatch
Hello Saturday,
This week, Meta launches Twitter rival Threads, Tesla announces record deliveries in the second quarter, and the IDFC and IDFC First Bank merger gets approved.
- Meta launches Instagram Threads, a text-based social media platform, which is a direct competitor to Twitter; about 30 million users sign up within 18 hours of launch.
- Tesla vehicle deliveries hit a record high in the second quarter of 2023, and are up 80% from a year ago; CEO Elon Musk continues to prioritise sales over profits with price cuts to stay competitive in markets like China, the US, and the UK.
- The generative-AI ecosystem is expected to be worth $7 trillion, and is already greatly benefiting tech giants like Nvidia and Adobe.
- Taylor Swift’s Eras Tour is on track to becoming the highest-grossing tour ever, with the potential to hit $1 billion in sales; the Ticketmaster fiasco has helped companies in the ticket resale market.
- IDFC First Bank and IDFC’s merger gets approved, and is expected to be completed before the year ends; the merger will help simplify the firms’ corporate structure and ease regulatory compliance.
Taking stock | The gloves are off | Street cred | AI spring | Gold Rush | Major merger | Invest wisely
Taking stock
Wall Street finished lower on Friday, and all major indices ended the week in red. The S&P 500 dipped 1.16%, the Nasdaq shed 0.92%, and the Dow dropped 1.96%, logging its worst week since March. Though the June jobs report showed that payrolls increased less than expected, strong wage numbers made it difficult for Wall Street to shrug off fears of a possible rate hike later in the month.
The gloves are off
Meta launched Instagram Threads on Wednesday, a text-based social media app that’s a direct competitor to Twitter. Threads is an independent social media app that users need to download from the App Store or Play Store, but it’s linked to Instagram, and users can use it with their existing Instagram usernames and follow the same accounts they follow on Instagram. Threads is available in over 100 countries and is off to a promising start — as of Thursday morning, it had around 30 million sign-ups.
Threads has several similarities to Twitter, from the aesthetics to the product description. Mark Zuckerberg said in a Threads post that the app aims to “create an option and friendly public space for conversation”, and users can post Threads that are up to 500 characters long. As of March 2023, Twitter ranked second in the US among social media platforms in terms of visits. But now, Twitter faces a real threat from Threads, especially given the timing of its launch.
Source: Statista
Ever since Elon Musk bought Twitter, users have been unhappy about the changes in the platform and have been looking for alternatives. Recently, Musk applied temporary limits to the number of tweets users can read per day, which added to user frustration. Now, Threads presents a seemingly perfect alternative. This project was internally code-named ‘Project 92’, and rumours regarding it also further fueled the rivalry between Meta and Twitter. Now that the app has been launched, Twitter has already threatened to take legal action against it.
Street cred
Tesla delivered a record number of vehicles in the second quarter of 2023, beating expectations. It delivered over 466,140 vehicles, as opposed to the 447,000 that Wall Street expected. This is also more than 80% higher than a year ago.
Tesla has been strategically cutting prices to boost sales — it slashed prices for the fifth time in April. Tesla CEO Elon Musk has said he believes in pursuing higher sales even if that means lower profits. While sales did go up in Q1 2023, profits fell by 24% compared to Q1 2022. This was partly due to price cuts and partly due to increased raw material costs. Tesla’s second-quarter financial results will be reported on July 19.
Musk’s strategy, however, has helped the electric automaker compete better with rival manufacturers in the US, the UK, and China. China is Tesla’s biggest market after North America, and it faces tough competition there. For instance, this week, Tesla’s Chinese rival BYD also reported record deliveries in the second quarter.
AI spring
The tech-heavy Nasdaq is up 31% year-to-date, primarily thanks to a few mega-cap tech stocks and the AI boom. Year-to-date, Meta is up 140%, Amazon is up 55%, and Apple is up 47%. But the company that’s stealing the show with a growth of more than 190% this year is Nvidia.
Thanks to Nvidia’s graphics processing unit (GPU) chips that now make up about 90% of AI-enabled chips in the market, the company has joined the elite $1 trillion market cap club. As per Goldman Sachs, generative AI could raise global GDP by $7 trillion, benefiting a range of tech companies, including Adobe and Microsoft.
This AI boom, however, is not good news for all tech companies. Lately, a lot of the changes that social media platforms like Reddit and Twitter have been announcing are an attempt to prevent AI companies from scraping data off them. Large language models are trained using enormous amounts of data, and platforms like Reddit and Twitter are data goldmines for this purpose. While these tech companies want to monetise their data instead of having AI companies benefit from it for free, the users of such platforms are not happy with such new policies that restrict their engagement with the apps — for instance, Twitter’s limit on tweet-viewing.
Gold Rush
Taylor Swift’s 106-stop Eras Tour is on track to hit a record-breaking $1 billion in sales. As of now, the music tour has grossed $300.8 billion, with tickets ranging in price from $50 to $899, and the singer hasn’t even begun touring internationally yet. If the Eras Tour hits the $1 billion sales mark, it will become the highest-grossing tour ever.
Back in November 2022, when the tickets for the tour went live on Ticketmaster, the site received 3.5 billion ticket requests and was unable to service such a heavy demand. This fiasco not only led the Department of Justice (DOJ) to launch an antitrust investigation into Live Nation, Ticketmaster’s parent company, but has also benefited other companies and Swifties, as the singer’s fans are called.
Stubhub, which is a ticket exchange and resale platform, has reported that 70% of Eras Tour ticket orders have been coming from fans instead of ticket brokers. About 54,000 tickets have been sold per show so far, and mega fans are willing to pay as high as five figures in the resale market to get hold of highly coveted Eras Tour tickets.
Major merger
This week, the merger between IDFC and IDFC First Bank was approved, and should be completed by the end of this year. This is another major merger in the financial sector in India after that of HDFC Bank and HDFC. IDFC’s shareholders will get 155 shares of IDFC First Bank for every 100 shares held. After the merger was approved, shares of IDFC First Bank fell about 6%, while IDFC shares rose 6% on Tuesday. This merger’s primary aim is to simplify the firms’ existing corporate structure and ease regulatory compliance.
Invest wisely
Your investment portfolio can benefit from significant capital gains by investing in stocks of companies that are part of generative AI’s $7 trillion ecosystem, such as Nvidia, Adobe, and Microsoft. To maximise returns from this investment theme, download the Appreciate app. Appreciate makes investing in US stocks as simple and quick as investing in Indian stocks so that you can seize opportunities from across the globe.
Warm regards,
Another week
in the markets
