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15 Sep
0/ $AFRM CFO Michael Linford on $V: "You can't look to V & say V is a loser here: (i) We ride V rail for a meaningful number of our transactions, and (ii) We receive repayment for 45-50% of our transactions on debit card anyway so they are recapturing that"
1/ "The networks are critical partners for us today. The virtual card product runs on $V, all that virtual card revenue is our cut of a V transaction."

The $AFRM network isn't exclusively reliant on theirs nor is it independent of theirs.
2/ On their view of underwriting. They are focused on their Variable Profit # (Rev-Transaction Cost); they can handle a lot more losses if there's more revenue & vice-versa. "$PTON users are generally higher credit quality but don't confuse credit with income as it's not as high
Read 11 tweets
13 Sep
0/ We've seen a lot of activity around the private market "exchange" race w/ $NDAQ spinning out NPM (alongside $SIVB, $C, $GS, & $MS) @cartainc launching CartaX, the @Forge_Global / @sharespost merger, etc

Forge is going public providing the first glimpse at #s in the ecosystem
1/ They quote $10B in volume inception to date across 19,000 trades (avg trade size of $526K) with 639 institutions, 123K accredited investors & ~399K registered users.

As of June they did $3.0B LTM, with $1.8B in '20 & $1.7B in '19 with a net take rate of 3.1% LTM
2/ They provide some good data about the private market landscape:
-Median age of tech co at IPO 4 years in '99 to 12 in '20
-Median valuation up from $493M in '99 to $4.3B in '20
-There are 762 "unicorns" with $2.4T in "market cap"
-Private market AuM is now at $13T
Read 8 tweets
10 Sep
0/ Yesterday was $AFRM's 3rd earnings call as a public co but @mlevchin treated it like Day 1 articulating the vision for AFRM to "unbundle the credit card," discussing TAM, product roadmap, the 10-year+ vision, & recent trends / consolidation

Worth a listen given BNPL debates.
1/ For FY21 $AFRM facilitated 16M+ transactions & $8B+ in GMV for 7M users with merchants +5x YoY

Initial FY22 guidance of $12.75B of GMV vs. high-end Street at ~$12B (doesn't include $AMZN, or Debit+, modelling $PTON (-30-35%) YoY vs. Street +, $SHOP is implied at ~$600M-$1.0B.
2/ He spent a lot of time talking about the @Returnly acquisition & looking at other ways to add value for their merchants.

He highlighted their merchant marketplace (~1/3 of FY21 tx's occurred here)
Read 12 tweets
8 Sep
0/ @Adyen's Head of Group Finance spoke w/ UBS about all things Adyen. Growth YTD has been driven predominantly from existing merchants (he called out marketplaces & vertical software companies specifically) while noting some take rate decline due to their tiered pricing model
1/ No surprise & we're seeing this in all the spending data but two areas where the pandemic affected their merchants negatively:
(i) Travel
(ii) In-Store Retail / In-Store Volumes in general
2/ He spoke a lot about their issuing initiatives & what he believes differentiates the Adyen platform:
(i) Issuing in a global nature- clients can issue in Europe, NA, etc... on the same tech stack vs. most competitors building one region at a time
Read 7 tweets
1 Sep
0/ August was another good month for risk assets across the board w/ $SPY +2.9% (7th straight month of + performance, 8 straight months has happened in 14 calendar years), $QQQ +4.0%, $34B in VC funding, $BTC +13% , $ETH +34.9%, $SOL +304.3% & NFT's (punks, rocks, degen apes) +∞
1/ Over the past 10 years September has been the worst month of the year for $SPY (1 of 3 avg negative months w/ avg / median performance of (0.92%) / (0.18%) w/ 50% negativity. Looking at skew the mkt pricing in some fear:

SPY 5% OTM Oct Call 9.7 vol
SPY 5% OTM Oct Put 18.0 vol
2/ Looking at $BTC Sept is the only negative month of the year (Bbg has an avg return of (6.62%) actual avg return closer to (6.1%)) / median of (6.5%) with just 40% positivity.

There hasn't been a positive Sept for $BTC since 2016.
Read 7 tweets
31 Aug
0/ The $TOST S1 is showing the way for other Vertical SaaS companies focused on embedded payments.

Looking at revenue & gross profit contribution payments is actually the lion share today, with subscription revenue of ~10%, while hardware & prof services are loss leaders re: GP
1/ Their net take rate for 1H21 is 55bps (up from 48bps in 1H20); this despite gross take rate down slightly.

This isn't unique to $TOST & we've seen a similar phenomenon with $SQ's #s showing take rates trend higher YoY & vs. '19 w/ more debit usage & online / CNP transactions
2/ Despite the pandemic if we look at their GPV on a quarterly basis its largely grown QoQ every Q except for 1Q & 2Q20.

We're also seeing GPV / ARR per location trend higher.
Read 11 tweets
31 Aug
0/ @patrick_oshag had former Notre Dame CIO Scott Malpass on the pod, Malpass took ND's endowment from a 3 person team (a priest, a receptionist & himself) & $425M in 1989 to ~$14.0B when he stepped aside last year w/ endowment spending going from $19.5M to $425.7M over that time
1/ He became CIO at 26 w/ 2 years of work experience & is one of the more underappreciated capital allocators of the last 3 decades.

Malpass was one of the first CIO's to embrace the Endowment Model having a greater equity allocation, diversification, & investing into alts.
2/ He thinks there are maybe ~40-50 institutions in the world that can implement this model successfully (which is why most endowments underperform) as it requires significant resources, access, continuity of the team, buy-in from the capital base, etc...
Read 13 tweets
30 Aug
0/ With the $AMZN partnership $AFRM now works w/ AMZN $SHOP & $WMT; the 3 most important eCommerce platforms in the US.

AMZN already has their own installment programs (30-35% of 1st party units) & a BNPL-esque offering w/ the store card so they must buy into > GMV & higher AOV
1/ AMZN is the poster platform for high conversion rates due to Prime, 1 click checkout, stored credentials, etc... so this is another validation of BNPL as a payment method.

This allows AMZN to offer AFRM as a payment option across a wider range of SKUs
2/ AMZN currently partners with $JPM & $SYF on private-label cards (5% back on AMZN & Whole Foods).

Estimates are that this accounts for ~$25B of spending on AMZN.

$SYF has expertise in non-prime underwriting but has really been behind on their BNPL suite.
Read 7 tweets
25 Aug
0/ The corporate card competition of '19 have now expanded into "financial operating system" competition of '21 with @tryramp's $300M Series C at a $3.9B valuation in order to build a "finance automation platform" just 890 days after starting the business.
1/ Concurrent w/ the raise @tryramp annc the acquisition of a "negotiation-as-a-service" platform.

This comes after @brexHQ recently acquired Weav (an API for commerce platforms) & $BILL's $3.1B of M&A YTD (@Divvy_HQ & @Invoice2go)
2/ @brexHQ now describes their north star as building the "financial OS" for SMB's serving them across:
(i) Payroll
(ii) Storing Money
(iii) Sending Payments
(iv) Controlling Spend
(v) Credit Card / Lending
(vi) Accounting
(vii) Receiving Payments
Read 5 tweets
24 Aug
0/ A good interview b/w @TruthGundlach & @JuliaLaRoche re: the macro environment. Gundlach's highest conviction idea over the med term is short USD, he's long European equities, & looking to add exposure to EM equities. Believes gold is headed higher & $BTC is speculative
1/ Re: the Fed he said they effectively promised ST rates would stay at 0% for at least a few years & they are controlling the shape of the yield curve, manipulating IR lower at the long end & extending maturities of QE (we can't get >2.0% on the 30-year despite higher inflation)
2/ So while US stocks are overvalued relative to historical measures such as P/E, CAPE ratio, P/B, etc... they look cheap on an ERP basis vs UST.

Bonds are even more overvalued vs. inflation, economic growth, copper/gold ratio, etc... all the typical benchmarks suggest the
Read 10 tweets
19 Aug
0/ In the past week we've seen first time earnings calls for a handful of new payment co's (e.g., $DLO, $MQ, $SOFI, $PAYO) touching on common themes across eCommerce, APM/LPMs, digitization, cash to card conversion, omnichannel, JIT funding, BNPL, pay-in / pay-out etc....
1/ $DLO had their best Q ever w/ TPV $1.5B (+319% YoY), revenue of $59M +186% YoY, NRR +196%.

They highlighted the local nature of payments & a trend of "continued fragmentation" as consumers adopt newly available payment methods & cash to card conversion accelerates
2/ The $DLO platform connects to 600+ LPMs including cards, bank transfers, wallets & APMs, as well as local acquirers banks & non-financial institutions.
Read 13 tweets
18 Aug
0/ Interesting note out of @davidmarcus discussing $FB, @novi & @DiemAssociation. Seems like a public call to regulators to provide the greenlight to go forward while highlighting threat of competition abroad & how existing payment infra is broken & expensive for many globally.
1/ Re-un/underbanked: "There are still ~1.7B people who are unbanked around the world, & even more who are underserved. Among them are 62M Americans who are unbanked or underbanked — people left behind by the current system and stuck in the cash economy."
2/ Re cross-border transactions "Globally the state of play for cross-border payments is dramatically bad w/ an avg cost to consumers, who can afford it the least, of 6.5% (more than 2x the SDG goal of 3%) & end-to-end settlement times of three days on average."
Read 13 tweets
11 Aug
0/ Some highlights from @brian_armstrong call:

-10% of the top 100 hedge funds by AuM are $COIN clients
-They highlighted @SpaceX $TSLA $PNC @DanielSLoeb1 & $WETF by name as inst'l accts (in addition to pensions, corporates)
-1.7M users stake crypto / 2.3M "earned" crypto
1/ They are focused on multiple crypto use cases including earning money w/ crypto, borrowing & lending, staking, using the Coinbase card & trading.

27% of users use multiple products up from 25% last Q.
2/ On fee compression / spreads Brian said " we do not compete on fees. Instead of focusing on being the lowest priced platform, we focus on providing the most value to customers through our custody, our security & storage in addition to trade execution."
Read 4 tweets
10 Aug
0/ $COIN first quarter as a public company
-2Q21: $2.0B of revenue / $1.6B of NI / $1.15B of Adj EBITDA
-1H21: $3.6B / $2.4B / $2.3B
-MTU of 8.8M vs 6.8M consensus

Consensus '21E is $6.1B of revenue / $2.9B of EBITDA / $2.0B of NI.
1/ Trading volume of $462B Inst'l trading was ~68.6% of volume (vs 64% in 1Q)

July saw 6.3M MTU & $57B of volume (down relative to 2Q levels)
2/ FY guidance now: Low 5.5 MTU / Mid 7.0M MTU / High 8.0M MTU. Avg net revenue / user has been $34-$45/mo ($408-$540/yr)

The Street is baking in conservatism into 2H / FY22 (given peak trading in 1H prudently so).

Continues to trade w/ higher correl to $BTC than exchanges
Read 4 tweets
4 Aug
0/ Great Forbes profile on @MichaelDell, the $DELL LBO & business transformation more broadly. From starting the business out of a dorm room in '83 to a projected $100B in revenue this year.

Pre LBO he owned 15.6% which was <$4B
Now he owns 52% of DELL & 42% in $VMW or ~$60B Image
1/ DELL was taken private in '13 for ~$25B in partnership with Silver Lake after a contentious battle w/ @Carl_C_Icahn

In a meeting w/ @egon_durban Durban said “You should just go private...The reality is, you don’t even need our money because you’re so undervalued.”
2/ There has always been skepticism about adding debt to tech companies, but particularly in '13 re: DELL which was thought to be in secular decline. Dell said
“If you have this savings glut, capital is inexpensive & there’s tons of cash on your balance sheet, it’s hard to make
Read 11 tweets
3 Aug
0/ Another good listen from @patrick_oshag. Karen highlighted democratization of global retail participation in US equity markets (espc via options) that may lead to changes in mkt microstructure & active performance

We've started to see this per Citadel
1/ In China retail investors are ~80% of the market enabling alpha generation for money managers.

In the US for the past ~2 decades professional money managers have been the market resulting in limited outperformance.

As passive / retail grow what opp for L/S investors arise?
2/ We wrote about this last summer but looking at data from @DriveWealth that enables global investors fractional equity access the most popular stocks ex-US look very similar:

Read 10 tweets
2 Aug
0/ $BTC finished August +19.2%, finishing with 11 straight positive $BTC "closes" for the first time since April-May '17 (second longest streak ever).

Annualized vol for the month was ~58.6% the lowest month since October '20 in what was an atypical grind higher.
1/ If we look at $BTC realized cap it "closed" the month at $19.9K (slightly below the ATH of $20.1K from mid-May). This was +2.6% MoM after a down June (which was only the 6th down month since Jan '19).

Spot prices went out at a ~109.8% premium to RC; top 27% all time
2/ It's atypical to see realized cap drop for 1 month in isolation & has only happened in March '20, April '14, Dec '13 & May '12 previously.

Looking at times where this has "bottomed" is a good sign of new $BTC holders ending capitulation.

3mo forward performance decidedly +
Read 6 tweets
2 Aug
0/ Not surprisingly a lot of ?'s on buy vs. build for $SQ. @jack kept coming back to qualitative attributes re: the teams ambition / vision / entrepreneurial spirit, as well as the connection b/w Seller & @CashApp ecosystems, diversified merchant exposure & merchant benefits
1/ A good deal of skepticism given how crowded the space is & @afterpay_au & $SQ both discussed their lead gen capabilities. With ~16.0M active consumers Afterpay generates ~1.0M leads / day for merchants they highlight what they can do with 70M annual tx Cash App users (40M MAU)
2/ @jack mentioned the importance of connecting the Seller / Cash App ecosystem countless times & they view this as yet another tool to drive sales to sellers, while enabling $SQ to reach large enterprises / global retailers they haven't been able to before
Read 7 tweets
1 Aug
0/ Big news out of $SQ w/ the acquisition of @afterpay_au for $29B (35x FY '22E EV/GP & 23.9x '23E EV/GP vs. $SQ trading 20.7x / 15.9x).

This is another attempt to further integrate @CashApp & the Seller Ecosystem as Afterpay serves 16M consumers & 100K merchants globally.
1/ $SQ highlights the BNPL opportunity quoting ~$10T of online payments with ~2% BNPL penetration.

Afterpay will be integrated into both $SQ's online & in-person checkout solutions, as well as @CashApp in order to augment their omnichannel capabilities & drive repeat engagement
2/ $APTPY now has 16.2M active consumers & 98K merchants up from 2.0M / 16K 3 years ago and 9.9M / 55K this time last year.

Afterpay cohort economics are impressive with consumers spending ~29.1x their first year total after 4 years, and 20.7x after ~3 years.
Read 10 tweets
30 Jul
0/ Retail option activity has changed Friday stock performance. Weekly options have become more active providing the highest leverage, most gamma & lowest premium outlay.

Friday is the most active day of the week given 1D options provide peak gamma / leverage chart per Citadel Image
1/ Options volumes are 26% higher on Fridays than Tuesdays (the lowest volume day of the week)
-Fridays have the best performance for Equities; $SPY mean return +23bps (vs +12bps for all days), $IWM is +40bps & $QQQ +31bps
Fridays also have the highest volatility of the week; ImageImage
2/ $SPY absolute move is 77bps on Fridays (vs 45bps on Tuesdays)
-Tuesday’s are the lowest volume day of the week; retail options flows are 10% below avg
-Tuesday’s have one of the lowest average returns & lowest absolute volatility days of the week.
Read 4 tweets
29 Jul
0/ Coming to the tail end of a big earnings week w/ $AAPL $AMZN $FB $GOOG $MSFT $V $MA $PYPL $SHOP $FISV $SPOT all reporting. A lot of insights on economic recovery, eCommerce, advertising, SMB optimism, payments, digitization of cash, BNPL, creator economy, streaming & more
1/ The size & scale of these companies are now larger than most nation states
$FB- 3.5B MAU / 2.8B DAU in June
$AAPL- 1.0B active iPhone devices / 1.65B total devices
$MSFT- LNKD 774M members, Teams 250M MAUs
$PYPL- 400M active accounts / 32M merchants
2/ $SPOT- 365M MAUs (165M premium)
$NFLX- 209.8M subs
$TWTR- 206M mDAU
$SHOP- 118M users (23M MAU)

Everyone is talking about eCommerce opportunities
$FB- "Our approach is to work our way down the stack and build world-class services at every layer of commerce, starting from
Read 39 tweets