As well as working from home, millions have been exercising, shopping and playing games to pass the time as they wait out coronavirus — activity that is powering this pandemic’s latest passel of IPOs.
Affirm, part of the buy-now-pay-later segment of fintech led by Sweden’s Klarna, said in its filing documents on Thursday that 30 per cent of its revenues in its September quarter came from the networked exercise bike provider Peloton, as people bought the machines and signed up to its fitness classes. Affirm, whose CEO is PayPal co-founder Max Levchin, said revenues rose 93 per cent in the year to June. It’s expected to be valued at north of $10bn.
Wish, the ecommerce platform led by a former Google executive that sells cheap Asian goods to the masses, said it had sales of $1.7bn in the first nine months of 2020, up nearly a third on last year. The San Francisco-based marketplace is aiming for a valuation of between $25bn and $30bn.
Roblox, the video game platform loved by preteens, earned close to $1.2bn from selling virtual currency to its users in the first nine months of the year as gaming surged under lockdown. The figure represents a 171 per cent increase from the same period in 2019 and Roblox expects to be valued ahead of the $4bn achieved in its last funding round.
But even in a time of unprecedented demand, these companies are not yet making money. Roblox reported net losses of $203m in the first nine months of 2020, Wish’s losses rose to $176m in the same period, compared to $5m in the first nine months of 2019. Affirm’s revenues of $509.5m in its year to June 30 saw its net loss decline slightly to $112.6m from $120.4m in 2019.
Earlier this week, we discovered the short-term rental platform Airbnb made losses of $700m on revenues of $2.5bn in the first nine months, while food delivery app DoorDash lost $149m on revenues of more than $1.9bn through the third quarter.
Investors should therefore note that “No pain no gain” does not apply to the profits of IPO candidates potentially benefiting from the pandemic.
The Internet of (Five) Things
1. Facebook and Apple argue over privacy and profit
“They claim it’s about privacy, but it’s about profit,” said Facebook in a spat with Apple after the iPhone maker accused the social network of having a “disregard for user privacy”. Facebook was referring to new privacy restrictions, postponed by Apple, that require apps to get users’ explicit permission to gather ad targeting and tracking data. “We are not fooled. This is all part of a transformation of Apple’s business away from innovative hardware products to data-driven software and media,” it added.
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2. The buzz on BuzzFeed and HuffPost
BuzzFeed has acquired HuffPost from the telecoms group Verizon in exchange for a minority stake in the online media group. It’s the latest consolidation in the ailing digital media sector. Condé Nast — the company behind Vogue and The New Yorker — had hoped to finally turn a profit this year, before the pandemic hit. We spoke to its chief executive Roger Lynch about the acceleration of its digital transformation.
3. Sage presages bigger spending
Sage’s shares fell more than 13 per cent on Friday as the FTSE 100 accounting software group said it would ramp up spending next year to capture small businesses as they shifted to cloud computing. Lex says it lost its crown as the largest UK listed technology company by market value after investors took fright at news of a tighter squeeze on profit margins.
4. UK launches into satellites
The UK has entered the increasingly competitive race to become a global satellite internet provider after taking control of failed space start-up OneWeb with Indian billionaire Sunil Bharti Mittal. The low-earth orbit satellite operator emerged from Chapter 11 bankruptcy protection on Friday and aims to launch a global commercial internet service by 2022 focusing on remote areas.
5. My back pages
“Ah, but I was so much older then, I’m younger than that now,” sang Bob Dylan, and John Gapper reflects on how backlists in the age of streaming are now the new thing for record labels and artists from Joni Mitchell to Taylor Swift to profit from. Meanwhile, Helen Barrett looks at how the likes of Mixcloud and Club Q are trying to recreate online the thrill of live music events.
Tech tools — Coding with Kanye
This £300 kit computer from Kano (in which Kanye West is an investor) is also a really good little Windows 10 machine, writes Jonathan Margolis. It comes with Microsoft Office ready-loaded, so it’s great for homework, but Kano’s real mission is to open up the world of coding to children, and the machine has its own software to train you. As a Christmas present for anyone aged from about 8 to 13, it takes some beating.