Tag: Tech

I did buy some DoorDash (NASDAQ: DASH) from the $140-150 level, but feel that potentials are priced in now.

To put some rough numbers –

DoorDash in 2020 Q3:

• Active customers: 18 million
• Total number of orders: 236 million
• That’s around 1 order per week for each customer.
• GOV: 7,252 billion
• So $ per order = $30.7
• Revenue: 879 billion
• Take rate = 12.1%
• Contribution Margin = 24.5%
• Adj. EBITDA Margin = 9.8%

That’s a nice profit thanks to growing orders during covid (no marketing needed).

The question is how much of the growth will continue post-pandemic.

My guess is that GOV will continue to grow, due to

1. Food delivery offers greater convenience & more selections – benefits that are not only tied to the pandemic (DashPass can become a food explorer’s subscription)
2. DoorDash is inner-city-delivery-as-a-service and can expand to groceries & pickups from brick-and-mortar stores. It’s a way to revive every kind of physical retail.

Plus, it’s legit to argue that as delivery network density grows, the efficiency grows, and unit cost will drop.

That being said, let’s assume (post-pandemic, by 2022) total order number goes to 450 million/qtr so 1,800 million/yr (e.g. 30 million customer x 60 orders/yr)

$ per order goes up to $35.

GOV = $63 billion

With unchanged 12% take-rate, revenue = $7,560 billion

Adj. EBITDA = $1,512 billion (margin improved to 20%)

Then 40x adj. ebitda will give us a valuation of ~$60 billion. (which is DoorDash’s current valuation)

Clearly, multiples will depend on the market sentiment.

Some of the assumptions are not conservative I have to say, so I won’t expect some solid 50% return ($90bn valuation) from the current level in near term.

Following up on my post almost 2 years ago – fresh fundings are going to EV makers and autonomous driving.

The check sizes are big – you need billions of dollars to compete with the $800 billion Tesla.

1/ Microsoft + Cruise, $2+ billion

A new investor in the EV space – Microsoft (NASDAQ: MSFT) led the $2+ billion round for GM’s (NYSE: GM) Cruise, with valuation up to $30 billion. Microsoft’s Azure is getting the new customers: GM and Cruise.

Cruise, as a self-driving unit, spent $0.8 billion in operating cash flow in 2019.

At December 31, 2019, external investors held 17.3% of the fully diluted equity in Cruise Holdings. After this funding, GM should still have 77%+ of Cruise.

2/ Rivian, $2.65 billion

The financing is led by T. Rowe Price and the firm is valued at $27.6 billion. This is in addition to the $2.5 billion raised in July 2020.

3/ Lucid Motor, $2 billion (?)

It was reported (rumored) that Lucid Motor will go public via a SPAC deal with Churchill Capital Corp IV (NASDAQ: CCIV), which raised $2.07 billion last year.

The transaction could be valued at up to $15 billion.

CCIV share closed at $17.9 today, or 79% above its blank check ipo price of $10.

If pre-money Lucid is worth $13 billion, then buying CCIV at $17.9 is buying Lucid at over $23 billion.

There were a lot more others, with SPACs. To name a few others – Lordstown Motors (NASDAQ: RIDE) raised $1.175 billion; Luminar (NASDAQ: LAZR) raised $570 million; Fisker (NYSE: FSR) raised $1 billion, etc.

Plus, Apple will make EVs, Alphabet has Waymo, Amazon has Zoox and invested in Rivian. With Microsoft’s deal today and Tesla surpassing Facebook in market cap: now top 5 big tech in the US all have an EV play.

Takeaways:

1/ Cash might be abundant today – cash will be a competitive edge tomorrow.

2/ Covid-19 delayed most EV companies’ production for 1 year – that’s a gift for those who can produce – namely Tesla. The valuation jump includes the unexpected another year ahead.

3/ Top 5 big tech in the US all have an EV play.

Spotify (NYSE: SPOT) launched podcast service in 2015. It appears to be the leading podcast provider in 2020.

Podcast listeners are projected to surpass 100 million in 2020 in the US alone, and podcast ads revenue to surpass $1 billion in 2021, according to emarketer.

Spotify launched Spotify Podcast Ads in January 2020.

In November last year, Spotify announced to acquire Megaphone for $235 million. Megaphone offers technology for podcast publishers and advertisers seeking targeted slots on podcasts.

Amazon Music came a bit late – it adds podcasts in September last year.

Apple, an already big player in podcast, seems to plan another route to monetize – a paid subscription service, according The Information today.

On the same day, Tencent Music (NYSE: TME) announced its acquisition of Lazy Audio, which provides audiobooks, and other forms of “podcast-like” audio services.

ByteDance, Kwai and LiZhi (NASDAQ: LIZI) have their own apps for podcast as well.

It’s another round of competition in long-form audio – PGC & UPGC contents will be hot.

Yep, tech companies always want to connect with users longer.

Industrialization: Automobile

While railway and steamship are useful in long distance delivery, short distance and city delivery system was still relying on manpower and horsepower. Things started to change in the 20th century.

In December 1899, an automobile mail wagon was tested in the US for the first time. Officials cheered the dramatic increase in collection speed and soon postmasters across the country were testing motorized vehicles. Collection times were cut at least in half in most trials. [PostalMuseum]

Driving was not an everyday skill in the early 20th century, so the Post Office asked manufacturers and suppliers to provide drivers along with the vehicles.

United Parcel Service (UPS)

In 1907, the predecessor of United Parcel Service (UPS), American Messenger Company, was founded. The company initially focused on merchant / retail businesses and then pivoted to “common carrier service” in 1922 with acquisition.

UPS bought its first car, a 1913 Model T Ford, and attached a truck bed to its back. By 1915, it was using four autos and five motorcycles, and employing 20 foot messengers.

In 1919, it started to use the current name UPS.

After WWII

During the Great Depression of the 1930s and America’s involvement in World War II from 1941–1945, new truck purchases were a low priority at the Post Office Department. As a result, trucks bought in the 1920s and early 1930s were kept on the road longer than expected.  [PostalMuseum]

Fueled by the boom of the auto industry, industrialization again revolutionized the delivery system and further expanded the ability of settlement in less connected lands across the US.

Post war, the family car played a central role in suburban life; the number of cars on the road increased from 25.8 million in 1945 to 61.7 million by 1960. America’s growing dependence on automobiles and the growth of the suburbs pushed the Post Office Department to change how it transported and delivered mail. Passenger trains — which had transported most mail since the 19th century — declined, as more and more people chose the open road over the railroad. [USPS]

The first Highway Post Office bus was inaugurated on February 10, 1941. A second route was not established until 1946 due to the outbreak of World War II.

Highway Post Office routes were organized on round trips which averaged about 150 miles each way. There was a very good reason for this, as the bus generally could only hold enough gas for about one 150 mile trip, and fuel stops meant losing valuable time.

Three-wheeled vehicles like Mailster were tested in half a dozen cities beginning in June 1950. By the end of the decade, more than 5,700 Mailsters were in service; the number peaked in 1966, at about 17,700 nationwide.

JumiaPay is a very natural business choice as we see the success of Alipay, spun out of Alibaba.

This is also the reason MasterCard expanded collaboration and invested €50 million last year.

In Jumia’s 19Q2 press release:

… expanded the scope of JumiaPay beyond our physical goods marketplace. As of December 31, 2018, JumiaPay was only available within our physical goods marketplace. It is now also available within our on-demand services, Jumia Food, and hotel booking portals, Jumia Travel, in selected countries.

…we continued to expand the range of financial and digital services available from third parties, powered by JumiaPay, offering our consumers an increasing range of relevant every day services.

In Nigeria for instance, consumers can now access micro-loans offered
by a local fintech startup, alongside event tickets offered by a local event ticketing provider.

In Egypt, in the second quarter of 2019, we started distributing services from a local deals provider allowing consumers to purchase their vouchers on the Jumia platform, using JumiaPay.

Not surprisingly, 2019 has been a good year for JumiaPay, with quarterly TPV ( Total Payment Volume) growing constantly and annual TPV of ~€124 million.

TPV as a percentage of Jumia’s GMV,  grew from 8.6% in 19Q1 to 15.1% in 19Q4. (update: GMV before adjustment)

Meanwhile, the value per transaction on JumiaPay is lower than its value per order on Jumia, which makes sense as JumiaPay is more user in every day purchases.

In 19Q4, €19 per transaction is roughly half of the Jumia order value (€36).

JumiaPay provides a hyper-growth opportunity.

In the Q4 press release, it says “the ramp-up of JumiaPay on-platform is attributable to our continuous education efforts of consumers, the expanding range of digital services offered as part of our JumiaPay app as well as a number of newly introduced marketing initiatives. These include Mastercard Tuesdays discounts, cash-backs funded by card issuing banks or the possibility to pay for purchases in 12-month installments at no interest, offered by partner banks. “