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From One Wallet to Another, Facebook Sued et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 17, 2018 1:43 PM 3 min read
Editorial

Good evening reader,

 

We're obsessed with content.

 

What works. What doesn't. Why. A lot of our time goes in figuring that out.

 

We're continuously enlightened and many a times baffled to see how consumer behaviour has such a big role in deciding the success and failure of good quality stuff.

 

The reigning master of this game i.e. Netflix is a titan we hence like to watch. Its Q3 results are out, with the giant adding another 7mn subscribers globally and beating all estimates. Investors rewarded the stock with a 12% spike in share price after-market hours. Free cash flow, unlike for most companies, take a back seat when bulls look at Netflix. For them it’s all about subscriber and revenue growth. The management doesn't seem to complain, preferring to rather invest billions (estimated to be around $8bn this year!) to continue generating original programming and a behaviour-driven distribution. But to what end?

 

Benefiting from a first mover advantage, Netflix's approach is not the only one shaking waters. Even in India where the company recently went into vernacular content, rivals Amazon Prime and Hotstar have been aggressively levering on lower prices and a differentiated offering. The former is pulling its e-commerce weight, the latter is jumping deep into local content and sports programming. Overseas, strategic M&A has created massive rivals such as AT&T's WarnerMedia, in addition to the threat posed by already existing giants like Amazon, Walt Disney, Apple, and others.

 

Is this going to be a zero sum game?

 

Well, all bets are off. But, it will be a thrilling ride for sure.

 

Here are today's Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

RBI issues guidelines for interoperability of e-wallets.

E-wallet users will now be able to transfer funds between different mobile wallets, as per RBI's new guidelines. As per RBI, in cases where Prepaid Payment Instruments (PPIs) are issued in the form of e-wallets, interoperability would be enabled through Unified Payments Interface (UPI). These guidelines denote norms for protection of customers, dispute resolution and also allow mobile wallets to issue cards in partnership with card networks such as Visa, MasterCard, RuPay etc. Consecutive phases of the same will aid interoperability between wallets, bank accounts, and cards.

 

UK PM met Ratan Tata as Jaguar forewarns of Brexit and diesel policy.

UK’s Prime Minister Theresa May and Business Minister Greg Clark met with Ratan Tata a few weeks ago, as Tata’s car brand, Jaguar Land Rover (JLR), warns about the effects of Brexit and diesel policy. A hard Brexit will disrupt the import and export of Jaguar’s components that are sourced from countries like Germany, Italy and Scotland. JLR’s sales have been hit, on account of weak performances in China and Europe, prompting a slowdown in output.

 

Govt. directs states to issue notices allowing Fixed-term Employment benefits to private firms.

Indian government has asked states to issue separate notices allowing benefits of Fixed-term Employment to all private firms, which enables them to hire workers for a fixed tenure. The labour law was initially passed in March 2018. As the government can only frame rules for public sector units, private sector firms in steel, construction, automobile industries etc. were unclear about new rules for contract workers. All firms now have benefits of the government’s labour law reform.

 

ArcelorMittal complies with SC ruling, to pay c. $1bn to creditors of Uttam Galva, KSS Petron.

Citing the decision as "an appropriate course of action", ArcelorMittal will pay approx. $1bn to creditors of Uttam Galva and KSS Petron. This comes after SC's ruling asking ArcelorMittal and Numetal to clear NPAs in order to bid for Essar Steel.

 

US/INTERNATIONAL

 

Facebook sued over non-disclosure of video ad metrics.

Advertisers have filed a complaint against Facebook for not disclosing key metrics used in measuring viewership of video ads. The company told advertisers that it had overestimated ‘average time spent watching videos’ by 60% to 80%. The advertisers claim that the error was much larger – metric inflated by 150% to 900%. It is alleged that Facebook knew of the fault for over a year before they made the information public in 2016.

 

US banks cite $120bn as Uber’s value in IPO proposals.

According to proposals by US banks, Uber could be valued at $120bn when it goes public next year. The estimated valuation stands at $50bn more than the company’s current estimated value. At a valuation of $120bn, Uber could be one of the biggest listings on Wall Street since China’s Alibaba Group, which was valued at $25bn. The ride-hailing company faces competition from Lyft that recently selected JPMorgan Chase to lead its own IPO.

 

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