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Also in this letter:
■ Delhivery shares battered for second day
■ CCI draws red line for tech companies
■ US-based Instacart halts IPO plans
WaPo says 75% of Twitter staff will be fired; company rejects report
A report in the Washington Post suggests that Elon Musk will sack 75% of Twitter employees once he takes over the reins of the company.
According to the report, Musk told prospective investors who may back his Twitter purchase that he plans to cut nearly 75% of Twitter’s employee base of 7,500 workers, leaving the company with a skeleton crew. The report, published on Thursday, cited documents and unnamed sources familiar with the deliberations.
Twitter denies layoff reports: Twitter quickly issued a clarification to staff after the report came out, stating that there are no plans for company-wide layoffs.
Twitter General Counsel Sean Edgett emailed employees on Thursday saying the company does not plan to issue pink slips.
Potential challenges: The world’s richest man himself had previously spoken about paring Twitter’s workforce. However, rumours about job cuts at Twitter have been making the rounds for a while now, even separate from Musk’s $44 billion buyout deal.
With as drastic a reduction as Musk may be planning, the platform could quickly become overrun with harmful content and spam — the latter of which the Tesla CEO himself has said he’ll address if he becomes the owner of the company.
Musk remains excited: Amid the drama, Musk seems to be ‘excited’ to become the new Twitter boss, even though he feels like he is spending too much on the social media platform.
“I’m excited about the Twitter situation,” Musk said, while fielding questions on a Tesla quarterly earnings call on Wednesday, as quoted by several media agencies.
“I think it’s an asset that has just sort of languished for a long time but has incredible potential, although obviously myself and the other investors are overpaying for Twitter right now,” he was reported to have said.
Shares of new-age logistics firm Delhivery took a massive beating for a second straight session, falling over 19% to close at an all-time low of Rs 381.6 apiece. The stock rout comes after the firm said in a stock exchange filing on Thursday that it is likely to see an adverse impact from high inflation and will clock moderate growth in shipments for the rest of the financial year.
Why the free fall? “While the festive season sale surge in shipment volumes will spill over to the third quarter as well, we anticipate moderate growth in shipment volumes through the rest of the financial year,” Delhivery had said in its filing, leading to a negative sentiment among the investors.
The share price has plummeted close to 32% in the last two trading sessions. On Thursday, the share price of the logistics company, which was listed on the bourses in May, fell below the issue price of Rs 487 for the first time.
Why is Delhivery important? Delhivery’s forecast is of significance as it is the largest third-party logistics player in the ecommerce space and is seen as a proxy for online consumption and demand trends.
The company said consumer discretionary spending in the first two quarters had been muted because of high inflation levels, with average user spending and total active shoppers staying flat or lower. This tepid demand environment, Delhivery implied, would continue in the second half and impact its performance.
Overall trajectory: According to the ETIG database, shares of companies on the ET Ecommerce Index have underperformed in the broader markets over the last month.
As of Thursday evening, the ET Ecommerce index was down 8.57% for the 30-day period, compared to a 1.42% fall in the benchmark Nifty 50 index.
A Rs 1,337.76-crore penalty on Google, and a Rs 392-crore fine on travel and hospitality sites MakeMyTrip, GoIbibo, and Oyo are the latest moves in the Competition Commission of India’s (CCI) crackdown on tech companies as the antitrust watchdog looks to rein in anti-competitive practices in the sector.
Tackling abuse of market dominance: In its order against Google on Thursday, the competition watchdog noted that the company was found “abusing its market dominant position” across multiple categories related to the Android mobile device ecosystem in the country.
On Wednesday, the competition regulator fined online hotel-booking companies MakeMyTrip Ltd and Goibibo and IPO-bound hotel chain Oyo, a combined $47 million for anti-competitive behaviour.
Heightened scrutiny: For the last few years, the competition watchdog has increased its focus on digital companies — both from a mergers and acquisition point of view, and a dominant position perspective. Last week, CCI Chairman Ashok Kumar Gupta said that the regulator was in the process of setting up a dedicated Digital Markets and Data Unit.
“In view of the number of cases and complexity in the digital sector and the increasing need for data and technology skills, CCI is in the process of setting up a dedicated Digital Markets and Data Unit,” he had said.
What now? While the DMDU could help the CCI expand capabilities to study potentially anticompetitive behaviour by tech companies, it remains to be seen if the regulator can make its case against these companies stand during an appeal.
ETtech Deals Digest
A week-old PwC report had suggested that startup funding in India had hit a two-year low, mirroring global trends. The total funding value in Q3, according to the report, was at $2.7 billion, across 205 deals. Despite this, last week saw Indian startups picking up funding from investors in a pre-Diwali investment spree.
India’s biggest edtech startup Byju’s, kicked off the week with a $250-million funding, round led by Qatar’s sovereign investment arm QIA, at its previous valuation of $22 billion, followed by electric scooter maker Ather Energy, which picked up $50 million.
Here’s the list of all the done deals from this week
US-based Instacart halts IPO plans amid tech winter
Instacart, a food-delivery company, is pulling its plans to go public this year in the latest sign of turmoil in the public markets, the New York Times reported.
The company had been one of the few tech companies seeking to go public this year, as investors all but shut the door on putting cash into the initial public offerings of unprofitable entities.
Why the delay? Instacart had filed papers this year for a so-called confidential filing, which meant it did not yet have to disclose certain data about its business. The filing did not require Instacart to follow through with a public offering, but it was considered a big step toward one.
However, the window to go public this year is quickly closing. Bankers prefer not to take companies public over the holidays, and the company was running out of time.
Dipping valuation: Instacart’s revenue surged as COVID-19 cases climbed at the beginning of the pandemic and people avoided stores for safety reasons.
But that acceleration dropped off in the second quarter of 2021 as more people got vaccinated and returned to their regular shopping habits.
In March, the company slashed its internal valuation to $24 billion from $40 billion.
Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.
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