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Deliveroo squeezed by belt-tightening consumers

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Deliveroo shares rose 6 percent on Monday after the food delivery company issued a warning over order growth as it faced “elevated consumer headwinds” in the second quarter.

If the reaction of investors seems illogical, Alphaville explained Order sizes are shrinking in a barely growing market, but selling fewer means earnings forecasts for this unprofitable business are rising. RBC Capital Markets now expects a loss of £118m for the full year, up from a previous forecast of £132m.

According to Deliveroo, growth slowed to 2 percent in the second quarter, compared to 12 percent in the first three months of 2022. It cut his lead for total annual revenue or gross transaction value growth to a range of 4 to 12 percent, down from 15 to 25 percent.

A cost-of-living crisis has squeezed household budgets, creating very different conditions from the ordering frenzy that Deliveroo has benefited from during the pandemic.

But Alphaville says Deliveroo still has plenty of cash – around £1.1bn – to get it through bad times and meet its target of being free cash flow positive.

The same isn’t true of China’s food delivery start-up Missfresh, which is struggling to survive as it shuts down operations across China, wallows in an accounting scandal and seeks capital to keep its business running.

The Nasdaq-listed company’s shares have lost 97 percent of their value since its IPO in June last year, with a market capitalization of $3 billion. Missfresh had expanded into 16 Chinese cities where it operated 625 warehouses to enable deliveries within 30 minutes as of June 30 last year. But a person close to Missfresh told our reporters the company “expanded blindly, opened new warehouses blindly and entered new cities blindly”.

This year, Missfresh has closed its convenience stores in at least nine cities. In another blow dealt to shareholders, it announced this week that it would dilute them to raise fresh capital – issuing 300m shares to a coal mining assembly in Shanxi for Rmb200m ($30m). for a 30 percent stake.

The Internet of (Five) Things

1. Fintech investors take off
Nearly Half a trillion dollars was erased from the valuation of once high-flying fintechs that took advantage of the IPO boom at the start of the pandemic. More than 30 fintechs have been listed in the US since early 2020, according to CB Insights data, but their shares have fallen more than 50 percent on average since early 2022. Measured from their all-time highs, around $460 billion has been lost.

2. The Facebook Giphy deal gets a new scrutiny
The UK Competition Authority will have to catch up its decision to block Facebook’s parent company Meta from buying gif platform Giphy after the Competition Appeals Tribunal ruled on Monday. The tribunal ruled that the CMA had improperly consulted during its investigation and also incorrectly redacted material from its final decision.

3. Binance fined in Holland
The Dutch central bank has fined Binance more than €3 million for offering services without proper registration a blow to the crypto exchange’s campaign to win over European regulators. The central bank said Monday that the world’s largest crypto trading platform broke its rules, which require digital asset companies to register to offer services in the Netherlands.

4. Musk is trying to postpone the Twitter court date
Elon Musk wrote on Twitter a “unjustified request to hurry‘ the trial to determine if he should be forced into a $44 billion deal to buy the social media company. According to a court filing, Musk has proposed a trial start no earlier than February, several months later than the September date requested by Twitter.

5. Virgin-TalkTalk offer call
Virgin Media is said to have made O2 a bid of about $3 billion for smaller competitor TalkTalk as UK telcos seek to compete in a highly competitive and fragmented market.

Tech week ahead

Monday: Tech earnings season starts this week with IBM which begins its second-quarter results after Monday’s closing bell.

Tuesday: Netflix is next, with investors keeping a close eye on subscriber numbers after disappointing the streaming service in the first quarter. They’ll also be checking for updates on the launch of the cheaper, ad-supported service.

Wednesday: Tesla reports Q2 results.

Thursday: camera app snap has Q2s.

Friday: Amidst all the musky brouhaha Twitter reports Q2 results.

Tech Tools – LG Gram 16 and +view

The LG Gram series of laptops has been around since 2015, with its incredible lightness being the standout. The first models weighed just under a kilogram, namely the 2022 LG grams 16 Weighing in at 1.2kg, it still feels featherweight compared to the equivalent MacBook Pro, which is a full kilogram heavier.

New features and upgrades for this year’s update include an anti-glare IPS display, a webcam that now offers Full HD, and 12th Gen Intel Core processors. New software adds facial recognition for logins and AI noise cancellation for clearer calls.

Battery life remains great between 13 and 22 hours depending on usage. The 16:10 display is still big and vibrant, but the Gram’s light weight means the sound is sacrificed a bit and lacks panache. I wasn’t a huge fan of the keyboard either when I tried it out. Consequently, while the large trackpad is smooth as silk and the dedicated number pad is useful, the keyboard is compromised in size and position, and I found the function keys to be too small and dependent on also having to press the Fn key.

This year’s best addition is the matching 16-inch portable +view monitor, which plugs into the Gram’s USB-C port to double your workspace. Normally £299, it’s free until the end of the month when bundled with the £1,499 Gram 16. There are also Gram 17, 15 and 14 models and 2-in-1 options.

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