May 13, 2020
Good morning! This Wednesday, everything you need to know about the Uber/Grubhub deal, why it's a surprisingly good time to launch in the U.S., and the latest development in the Animal Crossing economy. Want Index in your inbox each morning? Subscribe here.
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As of 4:45 a.m. PDT: Nasdaq Futures: 0.83% | Euro 600: -1.16% | Nikkei: -0.49% | Hang Seng: -0.27%
Grubhub investors had a pretty good Tuesday: The company's stock closed up almost 30% on reports that Uber has made an offer to acquire it. We've talked a lot about how the hyper-competitive delivery space was bound to lead to consolidation, and that's now coming to pass.
Consolidation was inevitable because it's the only way the economics make sense. This deal would give Uber control of 55% of the U.S. market, according to Wedbush analysts, which would let the price war ease up a little. That, combined with Uber adding value to its overall ecosystem (ride hailing, grocery delivery and the like), means your takeouts could actually make money.
And even if a deal is allowed, it might not be this one. Wedbush analysts said they "wouldn't rule out a bidding war with DoorDash … as it, too, will look to whether it makes sense to purchase market dominance." Biz, meanwhile, thinks Amazon might be a dark horse to enter the race — Grubhub's marketplace model is essentially Amazon For Restaurants.
Oh, and the deal terms? Grubhub had a market cap of $4.27 billion on Monday night, jumping to $5.51 billion as of today. As for how it'll be paid for, the Financial Times speculates that although Uber has $9 billion in cash, its significant burn rate means a stock deal might make more sense. Still, we're a long way from a deal being done: Watch this space.
Back in February, U.K. fintech Curve announced it was opening a Brooklyn office from which it would launch its "100 cards in one" product to the U.S. market. Flash forward three months and yeah, that's not happened yet.
It's also a good time to hire. "It is a buyer's market, which is to say there's a lot of talent that doesn't deserve to be on the marketplace, on the marketplace," Orson told me. "You can probably get better talent at lower cost right now than any other time since I've ever been recruiting."
And in the long run, marketing could go well, too. "To the extent that there's still some fallout ... in the early part of next year, I expect that all the media buys that are demographically targeted will probably be less expensive" year-over-year, she said.
Animal Crossing is so popular that an entire economy is being built around it. The Washington Post reported the other day on Nookazon, a "fan-made online retailer" that lets players trade in-game goods and now claims to have 7 million daily page views. It doesn't let players sell for real money, so rare items have become a currency instead. Unusually for an online retailer, Nookazon doesn't take a cut, instead running on donations. Just wait until Bezos hears about it.