Apple vs. Amazon market cap
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The race to $2 trillion

Protocol Index

Hello! This week: Big Tech's earnings have Apple and Amazon racing to $2 trillion; what biotech investors think of drug pricing caps; and your outlook for next week. Want Index in your inbox each week? Subscribe here.


  • "If they can get away with it, they're likely to try." — NYU law professor Scott Hemphill said Big Tech was likely to keep up its acquisition pace until regulators step in.
  • "China has long been the bratty kid who thinks it's OK to grab others' cake without sharing your own." — Policybazaar co-founder Yashish Dahiya thinks now's the time for India to push back.
  • "The surge of Tesla's share price has provided a window of opportunity for Chinese EV companies to get listed." — EqualOcean analyst Feng Linyan thinks the flood of EV listings might also be because companies are trying to preempt an economic crisis.

The Big Story

The race to $2 trillion

Two years ago this week, Apple's market capitalization hit $1 trillion. Back then, that was a momentous event: the culmination of a 42-year slog to reshape the economy with personal computers. But it looks like it'll take considerably less time to hit the second trillion.

After blowout earnings Thursday, analysts at Wedbush have raised their 12-month price target to $475 per share, valuing Apple at $2.01 trillion. Citi analysts aren't too far behind, with a $1.95 trillion expectation. But Apple has tough competition in the race to $2 trillion: Deutsche Bank and JMP Securities both have $2 trillion price targets for Amazon. I'm sure that won't bother Congress at all.

The eye-watering numbers are testament to just how good the past quarter was for the tech industry. Apple, Amazon, Facebook and Alphabet all smashed earnings expectations, and not even the latter's first year-on-year revenue drop could dampen the mood. Wedbush's Dan Ives summed it up best: "It's Big Tech's world and everyone else is paying rent."

  • It seems like almost every aspect of the tech industry has seen a COVID-linked boom. Small businesses pivoting to online sales doubled Shopify's gross merchandise volume to $30 billion. More time spent on our phones sent Facebook's ad sales soaring. Working and learning from home drove demand for tablets and laptops, along with the chips that power them. Oh, and cloud usage is through the roof.
  • The one area that is still under threat is travel. Expedia reported that bookings were slightly worse in July than in June, and a large drop in travel advertising accounted for part of Google's year-on-year revenue drop.

That should add some caution to the general tech optimism. Travel was the sector most immediately and severely hit by the pandemic, but it's far from the only one to face the consequences. Today, millions of Americans will see their benefits cut by $600 — an event that will almost certainly have knock-on impacts across the economy. Whether Big Tech can stay immune is yet to be seen. As Alphabet CFO Ruth Porat said Thursday: "It's premature to say that we're out of the woods."

Up To Speed

  • Monday: Rackspace set IPO terms, valuing it around $4.5B. TSMC shares soared, driving Taiwan's index to a 30-year high. Hong Kong's tech index closed down on its first day of trading. Ro raised $200M at a $1.5B valuation.
  • Tuesday: AMD earnings beat estimates. eBay earnings beat estimates. TransferWise was valued at $5B in a secondary share sale. Foxconn began assembling the iPhone 11 in India. SoftBank shares hit a 20-year high. Tencent offered $2.1B for Sogou. Traveloka raised $250M.
  • Wednesday: Big Tech CEOs testified at Congress. Shopify earnings beat estimates. Samsung earnings beat estimates. PayPal earnings beat estimates. Qualcomm earnings beat estimates. TikTok was reportedly valued at $50B. Remitly raised $85M at a $1.5B valuation. Sema4 raised $121M at a $1.1B valuation.
  • Thursday: Big Tech's earnings smashed estimates. EA earnings beat expectations. Affirm was reported to be planning an IPO at a $10B+ valuation. Infobip reportedly raised $200M at a $1B+ valuation. Monzo said its losses more than doubled.
  • Today: ByteDance was reported to be considering a Hong Kong listing for its Chinese business. Nvidia was reported to be in advanced talks to buy Arm.

Diving Deeper

Biotech investors don't want price caps

Last week, President Trump announced a new executive order that would cap U.S. drug prices based on how much other countries pay. And while the actual order is unlikely to change anything itself, it's reigniting a debate about drug prices that could have a big impact on biotech companies and investors.

  • Before we dive in, James Robinson, professor of health economics at UC Berkeley reminded me: "The president does not have the authority to reduce drug prices." So nothing's going to happen immediately, and everyone can calm down a bit. But, especially if November brings a Democrat-controlled Congress, something along these lines could end up becoming law. And that's what's really worrying people.

The argument is this: "People will invest less if they think they are going to be making less money," as VC and health entrepreneur Alexis Borisy told me. That means fewer drugs will be developed, making us all worse off.

Almost everyone I spoke to agreed, saying that there was an inevitable trade-off here. Peter Kolchinsky, managing partner of RA Capital Management and author of "The Great America Drug Deal," said the impact is immediate, too. "The administration could just look at what happens to the biotech markets valuations when they say something," he told me. "If it goes down, you just made it incrementally harder for companies to raise money — instantaneously." The National Venture Capital Association's Jeff Farrah said that was his particular concern with the executive order: "We're very sensitive to the types of signals that are being sent to the larger biotech innovation space," he explained.

But everyone also agreed that something was wrong with the current state of affairs — they just had different ideas about how to fix it.

Borisy said he thinks we just need to let competition loose. His company EQRx aims to make "equally innovative or better new medicines at radically lower prices," he said, "by leveraging the efficiency, knowledge, technology and know-how that's possible today." He, along with a few others I spoke to, said there is room to drastically cut the costs of drug development — and that the market opportunity in undercutting others is incentivizing companies to do just that.

  • Matt Ocko, a partner at DCVC, told me that "it is possible to be indifferent to the vicissitudes of pricing." He said that one of his portfolio companies has developed "a highly effective cancer therapy, demonstrated in human beings, for less than $100 million" — a fraction of typical drug development costs (though it is yet to be approved by the FDA). The people complaining about price controls, he thinks, are those whose "approach to biotech investing is to light $60 [million] to $100 million on fire before you know that anything works" — a strategy which he views as outdated.
  • Dr. Neel Madhukar, CEO of AI drug discovery company OneThree Biotech, agreed, telling me that the drug discovery process hasn't changed much to date, offering scope for using tech and data to cut costs.

Not everyone was so optimistic, though. "You can't just judge how efficient the whole industry could be by holding up a few cherry-picked projects that retrospectively turned out to go smoothly and cost less than average," Kolchinsky said. "Anything can be improved, but there are a lot of good reasons that the productivity of the industry as a whole is as seemingly 'inefficient' as it is."

  • Instead, Kolchinsky said he thinks we should focus on a different part of drug pricing. The revenues that drugs bring in 16 to 20 years from launch, "incentivize nothing in innovation — they're too far in the future," according to Kolchinsky, and are almost entirely discounted when using net present value models. Those revenues are the ones ripe for regulation, he thinks. "You've got to leave the front end of the NPV curve alone."
  • By enforcing "contractual genericization," governments could say that prices are capped only after a certain period of time, simulating the effect of post-patent genericization on the "artificial monopolies" of gene therapies. That, Kolchinsky said, is the key to fixing prices without stymying innovation.

Regardless of who's right, it's clear that this issue isn't going away. Biotech investors ought to buckle up.

Coming Up

  • Next week is quieter for earnings, but there's still a lot to keep your eye on. TakeTwo reports Monday, with competitor Activision following on Tuesday. Wednesday brings Square, Roku, Etsy and Zynga; and Uber,, Nintendo and Cloudflare report Thursday.
  • The big economic report of the week is in store for Friday: July's jobs report, which will show whether June's recovery continued — or if unemployment is back on the rise.

Thoughts/feedback/tips? Email me — — or And subscribe to get Index in your inbox every week. Thanks for reading — have a great weekend, and see you next week.

Clarification: This article was updated to clarify Peter Kolchinsky's comments on how cash flow discounting incentivizes innovation. Updated August 3.

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