Binance/FTX Drama Is a Movie | The Daily Peel | 11/10/22

Nov 10, 2022 | Peel #335

Market Snapshot

Sam Bankman-Fried comes across as the people’s champ. Dude manages a crypto empire from the Bahamas, seems to only own flip-flops and cargos, and hasn’t gotten a haircut this decade.

But his firm FTX wishes they had more suits in their ranks after a sudden liquidity crunch sent SBF’s firm and his net worth spiraling.


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Banana Bits


Macro Monkey Says

Disney & Thrill

Whether it’s ride-sharing or streaming, the ZIRP days of burning cash until you’re big enough to eke out a profit are over.

Unless you’re already Goliath.

  • Disney’s made it clear to investors that it’s willing to spend whatever it takes to gain a place on your smart TV
  • We’re not talking metaverse levels of investment here, but it’s still over a billion per quarter
  • Since its launch in 2019, Disney+ has swallowed $8 billion in investor money, with the promise that it’ll all be worth it once it becomes a market leader
  • Buying growth is easy. Now try turning those new subs into profits.

On one hand, Disney could slash spending and rely on legacy content to turn its streaming service into a cash cow. Other than maybe Marvel, it’s got one of the deepest entertainment catalogs on the planet.

But that would cut subscriber growth at the knees, all but ensuring Netflix’s continued dominance in the streaming wars.

Streaming execs across the industry, not just at Disney, have to get the balance right. Grow too fast, and your service will become a money pit. Grow too little, and you’ll never achieve the scale required to rake in meaningful profits.

Disney’s betting that the weakest players will die off amid the coming economic downturn. Only the big boys that can reach deep into their pockets to keep churning out new content will remain.

But if what they’re left with is an unprofitable service that still plays second fiddle to Netflix, it could mean billions down the drain.


Meme of the day

meme

Source


What's Ripe

Meta ($META) ↑ 5.18% ↑

  • 11,000 heads are rolling at Meta HQ this week, and investors couldn’t be happier
  • This thing is up 15% in the past week, giving some solace to Zuck, who’s still curled up in a ball after watching his net worth plummet by $100 billion

Life Time Fitness ($LTH) ↑ 4.39% ↑

  • After watching Peloton poach members throughout the pandemic, traditional gyms are making a comeback
  • A Q3 profit surprise shows plenty of people are opting to share sweaty equipment instead of getting yelled at by trainers on a screen

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What's Rotten

Disney ($DIS) ↓ 13.22% ↓

  • The Mouse had a splashy streaming debut, but it’s been more expensive and difficult to gain a foothold in the space than initially expected
  • Strong theme park performance saved the quarter, but CEO Bob Chapek needs to deliver on his promise to turn Disney+ profitable by 2024

Robinhood ($HOOD) ↓ 13.76% ↓

  • $HOOD was the big loser in the doomed Binance/FTX acquisition, since investors had hoped the latter would snap up the battered app
  • The odds of Robinhood remaining relevant in the crypto world have plummeted, minimizing the growth potential of the company

Data Peel

chart

Source


Thought Banana

Bahamian Billionaire Bailout

When the crypto bros emerged from their caves and became the hottest thing in finance, they were broadly seen as the good guys.

Wall Street had been in bed with the feds for too long, and here were the saviors ready to blow up the establishment.

  • We trusted these supergeeks with more of our hard-earned dough than we’d care to admit without understanding a thing about the underlying technology
  • The FTX drama has shown that decentralization and light regulation over anything having to do with money can be sketchy
  • Crypto has a long uphill climb back to its 2020/2021 peak

Here’s an overly simplified synopsis of the Binance/FTX drama:

SBF managed to elevate himself to the crypto god tier, amassing a net worth of $26 billion at his peak through his firm FTX. And he didn’t just do well for himself—he made it his mission to fight against the crypto winter, pouring personal funds into various nearly-dead projects from his base in the Bahamas.

As Robinhood made abundantly clear during its $GME charade, wild swings in prices can dry up cash reserves faster than people realize. Freefalling crypto prices sent FTX into a liquidity crunch, and it was basically in a get-funding-ASAP-or-die situation.

Binance was initially declared the savior, announcing it would swallow up FTX at cents on the dollar. SBF’s firm was saved, but his fortune had been decimated. Now regulators are spoiling the party, and the deal is dead in the water…gotta keep your head on a swivel with this story.

Crypto evangelists will say that mismanagement was the root of FTX’s woes, but it’s hard to see how clearer regulation wouldn’t have at least softened the blow.

The big question: Will regulators pounce on the opportunity to crank up crypto regulation in response to the Binance/FTX drama?


Banana Brain Teaser

Yesterday — A ladder hangs over the side of a ship anchored in port. The bottom rung of the ladder touches the water. The distance between rungs is 30cm, and the length of the ladder is 270cm. If the tide is rising at a rate of 15cm per hour, how long will it be before the water reaches the top rung?

The ship will rise with the tide, so the water will always remain level with the first rung.

Today — It’s 50 bananas off the WSO's VC Bootcamp. LFG!

There are three light switches outside a room. Inside is a single light bulb, controlled by one of the three switches. You need to determine which switch operates the bulb. You can turn the switches on and off as many times as you wish (they are all off to begin with) but may only enter the room once. There is no one there to help you. The door to the room is closed, and there are no windows, so you cannot see inside. How can you discover which switch operates the bulb?

Shoot us your guesses at [email protected] with the subject line Banana Brain Teaser or simply click here to reply!


Wise Investor says

“Time is your friend; impulse is your enemy.” — Jack Bogle


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