Top tech startup news for Friday, January 27, 2023: Tesla, Signal, Stripe, Tesla, and Wise
Good evening! It’s another light news Friday and as such, we’re going to make this very brief. Below are some of the top tech startup news stories for Friday, January 27, 2023.
Fintech firm Wise accused of harming competition in the money transfer market by delisting a rival
Wise, a $6.6 billion fintech behemoth, was accused on Friday of harming competition in the money transfer market by delisting a competitor, Atlantic Money, from its foreign exchange fee comparison tool. Wise (formally TransferWise) is one of the UK’s largest fintech companies.
In the letter to the U.K. Competition and Markets Authority (CMA), also shared with CNBC, Atlantic Money alleged that Wise’s conduct was “harmful to competition” and “ultimately results in higher fees for end consumers.”
Atlantic Money added that Wise, which has long touted itself as a champion of consumer rights, unfairly removed it from the price comparison section of its website and refused to include it on Exiap — a foreign exchange fee comparison site that also belongs to Wise.
We covered Wise back in June after the co-founder and CEO Kristo Käärmann came under investigation by U.K.’s Financial Conduct Authority (FCA) over a tax breach. The UK tax authority found that Käärmann failed to pay a tax bill worth about $1 million (over £720,000).
Wise was founded 12 years ago by two Estonian friends Kristo Käärmann and Taavet Hinrikus after their frustration with opaque bank charges on international money transfers. They later decided to find a new way to make cross-border transactions at the real exchange rate.
Fintech startup Stripe has set a one-year deadline to become a public company. The San Francisco-based Stripe said it will make a final decision on its plans to go public within the next year, The Information reported.
In a message to employees on Thursday, co-founders and brothers John and Patrick Collison said that they will set a goal of either through a direct public listing or selling shares via a secondary or private transaction. The 12-year-old has enlisted the help of Goldman Sachs and JP Morgan to decide the best course of action.
Meanwhile, Stripe has not been immune to the ongoing economic slowdown. Just a year ago, Stripe became the most valuable U.S. startup, with a valuation of $95 billion. However, the company reportedly lowered its internal valuation to $63 billion amid economic uncertainty, according to The Wall Street Journal.
In addition, as we also reported back in November, Stripe laid off 14% of its staff amid rising inflation and fears of a looming recession. In a memo to staff, CEO Collison said the cuts were inevitable as rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets, and lack of funding forced the company to make the tough decision.
Founded in 2010 by two Irish brothers Patrick Collison and John Collison, The San Francisco-based Stripe software platform was launched to compete directly with PayPal, Adyen, and Square. The company allows businesses to accept online payments. Today, Stripe is now one of the most valuable fintech startups in the world. Patrick and John Collison, who are 32 and 30 respectively, are each worth over $11 billion.
Tesla had its best week since May 2013 buoyed by better-than-expected fourth-quarter earnings results. Late last year, Tesla stocks were trading at an all-year low. It didn’t take long before Tesla short sellers piled on the stocks and netted a profit of $11.5 billion at the end of the year. The free fall did not stop there. On January 3, Tesla stock reached its lowest point trading at $108.10 per share. But that was the end long-year party for short-sellers.
On January 25, Tesla reported better-than-expected fourth-quarter revenue of $24.32 billion vs the $24.16 billion expected by Wall Street analysts. The world’s largest electric maker was rewarded by investors as Tesla’s shares rose by about 15% in the first hour of trading Thursday.
But the rally didn’t end there. Today, Tesla stock surged by another 11% hitting its highest point since November 2022. Analysts described the Tesla stock moves as a hint at positive signs for the market.
In the past five days alone, Tesla stocks have risen by over 30 percent and now trading at around $178 as of the time of writing. The latest surge has sent short-sellers scrambling to cover their positions.
Despite the good news, Musk offered a cautioned but optimistic outlook for the company’s production in 2023. “If it’s a smooth year, without some big supply chain interruption or massive problem we have the potential to do 2 million cars this year. I think there would be demand for that, too,” Musk told an analyst.
Sam Bankman-Fried caught trying to influence witness through encrypted messaging app Signal, DOJ alleges
Sam Bankman-Fried found himself in hot water again this week after the DOJ alleged the disgraced FTX founder tried to influence witnesses through the encrypted messaging app Signal.
In a letter to a Manhattan judge on Friday, federal prosecutors said Sam Bankman-Fried should be barred from encrypted messaging software, including Signal, citing efforts that may “constitute witness tampering.”
The prosecutors said that Bankman-Fried reached out to the “current General Counsel of FTX US who may be a witness at trial.” Ryne Miller, who was not identified by name in the government filing, is the current counsel for FTX US and is a former partner at Kirkland & Ellis.
The DOJ claimed that Bankman-Fried wrote to Miller via Signal on January 15, days after bankruptcy officials at the crypto exchange disclosed the recovery of more than $5 billion in FTX assets.
“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” Bankman-Fried allegedly told Miller during the Signal conversation.
That’s not all. The filing also showed that Bankman-Fried has also reportedly been in contact with “other current and former FTX employees.” Government prosecutors alleged that Bankman-Fried’s request suggests an effort to influence the witness’s testimony and that Bankman-Fried’s effort to improve his relationship with Miller “may itself constitute witness tampering,” CNBC reported.
Early this month, Bankman-Fried, 30, pleaded not guilty to federal fraud charges to eight federal fraud charges related to the collapse of the now-bankrupt crypto exchange FTX. His trial is set for October 2.