Afterpay and Square
Square is rolling out Buy-Now-Pay-Later in brick and mortar stores via Afterpay. Square is a Forward March favorite, and this is another great move. I’ll leave the question of BNPL in a recession for a later date though.
Square is uniquely positioned to offer this, as they own Cash App for the customer experience, Afterpay for the BNPL loan experience, and the Square terminal for the store experience. They’ve solved the three-sided coordination problem and can roll this out seamlessly. Bravo!
FTX, Sam Bankman Fried, and Robinhood
FTX is a very lucrative crypto exchange with an eccentrically groomed, billionaire founder. He has made two moves in the same direction recently: he personally invested in Robinhood, taking a ~7% stake, as well as launching US equities trading at FTX.US. I think these moves are very smart but bearish for crypto prices.
These moves are smart for several reasons. The ongoing evolution of fintech apps is to continue to expand into the mythical super-app. Why stop at Crypto when you can leverage that customer for equities investing, banking, loans, and other products? Crypto is a boom-and-bust industry, and diversification probably makes sense. Robinhood and Coinbase both look very shaky, so perhaps this is the time for a kill-shot.
That being said: if crypto is truly a can’t miss, generational event, multi-trillion-dollar industry, why invest a moment or dollar elsewhere? FTX has a shockingly small team of engineers. They are in third place by trading volume, a distant runner up to Binance in particular. Focus is king. Moving into other markets betrays a lack of confidence in crypto to me.
Tether
Notorious ‘stablecoin’ Tether is long-reputed to be the Lehman Brothers lurking under the coming great crypto crash. While we haven’t seen a full run on the bank, Tether has seen $10 billion in redemptions in the last 2 weeks. $73 billion in Tether dollars are still in circulation, but one wonders if insiders are starting to flee the ship. USDC, taking a more regulatory-friendly approach, has seen inflows during this period. I suspect Tether has at least some backing to sustain for the time being, though I project this company is done in by regulations in the near future.
Great write-up. I wonder how much investors can drain the Tether reserves before they hit the muck.