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AFRM starts trading on Nasdaq

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Affirm Holdings Inc. website home screen on a laptop computer in an arranged photograph taken in Little Falls, New Jersey, U.S., on Wednesday, Dec. 9, 2020.

Gabby Jones | Bloomberg | Getty Images

Shares of payments company Affirm soared more than 80% in its initial public offering on the Nasdaq, kicking off what’s likely to be a busy season for market debuts.

The stock began trading at $90.90 per share. Affirm had priced its shares at $49 apiece, above its target range of $41 to $44 each, and seeks to raise $1.2 billion.

Founded in 2013 by PayPal co-founder Max Levchin, Affirm has become a prominent in the “buy now pay later” space that offers point-of-sale loans. The company allows customers to finance online purchases that can be paid back in monthly installments without accruing compounding interest. 

It works with around 6,500 retailers, including PelotonWayfairWalmart and direct-to-consumer eyeglasses company Warby Parker. In an update to its IPO filing, Affirm said it is used by more than 6.2 million people. Affirm also partnered with Shopify last year, allowing merchants to offer installment loans on products they sell.

Affirm brought in roughly $510 million in revenue for the fiscal year ended on June 30, a 93% jump from last year, according to its filings. In the three months ending Sept. 30, revenue grew 98% year over year, while net losses fell by roughly half to $15.3 million.

Affirm makes money when they help a merchant make a sale. It also earns interest income on loans it buys from bank partners and some consumer loans. The rate they charge varies by consumers’ creditworthiness, but often starts at 0%.

“Our goal is to be a viable alternative to credit cards,” Levchin told CNBC ahead of the company’s first trade.

Morgan Stanley, Goldman Sachs and Allen & Co were the lead underwriters for the offering. Major investors include Peter Thiel’s Founders Fund, Khosla Ventures and Lightspeed Venture Funds.

Affirm’s market debut could mark another successful venture for Levchin, who owns 27.5 million shares in the online lender. Following PayPal’s sale to eBay in 2002, Levchin started the social application company Slide. That sold to Google in 2010 for a reported $182 million. 

Affirm, which trades under the symbol “AFRM,” has made CNBC’s Disruptor 50 list twice.

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Google announces plan to tackle privacy issues in online advertising | Google

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Google has announced a plan to tackle privacy issues in online advertising, as the company attempts to chart a middle ground between Apple’s privacy-first approach and the needs of advertisers – including itself.

Google will use AI to bundle an individual user with similar visitors in an attempt to convince users that they don’t need to block all tracking on the internet to preserve their privacy. It will also use a “trusted server” to store adverts without needing to connect to hundreds of providers across the wider web, and cryptography to ensure that advertisers only find out the information they need to pay websites.

“We believe that the notion that ‘it’s privacy or it’s advertising’ is a false choice,” said Chetna Bindra, Google’s head of user trust and privacy for advertising. “We really do believe there is a way to meet user expectations, and protect their identity, while allowing for ad supported content.”

Google says it will shortly begin to experiment in Chrome, its browser, with how to actually do that. A new “privacy sandbox” bundles together five proposals with bird-themed code-names including Floc (federated learning of cohorts), Fledge (first “locally-executed decision over groups” experiment) and turtledove (two uncorrelated requests, then locally-executed decision on victory), which explore various ways with letting advertisers continue to target ads on the internet, but without the vast surveillance ecosystem that exists to support that.

It’s an approach that differs from the simpler option selected by Apple for Safari: just block all the surveillance. Bindra said there are multiple reasons why the company went a different route.

One is that Google has a more rosy view than its competitor of the importance of advertising. “We do believe that ads play a major role in making the internet an accessible and open place,” she said, specifically siting the need for marketers “to connect with people interested in what they have to offer”.

But that optimism is paired with a pessimistic view of what blocking surveillance actually means: an arms race between the blockers and the blocked. “A large focus of this effort has been to ensure the ad industry is not being driven towards workarounds for their business where they’re actually circumventing true user privacy,” Bindra said. “We’ve certainly seen that happen over the last couple of years, where companies have leaned into things like fingerprinting and other alternative techniques to be able to work around the absence of third party cookies in certain browsers.”

But whatever Google does to online advertising, the company walks a tightrope. With Chrome’s share of the browser market and Google’s share of the online advertising market, it has to keep one eye on the Competition and Markets Authority, which has already announced plans to try to limit Google’s power. At the same time, it needs to satisfy the Information Commissioner’s Office, which has launched its own investigation into privacy in the adtech ecosystem.


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Birdwatch: Twitter pilot will allow users to flag misinformation | Twitter

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Twitter will allow users to flag and annotate misleading or inaccurate tweets in ongoing efforts to address misinformation on the platform.

The pilot program, called Birdwatch, is being tested in the United States, the social media firm said in a blogpost. It comes as calls to better combat misinformation on social media have grown substantially in recent years, particularly surrounding the 2020 presidential election.

Twitter in the past year started adding labels and warnings about misinformation on the site, including about the Covid-19 pandemic and the US election. It permanently banned Donald Trump in the days leading up to the inauguration of his successor after the former president’s use of Twitter was seen to praise or enable the storming of the Capitol on 6 January.

Executives of the platform, along with those of other big tech firms, have been called to testify in front of Congress multiple times in the past year to answer for issues that include misinformation as well as the reach of big tech’s influence and power.

Following its launch, Birdwatch can be found on a separate section of Twitter – twitter.com/i/birdwatch, and pilot participants who apply to the program can write posts identifying and rebutting misinformation. Their notes will initially not be visible on Twitter for users outside the pilot group but will be visible on the Birdwatch site.

Twitter said it expects to have between 1,000 and 100,000 Birdwatchers who are being admitted on a rolling basis and who will not be paid. In the blogpost, the Twitter vice-president of product, Keith Coleman, said the notes will ultimately be visible to the global Twitter audience.

“We know there are a number of challenges toward building a community-driven system like this – from making it resistant to manipulation attempts to ensuring it isn’t dominated by a simple majority or biased based on its distribution of contributors,” said Coleman in the blogpost.

Pilot participants can rate the helpfulness of notes from other contributors.

“We believe this is a model worth trying,” he said.

Some have criticized Twitter for delegating the important task of moderating questionable content to unpaid users. But others say it could be a step in the right direction. Evan Greer, the director of online activist group Fight for the Future said the effectiveness of the program will depend largely on how, exactly, it is carried out.

“There is definitely a need for creative thinking when it comes to addressing disinformation beyond just ‘let’s censor more things’. And it makes sense to explore more decentralized models rather than giving more power to big tech companies,” she said.

“That said, as always the devil is in the details. Twitter and other companies should consult with experts and members of impacted communities as they craft their policies and experiment with possible solutions to complex problems.”

Reuters contributed to this report.



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Tencent shares fall over 5% after closing in on $1 trillion valuation

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WeChat mascots are displayed inside Tencent office at TIT Creativity Industry Zone in Guangzhou, China, May 9, 2017.

Bobby Yip | Reuters

GUANGZHOU, China — Tencent shares dropped more than 5% on Tuesday — one day after a huge rally pushed its valuation to nearly $1 trillion for the first time.

The Chinese internet giant saw its shares hit as high as 767.5 Hong Kong dollars on Monday, rallying 11% at one point. That pushed the company’s market capitalization to 7.35 trillion Hong Kong dollars ($949 billion) on Monday.

Monday’s rally appeared to be propelled by bullish calls by two investment banks. In a research note, Citi raised its target price to 876 Hong Kong dollars from 734 Hong Kong dollars, a 14% rise from Monday’s close.

UBS also upped its price target on Tencent from 700 Hong Kong dollars to 830 Hong Kong dollars — that’s a more than 8% rise from Monday’s close.

But investors took profit on Tuesday, driving Tencent shares lower by around 5.48% to 724.50 Hong Kong dollars at 2.45 p.m. local time. The stock was down over 6% earlier in the day but pared some losses.

Investors are waiting for Tencent’s 2020 results for the fourth quarter and full year, which will be released in March.

Analysts are expecting revenue to come in at 131.83 billion yuan (about $20.36 billion) for the December quarter, a 24.6% year-on-year rise, according to Refinitiv estimates. Net income is expected to grow nearly 29% to 32.85 billion yuan.

Tencent is known for its huge gaming business which analysts expect to have performed well in the fourth quarter. Revenue from smartphone games in particular are expected to grow 46% year-on-year to 38 billion yuan, helped by new title releases, according to a recent note from Jefferies.

Other analysts have also backed that up.

“We expect solid results in upcoming 4Q20, with strength in the game business overall,” Macquarie analyst Han Joon Kim said in a note published Jan. 19.

But Tencent has also been growing other areas of its business including advertising, cloud computing and financial technology via its WeChat Pay mobile payment system.

WeChat, in particular, has been a focus of investors.

Last week, Tencent announced that transactions on its WeChat Mini Programs rose more than 100% in 2020 from 800 billion yuan in 2019. The company did not reveal the 2020 figure. But it highlights the way that Tencent is trying to monetize and increase the stickiness of its messaging app WeChat, which is used by over a billion people.

Mini Programs are apps people can use within WeChat without having to leave the messaging app. They have been a key part of the growth of WeChat.

Though the monetization efforts of WeChat are still in the early stages, analysts see this as a long-term effort.

“We continue to find stronger emphasis on improving accessibility and functionality than monetization. We think lack of monetization of mini programs in 2021 is fine, as there is limited expectation of such embedded in earnings expectation anyways,” Macquarie’s Kim said.

“Rather, Tencent’s growing influence in on-line commerce activity will strengthen the stock’s long-term narrative and support its valuation multiple.”


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