The Start of Fall Semester Makes Venmo the #1 Finance App on the App Store - For One Day
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Venmo, PayPal’s peer-to-peer mobile payments app, momentarily stole the top spot from Square’s Cash App on the Apple App Store’s Finance category. With the highest number of downloads, Cash App had been at the top for months and regained its spot in a few days.
Why did Venmo become so popular for a few days? Our research suggests that the number of daily Venmo signups increase significantly during the back to school season in late August and early September. College freshmen are pressured socially to download the app, parents download the app to send their children money for books or tuition, and all students start paying rent or utilities for the new semester. In the past, Venmo has capitalized on this dynamic by sponsoring college parties and this year it targeted college students with a cash back campaign on Venmo Card purchases. Invited Venmo users can apply for a Venmo debit card and earn 5% cash back on “eligible” purchases until September 30, 2019, with a maximum cash back of $15. It will “drop the cash [back] in your Venmo balance around October 15, 2019”.
Venmo’s cash back campaign is similar to Cash App’s Boost feature, which enables users to receive discounts on purchases at selected merchants. Unlike with Venmo’s cash back program, Cash App users enjoy discounts of up to 15%, instead of 5%, and receive the cash back immediately, instead of weeks later.
What Could the Spirit Airlines and WhatsApp Partnership Signal?
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Spirit Airlines announced that on September 1stits customers will be able to book and modify reservations using WhatsApp in both English and Spanish. Spirit is a low-cost international carrier offering 600 flights per day to 76 destinations in the United States, the Caribbean and Latin America. Customers will interact first with messaging bots, as shown below, then customer service agents confirming their bookings, and finally a link outside of WhatsApp to consummate transactions.
Source: https://ml.globenewswire.com/Resource/Download/865c7f12-ece6-47e1-bded-2c58172e0100?size=0
The cost to book a flight on Spirit Airlines through WhatsApp is $25. So, Spirit has discovered yet another way to squeeze money out of flights. That said, it also is tackling the problem that long waits for agents have become and giving customers the opportunity to message agents on their own time and at their convenience. Also interesting to note, Spirit charges $25 to book or modify flights over the phone.
Arguably, this service is a more interesting development for Facebook, WhatsApp’s parent, as it creates utility and value for both users and Spirit. Importantly, Facebook has the potential to monetize WhatsApp and perhaps create a digital wallet. As users contact and transact with businesses directly, the fee for such services could be sourced from balances that build up within the WhatsApp ecosystem.
We will be following WhatsApp closely to see if this customer service initiative morphs into a mobile wallet.
Can China Catch Up to the World in Semiconductors?
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China consumes more than half but produces less than 5% of the world’s semiconductors. Perhaps more than any other, this statistic explains China’s obsession with becoming self-sufficient and the important role that chips are playing in the current US-China trade war.
Every decade or so, China tries to catch up in the semiconductor race with ambitious state funded plans. Historically, cultural revolutions, mismanagement, and/or a talent deficit have hindered its attempts. Now, China aims to produce domestically 40 percent of the semiconductors it consumes by 2020, and 70 percent by 2025. The state backed Integrated Circuit Industry Investment Fund (ICIIF) has raised more than $50 billion to invest in domestic and foreign semiconductor companies. Will this time be different?
Three forces are working in China’s favor this time around. First, the slowdown in Moore’s Law is giving China more time to catch up. This year, China’s SMIC fab started producing chips in the 14nm process, an important milestone. Second, Huawei has imitated Samsung successfully, both in designing its own smartphone chip and in selling its own smartphone, now with almost 20% market share worldwide. Finally, Chinese companies from Alibaba to Horizon Robotics have invested heavily in AI chips. With no IP licenses necessary and a huge domestic market, Chinese companies could capture a large portion of the emerging $40 billion AI chip market.
Bitcoin’s Realized Capitalization Has Eclipsed $100 billion
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This week, bitcoin’s realized capitalization surpassed $100 billion for the first time. Highlighted in a report released by Coin Metrics, realized capitalization measures the value of bitcoin on a cost basis, adding perspective to the network’s “economic weight.” While market capitalization values each coin at the market price, realized capitalization values each coin at the price at which it last moved.
A breakdown by price range of the realized cap contributions in the charts below suggests that bitcoin has more economic weight today than at its previous realized cap peak in January 2018.
Source: Coin Metrics' State of the Network: Issue 14
In late 2017, 74% of realized cap was composed of coins above current price levels, as shown in the graph above.
Today, 52% of realized cap is composed of coins above current price levels.
Source: Coin Metrics' State of the Network: Issue 14
As Coinmetrics points out, “A relatively large amount of [bitcoin] BTC ownership is now concentrated in the $3,000 to $12,000 range,…a healthier base.” The downward shift in contribution signifies that current price levels could be more sustainable, since a majority of the BTC bought above $13,000 has been sold.
The full realized capitalization report can be found here, along with a more comprehensive explanation of the metric’s significance.