A Juxtaposition Moment Example In Real-Time

It seems that the digital ink was barely dry on my prior article when overnight (morning in Asia) a real-time example involving not only a few of the players, but the example industry itself seemed to have held a meeting and went through the process I explained earlier and moved on it. The player? SoftBank™.

So what was the move, and what does it imply, you ask? Fair questions, but I’ll let you decide. To wit:

Via the Financial Times™: “Didi Chuxing raises $4bn as it plots overseas push”

Who is “Didi” you ask? Didi Chuxing™ is the Uber™ of Asia. It is also the company out Uber-ing Uber in both competition for customers, as well as (wait for it…) actively being chased with “big fat wallets” wanting to invest it in it. The rewards for investing in Didi (as in Series funding) now has one particular advantage (and I’ll argue most) that the other has lost. What is that advantage?

A funding round still raises the valuation, considerably. The next funding round for Uber everyone both assumes, as well as has been reported, will be the equivalent of a down round, or more importantly – lowers its valuation, regardless of how they want to report the numbers. i.e., What ever it is said, or stated to be worth, everyone knows it’s just a ruse, for the bloom has long fell off this once idolized Silicon Valley rose.

In April of this year SoftBank had already invested $5 Billion in Didi. This latest round adds to that already sizable position. I’m going to go out on a limb here and surmise, that adding to that investment today, in light of the ever escalating legal issues that seem to be appearing daily in regards to Uber, that a juxtaposition moment was reached. i.e., Why exactly are we (SoftBank) waiting to invest there (Uber) when we could just easily invest here (Didi) and the valuation goes up, not down?

Or said differently – there’s your juxtaposition moment example (all conjecture of course) in real-time with real-world consequences.

You don’t add to an already sizable position into the demonstrated “Uber killer” in the largest growing markets if you’re still interested in buying heavily into that competitor with its ever-increasing legal issues galore and valuation issues. Let alone, have to sit and wait to see if they can come to some type of agreement as to take your money, while playing numeric alchemy with its valuation metrics and stock holders. All while they burn through cash in a way that would make Elon Musk nervous.

If the above isn’t enough writing on the wall, writ large enough, for most to understand its possible implications. Let me add a few other points for consideration:

SoftBank was joined in this latest funding round with the state fund of Abu Dhabi. Why is that relevant you ask? Fair question, and it is this. If one remembers, the last state fund with deep enough pockets to make a funding round worth it, was when Saudi Arabia did the same, only in Uber. The issue here? Abu Dhabi’s investment is taken for granted as increasing in value. Adding to Uber would be seen as diluting Saudi Arabia’s prior.

Distinction with a difference? A difference with a problem is probably a better question. But I would bet dollars to doughnuts – that question is currently being asked and aggressively assessed. Wouldn’t you?

Oh, I almost forgot: And I would imagine that would now leave one (e.g., SoftBank) with the added benefit of freeing up those pre-allocated $Billions for more immediately, report-able “profitable” investments elsewhere if needed. You know, like in anything with crypto-something-or-other in its name. I mean – did you know there’s an all out mania in that area going on? (snark intended)

The only thing to watch for now, and is truly the moment to watch for, is if, or when, there’s an official statement made by SoftBank in regards to that they’re no longer looking to invest in Uber. For if that happens?

Break out the remaining crying towels.

© 2017 Mark St.Cyr