The latest disaster story authored by the aptly named Hindenburg Research is unfolding.
The investment firm that’s made a name for itself by combining nuclear-grade critical company reports with short-selling bets is targeting Equinix, a data center company that operates as a real estate investment trust (REIT). Former employees told Hindenburg that they were pressured to misclassify certain expenses to falsely boost a key profitability metric — which in turn unlocked stock grants for top executives. Hindenburg also alleges that the REIT was selling investors an “AI pipe dream.” Sounds more like short-selling a pipe bomb, if you ask us.
The European Union expects to roll out new guidelines that will require major online platforms to moderate misinformation regarding elections or risk getting fined.
I Read It on the Internet
You may have been scrolling through social media during the runup to the 2016 US presidential election only to stumble upon news stories with odd headlines like “Pope Francis shocks world, endorses Donald Trump for president.” And they always came from sources with seemingly legitimate names like “The Boston Tribune” or “The Denver Guardian.” In reality, these were fake news sites, and voters and lawmakers alike quickly feared that the spread of misinformation via online platforms like TikTok, Facebook, YouTube, and Twitter (now X) could manipulate the masses and influence elections.
The West’s biggest concern is Russia, which has multiple entities, including the Social Design Agency and Structura National Technologies, that are accused by Western governments of leading fake news campaigns during elections throughout the entire world — and in its war against Ukraine. And now, advancements in artificial intelligence and deep fakes — videos that look real but aren’t — can potentially allow fake news to spread faster and appear more convincing.
With the EU’s parliamentary elections coming up in June, the bloc aims to keep out as much fake news as possible. While combating the Kremlin directly is a rather large task, taking on Big Tech, on the other hand, is slightlyless Herculean… but only slightly:
Companies like Snap, Meta, and Google have teams and policies to moderate the spread of misinformation on their platforms, but the EU — which imposed the Digital Services Act last summer as a way to oversee Big Tech companies online — believes self-regulation just won’t cut it anymore.
As soon as next week, the European Commission is expected to pass new rules that will allow it to penalize any platform that fails to address AI-powered disinformation or deep fakes with fines of up to 6% of its global net sales.
Is Time Up for TikTok? In that other Big Tech smackdown across the pond, US lawmakers aren’t looking to merely rein in TikTok — they’re looking to either get it entirely out of the hands of parent company ByteDance, which has been accused of feeding American user data to the Chinese government, or ban it outright. Last year, Washington banned federal employees from accessing the platform on government devices and most states followed that lead. A public ban seemed unlikely but could now be right around the corner with Republicans and Democrats in lockstep. Trump, known for his “tough on China” stance, once strongly supported a TikTok ban but has since flip-flopped. And even though President Joe Biden said he would sign a bill banning TikTok if it reached his desk, his campaign made its own account on the platform just last month. Word of advice, Mr. President: Don’t try the Nyquil chicken challenge. It never ends well.
Since launching its inaugural fund in 2022, more than 5,500 investors have deployed capital into 33 promising startups on Sweater’s disruptive platform.
Retail investors have flooded to the platform to tap a highly attractive asset class that has for decades been untouchable for regular investors (since 1995, venture capital has produced an average annual return of 32.4% compared to the S&P’s 9.1%).*
Now, Sweater’s VC-backed operating company, Sweater Inc, is opening its doors for backers who want a stake in the retail-venture revolution. The platform has already signed its first partner contract for a $500M fund, with an estimated lifetime value of over $15M in revenue.
Kering, the Paris-based luxury conglomerate whose brands include Gucci, Balenciaga, and Yves Saint Laurent, said late Tuesday it was expecting a 10% drop in sales in Asia — which is largely due to softness in the Chinese market. The warning not only sent Kering’s shares down 14% on Wednesday, it dominoed into other European luxury brands’ stock, including LVMH, Prada, and Burberry.
The precipitous fall in Kering’s stock is largely due to Gucci, which made up 68% of Kering’s operating income last year, and is expecting a 20% sales drop itself, the company said. The timing isn’t great for the luxury goods giant:
Kering’s operating income dropped 15% in 2023 compared to the year before. Early this year, the firm said it was investing $963 million in New York retail real estate — maybe with post-lockdown online impulse buys dwindling, a glitzy new store opening will drive foot traffic.
While Kering has fallen behind fellow luxury goods giants including LVMH and Hermès, its ill fortune still has the potential to spread. “Gucci has been encountering some company-specific problems for a few quarters, but this update will raise further worries about the state of consumer spending and China’s economy,” Vital Knowledge wrote in an analyst note, per Bloomberg.
Birkin or Bust: While Kering tries to turn its fortunes around, Hermès could become a victim of its own mystique. The company faces a class-action lawsuit from two disgruntled shoppers who wanted to buy the company’s famous Birkin bag, the cheapest of which clocks in at $10,000. But you can’t just buy Birkins — you need to spend enough money at Hermès to be able to buy one from the retailer itself. The other option is to buy a second-hand one at auction, or off this totally legit guy I know who sells them in the alley. One of the plaintiffs in the lawsuit said that despite spending tens of thousands at Hermès, she says she was told that the bags were reserved for customers “who have been consistent in supporting our business.” How much more supportive can you possibly get?
Maybe naming your company after one of the greatest inventors of all time set the bar a touch too high.
Nikola, the oft-bedeviled, legally challenged startup-turned-combustible-SPAC-star that’s long struggled to get its signature electric vehicles on the road, is now similarly flailing to manufacture its other alternative to gas-powered engine vehicles: hydrogen fuel cell big rig trucks, per a Wall Street Journal report published Wednesday.
Oh, the Humanity
Battery-powered EVs get all the spotlight, but some experts still see hydrogen fuel cell cars as the best carbon-free successor to internal combustion engine vehicles. That’s because hydrogen-powered cars can refuel far faster and have much better mileage than their battery-powered counterparts. The process of converting hydrogen into fuel also only has one byproduct: pure, clean H20.
The downside? They remain far more expensive than either traditional EVs or traditional diesel cars alike:
Nikola executives said the cost to manufacture a single big rig in the fourth quarter was $679,000, while the company sold each truck at an average price of just $351,000 due to previous contracts; that’s as much as $150,000 more than a typical high-end gas-powered big rig.
Worse for Nikola, a shortage of pressurized fuel tanks and electric batteries has significantly disrupted production, CEO Steve Girsky told the WSJ. The company expected to deliver up to 350 hydrogen-powered semi-trucks this year but has shipped only 35 through the first quarter.
Golden State Opportunity: The timing couldn’t be poorer for Nikola. Thanks to new regulation in California that significantly strengthens emissions standards, demand for carbon-free big rigs has soared. “Right now, California has got tailwinds,” Girsky said. “We could have sold a lot more than 35 trucks in the fourth quarter if we didn’t have supply-chain issues.” Then again, given Nikola’s battery-powered EVs have a penchant for spontaneous combustion, we shudder to think what could go wrong with hydrogen, a notoriously combustible element.
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Is Time Up for TikTok? In that other Big Tech smackdown across the pond, US lawmakers aren’t looking to merely rein in TikTok — they’re looking to either get it entirely out of the hands of parent company ByteDance, which has been accused of feeding American user data to the 
