Just a few years ago, smart cities, a catch-all phrase for connecting urban infrastructure like parking meters and stoplights online, had major buzz. The idea was to use machine learning to crunch data collected across cities to, for example, minimize traffic delays and reduce pollution.
But smart city projects haven’t taken off as quickly as expected, partly because of COVID-19 decimating local economies and reducing city budgets.
One of the latest smart-city causalities was Cisco’s ambitious Kinetic for Cities software, a dashboard for governments to manage data from their local smart-city projects. Cisco said in December that it would kill the product.
“The cities realized that that’s not what they actually need,” said Cisco global innovation officer Guy Diedrich.
Instead of pushing its software, Cisco plans to work with city governments on other efforts involving Internet connectivity. The company recently worked a lot with local officials to install basic Internet infrastructure, for instance, like helping Brazilian cities create virtual courtrooms, he said.
Forrester analyst and smart city expert Michele Pelino said local governments are feeling pressure to keep city operations humming despite shrinking budgets. Because smart city projects can be expensive and often don’t pay off for years, they’re being cut back.
Furthermore, some smart city projects had been focused on fixing problems that are no longer as pressing. Reducing traffic and parking now in many cities isn’t as important because many workers no longer commute to downtowns because of shelter-in-place rules.
Now, city governments see “security and safety” as a priority, and have reallocated some of their budgets to solve the problem, Pelino said.
“People need to feel comfortable that they are coming into an environment that is safe and secure,” she said about these kinds of projects.
Pelino is unsure when more ambitious projects, like using machine learning to optimize traffic lights, will be reinstated. She’s “certain” that bigger projects will eventually come back, but for now, many cities don’t have the money.
“Where is the money going to come from?” Pelino said.
As for Cisco, shuttering its smart city technology is another example of its challenges in expanding beyond its core networking gear business. Although the networking giant has been pushing into new areas like selling more specialized chips and networking software, the company’s overall business is still shrinking as firms buy less routers and switches than they used to, partly due to the rise of cloud computing.
Diedrich is still optimistic about Cisco’s smart-city push, saying that the company must still learn about it by working with governments via its Country Digital Acceleration (CDA) program, intended to help various governments with their digitization projects.
“What we learned with coming to cities, is that their needs are evolving and changing in real time,” Diedrich said. “One thing that we’re not doing is coming up with what we think cities need and shoving it down their throats—that’s not Cisco and certainly not the CDA program.”
As to whether Cisco would have kept selling its Kinetic for Cities software if it wasn’t for the coronavirus pandemic, Diedrich was vague. One thing that is certain: any smart city projects the company pursues will involve artificial intelligence.
Among the local governments still testing smart city projects, officials “know A.I. and machine learning is going to be very important,” said Diedrich, adding that it’s needed for making quick decisions like adjusting traffic lights quickly.
Coinbase’s near-term outlook is ‘still grim’, JPMorgan says, while BofA is more positive about firm’s ability to face crypto winter
Coinbase is well positioned to successfully navigate this crypto winter and take market share, Bank of America said in a research report Tuesday. It maintained its buy recommendation following the exchange’s second-quarter results.
The results warrant “a muted stock reaction,” the report said. Net revenue of $803 million was below the bank’s and consensus estimates, while its adjusted $151 million loss before interest, tax, depreciation and amortization was better than the street expected. Importantly, the company remains “cautiously optimistic” it can reach its goal of no more than $500 million of adjusted EBITDA loss for the full year, the report added.
Coinbase shares fell almost 8% in premarket trading to $80.74.
Bank of America notes that Coinbase had no counterparty exposure to the crypto insolvencies witnessed in the second quarter. The company also has a “history of no credit losses from financing activities, holds customer assets 1:1, and any lending activity of customer crypto is at the discretion of the customer, with 100%+ collateral required.” These rigorous risk-management practices will be a “positive long-term differentiator” for the stock, the bank said.
JPMorgan said Coinbase had endured another challenging quarter, while noting some positives.
Trading volume and revenue were down materially. Subscription revenue was also lower, but would have been much worse were it not for higher interest rates, it said in a research report Wednesday.
The company is taking steps on expense management, and in addition to the June headcount reductions, is scaling back marketing and pausing some product investments, the note said.
The bank says the company’s near-term outlook is “still grim,” noting that the exchange expects a continued decline in 3Q 2022 monthly transacting users (MTUs) and trading volumes, but says Coinbase could take more “cost actions” if crypto prices fall further.
JPMorgan is less optimistic than Bank of America about the company in the near term, saying pressure on revenue from falling crypto markets will have a negative impact on the stock price. Still, it sees positives including higher interest rates, from which the firm will generate revenue. It also sees opportunities for the exchange to grow its user base, leveraging almost $6 billion of cash. The surge in crypto prices in July, and the forthcoming Ethereum Merge are also seen as positive catalysts, it added.
The bank maintained its neutral rating on the stock and raised its price target to $64 from $61.
Elon Musk sold $6.9B in Tesla stock in case he’s forced to buy Twitter
Elon Musk sold $6.9 billion of his shares in Tesla Inc., the billionaire’s biggest sale on record, saying he needed cash in case he is forced to go ahead with his aborted deal to buy Twitter Inc.
“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” Musk tweeted late Tuesday after the sales were disclosed in a series of regulatory filings.
Asked by followers if he was done selling and would buy Tesla stock again if the $44 billion deal doesn’t close, Musk responded: “Yes.”
Tesla’s chief executive officer offloaded about 7.92 million shares on Aug. 5, according to the new filings. The sale comes just four months after the world’s richest person said he had no further plans to sell Tesla shares after disposing of $8.5 billion of stock in the wake of his initial offer to buy Twitter.
Musk last month said he was terminating the agreement to buy the social network where he has more than 102 million followers and take it private, claiming the company has made “misleading representations” over the number of spam bots on the service. Twitter has since sued to force Musk to consummate the deal, and a trial in the Delaware Chancery Court has been set for October.
In May, Musk dropped plans to partially fund the purchase with a margin loan tied to his Tesla stake and increased the size of the equity component of the deal to $33.5 billion. He had previously announced that he secured $7.1 billion of equity commitments from investors including billionaire Larry Ellison, Sequoia Capital, and Binance.
“I’ll put the odds at 75% that he’s buying Twitter. I’m shocked,” said Gene Munster, a former technology analyst who’s now a managing partner at venture-capital firm Loup Ventures. “This is going to be a headwind for Tesla in the near term. In the long term, all that matters is deliveries and gross margin.”
At the weekend, Musk tweeted that if Twitter provided its method of sampling accounts to determine the number of bots and how they are confirmed to be real, “the deal should proceed on original terms.”
Musk, 51, has now sold around $32 billion worth of stock in Tesla over the past 10 months. The disposals started in November after Musk, a prolific Twitter user, polled users of the platform on whether he should trim his stake. The purpose of the latest sales wasn’t immediately clear.
Tesla shares have risen about 35% from recent lows reached in May, though are still down about 20% this year.
With a $250.2 billion fortune, Musk is the world’s richest person, according to the Bloomberg Billionaires Index, but his wealth has fallen around $20 billion this year as Tesla shares declined.
The rent is too d*mn high for Gen Z: Younger generations are ‘squeezed the most’ by higher rents, BofA says
Most of Gen Z is too young to remember the 2010 New York gubernatorial candidate Jimmy McMillan.
But over a decade later, they would probably agree with his signature issue (and catchphrase): the rent is too damn high.
This July, median rent payments were 7.4% higher than during the same period last year, according to a Bank of America report released Tuesday.
The national median price for a one-bedroom apartment has been hitting new highs nearly every month this summer. It was $1,450 for July, according to rental platform Zumper. In the country’s largest city, New York, average rent exceeded a shocking $5,000 a month for the first time ever in June.
But inflation in the rental market hasn’t hit each generation equally, and no one is getting squeezed harder by the higher monthly payments as Gen Z. Those born after 1996 have seen their median rent payment go up 16% since last July, compared to just a 3% increase for Baby Boomers, BofA internal data shows.
“Younger consumers are getting squeezed the most by higher rent inflation,” BofA wrote.
The great rent comeback
Early in the pandemic, landlords slashed rents and gave significant COVID discounts to entice tenants to stay instead of leaving urban areas. Once those deals started expiring in 2021, many landlords suddenly raised payments once again, sometimes asking for over double their pandemic value.
Young people across the board have been hit hard, and rent burdens compared to age can be seen even within a single generation. Younger millennials had their median rent payment grow 11% from last year, while the median payment for older millennials rose 7%. Gen X experienced a 5% median rent increase, according to BofA.
It’s not a surprise, then, that Gen Z feels so strapped for cash. The majority of young people, 61%, said they want to receive their wages daily instead of twice a week, a practice typically reserved for workers living paycheck to paycheck, according to a report from the Center for Generational Kinetics, which specializes in research across the generations. Rising rent inflation has even priced nearly a third of Gen Zers out of the apartment search altogether. Around 29% of them have resorted to living at home as a “long-term housing solution,” according to a June survey from personal finance company Credit Karma.
It’s no wonder—the rent really is too high.