August 03, 2022
🐫 Happy hump day, fintech friends. After a week away, Lucinda has returned and we are back at full capacity!
Situational awareness: Binance tells Axios that it has named co-founder Yi He as head of Binance Labs, its VC and incubator arm.
1 big thing: Playing nice with PayPal
Some key parts of Elliott Management's stake in PayPal were revealed with the company's earnings, and the window into what's at play there is a bit clearer. The fog of activist investor war could cloud that pane quickly, though.
Why it matters: In addition to the size of the stake ($2 billion), this much was clear in the earnings release: Elliott and PayPal have been in dialogue for a while now, and so far things are amicable.
- That's a really good sign for the company in that a knock-down, drag-out activist campaign (the kind Elliott has a long track record of doing) can be distracting. The Q2 earnings release was a love fest of supportive Elliott quotes. Investors cheered.
Yes, but: If the company underperforms and doesn't execute on what it laid out in yesterday's earnings materials, Elliott will ratchet up the pressure. That's what it does best and that's what Jesse Cohn, the Elliott managing partner leading this investment, is known for. Paul Singer founded the firm, but Cohn elevated its activist practice.
- Cohn is particularly adept at using the activist tool kit to pressure companies into transactions — sales, mergers, divestitures.
The bottom line: PayPal's buyback and other measures it announced on Tuesday have the imprint of an Elliott behind-the-scenes dialogue. The M&A talk around PayPal and Pinterest (also a confirmed Elliott investment) and other options died down with yesterday's news cycle.
- That could pick up fast if the stock sags, and performance metrics are missed.