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(Bloomberg) — Basketball stars Chris Paul and Kevin Love are part of a group of athletes putting money behind a sports-card marketplace as collectibles gain momentum with investors.

Dibbs, a real-time trading platform that allows users to invest in fractions of physical sports cards through nonfungible tokens, or NFTs, is raising $13 million in funding in a round set to be announced Tuesday. The investment was led by venture firm Foundry Group and joined by Tusk Venture Partners, Courtside Ventures and Founder Collective.

Sports memorabilia has become a popular asset class, with items going at record prices over the past year. In January, a collector bought a Mickey Mantle card for $5.2 million at auction — the most ever paid for a baseball card. New York-based card company Topps Co. is going public through a deal with a special purpose acquisition company, and Italy’s Panini SpA is attracting interest as well.

The round brings total funding for Dibbs to $15.8 million since it was founded in 2020. Management will spend funds on engineering, product-development staff and marketing as it looks to expand after ending an invite-only beta test this month. It’s now available in the U.S. and has accumulated more than 17,000 users who’ve made more than 100,000 trades.

The Vault

Dibbs takes cards and puts them into vaults to be housed while users trade fractions of the items, lowering entry barriers for those who want to own a piece of a high-value collectible. Cards can come on or off the platform as traders add them on consignment or buy out ownership entirely. Dibbs makes revenue off the trading fees.

“Physical collectibles have hundreds of years of proven value and interest and genuine collectability,” Evan Vandenberg, co-founder and chief executive officer of Dibbs, said in an interview. He hopes to add other memorabilia beyond cards, including less traditional goods like game tickets.

Executives plan to work with their new high-profile investors on marketing and creative direction. Other sports figures participating in the funding round with Dibbs are the NFL’s DeAndre Hopkins, MLB’s Kris Bryant and basketball’s Skylar Diggins-Smith and Channing Frye.

Paul, 35, has invested in businesses such as mobile banking app Goalsetter, indoor farming startup Bowery and therapy device maker Hyperice. He’s also an investor in Beyond Meat Inc., where he has taken an active role as a celebrity endorser for the plant-based food company.

“As new digital platforms are created, what it means to be a fan evolves and it creates new meaningful ways to connect with fans,” Paul said in a statement. “Dibbs levels the playing field for fans for whom the current collectibles market is inaccessible.”

(Updates card trades in the fourth paragraph)

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(Bloomberg) — Volkswagen AG is moving closer to a deal to buy Europcar Mobility Group after sweetening its offer for the car renter.

Europcar is in talks with a consortium led by the German carmaker about a possible takeover at a price of 50 euro cents per share, the company said in a statement Tuesday, confirming an earlier Bloomberg News report. The bid would value the company at around 2.5 billion euros ($3 billion).

Europcar shares rose as much as 5.4% on Tuesday and closed up 3.7% to 49 euro cents in Paris.

There’s no certainty as to the outcome of the discussions, Europcar said. Negotiations are particularly complex given there are about 10 different stakeholders involved, including more than half a dozen hedge fund investors in Europcar, people familiar with the talks said earlier.

VW’s previous offer with its partners Attestor Ltd. and Pon Holdings BV of 44 euro cents a share was rejected about a month ago by Europcar as too low. A bid of 50 cents a share would be a premium of 27% to Europcar’s share price on June 22, the day before Bloomberg News first reported on the initial bid.

VW is interested in gaining access to Europcar’s infrastructure and technology in a bet on the future of mobility services. While demand for rental cars has recovered as governments loosen virus-related restrictions, companies in the sector face long-term challenges from newer entrants offering ride-hailing and car-sharing.

Representatives for VW and Pon declined to comment, while spokespeople for Anchorage, Attestor and Marathon couldn’t immediately be reached for comment.

If a deal is agreed, it would mark a reversal of sorts. VW took over Europcar in the late 1990s, then sold it to buyout firm Eurazeo SE in 2006 for 1.26 billion euros.

Late last year, Europcar agreed to a debt restructuring and capital increase that wiped out more than 1 billion euros of debt and handed control of the company to several hedge funds including Anchorage Capital Group and Marathon Asset Management.

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(Bloomberg) — Tether and the Facebook Inc.-backed Diem token were a main focus of a recent meeting U.S. regulators held on the financial risks posed by stablecoins, a fast-growing corner of the cryptocurrency industry, said people familiar with the matter.

The President’s Working Group on Financial Markets, a team of watchdogs led by Treasury Secretary Janet Yellen, was particularly concerned about Tether’s claims that it holds massive amounts of commercial paper — debt that companies issue to meet their short-term funding needs, the people said. Participants likened the situation to an unregulated money-market mutual fund that could be susceptible to a chaotic investor exodus, said the people who asked not to be named because the meeting was private.

Regulators also expressed worries about Diem — a coin being developed by an association that includes Facebook, as well as other companies and nonprofits — because of its potential for widespread adoption. The social media company has almost 3 billion active monthly users.

Yellen urged agency heads at the July 19 meeting to “act quickly” to ensure stablecoins face appropriate rules, according to a brief Treasury Department statement. The market value of the tokens now exceeds $100 billion, with Tether accounting for more than half that total.

Stablecoins are notable for being pegged to fiat currencies and largely immune to the volatility that plagues Bitcoin and other tokens. But regulators worry they’ve gotten too big and are often used to facilitate illegal financial transactions.

Read More: Why Yellen, Powell Cast a Wary Eye on Stablecoins

Acting Comptroller of the Currency Michael Hsu said regulators are scrutinizing Tether’s stockpile of commercial paper to see whether it fulfills the company’s pledge that each token is backed by the equivalent of one U.S. dollar. He added that stablecoins look “a lot” like money funds, which have been a priority for watchdogs since investors pulled money out of them en masse in March 2020, exacerbating the pandemic-fueled market panic. Other agencies that attended the meeting either declined to comment or didn’t respond.

A Facebook spokesman didn’t respond to a request for comment, while the Diem association declined to comment. The association has previously said it’s working closely with U.S. regulators, and that Diem is being built with consumer and anti-crime protections.

“We are pioneers in this industry, which is all very new,” Tether said in a statement. “We are not just keeping up with new rules, but helping shape them.”

At the end of March, commercial paper made up about half of Tether’s roughly $60 billion in reserves, according to a company presentation. Such a stake would make Tether the world’s seventh-biggest holder of commercial paper, JPMorgan Chase & Co. strategist Josh Younger wrote in a May report.

Read More: The Case for Stablecoins Being the New Shadow Banks

Tether has also been the target of federal prosecutors and state authorities. The U.S. Justice Department is investigating whether executives committed bank fraud in the company’s early days by concealing from lenders that transactions were linked to crypto, people familiar with the matter have said.

As cryptocurrencies have exploded, the U.S. government has been debating how best to oversee the mostly unregulated industry. Many predict the issue will land at the Financial Stability Oversight Council, an uber group of regulators also headed by Yellen. It has the ability to designate firms or even products like stablecoins as systemically important, which would lead to stepped-up supervision by the Federal Reserve. Another path would be for FSOC to direct agencies such as the Securities and Exchange Commission to take action.

SEC Chair Gary Gensler issued his own warning last week, arguing that “a stable value token backed by securities” may be violating U.S. rules if it’s not registered with his agency. On Monday, Massachusetts Democratic Senator Elizabeth Warren sent a letter to Yellen urging FSOC to boost oversight of cryptocurrencies.

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(Bloomberg) — U.S. companies that provide critical services or have high-value trade secrets should be required to improve their cybersecurity and report hacking attacks to the federal government, national security officials and senators said Tuesday.

The attack on Colonial Pipeline Co. in May, which forced the shutdown of the largest fuel pipeline in the U.S. until the company paid $4.4 million in ransom, represents “a total face-plant failure,” Senator Sheldon Whitehouse said during a Senate Judiciary Committee hearing on what to do about ransomware attacks.

“We now have a situation in which you can have critical infrastructure companies fail at meeting basic standards of cyber hygiene, and we’re OK with that,” Whitehouse, a Rhode Island Democrat, said. “We don’t have to regulate everybody in the world. But if you’re critical infrastructure we should no longer tolerate this voluntary regime with big companies who know their infrastructure is critical and fail.”

Whitehouse has introduced legislation with Senator Lindsey Graham, a South Carolina Republican, that would create cybersecurity and breach reporting requirements for certain companies. Whitehouse called on the Biden administration to promptly work with lawmakers to prepare the legislation.

The Justice Department also wants Congress to pass legislation requiring certain companies to notify the federal government about ransomware attacks, Richard Downing, deputy assistant attorney general, testified. The requirement should be for breaches that affect critical supply chains and high-value trade secrets, Downing said.

The department is also seeking help from Congress to improve the ability to disrupt criminal activity and enhance the ability to prosecute those carrying out attacks, who often live in countries that are off-limits to U.S. investigators such as Russia and China, Downing said.

Downing said that Russia is at the top of the list of countries that protect criminals. The U.S. has found connections between criminals carrying out ransomware attacks against U.S. companies and Russian intelligence agencies, Downing said.

“I wouldn’t say that the government of Russia is behind these attacks. However, we do believe they aren’t doing what they could be doing to suppress these attacks,” Downing said.

Despite broad support for new legislation, the hearing also aired criticism along party lines. Senator Ted Cruz, a Texas Republican, said President Joe Biden has “responded to an extreme threat with extreme weakness” after attacks.

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(Bloomberg) — Tesla Inc.’s shares fell as the global chip shortage cast doubt on its sales targets for 2021, damping investor enthusiasm after the electric-vehicle maker had its first $1 billion quarter of net income.

Even with second-quarter profit and sales exceeding estimates, it was Chief Executive Officer Elon Musk’s cautionary hints from Monday evening’s call with investors that held sway with investors Tuesday. He highlighted the unpredictabiltiy of chip supplies and the hurdles he expects in ramping production at two new factories in Austin and Berlin later this year. 

Tesla fell as much as 4.2%, the biggest intraday decline since June 3, and was trading down 3.2% at 12:10 p.m. in Jin New York.

“While we’re making cars at full speed, the global chip shortage situation remains quite serious,” Musk said. “For the rest of this year, our growth rate will be determined by the slowest part in our supply chain.”

Musk said Tesla has had factory shutdowns due to parts shortages even as its engineers rewrote software to adapt to whatever chips they could find. The company confirmed a forecast for 50% annual growth in deliveries over multiple years and reiterated that this may be one of the years it expands by more than that.

“Guidance for this year and comments about next continue to be vague,” Cowen analyst Jeffrey Osborne wrote in a note Monday after the earnings release. “The company continues to target over 50% delivery growth; however, consensus assumes over 70% growth.”

Tesla sold just under 500,000 vehicles in 2020, and a record 201,250 cars in the second quarter. Profit for the three months ended June 30 more than tripled to $1.45 a share on an adjusted basis, beating the 97-cent average of analysts’ estimates and marking the eighth straight quarter of profit.

Manufacturing Agony

Musk also revisited one of his familiar themes on the earnings call: the challenges of manufacturing vehicles at scale.

“It’s hard to sort of explain to people who have not been through the agony of a manufacturing ramp,” he said. “It is so hard to do production.”

Musk may have been setting expectations as Tesla approaches two ambitious manufacturing pushes later this year. The automaker said it’s on track to start output of its Model Y crossover in two new plants — the one in Austin, and another in Germany — by year-end.

Tesla pushed back the start date for its Semi truck, first unveiled in 2017, yet again to next year. Production of its highly anticipated Cybertruck pickup will follow the Model Y in Austin, but Tesla didn’t provide further details.

“I don’t think anyone is surprised that the Semi is delayed and that the focus is on Model Y and Cybertruck,” analyst Gene Munster of Loup Ventures said in a phone interview.

Battery Timeline

Musk also declined to give a firm timeline for when Tesla’s new, larger 4680 battery cells, which it’s trying to make in-house, will be ready. The automaker plans to use them in both the Semi truck and the Model Y built in Austin, but has a backup plan to use 2170 cells if it can’t be achieved in time, Musk indicated on the call.

“There is a tremendous amount of innovation that we’re packing into that 4680 cell,” he said. “I think it will be great, but it’s difficult to say when the last of the technical challenges will be solved.”

While Musk telegraphed uncertainty ahead, Tesla achieved rich profit margins in the second quarter despite grappling with chip shortages and port congestion.

Rising sales of Model Y crossovers and Model 3 sedans delivered a fourfold increase in operating income, even as Tesla slogged through a costly ramp up of new Model S and X vehicles. The company widened its margins from core auto operations to 25.8%, from 22% in the prior quarter and 18.7% a year earlier.

“It puts them down the path of being the best-in-class automotive company from a margin perspective,” said Ben Kallo, a Robert W. Baird analyst. “I don’t think anyone expected this big of a beat.”

Tesla’s auto gross margin excluding regulatory credit sales has increased almost 10 percentage points to the highest since the company introduced the Model 3, Chief Financial Officer Zachary Kirkhorn said on the conference call with analysts. That was possible because Tesla has lowered the cost of making cars by more than it has cut prices, he said.

While Tesla is still by far the world’s biggest automaker by market value, its shares have declined about 9.9% this year even as the S&P 500 has reached new highs. More established peers including General Motors Co. and Ford Motor Co. have rallied as they have laid out plans to more aggressively push into the nascent EV market.

More competition from rival EVs comes against a backdrop of supply-chain challenges from a global semiconductor shortage and higher commodity prices.

Tesla’s second-quarter revenue almost doubled to $11.96 billion last quarter, beating analysts’ estimates of $11.36 billion. Revenue from the sale of regulatory credits — used by other automakers to offset greenhouse gas emissions — totaled $354 million, down from $518 million in the first three months of the year.

 

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(Bloomberg) — Trading volume of Ether, the second-biggest cryptocurrency, grew faster than that of Bitcoin in the first half of the year, according to a report out today from U.S.’s biggest crypto exchange, Coinbase Global Inc.

Looking at data from 20 major exchanges worldwide, Coinbase found that Bitcoin’s trading volume for the period reached $2.1 trillion, up 489% from $356 billion over the first half of last year. In the same period, Ether’s total trading volume reached $1.4 trillion, up 1,461% from $92 billion in the first half of 2020. This was the first sustained period of time ever for Ether’s trading pace to exceed Bitcoin’s, according to Coinbase.

Both Bitcoin and Ethereum have rallied in the past week after sinking in May on worries about Bitcoin’s environmental impact and a regulatory crackdown in China. Ethereum has been at the center of a new crop of apps allowing for peer-to-peer lending, borrowing and trading. It is also facing an upgrade due around Aug. 4 that will reduce the amount of outstanding tokens by destroying some of them every time it’s used to fuel transactions, which could spur more price gains.

The coin with the highest trading volume is Tether, the stablecoin whose value isn’t supposed to fluctuate much.

Coinbase’s report looked at trends in institutional investment in crypto.

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(Bloomberg) — Trading in Chinese education stocks listed in the U.S. showed signs of a slight reprieve on Tuesday after a sharp two-day selloff wiped out billions in market value from the companies.

Shares of TAL Education Group and New Oriental Education & Technology Group — down nearly $20 billion in value in the past two trading sessions — each gained more than 1%. Other companies, including Meten EdtechX Education Group Ltd. and 17 Education & Technology Group Inc. were also higher as of 11:40 a.m. in New York. Still, the recovery was short-lived for others, with shares of firms like Gaotu Techedu Inc. and China Online Education Group erasing gains seen earlier in the morning.

The rebound follows the worst two-day selloff in U.S.-listed companies in over a decade as regulators in Beijing unleashed sweeping policy changes on the technology, online education and property management sectors. Market across China slumped on Tuesday as rumors circulated that U.S. funds were dumping Chinese and Hong Kong assets, with analysts warning that gains may be short-lived.

“I think it’s kinda of a dead cat bounce,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It’s way too early to be catching the falling knife,” he added.

Despite the rebound in some education names, not everyone’s convinced the selling pressure on Chinese shares has abated.

“I expect the selloff in listed mainland companies in Hong Kong and the U.S. to continue for some time yet until we reach a level that international investors feel the now much-increased China regulatory risk is balanced by attractive enough valuations,”said Jeffrey Halley, senior market analyst at Oanda.

The Nasdaq Golden Dragon China Index — which tracks 98 of China’s biggest firms listed in the U.S. — fell for a fourth straight day bringing its losses since a record high in February to nearly 50%. Stocks on the gauge have combined to lose more than $858 billion in value over that five month stretch. Tech-giants including Alibaba Group Holding Ltd., JD.com Inc., NIO Inc. and Baidu Inc. were among the biggest decliners, all declining by at least 4%.

(Updates pricing throughout)

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(Bloomberg) — Robinhood Markets Inc. is exploring new features that would let customers invest spare change and better protect against volatility in cryptocurrency trading, according to code hidden inside a test version of the company’s iPhone app.

Robinhood is developing an option called “round up investments” that will allow users to invest their spare change in specific stocks, according to the code, which was part of a version of the app distributed to beta testers earlier this month. The code also shows that the company is exploring a rewards program that will give bonuses to those using the round-up feature.

Investing spare change has become an increasingly popular strategy for new stock traders and is a key piece of competing apps such as Acorns, Chime and Wealthsimple. The code in the Robinhood app doesn’t indicate where the spare change will come from, but other apps typically connect to a debit or credit card. They round up purchases to the nearest dollar and automatically invest that difference. For example, if a user spends $3.75 on a cup of coffee, 25 cents will be put toward a chosen stock.

Robinhood plans to make its public debut this week, with its shares set to start trading on Thursday. The company is looking to raise about $2 billion in its initial public offering, with a valuation of up to $35 billion. Robinhood is challenging IPO conventions in a variety of ways, including by setting aside up to about a third of its shares for its own users — in what it expects to be one of the largest-ever IPO allocations to retail investors.

On Saturday during a livestreamed roadshow — an event typically held in private for institutional investors — Robinhood executives answered customer questions about how the company might grow in the future.

“There is more we can do with direct deposit and debit cards, particularly given the opportunity to connect rewards with our brokerage and crypto offerings,” Chief Financial Officer Jason Warnick said in response to a question on the firm’s growth strategy.

The code was discovered by iOS developer Steve Moser. Work on the features is no guarantee that the functionality will ultimately be released. A Robinhood spokeswoman declined to comment on the findings.

Other app features have been discovered in code before they’ve been announced. Bloomberg News reported on code in Square Inc.’s app in May that revealed plans for business checking and savings accounts. The new offerings were officially unveiled this month. And evidence of Netflix Inc.’s push into video games appeared in its app before the streaming service disclosed the plans.

Volatility Safeguard

Besides spare-change investing, the code also indicates that Robinhood is working to better guard against the vagaries of the crypto market through a feature called “price volatility protection.”

“To protect your orders against price volatility, we may sometimes skip your recurring orders or buy less than your chosen amount,” a message in the code reads. The code says the app will let a customer know when this happens and will never buy more than a user’s chosen amount.

Robinhood, based in Menlo Park, California, struggled with turbulence in virtual currency trading this year. As the price of Dogecoin boomed and crashed, Robinhood’s crypto trading platform suffered an outage.

Still, investors have proven eager to use Robinhood to trade virtual currencies. The company brought in about $87.6 million, or about 17% of its first-quarter revenue, from cryptocurrency transactions, up from just 3% in the same period in 2020.

Chief Executive Officer Vlad Tenev said during the company’s roadshow that Robinhood is working on building up its crypto business. Without specifically mentioning a volatility feature, he said that introducing options like crypto wallets will be a priority at the firm.

“We’ve been doing a lot of work behind the scenes to provide our crypto customers with the functionality that they’ve been asking for,” Tenev said. “We want to introduce new features safely, and there’s a lot of items we have to get right from the start. For instance, making sure we get security right is a top priority.”

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