TheChek News Flow

The tension between incumbents and fintechs has existed for decades. But every once in a while, the two groups decide to put their competition aside and work together.

In an unusual move, Capital One is teaming up with payment giants (and rivals) Stripe and Amsterdam-based Adyen to offer a free product aimed at fraud reduction, the financial services giant told TechCrunch in an exclusive interview.

While Capital One has built models to protect its customers from fraud, it was getting stuck because it just “didn’t have enough data,” said head of fraud strategy Jon Borman.

So it built an open-source project, called Direct Data Share, which he described as an API that allows merchants or anyone in the payment stack to send real time transaction data. This is particularly useful for e-commerce transactions, which he described as “pretty unsafe” compared to in-person purchases where a user is verifying the chip on a credit card, for example.

With Direct Data Share, every time an online purchase was made, “a bunch of data” flowed through Capital One’s API to the bank, which would be used to help prevent fraud for more customers and merchants, he said.

But by partnering with Stripe and Adyen with Direct Data Share, Capital One can act like a data clearinghouse, identifying fraud across all of their rails.

“If we see an IP address through Stripe that turns out to be fraudulent, we can now use that same IP address to prevent fraud for transactions happening at Adyen, and vice versa,” Borman told TechCrunch.

Merchants win, he said, because more fraud should be identified. Global ecommerce fraud losses are expected to spike to $343 billion by 2027, according to a study by Juniper Research.

But it should also mean fewer false declines, when a card or transaction is flagged but shouldn’t be. And merchants pay no extra fees for the protection. So far, Borman said that the partnering with the fintechs has resulted in the approval of over a billion dollars worth of transactions that would have been declined.

“They’re trying to stop fraud on their side, too, both for financial reasons, as well because this is criminal activity that we’re preventing,” he said of Stripe and Adyen. “So we had this light bulb moment in that we realized we have the exact same business model, so we can work together and fight fraud.”

Capital One has been working with Stripe on this offering since early 2023, but only recently began collaborating with Adyen.

Specifically in the case of Stripe, Capital One through its API is able to receive fraud scores from Stripe’s Radar product that it says will help it improve accuracy during the transaction authorization process.

When Capital One approached Adyen with a solution to improve authorization rates, “it was an easy decision,” Trevor Nies, Adyen SVP and global head of digital told TechCrunch.

“We love this partnership because we can succeed together,” he added. “Adyen’s merchants benefit from higher authorization rates and fewer chargebacks just as Capital One’s cardholders benefit from fewer false positive declines and less fraud.”

- Cytokinetics and that third party engaged in good faith negotiations. The Board was supportive of moving forward on a potential acquisition on substantially the terms the counterparty communicated to us and on terms that we believed were going to be mutually acceptable. However, the third party did not move forward with an acquisition of our company at that time. There are a few additional points I’d like to make by way of background:

Russia has taken out over half of Ukraine power generation

Country’s electricity capacity has dropped below 20GW, with Russian attacks causing worst blackouts since start of war

Russia has knocked out or captured more than half of Ukraine’s power generation, causing the worst rolling blackouts since the start of its full-scale invasion in 2022.

Moscow’s missile and drone attacks in recent months have homed in on Ukrainian power plants, forcing energy companies to impose nationwide shutdowns while scrambling to repair the damage and find alternative supplies.

Before Russia’s full-scale invasion in 2022, Ukraine’s domestic energy production was about 55 gigawatts of electricity, among the largest in Europe. That power generation capacity has currently dropped below 20GW, due to bombardments or to Russian occupation taking those plants offline, according to Ukrainian officials.

Prime Minister Denys Shmyhal told government meeting on Thursday that the consequences of Russian attacks on Ukraine’s energy sector are “long-term”, which means that saving power “will be part of our daily life in the years to come”.

“Our goal is to save at all levels: from large enterprises to individual houses and apartments,” he said.

A Russian attack on Saturday struck energy facilities in five regions, causing significant damage, said Kyiv energy minister German Galushchenko.

The latest strikes have also targeted pumping facilities for underground natural gas storage being used by EU customers. Though these pumps can be easily replaced, the attacks do highlight concerns about security of supply come winter — both for domestic use and exports to the bloc.

The EU’s ambassador in Kyiv, Katarina Mathernova, said that since March, “Russia has destroyed [a] whooping 9.2GW of energy generation” in Ukraine. She added that she was meeting officials to establish what their “urgent energy equipment needs” were in order to “help alleviate the impact of continuous Russian missile attacks on energy infrastructure”.

Russia’s first aerial bombardment campaign in the winter of 2022-23 targeted the country’s electrical distribution grid — which could be repaired relatively easily, according to officials and experts. But the latest barrages are zeroing in on thermal and hydroelectric power plants which will be much harder and more expensive to fix, rebuild or replace, they said. 

One Ukrainian government official described Saturday’s assault as “devastating” while another said it was likely to mean that by winter residents would be spending a vast majority of their day without electricity.

Both officials spoke on the condition of anonymity because they were not authorised to speak to the press. One of the officials said 1.2GW of power generation was lost in Saturday’s bombardment alone, while infrastructure critical for transporting gas from underground storage facilities in western Ukraine was badly damaged. 

Asked what the damage would mean for the months ahead, one of the officials put it bluntly: “We should prepare for life in the cold and the dark.”

“This is our new normal,” the second official said, gesturing outside a window to the darkness that had descended on Kyiv during a recent emergency power shutdown.  

Ukraine’s leadership has blamed the recent destruction on insufficient air defences being provided by western allies. President Volodymyr Zelenskyy said Russian missiles were able to hit Kyiv’s largest thermal power plant in April because Ukrainian forces had run out of munitions. 

Zelenskyy has urged his allies to send more interceptors and air defence batteries — but so far only Germany and Italy have pledged to do so.

Russia’s aim appears to be to make life untenable for Ukrainians, Oleksandr Lytvynenko, secretary of Ukraine’s national security and defence council, told the Financial Times. He described plans to set up a “decentralised energy system” relying on more mini-power plants that would be less vulnerable to Russian attacks. 

European countries have so far donated 120 shipments of critical energy equipment and tools to Kyiv to help shore up and repair the energy system.

In addition to increasing imports of EU electricity from 1.7GW to 2.4GW and bringing more gas-fired energy plants online, Ukraine’s leadership will have to adopt further unpopular tariff hikes, according to Borys Dodonov, head of energy and climate studies at the Kyiv School of Economics.

“If no measures are taken, according to our modelling, then probably the population will have only two to four hours of electricity [per day] in January,” said Dodonov.

On Friday, Ukrainian authorities doubled energy prices in a bid to fund the reconstruction effort but they still fall short of market rates.

Lytvynenko said Ukraine was also trying to increase its use of green technology, such as solar panels and wind turbines. While these are seen as crucial for Ukraine’s future energy security, they require foreign investment which given the country’s risk profile is difficult to attain.

Move is latest by a London landowning company to diversify its role

The Earl of Cadogan’s property company, which owns almost 100 acres of London’s Chelsea, is making a push into running hotels as it seeks higher returns and more control over hospitality in the high-end neighbourhood. 

The £5.4bn estate now operates five hotels with various partners, having added two new properties to the portfolio over the past year. 

Hotels have enjoyed a post-pandemic boost, making them one of the few areas of strength in the wider commercial property market and prompting a spate of dealmaking. 

For Cadogan Estates, the investments form part of a strategy to boost its returns by taking on riskier business ventures beyond its traditional role as a landlord.  

“The strategy on hotels is to take operational risk,” said Hugh Seaborn, the estate’s chief executive. He said the new approach was “very different to renting something out and letting someone else take the risk and the benefit”.

Playing a bigger role in operating the hotels would also give the estate more control over the mix of accommodation, restaurants and bars in the neighbourhood, Seaborn added. 

The move by Cadogan is the latest by large London-based estates to push into new ventures to boost returns. The Duke of Westminster’s Grosvenor estate in Mayfair and Belgravia has invested in operating more flexible workspaces and has also launched a new lending strategy. 

Cadogan’s latest hotel opening, in September last year, is At Sloane — a 30-bedroom, five-star hotel operated with French hotelier Jean-Louis Costes. The estate this year completed the refurbishment of the former Draycott Hotel, which it bought and rebranded The Chelsea Townhouse. 

The new properties add to an existing portfolio that includes The Cadogan Hotel — best known as the scene of the arrest of Oscar Wilde — which reopened in 2019 after a big refit. The estate traces its history back over 300 years to Sir Hans Sloane.

Cadogan reported on Wednesday that its operating profit, before capital items, increased 22 per cent to £120mn in 2023. The value of its properties increased 3 per cent — up from £5.1bn, adjusted for sales, purchases and capital expenditure. 

Its retail portfolio, which makes up the largest share of its holdings at 46 per cent, had its first full year of recovery from the Covid-19 pandemic. Retailers on the estate reported footfall and turnover were about 10 per cent above 2019 levels. Cadogan booked a 10 per cent increase in gross rental income from retail, rising to a record £96mn. 

Seaborn said the estate was seeing the benefit of financial support it extended to its tenants during the pandemic, including only charging restaurants rent based on their turnover, which helped those businesses bounce back. 

Cadogan also worked with the borough of Kensington and Chelsea — the UK’s wealthiest — to add 1,000 tables and chairs in the neighbourhood, which it has maintained. Seaborn said the changes had created “a much more alfresco atmosphere in Chelsea”.

A dispute between Porsche and its Chinese dealers highlights falling sales

Germany’s luxury automakers from BMW BMW 0.04%increase; green up pointing triangle to Mercedes-Benz MBG 0.53%increase; green up pointing triangle used to rule China’s streets. No longer.

A recent dispute between Porsche PAH3 0.40%increase; green up pointing triangle and its dealers in China has shed some light on the tricky situation for even some of the world’s premium car brands. According to local Chinese media, some of Porsche’s dealers refused to stock up more inventories and asked for additional subsidies from the company. Porsche, and its dealers in China, released a statement last week saying that they are facing complex issues and will work together to find effective ways to respond to market changes.

Indeed, Chinese car dealers are in pretty bad shape. Faced with a brutal price war, they have no choice but to offer deep discounts to customers. For example, gross profit margins on sales of new cars for Meidong 1268 1.51%increase; green up pointing triangle, a dealer for brands such as Porsche and BMW, fell to negative 0.6% in 2023, compared with a positive 6.8% in 2021. The Hong Kong-listed company has lost 94% of its value from its peak in 2021. Eventually this will mean the automakers will have to offer more rebates and cut into their own margins.

Porsche’s first-quarter deliveries in China fell 24% from a year earlier. It isn’t alone. Ferrari’s shipments to mainland China dropped 25% year over year in the quarter, too. Mercedes-Benz and BMW also sold fewer cars in China in the first quarter compared with last year.

The implosion of China’s housing market and the resulting economic slowdown has probably taken a toll on luxury spending. Brands such as LVMH and Gucci have also seen a slowdown in China lately.

But China’s car-buying habits have also undergone a seismic shift with the rapid rise of electric vehicles. Around 44% of cars sold in China in April were new-energy vehicles, which include plug-in hybrids, according to the China Passenger Car Association. German brands have long reigned supreme in China’s luxury segment. While they are still dominant there—the EV penetration rate for cars priced higher than 350,000 yuan, the equivalent of $48,300, was less than half the rate of the overall market at the end of last year, according to Bernstein—things could change fast.

In fact, for slightly cheaper cars, Chinese EV brands have been fast gaining share. Bernstein estimated that for cars priced above 250,000 yuan, the equivalent of $34,500, German brands had only a 45% market share in 2023, compared with a 60% share in 2020. Tesla has been taking share from them, but Chinese EV brands like Li Auto and BYD’s Denza have also been rolling out more premium models. German brands, by contrast, have been slower to introduce EV models. Increasingly, Chinese consumers are also looking for technology features such as infotainment or drive-assistance systems that are frequently paired with EVs.

China has long been a lucrative market for German luxury carmakers, whose prestige kept them in the fast lane. But now they need to work harder to avoid falling behind local rivals.

With earnings season over, analysts said resilient profit margins provided the biggest surprise, with numbers holding up firmer than expected

European companies showed tentative signs of an earnings recovery in the first quarter, leaving investors wondering if the region has turned a corner as it braces for a shift in monetary policy.

With earnings season over, analysts said resilient profit margins provided the biggest surprise, with numbers holding up firmer than expected after companies were able to cling to price increases despite slowing inflation.

Stocks in the U.S. and Europe have pulled back after rallying to record highs earlier this year as investors assess when major central banks will pivot to cut interest rates. The European Central Bank has signaled it will go ahead on Thursday, and its move will come against the background of an improving economy, cooling inflation and a corporate reporting season that turned out to be better than feared.

Earnings per share surpassed expectations in the first quarter, with 60% of Stoxx Europe 600 companies reporting numbers that beat consensus estimates, compared with the long-term average of 54%, according to data provided by LSEG I/B/E/S. In aggregate terms, earnings per share at Stoxx Europe 600 companies that reported results for the period declined 2.3% in the first quarter on revenue that dropped 4.1%, the data showed.

Leading the charge for European stocks was the financial sector, with banks giving the strongest push to earnings, Allianz lead investment strategist Jordi Basco-Carrera said. The sector enjoyed the biggest proportion of companies reporting earnings that beat expectations at 79%, according to LSEG I/B/E/S.

“European companies have been able to beat estimates overall, but the bar was set low,” Societe Generale’s head of European equity strategy Roland Kaloyan said. “Sales continued to disappoint, which isn’t a surprise for us because inflation continued to go down, and profit margin is right now the biggest surprise, because it continues to be quite high and resilient.”

The results came amid low expectations, with analysts having cut first-quarter views for the Stoxx Europe 600 in recent months, according to an aggregate of consensus estimates for individual companies provided by FactSet.

Still, first-quarter earnings gave analysts more confidence on the outlook for European companies, given that consensus expectations have stabilized after a cycle of downward revisions that began in late 2023, FactSet data shows.

The results also mirrored signs of a recovery for the eurozone economy which expanded 0.3% in the first quarter, following a 0.1% contraction in each of the previous two quarters. Put in the context of an economy that still isn’t buoyant, the earnings season was better than expected, Allianz’s Basco-Carrera said.

“This was a positive start to Europe’s earnings growth recovery, which we expect to continue in the coming quarters,” Morgan Stanley analysts said in a note.

For 2024 as a whole, analysts expect earnings-per-share growth of 4.6% and revenue to rise by 2.6%, signaling an improvement compared to the trends seen in the first quarter, according to numbers compiled by LSEG I/B/E/S.

Hesitation still remains concerning upgrades to expectations, with margins likely to come under renewed pressure this year as wage and commodity costs go up and outpace price increases, Societe Generale’s Kaloyan said.

“Analysts need to have more meat on the bones to upgrade, so we are in a wait-and-see mode now,” Kaloyan said.

But companies are feeling better about their prospects, with guidance sentiment improving among managers of European companies, HSBC equity strategists said in a note.

Financials look set to continue performing particularly well, Allianz’s Basco-Carrera said. Tech, luxury, defense and industrial companies benefiting from reshoring look set to perform well, while energy and materials face a tougher year, he added.

Meanwhile, European earnings could benefit from a steady rise in consumer spending as the cost-of-living crisis eases, which the European Commission expects to drive eurozone growth of 0.8% in 2024. And if the ECB goes ahead with a 25-basis point cut to interest rates on Thursday, as expected, this could provide another key boost, though strategists caution that this is likely priced in by companies and the market.

With earnings season over, analysts said resilient profit margins provided the biggest surprise, with numbers holding up firmer than expected

European companies showed tentative signs of an earnings recovery in the first quarter, leaving investors wondering if the region has turned a corner as it braces for a shift in monetary policy.

With earnings season over, analysts said resilient profit margins provided the biggest surprise, with numbers holding up firmer than expected after companies were able to cling to price increases despite slowing inflation.

Stocks in the U.S. and Europe have pulled back after rallying to record highs earlier this year as investors assess when major central banks will pivot to cut interest rates. The European Central Bank has signaled it will go ahead on Thursday, and its move will come against the background of an improving economy, cooling inflation and a corporate reporting season that turned out to be better than feared.

Earnings per share surpassed expectations in the first quarter, with 60% of Stoxx Europe 600 companies reporting numbers that beat consensus estimates, compared with the long-term average of 54%, according to data provided by LSEG I/B/E/S. In aggregate terms, earnings per share at Stoxx Europe 600 companies that reported results for the period declined 2.3% in the first quarter on revenue that dropped 4.1%, the data showed.

Leading the charge for European stocks was the financial sector, with banks giving the strongest push to earnings, Allianz lead investment strategist Jordi Basco-Carrera said. The sector enjoyed the biggest proportion of companies reporting earnings that beat expectations at 79%, according to LSEG I/B/E/S.

“European companies have been able to beat estimates overall, but the bar was set low,” Societe Generale’s head of European equity strategy Roland Kaloyan said. “Sales continued to disappoint, which isn’t a surprise for us because inflation continued to go down, and profit margin is right now the biggest surprise, because it continues to be quite high and resilient.”

The results came amid low expectations, with analysts having cut first-quarter views for the Stoxx Europe 600 in recent months, according to an aggregate of consensus estimates for individual companies provided by FactSet.

Still, first-quarter earnings gave analysts more confidence on the outlook for European companies, given that consensus expectations have stabilized after a cycle of downward revisions that began in late 2023, FactSet data shows.

The results also mirrored signs of a recovery for the eurozone economy which expanded 0.3% in the first quarter, following a 0.1% contraction in each of the previous two quarters. Put in the context of an economy that still isn’t buoyant, the earnings season was better than expected, Allianz’s Basco-Carrera said.

“This was a positive start to Europe’s earnings growth recovery, which we expect to continue in the coming quarters,” Morgan Stanley analysts said in a note.

For 2024 as a whole, analysts expect earnings-per-share growth of 4.6% and revenue to rise by 2.6%, signaling an improvement compared to the trends seen in the first quarter, according to numbers compiled by LSEG I/B/E/S.

Hesitation still remains concerning upgrades to expectations, with margins likely to come under renewed pressure this year as wage and commodity costs go up and outpace price increases, Societe Generale’s Kaloyan said.

“Analysts need to have more meat on the bones to upgrade, so we are in a wait-and-see mode now,” Kaloyan said.

But companies are feeling better about their prospects, with guidance sentiment improving among managers of European companies, HSBC equity strategists said in a note.

Financials look set to continue performing particularly well, Allianz’s Basco-Carrera said. Tech, luxury, defense and industrial companies benefiting from reshoring look set to perform well, while energy and materials face a tougher year, he added.

Meanwhile, European earnings could benefit from a steady rise in consumer spending as the cost-of-living crisis eases, which the European Commission expects to drive eurozone growth of 0.8% in 2024. And if the ECB goes ahead with a 25-basis point cut to interest rates on Thursday, as expected, this could provide another key boost, though strategists caution that this is likely priced in by companies and the market.

To increase investments across its portfolio of brands, including Hanes, Bonds, Maidenform, and Bali

Hanesbrands HBI -2.13%decrease; red down pointing triangle has agreed to sell its Champion business to Authentic Brands Group in a deal valued at up to $1.5 billion.

The apparel brands company said Wednesday it has signed a definitive agreement to sell the intellectual property and certain operating assets of its Champion business for a transaction value of $1.2 billion, which could rise up to $1.5 billion based on reaching certain performance thresholds.

The decision to sell the segment follows an evaluation of a range of strategic options for the global Champion brand.

Once the transaction is completed, Hanesbrands said it plans to turn its attention to the innerwear category and generating higher growth through improving products and increasing investments across its portfolio of brands, including Hanes, Bonds, Maidenform, and Bali.

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