—— Rivian Shares Plunge Amid Rapid Cash Burn; Bain Capital Launches $1.9B VC Fund; Drone Startup Raises $230M; Eli Lilly Cuts Insulin Prices; Bridgewater to Lay Off 100 Employees; Silverstein to Develop Queens Apartment Project; Two Landlords May Trigger Default Wave
1. Rivian Shares Plunge Amid Rapid Cash Burn
On Tuesday, Amazon-backed electric vehicle maker Rivian Automotive released its Q4 earnings and 2023 revenue outlook.
Rivian expects to produce 50,000 vehicles in 2023—double last year’s output but well below analysts’ consensus estimate of 62,797 units.
For Q4, Rivian posted $663 million in revenue, short of the $717 million estimate. Cash and equivalents fell to $12.1 billion from $14 billion the previous quarter, indicating a faster-than-expected burn rate.
Rivian warned that its cash reserves may dwindle to $6 billion this year, significantly increasing its need for external funding as the company grapples with profit margin challenges.
Amid a slew of negative news, Rivian shares plunged 14% today to $16.63 per share. In 2022, the stock dropped 80%, marking the second-worst performer in the Nasdaq 100 Index.
Rivian said orders are backed up through 2024, but it may still face supply chain issues this year.
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2. Bain Capital Launches $1.9B VC Fund
Bain Capital Ventures (BCV), the San Francisco-based VC arm of Bain Capital, has announced two new funds totaling $1.9 billion to support seed through growth-stage startups in FinTech, infrastructure, applications, and commerce.
In May 2021, BCV raised a $1.3 billion early-stage fund and later launched a $500 million crypto fund.
BCV partner Kevin Zhang wrote in a blog post that while VC investment overall has declined, investors still trust the firm to manage capital—a fact the firm deeply appreciates.
According to Crunchbase, BCV participated in 39 deals in the first half of 2022 but only 20 in the second half as the market cooled. So far in 2023, it has made four investments, including a Series B in fintech platform Moov.
Startup valuations have dropped across the board, yet large VC fund launches are becoming more frequent and sizable.
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3. Drone Startup Raises $230M
Drone startup Skydio has raised $230 million in a Series E round, valuing the company at $2.2 billion—more than double its valuation two years ago.
The round was led by Linse Capital, with participation from Andreessen Horowitz, Next47, DoCoMo, and Nvidia.
Skydio produces drones for consumers, enterprises, and government clients. All departments of the U.S. Department of Defense use its products, and the company serves over 1,200 enterprise customers.
Over the past three years, Skydio has grown 30-fold. CEO Adam Bry wrote that drones can enhance safety and efficiency across critical sectors including transportation, public safety, energy, construction, communications, and defense.
At the end of last year, defense AI firm Anduril raised $1.5 billion in its own Series E round.
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4. Eli Lilly Cuts Insulin Prices
In response to President Biden’s call for lower diabetes treatment costs, pharmaceutical giant Eli Lilly announced today that it will cap out-of-pocket insulin expenses at $35 per month.
Additionally, the company will lower the price of its Insulin Lispro Injection to $25 per vial starting in May, and reduce prices of Humalog and Humulin by 70% in Q4.
In a statement, President Biden said American families have long suffered under high drug prices. Though insulin costs less than $10 to produce, Americans often pay at least $300. He praised Lilly for setting a strong example.
Lilly CEO David Ricks noted that while insurance covers treatments for many obese patients, insulin affordability remains poor and must be addressed. The company wants to make a real difference for diabetes patients.
The U.S. is the most obese nation globally, yet insulin affordability remains critically poor.
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5. Bridgewater to Lay Off 100 Employees
In a letter to staff, new Bridgewater Associates CEO Nir Bar Dea said the firm will lay off about 8% of its workforce to cut costs, reallocate resources, and restructure operations. The firm also plans to cap AUM for its flagship investment strategy.
Sources say Bridgewater’s Pure Alpha fund will be limited to $70 billion in assets to maintain agility, and about 100 employees will be laid off.
Nir said saying goodbye to colleagues is difficult, but the company sees many future opportunities.
In the first half of 2022, Pure Alpha returned 32%, but its second-half gains fell to 9.5%.
To boost returns, Bridgewater plans to double down on AI and machine learning, and expand in Asia.
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6. Silverstein to Develop Queens Apartment Project
Silverstein Properties has recently secured a $137 million construction loan and a $27 million project loan from Banco Inbursa to fund the development of a 13-story apartment building in the Astoria neighborhood of Queens.
The new building will feature 354 residential units, including nearly 90 affordable apartments.
Designed by Hill West Architects, the property will also include 25,000 square feet of retail space and 200 parking spots.
In 2019, the site received rezoning approval to convert from industrial to residential use. Silverstein purchased the land in 2021 for $39.7 million.
Foundation work is nearly complete, and the project is expected to be completed by spring 2024.
Silverstein previously held the lease on the World Trade Center and was involved in post-9/11 reconstruction.
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7. 两大业主或掀起违约浪潮
In recent years, the rise of remote work has created enormous challenges for office landlords. Brokerage firms estimate that by 2030, as much as 300 million square feet of U.S. office space could be vacated as a result.
As borrowing costs continue to climb, a growing number of large landlords are defaulting on commercial mortgage-backed loans, including Columbia Property Trust, owned by PIMCO, and Brookfield Corp. Because many of these debts carry floating interest rates, rate hikes have significantly tightened cash flows.
Nitin Chexal, CEO of real estate investment firm Palladius Capital, stated that this wave of defaults also has a major psychological component—when one major landlord defaults, others may follow suit. He predicts more defaults in the next six months and warns that many underlying assets may never return to their previous values.
Jeffrey Gural, Chairman of GFP Real Estate, noted that if a loan’s principal is due this year, the borrower may be in trouble. But if the maturity is three years away, there’s still time to wait and see.
Recently, GFP defaulted on a Manhattan office building loan and is currently negotiating an extension with the lender. Gural pointed out that the scarcity of buyers works in the borrower’s favor—lenders may be reluctant to take back the property.
This year, nearly $92 billion worth of non-bank-originated office loans are set to mature, suggesting the current wave of defaults may only be the beginning.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.