TOP STORY
🤖 Reddit Signs a $60M Deal to Train AI Models Ahead of IPO

With a $5B IPO expected next month, Reddit is making headlines after reportedly signing a $60 million per year content licensing deal with an unnamed AI company to use Reddit’s data to train AI models.

🧑‍💼 Redditors, Put AI-Trainer on Your Resume

To build an AI model, the model needs to be trained on huge amounts of data. Essentially you give the model 100 examples of what you want it to do, and then it can predict what to do the 101st time. If you feed it 1 million examples, it will be more accurate.

With Reddit users posting ~1 million times a day, this massive amount of data is very valuable to train AI models, enabling Chatbots to sound more like real people.

📈 Fuel for the Upcoming IPO

With a highly anticipated $5B IPO coming soon, the ability to profit from the AI wave will certainly boost investor interest.

While Reddit did not achieve profitability in 2023, with a net loss of $69M, revenue was up 20% to $800M.

With the $60M AI deal already representing 7.5% of revenue, this could be big for Reddit, assuming they can land other contracts of a similar nature.

🪧 Riots, Protests, Hacks

While great by the numbers, the move is likely to be controversial among Reddit users who shut down thousands of Reddit forums in protest after Reddit announced last year it would charge for API access.

A group of Reddit hackers also threatened to release stolen site data unless the company reversed the decision.

With many already questioning the ethics of using public data, art, and other human content to train AI models, it’s unlikely that Redditors will be too happy with the new deal.

📲 Content is King

To train the AI models, content is becoming increasingly valuable, with many deals already made.

OpenAI for example has deals with Business Insider, Politico, and German media giant Axel Springer SE worth tens of millions of dollars. The company is reportedly in talks with CNN, Fox, and Time as well.

These deals are important, as without them the AI companies open themselves up to lawsuits. The New York Times for example is suing both OpenAI and Microsoft over copyright infringement.

👇 Share your thoughts on Reddit selling data to train AI models on this Blossom poll!

FROM OUR FRIENDS @ HARVEST ETFS
💊 Healthcare – Nearly a Decade of Steady Monthly Income and Exposure to Innovation

The Harvest Healthcare Leaders Income ETF (HHL:TSX) has paid over C$400 million in cash distributions since inception and is the largest Canadian healthcare ETF with approximately C$1.5 billion in assets under management (AUM).

In January, Harvest ETFs CIO and Portfolio Manager Paul MacDonald sat down to discuss healthcare’s performance in 2023, trends to watch in 2024, and HHL’s track record.

Harvest ETFs offers two ETFs with Healthcare focuses.

Harvest Healthcare Leaders Income ETF (HHL:TSX)

• Global trends driving long-term growth in the healthcare sector

• Diversified exposure to 20 large capitalization global healthcare stocks

• Attractive monthly income with opportunity for capital appreciation

• Covered call strategy to enhance portfolio income potential and lower portfolio volatility

• Available in multiple currency classes: Hedged, Unhedged, US dollar

Harvest Healthcare Leaders Enhanced Income ETF (HHLE:TSX)

• Employs modest leverage up to 25% and invests directly in HHL to achieve enhanced monthly cashflow and growth prospects from:

  • Access to global trends driving long-term growth in the healthcare sector

  • Diversified exposure to 20 large capitalization global healthcare stocks

  • Direct exposure to a portfolio of large-cap tech leaders and uses a covered call strategy to increase income potential and reduce volatility

  • Attractive monthly income with opportunity for capital appreciation

For the latest updates on the Healthcare sector, sign up for Harvest ETFs' monthly newsletter.

BANKING
🤑 Goldman Sachs’ CEO Gets a $6M Raise Despite Profits Down 24%

Despite a challenging year for the financial giant Goldman Sachs, CEO David Solomon will be celebrating after a $6M raise.

After a 24% decrease in profits, Goldman’s board decided to increase Solomon’s compensation by 24% to $31M… I wonder if they see the irony…

🤑 The biggest raise of them all

Solomon’s raise was not only big, it was the biggest % increase of all the big bank CEOs.

Next up was Wells Fargo’s CEO who received an 18% raise and Morgan Stanley’s CEO with a 17% raise.

So far only Brian Moynihan of Bank of America got a pay decrease - cut 3.3% to $29 million after annual profit fell 4%. I bet he’s a bit jealous of Solomon’s more ‘supportive’ committee 🤣

🤔 Did Solomon deserve the raise?

With profits down, the decision is certainly controversial, but Goldman’s compensation committee insists that Solomon’s “decisive leadership” was key to setting the company on the right path and wanted to “show support for Solomon after his most challenging year as boss.”

This ‘decisiveness’ included laying off 3,200 jobs and pivoting from retail banking (including breaking up with Apple).

The company will be refocusing efforts on its core investment banking and trading businesses and growing its asset and wealth management divisions.

OFFERS FOR THE COMMUNITY
🎁 Blossom Offers

• 📊 FREE Passiv portfolio rebalancing tool for Questrade users and 50% off for everyone else

• 🏡 Get $25 to invest in fractional real-estate on addy

• 👀 FREE credit score from Borrowell

• 💸 Earn 4% interest on cash from NEO’s High-Interest Savings Account

CRYPTO
📈 Coinbase Bounces Back with First Quarterly Profit in Two Years

Coinbase announced a significant and unexpected turnaround on Thursday - its first profitable quarter in the last 2 years:

• Net Income hit $273 million, up from a $557 million loss last year.

• Revenue was up 50% to $954 million.

📈 Following the announcement, Coinbase's shares soared by 15%, ending the week up ~28%.

💰️ Transaction Revenue Leads the Charge

Transaction revenue was the key contributor to Coinbase's revenue growth, up 83% from Q3 and driving ~55% of total revenue.

Coinbase attributed this growth to higher volatility in crypto and excitement around the Bitcoin spot ETF.

With Bitcoin up ~100% in the past 6 months, more investors are turning back to crypto after the recent ‘crypto winter’.

🏦 Bitcoin ETFs - a positive or a negative?

Many were concerned that the newly launched Bitcoin ETFs could cannibalize Coinbase’s retail revenue, with investors buying ETFs instead of Bitcoin directly, but so far the excitement around the ETFs has seemed to only fuel more direct trading.

Coinbase also acts as a custodian for 8 of the 10 spot Bitcoin ETFs, earning custodial fee revenue of ~$20M in Q4. While still only ~2% of revenue, Coinbase stands to benefit as these funds gain more investments.

🏦 Analysts Bullish, Blossom Selling

The results have turned the heads of analysts like Oppenheimer & Co. which put an “outperform” rating on Coinbase:

The Blossom community is a little less bullish, or at least is collecting profits, with Coinbase coming in as the #46th most sold stock this week, and not even cracking the Top 100 for most bought.

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions on Blossom this Week

BIG TECH EARNINGS
📉 Dropbox Down ~20% Despite Steady Q4 Performance

Dropbox, the $11B file hosting company, plummeted 19.8% after reporting Q4 earnings, even after surpassing revenue forecasts.

• ✅ Revenue: $635 million vs. $632.2 million expected

• ✅ Earnings per share: $0.50 vs. $0.48 expected

🤔 So why the big ‘drop’?

Dropbox highlighted several operational challenges including increased customer caution and price sensitivity. This led to a decline in new license acquisitions, upselling activities, and an uptick in customer churn and downselling efforts.

Dropbox also faced obstacles from earlier decisions to curb misuse of its services, such as crypto mining and unauthorized reselling, shifting to a metered storage model from an unlimited one.

💪 Despite the negative reaction, Dropbox has emphasized this isn’t going to slow them down.

For Q1 2024, Dropbox anticipates revenue of $627 million to $630 million, reflecting the company's strategic planning to enhance user engagement through its new Dash product, with a focus on onboarding, activation, and retention.