A Company Building Agent, Frontier Releases, Korean Crashes, & More

TLDR;

Welcome back! This week, we have a particularly packed newsletter (despite it being slightly shorter than my average newsletter).

We cover all there is to know, from what in the actual … is going on in Korea, several frontier Lab releases, and several innovative products, with the highlight being Polsia, that are going to excite you about the future.

Enjoy!

MEMORY HARDWARE

The Huge Korean Crash

In the last two days, South Korea’s market has suffered a tremendous rout tightly linked by investors to the shock of a widening Middle East war involving the US, Israel, and Iran, and to the way that shock transmits into Korea’s economy.

Today, the KOSPI suffered what Reuters described as its worst trading day on record, falling 12.06% as the won slid to a 17-year low intraday and circuit breakers were triggered to slow the selloff. In layman’s terms, the market was closed due to the sheer force of the decline.

Samsung Electronics and SK Hynix, two of my largest investments, which had been central to Korea’s AI-driven equity rally, became obvious objectives in the fall, losing about 9.9% and 12%, respectively, as the conflict premium hit global assets and energy surged.

The stocks are still 21% and 25% up for the year, even after this crash.

It was less than a week ago that Samsung crossed the $1 trillion market cap (and Hynix the half-trillion mark), and now both are trading at $780 billion and ~$400 billion, respectively.

But… why?

TheWhiteBox’s takeaway:

The most direct macro reason is energy. Korea is a large importer of Middle Eastern oil, and the market’s fear was not simply “higher prices,” but geopolitical risk.

Thus, this had nothing to do with the company’s businesses, which are as strong as ever, but the fact that Iran is forcing the Strait of Hormuz to close poses a serious risk for countries like South Korea or China. For reference, South Korea relies on this strait almost four times as much as the entire European Union and imports almost as much as India.

Source

Moreover, the sharp depreciation of the Korean won makes the trade look even worse in dollar terms.

In my humble view, which could be wrong, of course, this doesn’t change the investment thesis much (in fact, I’ve bought both in the last few hours), but it’s very hard to predict the long-term effects, so who knows. That’s the thing with markets, it’s not only about the business, but also the geopolitical ramifications on the country you’re in.

So if you’re someone who was already weary of the risks associated with the memory trade (the overarching question as to whether demand will not be cyclical anymore), the geopolitical situation isn’t going to make it look any better, and might not be the best trade for you. Your call.

CODING

Cursor Reaches $2 Billion in Annualized Sales

According to Bloomberg, Cursor, a very popular AI coding assistant startup, has passed an annualized recurring revenue (revenue “run rate”) of…

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