Is the IPO market reopening? Reddit, AI, Starlink & Meta. And more...

No. 17: Weekly listening & reading & more...

Area I wanted to brush up on…Is the IPO market reopening?

• Late in 2023 Goldamn Sachs said that "We’re more optimistic about the real reopening of the IPO market in 2024 than in 2023." Later the Global Head of Equity stated, “The market is open” in a soundbite marketing piece. It looks like this may be now happening.

• The blowout Reddit debut raises hopes of revival in dormant IPO market. Reddit listed at $US34 a share, the top of its suggested range. It’s stock soared on the New York Stock Exchange trading up 91% to $US65 and value of $US10.3bn. But Reddit is not alone…
• A day earlier, shares in AI infrastructure group Astera Labs surged 72 per cent on their Nasdaq debut. The company raised $US713 million and now trades at 94x sales.
• Even Trump’s Truth Social, the biggest Meme stock in history, defied gravity and debuted to a massive 50% pop in share price, valuing the nascent social media platform at over 1,650x sales and reaching a market value of US$7.8 billion (on US$3m revenue!).
• And it’s not just the US. In Europe last Friday EQT-owned Galderma also priced its shares at the top of its range and rallied 21 per cent on it’s debut. The Swiss dermatology giant raised 2 billion Swiss francs ($US2.2 billion) in the biggest European float since Porsche’s debut two years ago.
• German defence contractor Renk and Athens International Airport rising after their market debuts, leaving European investors wanting more.?
• The main drivers to expect that this time it’s real are:- the rally of the underlying equity market- sensible valuations (mostly) - Reddit IPO was $6.5bn vs its last round at $10bn in 2021- 2 years of virtually no listings- a great deal of pent up cash on the sidelines- expectation that US rates will start to fall later in 2024- some quality listings coming through, not crappy SPACs (except for Truth Social).
• Clouds on the horizon are US elections, China (economy and Taiwan) and of course…the unexpected!

Viewed on Youtube or listening

Some of the videos that caught my eye last week. I download videos I like into my YouTube Downloads and listen when exercising, driving, walking the dog (RIP Bondi), grocery shopping and any other spare moments I have:

• Jensen Huang of Nvidia on the Future of A.I. | DealBook Summit 2023 - NY Times
• BG2 with Bill Gurley, Brad Gerstner & Aaron Levie | Software Valuations, Earnings, Immigration | E02
• Verity Harding — Are We in an AI Arms Race? | Prof G Conversations
• Why We Can’t Just Stop Oil - Economics Explained

Reading - Articles

Some articles also catching my eye this week:

• All Revenue is Not Created Equal: The Keys to the 10X Revenue Club - Bill Gurley
• Time to Get Fit — an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors) - Brad Gerstner. Zuck/Meta took the advice and is up over 500% in 18 months.
• The problem of AI ethics, and laws about AI - Benedict Evans
• After raising $1.3 billion just 9 months ago lead by Microsoft, Co-founders Mustafa Suleyman and Karén Simonyan and most of the staff will go to Microsoft. Fine for Microsoft, not so good for all the other investors.
• Elon Musk’s Starlink Terminals have a black market problem whereby they are being used in US sanctioned countries such as Sudan in North Africa, Russia (against Ukraine) and Venezuela. Geolocating is easy so in theory you flick the switch and you turn it off. Starlink and they have yet to respond.

Reading - Books

I read most nights, mornings and whenever I have a few spare minutes:

• AI Needs You: How We Can Change AI's Future and Save Our Own - (2024) Verity Harding

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