The U.S. economy continues to pick up speed after the first quarter of 2024. IPOs are back with several recently successful listings, including social media platform Reddit and Astera Labs, a semiconductor connectivity company. While U.S. capital markets continue to thrive, China continues to struggle. All eyes are on what Shein will do next. Security regulators are currently looking into more than four hundred companies regarding possible fraudulent activity.
Meanwhile, streaming media platforms are adopting new business strategies. Recent news includes Walmart buying up smart TV company Vizio and YouTube adding more user interactivity. The emergence of the Chief Artificial Intelligence Officers gives the CIO and CTO a new challenge as they navigate roles in the executive suite.
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Capital Markets
United States
U.S. initial public offerings (IPOs) are back with recent successful raises including social media platform Reddit’s 48% rise in the first day of trading. Frequent commenters and moderators of their chat groups were even given the opportunity to invest at $34 before the listing. Prices closed above $50 on the first day of trading.
NYSE President Lynn Martin commented that the IPO was a “big test” for other companies. As likely harbingers of a wave of new, high profile IPOs, direct-to-consumer personal care company Harry’s and Swedish buy-now, pay-later firm Klarna are preparing for their own listings along with cybersecurity firm Rubrik, which is backed by Microsoft.
Asia
While Washington’s scrutiny of Chinese companies continues, especially over TikTok’s ownership, retail giant Shein is reportedly considering a UK-based listing. This would be a boon for London’s exchange, which has seen several listings recently head elsewhere.
Back in China, the country’s security and regulatory commission (CSRC) is taking a long hard look at potential A-share IPOs. With 420 companies now under scrutiny for fraudulent activity, a significant increase from the past, at least one-third of applicants are expected to be reviewed, according to Yan Bojin, head of the CSRC’s department of public offering supervision and chief risk officer.
The CSRC recently fined Evergrande Real Estate Group RMB 4.175 billion for inflating revenues by RMB 564.1 billion over two years. The company was also suspected of fraud in corporate bond issuance and failure to disclose information in a timely manner. Xu Jiayin, chairman of the Evergrande Group was fined RMB 47 million and banned from China’s securities markets.
Hong Kong markets are still struggling to find their footing, though some remain optimistic that the ship may be re-directed to a growth trajectory. According to MarcumAsia’s Drew Bernstein, the city still retains exceptional talent and is attracting listings of mainland Chinese companies.
Media and Entertainment
Major entertainment and media companies continue to tweak their business models to align with the times. For market leader YouTube, which has been on top of the leaderboard of the past 13 months, that means redesigning the user experience. Viewer interaction is the latest trend adding comments alongside videos as they play.
Netflix also continues to rise, at least in the eyes of investors, as analysts raise their price targets 17% to $725. Long-term subscriber numbers and average revenue per member continue to look strong.
Another major competitor, Walmart, is looking to hardware for a boost to its advertising and media business. With stiff competition from Amazon, the company is planning to acquire Vizio, the smart TV manufacturer, for $2.3 billion. Walmart Connect, its retail media business that already grew 22% year over year for the fourth quarter, should see a boost from the acquisition.
And legacy media, aka Hollywood, is banking on a sci-fi blockbuster to draw viewers away from their personal screens and back into movie theaters. Dune: Part Two features the star power of Timothée Chalamet, Zendaya, Rebecca Ferguson, and Javier Bardem, along with expert special effects to top the 2024 charts with over $233 million in box office receipts so far. Not to be outdone by the purely fictional, live sports are driving a significant amount of traffic to streaming platforms. YouTube TV benefited greatly from its NFL rights deal, managing a whopping 92% retention rate and 48% growth year over year. Peacock saw similar numbers with 71% retention of its NFL wild-card subscribers even after seven weeks. Fans of the Super Bowl, however, need not be worried that the game will go the way of streaming subscription-only viewing. According to Brian Rolapp, NFL chief media and business officer, he doesn’t see that happening any time soon.
GenAI
As with tech evolutions of the past, from home computers to the internet to the cloud, AI is having its time in the sun. Generative AI in particular is being utilized to decrease inefficiencies in summarizing meetings, photo editing, and customer support, among other uses. The potential for this technology to significantly alter business operations and performance has created a new executive position – Chief Artificial Intelligence Officer. The jury, however, is still out on whether all companies will have similar senior AI needs. As the AI market continues to take shape, technology giants like Apple are looking at Google, Cohere and OpenAI for potential partnerships. The broader AI market is priming for global expansion as well, according to Nvidia CEO Jensen Huang. He sees sovereign AI as a growth trajectory as nations develop their unique AI solutions. The company’s chips drive much of the AI infrastructure being built and its stock price has risen to new all time highs.
Real Estate
The U.S. real estate market is expected to do well in 2024 with home prices already showing healthy appreciation. With the potential end to high broker fees after the National Association of Realtors lost a class-action lawsuit for keeping prices artificially high, the volume of sales is expected to pick up even more steam. However, some analysts see problems once the split-the-fees system comes to an end. Buyers may potentially lose out on good representation in the process.
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Until next month,
- Rachel