IPO markets in the United States and Asia appear to be awakening as listings start to pick up. Some notable U.S. listings, such as Reddit and EV manufacturer Zeekr, hit the top of their valuations while Hong Kong sees a long list of companies waiting to go public.
There is also growth in the artificial intelligence market as creators seek ever more refined data sets to feed the insatiable appetites of their AI systems. While data may be the new gold, information workers will need non-technical skills to thrive in the workplaces of the future, especially when it comes to telling compelling stories.
The U.S real estate market continues to slog through another spring season with limited listings amongst persistently high interest rates. This conundrum is keeping homeowners from moving or trading up and renters renting. Commercial real estate is also feeling the pinch as even big tech companies downsize their office footprints.
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Capital Markets
United States
U.S. IPO markets are looking strong with $7.8 billion worth of listings for 30 companies in Q1 2024. Add in SPAC deals and the numbers climb to $8.4 billion across 49 companies. That’s generating renewed optimism and a raft of eager companies ready to go public. Rubrik, a cybersecurity company, priced above expectations and raised $752 million with a $5.6 billion valuation. The stock jumped 16% on its NYSE debut. Other highly anticipated Q2 or Q3 listings include Waystar, Lineage Logistics and StubHub, which are reportedly targeting eye catching valuations.
There are still plenty of skeptics about a broad IPO market recovery, but NYSE President Lynn Martin said on CNBC’s Money Movers that the early 2024 listings showed promise for more companies to go public this year. Regarding why there haven’t been a lot of AI listings, she commented that it was still early for that sector.
Asia
Chinese companies are not shying away from U.S. listings, despite geopolitical and economic tensions with Washington. EV maker Zeekr listed at the top of its range and has seen its stock price holding steady despite the Biden administration announcing 100% tariffs on Chinese-made electric vehicles. GM-backed Beijing Momenta Technology Co. has also reportedly filed for a U.S. IPO. And TikTok refuses to go down without a fight, taking to court a law meant to force its sale of U.S. assets. The company continues to act as if it were business as usual, promoting advertising sales on their communication platform.
Hong Kong’s IPO market also appears to be bouncing back from a long slump after foreign capital fled Chinese markets and interest rates rose. Jan Metzger, Citigroup Asia head of investment banking commented in an SCMP article that “what is most important to us is that the underlying creation of interesting companies has not stopped in China – and that is really important”. Expectations are for a stronger 2024 than first quarter as fast growing Chinese companies look for market listings. There are reportedly 90 companies waiting to list in Hong Kong, partly due to tighter mainland listing requirements in the A-shares market.
Media and Entertainment
Commercial-level storytelling is reaching new heights as Netflix hits nearly 270 million subscribers, far outpacing rivals Apple, Amazon, Walt Disney Co. and Warner Bros. Discovery. Profits soared as the company expanded into advertising and its strategy to crack down on password sharing added 30 million new accounts last year. A change to its quarterly updates, however, have left some investors miffed, as subscriber rates will no longer be shared. Co-CEO Greg Peters said that the company will instead report on the company’s financial growth.
The rest of the industry is struggling with its own growth prospects as Disney and Comcast look to an outside financial advisor over differing valuations for Hulu. They are currently $12.5 billion apart, with seller Comcast holding firm on their belief that the service is more valuable today than when negotiations started. The service has already been rolled into Disney+.
Other peer competitors are making moves of their own with Sony Pictures Entertainment and Apollo Global Management reportedly discussing a joint bid for Paramount Global, which is already in exclusive deal talks with SkyDance Media. Sony and Apollo would offer all cash and take the company private with Sony running the business.
YouTube is also nipping at Netflix’s heels with original content and ad-supported subscriptions, helping bolster Google’s bottom line. The streaming media giant had $8.1 billion in ad revenues in just the first quarter of 2024, up 21% year over year. Those numbers are separate from its subscription revenue, which hit $15 billion last year. With numbers like that Netflix may need to watch its streaming back.
GenAI
Data is the new gold and AI systems need a near endless supply of it. But not all that glitters is valuable as competition heats up among major tech companies aiming to be the new standard for large language models.
Web scraping the public internet, an earlier technique to hoover up vast troves of digital text, no longer suffices. “Expert” data is the next leap forward as OpenAI’s Chat GPT competes with Anthropic, Mistral, Meta, Cohere, and Google, among others. What may differentiate these increasingly similar systems is their use of domain-specific datasets that they either build or buy. Owners of these treasure troves of information may be acquisition targets in the very near future.
And to thrive in the new AI-dominated workplace workers will need not coding skills, but storytelling, according to millionaire founder Scott Galloway. That’s the number one skill to succeed along with the “ability to write well, an ability to articulate ideas and an ability to present ideas with data, infographics, slideshows,” the NYU Stern School of Business marketing professor recently told CNBC’s Make It.
Real Estate
Home buyers and renters just can’t get a break these days. With interest stalled at historic highs above 7%, and the Fed refusing to cut rates, those with a home are mostly staying put, waiting for better financing days ahead. They are also building out what they have rather than trading up to a bigger home. Those who are renting and want to transition into home ownership are stuck waiting for the market to warm up with affordable options. That doesn’t appear to be on the near-term horizon, though a bright spot is that mortgage rates have softened a bit recently.
Commercial real estate is also stuck in the Covid-induced work-from-home trend that started a few years back. Tech companies in particular are downsizing along coastal cities, leaving a glut of high-end office space. Commercial landlords are facing difficult times with the difficulties of converting existing office buildings to residential towers, and large blocks of square footage remaining empty.
Until next month,
- Rachel