- Social Media Sale
- General Motors unveils flying Cadillac concept
- Intel CEO to resign
- Short-squeeze in GameStop stock
- Wall Street believes in the outlook for the space
- IPO News
- Insider for a successful IPO trade
- U.S. stock indices were negative for the week
Social media sellout
The largest social networks Twitter, Facebook, Snapchat, etc. blocked the accounts of the current U.S. President Donald Trump. It was Twitter that Trump used as the main platform for expressing his opinions, with almost 89 million users subscribed to his account.
The official explanation of Twitter: after the riots, which were arranged by supporters of the President on January 6 in the Capitol building, the social network blocked his account first for 12 hours and demanded to delete three posts that violated the rules of the community. But after that deadline expired, Trump posted two new tweets that Twitter said “violated the social network’s policy against the glorification of violence.
Twitter’s shares sold off the most -12%, but so did Facebook -6% and Snapchat -4.6%.
General Motors unveiled a flying Cadillac concept
Automaker General Motors unveiled a flying Cadillac concept, an unmanned car that takes off and lands vertically. It travels up to 55 miles per hour. It is fully autonomous and electric, with a 90 kW engine, GM Ultium battery pack and an ultralight body with four pairs of rotors.
It is unlikely that the models shown will begin production any time soon. The task of the presentation is to show the world how Cadillac could look like in the not so distant future.
But in the near future a new direction of business – production of electric cars and software will start working. At the start will serve only customers from China and the U.S. The new division BrightDrop will produce EV600 electric trucks. FedEx Express will receive the first batch at the end of this year. The electric trucks will be available to more customers from the beginning of 2022. General Motors shares reacted by rising to this news.
Also this week, Chinese IT giant Baidu and automaker Geely (which owns the Volvo brand) announced that they would team up to develop a joint electric car.
Intel CEO resigns
Bob Swan will resign as CEO on February 15. Pat Gelsinger of VMWare will become the new head of the company. Intel shares reacted to the news with a rush.
Earlier, the head of Daniel Loeb’s hedge fund Third Point called on Intel to immediately address the company’s loss of market share and the departure of leading chip developers. The hedge fund owns a stake in Intel worth nearly $1 billion.
Short-squeeze in GameStop stock
There has been a surge in investor activity in shares of video game retailer GameStop. A short-squeeze is the phenomenon of a sharp rise in the price of an asset.
The situation is caused by the fact that the rapid growth of the share price leads to a decrease in the volume of issued bids for sale with an increase in demand for the traded instrument. Short-squeeze is caused by sellers closing their positions on the exchange because they can incur even more significant losses.
Wall Street believes in the outlook for the space
Shares in suborbital flight technology developer Virgin Galactic rose 20% on the week on news that the management company Ark Investment Management plans to launch an exchange-traded fund ARK Space Exploration, which will track U.S. and global companies involved in space exploration and innovation. It is not yet known which companies it will include, but investors are confident that Virgin Galactic, founded by Richard Branson, will definitely be among them.
There were six IPOs this week, of which three attracted attention.
Affirm is a financial-tech startup that allows consumers to buy products and make payments in installments. Affirm works with 6,500 merchants directly.
Affirm’s initial public offering was priced at $49, with an opening price of $90.90.
Poshmark – Develops and promotes its own online platform for selling used items. The Poshmark platform allows sellers and buyers to conveniently communicate and transact, and the company itself earns commissions from those transactions. The user base has grown from 21.7 million in 2018 to 31.7 million as of Sept. 30, 2020. More than 200 million items have been sold through the site.
Poshmark’s initial public offering was priced at $42, with an opening price of $97.50.
Playtika is an online casino mobile game developer known for its poker and solitaire applications. The company’s portfolio includes 9 games in the top 100 highest grossing mobile games in the U.S. for the first nine months of 2020. The company’s games have over 30 million active users.
Playtika’s initial public offering was priced at $27, with an opening price of $33.40.
Insider’s Guide to Successful IPO Trading
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Key criteria for a successful IPO transaction on the demand side:
Over-subscription of the order book by a factor of 2.5 or more.
Prevalence of smart money in the order book from hedge funds and other institutional investors. If the majority of bids come from private investors, that’s no good. You can’t be sure for sure that they understand the meaning and fidelity of their actions.
Positive subscription dynamics within the order book. A negative subscription trend in the last 3-4 days before a stock offering can be an alarming signal. It is possible that in this case a major player or group of investors becomes aware of the hidden risks of the offering. As a result, he refuses to participate in the transaction for reasons directly or indirectly related to the issuer.
The key criteria of a successful IPO transaction on the offer side:
The sale of an exclusively minority stake by a major shareholder or the exit of an entirely portfolio venture capital investor who has met his or her objectives. In either case, the offering must be no more than 20% of the company’s capital. If the majority owner sells a large portion of its stake, the offering should be abandoned.
If the issuer represents a high-tech sector of the economy, by the time of the offering the company should already be in operating profit at least for the last reporting period or should systematically reduce operating losses. It is not always the case that IFRS statements on paper reflect the objective reality. For example, a company may invest in the construction of a new plant or make other large investments, which will be reflected as a loss in the statements, but by their nature they are not.
The company’s position on the use of capital from the sale of shares is absolutely transparent. If the capital is used to scale the business, everything is OK. If the majority owner withdraws a part of the capital from the business, then one should be wary of the placement.
The Continuity Factor: The IPO for a successful company should not be the beginning or the end of attracting investment. Selling shares on the stock exchange is just another round of capital raising, not the first or the last. A big plus for a company new to the stock market is the presence of major professional venture capitalists among the shareholders. For example, subsidiary funds of major investment banks such as JP Morgan, Goldman Such’s, Maryll Linch, Sequoya, Fidelity and others. Wall Street sharks are rarely wrong in choosing startups to put capital into their funds and are extremely interested in portraying a real success story to get out of already mature and quite expensive businesses.
U.S. stock indices closed the week lower
Investors followed Biden’s $1.9 trillion plan for economic recovery. Trading activity was also colored red by Friday’s earnings reports from major U.S. banks.