Displaying items by tag: tech

(San Francisco)

In what would likely come as the biggest IPO in recent memory, Uber says it is planning for a potential IPO in 2019. Parties close to Uber say that its bankers delivered valuation proposals for an IPO in the range of $120 bn. That is an eye-opening figure because it is almost double the company’s valuation from its most recent funding round 2 months ago. There are no guarantees the company will go public next year, but its CEO has said it is aiming for a public debut in the second half of 2019.

FINSUM: We do not think that valuation is out of the question given how much investor anticipation there might be for this IPO. The IPO market has been red-hot, so nothing seems out of reach.

(New York)

Whether investors like it or not, the market seems to have finally come to grips with the reality of higher rates. That realization has started to change the performance of different assets from even a week ago. So who will win and who will lose? On the positive side, financials and banks seem likely to benefit, as they make a great deal of their income from interest. Energy and materials stock are likely to shine as well as they benefit from the expanding economy. On the losing side will be utilities, housing, and autos stocks, all of which are sensitive to higher rates in their own ways. No one can be sure how tech might respond, as the sector is young enough that there is not good evidence to say how it might react.

FINSUM: The business case for how most sectors will be impacted by higher rates is clear. If only share performance were so simple.

(San Francisco)

Want to find a good test for whether the Fed has hiked rates too far? Look no further than everyone’s favorite, the FANG stocks. There is an increasing risk that the Fed may get very hawkish with its rate hikes, and if that happens, FANGs will show the pain first, says Julius Baer & Co. Baer thinks that the S&P 500 might sink 20% on the back of rate hikes before the Fed starts to moderate its action. It believes FANGs will feel the brunt of the losses. The NYSE FANG+ index peaked three months ago and has fallen 13% since June.

FINSUM: We do not disagree that rate hikes could cause market losses, but we don’t know why FANGs would feel the most heat other than the simple fact that they have gained the most.

(Los Angeles)

In a turn of events that stretches the boundaries of our understanding, Elon Musk took to Twitter yesterday to mock the SEC. The move comes in the same week that the CEO agreed to settle a suit with the regulator over his misleading tweets this summer. Musk tweeted yesterday afternoon that “Just want to [say] that the Shortseller Enrichment Commission is doing incredible work … And the name change is so on point!”. Legal experts say the tweets jeopardize his potential settlement the SEC as they violate specific clauses of the agreement.

FINSUM: We know he is a defiant character, but this kind of behavior seems to show extremely poor judgment, if not borderline mental instability.

(New York)

Looking at the market’s performance, it is probably a good time to short some shares. The majority of gains for the sector are being driven by a handful of high-flying tech shares, but the majority of stocks are doing much. Therefore, it seems like a good bet to short certain under-performing sectors. However, the options for doing so aren’t great, as the majority of short ETFs cover the whole market or are heavily leveraged. Now there is a new option though, the AdvisorShares Dorsey Wright Short ETF. The ETF shorts only the market’s 80 to 100 weakest mid and large caps, and it is one of only four short ETFs that don’t seek to replicate an index’s return.

FINSUM: This seems like a very good application of the smart beta concept.