Skip to main content

Is IPO party over?

2019 was supposed to be multi-billion unicorns coming out to markets with big bang with their stocks going up by 50% plus on first day. But suddenly these unicorns are finding that staying private was much easier than public scrutiny on their books. WeWork had to cancel it's IPO because valuation it was getting was nearly 70% below last valuation of $47Billion. Uber and Lyft also had to reduce their valuations and they are further down by 30-40%. Peleton is down by 15% since their IPO price. Slack is down by 40% since opening day price. There are few exceptions like Zoom and Guardant Health. But generally mood is downbeat. Is IPO market having Autumn Blues or is this the start of trend similar to what we saw in late cycle during dot.com bubble? It feels very much like late 90's - similarities are too many to ignore. Let's look at them
  • Longest economic cycles (1991-2001 and 2009-2019). So the economic cycle is getting tired and markets are betting that recession is in sight
  • Federal bank policy of interest rate cuts to keep the expansion going as much as possible
  • Cheap money due to low interest rates
  • Currency crisis - Russian ruble, East Asian currencies and now Argentine Peso (and currencies of many emerging countries)
  • And of course Impeachment - The tables have turned. Republicans were going after Clinton and now Democrats are going after Trump. In modern times, every 20-25 years, US gets a President which does something illegal (Nixon, Clinton and now Trump) and country had to go thru Impeachment drama!
Markets have returned barely 3% since Jan 2018 and are just about 3% below all time highs reached in July 2019. So what's in store for last quarter of 2019? Would it be as scary as last quarter of 2018 or will it be sane as last quarter of 2017? Looking at events in October - Q3 earnings, Brexit, Elections in Argentina, continuous back-n-forth trade war drama, Impeachment, Biden getting hunted out of democratic nomination race due to his son's involvement in Ukraine (his son's name happens to be Hunter!) and Warren becoming leading democratic candidate. Lots of potential market moving events. So IMO, October would be rough and then markets would be mix of 2017 and 2018.

Happy Navratri!

/Shyam

Comments

Post a Comment

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...
Post a Comment
Read more

And the Oscar goes to...

It's Oscar Sunday and time for predictions for few categories - before I digress into talking about drama in DC or markets.  First of all, I want to recognize the damage LA fires have done to the beloved areas of Los Angeles and impacted families across all spectrums. My heart goes out to them and wish them recovery and rebuilding of their lives... This year's Oscar nominees and post nomination period had been interesting to say the least. Due to this, the field is wide open in almost all categories and that's what makes prediction game so interesting. Just to set expectations, I would consider a win if I get even 50% predictions correct given the dynamics of nominees this year. So here are my predictions - "And the Oscar goes to..." Best Picture - Anora (surprise could be "The Brutalist") Best Director - Sean Baker for "Anora" (Surprise could be Brady Corbet for "The Brutalist") Best Actor - Adrien Brody for "The Brutalist"...
Post a Comment
Read more

The Politics and Gamesmanship of TikTok!

TikTok is less than 3 hours from going dark on USA's east coast if TikTok owner Bytedance (and Chinese Government) follows thru its "bluff" to honor the law " Protecting Americans from Foreign Adversary Controlled Applications Act" which goes into effect on Jan 19, 2025. And suddenly there is lots of politics and gamesmanship around TikTok.. Let's look at the players and their positions US Congress: The " TikTok Ban" law was passed by congress with bipartisan support and coincidently it goes into effect one day before new administration takes charge. Everyone knew the exact date and time of oath taking ceremony of new President...but maybe the congress did not think that there would be change of President and did not bother to put effective date post new government taking charge...that created a window of 36 hours of "law being in effect" unless... President Biden: Biden himself did not think that he won't be President for 2nd term. S...
Post a Comment
Read more