US stocks were mostly higher on Wednesday with weakness in tech stocks weighing on the Nasdaq. Wednesday marked the end of one of best first six months of the year for the S&P 500 since 1998, up 14% year-to-date.
Investors are now mulling how strong economic data will influence the Federal Reserve’s accommodative policy stance. Wednesday morning the ADP Employment report showed the US added 692,000 private payrolls in June, higher than the 600,000 expected. All eyes will be on to the Labor Department’s non-farm payrolls data for June set to be released on Friday.
Here’s where US indexes stood at the 4 p.m. ET close on Wednesday:
One of busiest week for initial public offerings this year is underway, with Didi soaring as much as 28% in its public debut Wednesday. Didi is the largest public debut for a Chinese company since Alibaba in 2014. Meanwhile, shares of LegalZoom popped as much as 39% in the first day of trading while cybersecurity company SentinelOne popped as much as 30%.
There have been 209 IPOs priced this year, a 226.6% change from the same date last year, per Renaissance Capital.
Retail trading activity in the US has cooled from its pandemic peak but still makes up 10% of stock trading volume on the Russell 3000, a broad benchmark of US stocks, according to a recent note by Morgan Stanley.
Bitcoin slipped 4% to $34,727 as the cryptocurrency struggles to rally higher amid a crackdown in China. The coin is finishing the first half of 2021 up 18%.
Robinhood is targeting a stock market debut in July, after its plan to go public this month fell through, Bloomberg reported.
The popular investing-app provider, expected to trade on the Nasdaq index, wants to time its initial public offering for when people return from the US Independence Day holiday break next month, Bloomberg said on Tuesday, citing sources.
The decision isn’t final, and Robinhood’s plans are subject to change.
The company confidentially filed for an IPO in March, aiming to make its debut in late June. But its prospectus with the securities’ regulator has not yet been made public. It has been contemplating a listing since as early as 2018.
Popular among retail investors, Robinhood counted more than 13 million users at the end of 2020. It has been credited with helping enable the trading frenzy that sent GameStop stock skyrocketing this year.
The trading platform scored an $11.7 billion valuation at a funding round late last year. But secondary shares have given the company a valuation of as much as $40 billion, according to Bloomberg Intelligence analyst David Ritter.
Three new independent directors joined Robinhood’s board earlier this month. The addition of its first female director, Paula Loop, helps it meet a requirement by underwriter Goldman Sachs that all companies seeking to go public must have at least one diverse board member.
Last month, the company rolled out a service that allows users to buy into IPOs alongside institutions and wealthier investors – including into its own listing.
Robinhood did not immediately respond to Insider’s request for comment on its plans for July.
The video software company Kaltura readied its initial public offering on Tuesday, targeting a $2.2 billion fully diluted market value.
The company expects to raise $353 million by offering 23.5 million shares at a range of $14-$16.
26%, or 6.1 million of those shares, will be offered by insiders, according to the firm’s S-1 Prospectus. Underwriters may exercise their option to purchase up to an additional 3.53 million shares as well.
Goldman Sachs, BofA Securities, Wells Fargo Securities, and Deutsche Bank are the joint bookrunners on the deal which is expected to be priced sometime next week. Kaltura will trade on the Nasdaq under the symbol “KLTR.”
Kaltura was founded in 2006 by current CEO Ron Yekutiel, along with Shay David and Michal Tsur. The company’s stated goal is to “power any video experience, for any organization.”
In 2020, Kaltura posted $120.4 million in revenue, up 23% year-over-year. However, the New York, New York-based video software firm also saw a net loss of $58.7 million on the year.
Kaltura boasts more than 15 million authenticated users across all its products and solutions. From hosting meetings, webinars, and townhalls, to the company’s lecture capture technology, Kaltura has a foot in every aspect of the video software industry.
The company is attempting to take advantage of the growth of the online video platform market which, according to data from Research and Markets, is expected to hit a compound annual growth rate (CAGR) of 16% over the next five years.
Kaltura received $166 million in funding over seven seed rounds as a startup including investments from the likes of Goldman Sachs and Intel Capital, according to data from Crunchbase.
Airbnb’s stock soared on Thursday in its highly anticipated public market debut, closing at $144.71 per share, more than double its initial offering of $68 per share.
That price also gives the short-term rental giant an approximately $86.5 billion valuation. Or, more than the combined market capitalization of the top three hotel chains globally: Hilton Worldwide Holdings, Marriott International, and Intercontinental Hotels Group, which were together worth $84.1 billion when the markets closed Thursday.
Airbnb also surpassed its largest rival among online travel agencies, or OTAs: Booking.com closed at $86.2 billion on Thursday.
Airbnb’s successful opening day comes amid a broader tech IPO frenzy this year despite massive economic fallout from the pandemic. On Wednesday, DoorDash and C3.ai posted substantial gains of 78% and 174%, respectively. And in September, Snowflake completed the largest software-technology IPO in history with a 258% surge and has been on a tear since its debut.
But top strategists said the massive debut rallies of Airbnb and DoorDash revealed an unsustainable optimism in the markets.
Paul Schatz, president and chief investment officer of Heritage Capital, told Business Insider’s Ben Winck the rallies showed “euphoria and greed” that’s likely not been seen in the stock market since the dot-com bubble of the late 1990s.
“It’s silly season,” Rich Steinberg, chief market strategist at The Colony Group, told Winck. “Investors need to distinguish the difference between a great company and a great price or value.”
DoorDash commenced public trading on Wednesday, opening at $182, which was 78% above its initial public offering price. The stock is listed on the New York Stock Exchange.
The food-delivery company raised roughly $3.4 billion in its initial public offering, selling shares at $102 each. The final pricing exceeded its previously expected range of $90 to $95 per share, and gave DoorDash a valuation of roughly $34.2 billion. That sum handily surpasses the $15 billion valuation it achieved in the private market earlier this year.
DoorDash’s IPO marks one of the year’s biggest offerings and caps a historic year for public debuts. US listings already raised a record $156 billion in 2020, according to Bloomberg data. Airbnb and Wish-parent ContextLogic are still poised to enter the market this month, with the former set to begin trading on Thursday.
Overwhelming investor demand placed shares on track to open as high as $195 before trading began. Its ultimate opening level of $182 is more than double the $75 to $85 range DoorDash expected to price shares as recently as Thursday.
DoorDash’s debut establishes it as the highest-valued food-delivery company. The firm trades under the ticker “DASH.”
While the coronavirus slashed sales across the US economy, stay-at-home orders led DoorDash to thrive through the pandemic. Third-quarter revenue leaped 268% from the year-ago period as a larger portion of Americans turned to food delivery services.
Jeremy Grantham’s early stake in battery producer QuantumScape has surged following the firm’s merger with a special-purpose acquisition company, but Grantham still isn’t sold on the blank-check IPO trend.
Grantham invested $12.5 million into the company seven years ago. That stake now stands at roughly $278 million thanks to a SPAC merger and QuantumScape’s subsequent stock rally.
The position is “by accident the single biggest investment I have ever made,” Grantham told the Financial Times.
Still, the investor sees SPACs as a “reprehensible instrument, and very very speculative by definition,” largely due to their lack of listing requirements and overall regulation.
The very kind of dealmaking that Jeremy Grantham previously deemed “reprehensible” netted the famous investor a $265 million profit.
Grantham, who founded investment management firm GMO and serves as its long-term investment strategist, invested $12.5 million in battery producer QuantumScape seven years ago as one of several stakes in early green-tech companies, according to the Financial Times. The position swelled after Kensington Capital Partners announced plans to merge QuantumScape with a special-purpose acquisition company, or SPAC, in September.
The deal valued QuantumScape at $3.3 billion, and shares traded at more than four times their listing price when the acquisition was completed on November 30. The company’s stock rallied another 31% on Tuesday alone, valuing Grantham’s stake at roughly $278 million.
Yet the legendary investor isn’t convinced Wall Street’s SPAC frenzy will last. The QuantumScape position is “by accident the single biggest investment I have ever made,” Grantham told the FT, partially fueled by the so-called blank-check companies’ lack of regulation.
“It gets around the idea of listing requirements, so it is not a useful tool for a lot of successful companies. But I think it is a reprehensible instrument, and very very speculative by definition,” he added.
Grantham’s profit stands to climb even higher. QuantumScape soared as much as 37% in early Wednesday trading. Should the rally hold into the market close, it would add another $100 million to his total gains.
SPAC firms raise capital through an initial public offering with the intention of using the cash to acquire a firm and take the merged entity public. The last two years have seen market favorites including Virgin Galactic, DraftKings, and Nikola go public through such deals.
Blank-check IPOs exploded in 2020 as firms looked to take advantage of a surge in participation from retail investors and hopes for an economic recovery. More than $74 billion has been raised across 218 SPAC debuts in 2020, according to data from SPACInsider.com. That compares to just $13.6 billion raised across 59 deals in 2019.
Wall Street’s obsession with the vehicles could be a sign of unsustainable market optimism, Grantham told the FT, rivaling the overwhelming bullishness seen during the 1920s and the late-1990s tech bubble.
Tesla’s meteoric rise through the year has made electric-vehicle SPACs – and any SPAC related to the EV market – particularly popular. QuantumScape lands in that basket. The firm produces solid-state batteries used in electric cars and has backing from industry giant Volkswagen.
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DoorDash priced its shares at $102 each on Tuesday ahead of its highly anticipated initial public offering, CNBC’s Leslie Picker reported. The final pricing comes in well above the expected range.
That pricing will allow the company to raise $3.4 billion when it begins trading on Wednesday, according to a regulatory filing. It also gives the firm a $34.2 billion valuation, based on common stock outstanding, and $38.7 billion on a fully-diluted basis. It will mark one of the year’s largest market debuts.
The pricing brings DoorDash well above the roughly $15 billion private valuation it achieved earlier in 2020, which was already a major increase from the $1.4 billion it was worth in 2018.
DoorDash is poised to become the highest-valued food-delivery company when it debuts on the New York Stock Exchange. The company is set to trade under the ticker “DASH.”
DoorDash lifted its IPO price range on Friday to $90 to $95, from $75 and $85 per share. Its latest target sets it up to be among the year’s five largest offerings.
IPOs from DoorDash, Airbnb, Wish-parent ContextLogic, and others are set to drive the busiest December on record for public offerings. US listings have already raised a record $156 billion in 2020, according to Bloomberg data, partially fueled by the year’s blank-check frenzy.