With Airbnb set to IPO next week with a price range of between $44 and $50 per share, the company could raise as much as $2.5 billion with a target valuation of $32 billion. If the company can achieve the top end of its targeted valuation, it will once again underline the extent to which investors are clamouring for fast-growing technology companies as shares in sectors such as business software and cloud computing surge to new market highs.
The crisis has forced us to work in accordance with new procedures using new technologies. Business processes, such as alternative investment capital, were redesigned in an unplanned revolutionary manner and at unprecedented speed.
A positive effect of the pandemic has been the rocketing digital adoption with levels that previously took several years to achieve being arrived at within months (McKinsey Digital, 2020). When asked why their organisations didn’t implement these changes before the crisis, the majority have said that they weren’t a top business priority. The crisis removed that barrier.
Warren Buffett and Charlie Munger of Berkshire Hathaway fame are widely heralded as the greatest investors of all time. Their tried and tested investment strategy is centred on buying securities in typically well-established, non-tech companies identified through their investment model as under-priced. Whilst Berkshire Hathaway has its own number crunching fundamental analysis to identify investment opportunities, “Value Investment” has been the standard investment strategy for the majority of institutional investors and major funds for the past century.
Since the liquidity crisis in March, as the S&P has rallied to all- time highs this summer there has also been a strong correlation between the index and the price of Bitcoin. In our latest blog, we ask whether this statistical relationship suggests the fate of the world’s biggest cryptocurrency has become tied to the financial system it was built to challenge.
The COVID-19 pandemic has impacted all parts of the global economy. Venture Capital (VC) across Europe has remained surprisingly resilient with investment on target to exceed previous records set in 2019. Below we look at the figures for the first six months of 2020 and what can be expected for the second half of the year.
The last week of August saw seven high profile US tech unicorns announce upcoming Initial Public Offerings (IPOs) with a combined valuation in the region of $44 billion. Add into the mix Airbnb filing for its long-awaited public offering and these look like very exciting times for the US IPO market. However, not all is rosy and change is afoot. A number of these unicorns have decided a Direct Listing is their preferred route to the public markets; even before the New York Stock Exchange (NYSE) announced SEC approval for companies to raise capital when going public through a Direct Listing. Many feel this will prove game changing for Direct Listings and at the same time sound the death knell for traditional IPOs. Below we look at the advantages of Direct Listings as well as why there has been a recent frenzy of Special Purpose Acquisition Companies (SPACs) as another alternative to traditional IPOs.
Smaller companies will tend to be more vulnerable to the pandemic and its economic turbulence. Most have little or no financial reserves and sell a limited range of products. However, well-funded smaller companies have a major advantage over larger firms as they can change direction much quicker and this flexibility could prove vital as they grow their way out of the crisis. Below we identify some essential characteristics the management teams of smaller growth companies will need to display in order to be successful and attractive to investors.
Previous downturns show that the investments made post downturn and in to the early stage of recovery can benefit from lower prices, less competition and a macroeconomic tailwind. As a result these investments will normally significantly outperform those made at higher prices pre downturn.
Right now, the balance of power is favouring investors and this could be a once in a generation opportunity to invest in innovative SMEs – with lower valuations, greater opportunity for disruption and demand from large customers.
To stay competitive, businesses must diversify revenue streams, manage risk, access financing, and do everything in their power to maximize productivity. It is vital for companies to retain existing customers – many of whom will have different expectations in a new-normal world.
As the UK opens up extensive daily data will be key. Investment banks and consultancies have increasingly been “nowcasting”, as opposed to forecasting, to obtain the most up to date information available.
On 24 June PWC released their latest economic review providing updated UK economic data, including the results from the Office for National Statistics (ONS) Business Impact of Coronavirus Survey, and highlighting April’s GDP data, retail sales and the labour market. There is also a special focus on the impact of COVID-19 on UK trade and its prospects for 2020.
In our latest blog, CSS Partners highlights some of the areas of the UK economy seeing early signs of recovery as well as PWC projections for the rest of 2020 and into 2021.
In our latest blog, CSS Partners looks at the extensive In Gold We Trust report and also at the latest figures from the World Gold Council on investment levels into gold.
The In Gold We Trust analysis is an annual report on the gold market by Incrementum. The full report runs to 350 pages and is a detailed analysis of macro and micro economic factors and other fundamentals that may have an influence on the gold price going forward. The full report is available at www.ingoldwetrust.report
Below we try to summarise the key findings of the report and what we can learn from the recent strong performance of gold as an asset.
21 April 2020
Over the past twelve months, the gold price has increased by 34% to over $1,700 per ounce. Many analysts are forecasting great things for gold with Eduardo Elsztain predicting “this level only express the start point of what might be the strongest rally of the metal as never before, at the same pace that fiat money is being printed worldwide”.