An awful year for tech IPOs

Hello and welcome to Alts Cafe

This is everything you need to know about what’s going on in the world of alternative assets, best enjoyed with your morning coffee.

Let’s go!

Macro View

This is the second down week in a row for the equities market, as they had their worst day in weeks/months on Thursday.

It was a big week from a macro point of view, with both the CPI print and the Fed meeting.

Here’s what happened:

  • Inflation was lower than expected, and the rate of decrease is accelerating, which is good news all around. CPI came in at 7.1% vs. estimates of 7.3%, which was a positive surprise that sent the equities market up 0.7%.
  • That was actually down from 3.2% at the time of announcement, though, so conviction faded fast.
  • Based on comments from the Fed meeting, analysts now expect only another 50bps increase before rates top out at 4.75% – 5.00% in July 2023. That’s more or less when inflation is estimated to cross lower than Fed rates.

Bullish News

  • US import prices fell for a fifth straight month in November.
  • UK inflation came in slightly below expectations at 10.7% in November, as cooling fuel prices helped ease price pressures.

Bearish News

  • Central banks for the EU, UK, and Switzerland all raised rates 50bps last week.
  • Retail sales for November declined 0.6%, even worse than the Dow Jones estimate for a 0.3% drop.
  • Weekly jobless claims fell to 211,000, a decline of 20,000 from the previous period and well below the Dow Jones estimate for 232,000 (bearish because we need unemployment up before rates will come down).
  • Manufacturing contracted in November.
  • The European Central Bank expects inflation to remain above its 2% target for the next three years.

What are we doing?

ALTS 1 fund news:

We made a big purchase last week.

Announcement coming soon.

What’s Elon doing?

Do you care a lot (or more than you’d like to admit) about what Elon did or said yesterday?

Three of Elon’s six companies.

Sign up here to get a daily snapshot of all things Elon.

Crypto

Here’s what you need to know:

Crypto followed equities down last week, with ETH approaching yearly lows.

The Fear and Greed index actually ticked up slightly.

The Fear & Greed Index is often a (slightly) leading indicator of where crypto is moving.

SBF was finally charged with a bunch of crimes, which hopefully means the crypto world can begin to move past the FTX debacle…

…and onto the Binance debacle.

This does not inspire confidence in the platform.

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Bullish News

  • Hong Kong debuted its first crypto futures ETFs.
  • Payments giant, PayPal, will now integrate with MetaMask wallet for a simpler way for customers to buy Ethereum.

Bearish News

  • Speaking at the US Senate Committee on Banking, Canadian entrepreneur and “Shark Tank” star Kevin O’Leary slammedcrypto exchange Binance and claimed they caused the collapse of FTX on purpose.
  • Wall Street banks’ interest in crypto has significantly fallen as digital asset prices have tumbled.
  • Crypto traders withdrew billions from Binance last week.

What to do with that info:

Get your money off Binance and into a cold wallet.

Real Estate

Here’s what you need to know:

House flippers are in trouble.

This shouldn’t be a surprise given recent rate hikes, home price declines, and stalling sales, but now we have stats to back it up.

Home flipping is still profitable, for now.

In the third quarter, gross flipping profit fell 18.4% from the previous quarter to $62k. This is the difference in the median sale price and purchase price, and it doesn’t factor in refurbishing, debt payments, agent fees, or legal fees. It’s the smallest profit since Q4 2019 and the fastest drop since 2009.

Roughly 7.5% of the Q3 home sales were flips (still historically high) but down from 8.2% in the second quarter.

Flipping is defined as anything bought and sold in a twelve-month period, meaning that a great many of the homes comprising these stats were bought nearly a year ago. And while home prices are falling rapidly, they’re still higher today than they were twelve months ago in most markets. So there’s a bag lag.

These numbers will get worse when we get data on homes purchased in the second and third quarters of 2022.

Bullish News

  • Mortgage rates dropped for the fifth week in a row to 6.6%.
  • Real estate tech-focused VC firm Fifth Wall raised $866M for its Real Estate Technology Fund III, the largest-ever proptech-focused VC fund.

Bearish News

  • US rents dropped at the fastest rate in 7 years, shrugging off 0.4% month over month in November. Raleigh, Austin, and Seattle were hit hardest.
  • Sales of previously owned US homes will fall for a second year in 2023 to their lowest annual total since 2012, according to the National Association of Realtors.
  • The UK property market may be verging on a major downturn, with some market watchers warning of a collapse in prices of up to 30%.

What to do with that info:

I’m starting to like the affordable STR market.

People have to go on holiday somewhere.

NFTs

Here’s what you need to know:

Tough week for NFTs. But again, they’re just tracking ETH but more so.

Every component was negative on the week, with Moonbirds struggling the most.

Over the weekend, former US President Donald Trump released an NFT collection. How you feel about that probably depends a lot on how you feel about the man himself, but it’s hard to argue it’s not been successful.

The project netted $4.5m at mint plus 10% of the 6,500+ ETH traded so far. Originally minted at $99 each, the collection sold out within hours. At time of printing, the collection floor is around 0.3 ETH, or $333.

What a world.

Bullish News

  • Tech giant Apple is gearing up to permit third-party app stores on its devices to comply with new anti-monopolistic requirements from the European Union (EU), which could be seen as a huge win for crypto and NFT app developers, at least in Europe.

Bearish News

  • A recent class action suit alleged that Yuga Labs and Moonpay illegally used celebrities and a network of Hollywood influencers to promote their digital assets without full disclosure.

What to do with that info:

Build an NFT marketplace for iPhone?

Startups

Here’s what you need to know:

It has been an awful year for tech IPOs, as global figures were down 45% YoY.

Some markets were worse than others.

In the US, 2022 will be the worst year for IPOs since 1990, with just 74 companies raising $8B this year. That’s down 95% from 2021 and 50% from any of the past 31 years.

It was bad in the UK as well, with volume decreasing by 90% in 2022 (from £14.3 billion to £1 billion).

Over in Russia, Whoosh staged the country’s only IPO of the year on Wednesday. The company said it raised 2.1 billion roubles ($33.2 million), less than half of its initial goal of $80 million.

I’m going to start a scooter company in a country where it’s sub-zero 300 days a year.

The first half of 2023 looks very light for IPOs as well, with the back half of the year perhaps bringing more action.

Bullish News

  • ChatGPT owner OpenAI projects$1 billion in revenue by 2024.
  • Ventures Platform, a Pan-African early-stage venture capital firm, has closed its fund at $46 million.

Bearish News

  • Twitter has stopped paying the rent on some of its office leases and hasn’t paid numerous other vendors since Elon Mus  acquired the company in late October.
  • The American Senate passed a bill to ban TikTok on US government devices.

What to do with that info:

Build, build, build.

Quick hits

Sports Memorabilia

Aaron Judge’s AL record 62nd home run ball sold at auction this week, and there were high hopes.

The ball has the potential to become the highest-priced baseball ever sold,Ken Goldin said, adding … “Three million plus would be my estimate.

Unfortunately, it sold for only $1.5m =, which is perhaps the biggest indicator yet that we’re in a tough market for sports memorabilia. That said, I’m not sure it was ever a $3m ball in the first place.

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That’s all for this week. Hope you enjoyed your coffee and this edition of Alts Cafe.

Cheers,

Wyatt

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Author

Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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