🦄 Where are all the IPOs?

There’s an IPO drought… and it’s leaving Wall Street thirsty. Big banks like Morgan Stanley, Chase, Bank of America, Goldman, and Citi make big bucks from helping companies go public. But as initial public offerings have slowed to a trickle, fees have shriveled:

• Fewer offerings, less champagne: The Big Five investment banks have earned just $645M from IPO fees this year, compared to $5.3B at this point last year (don’t cry for the banks: their profits mostly come from other services, like wealth management).
• Boom to bust: Last year companies raised a record $286B through 1K+ IPOs, or three IPOs per day. Already this year there was a 25-day stretch without a single IPO, the longest dry spell in five years.

A perfect storm… Last year, IPO conditions were ideal: booming markets, low interest rates, confident investors, SPACs, and online roadshows made listing easy. But the clouds have rolled in and most of last year’s IPOs are trading below their listing prices (not encouraging for prospective IPO’ers). Some other reasons for the reversal:

• Too many IPOs: We may be seeing "demand pulled forward" — aka some companies that would’ve IPO’d this year already did last year.
• Too many options: VCs are sitting on record cash piles, giving startups easy access to private $$ — and one less reason to tap the public markets.
• Too much uncertainty: Now public-curious companies have to navigate the effects of war, a newly hawkish Fed, and bearish markets.

Took the Harry Potter sorting quiz... still not a wizard. Investors weren’t feeling the magic this week when HuffPost owner BuzzFeed dished up its first public earnings. On the plus side, annual sales were up 24% from 2020. On the not-so-plus side, revenue was still $100M short of what investors expected. BuzzFeed shares are down 40% since its December IPO.

10 reasons your cat’s grumpy… Like most digi-media companies, BuzzFeed makes money through strategically placed ads — alongside “Seinfeld” quizzes and spring break shopping listicles. But a decade ago, the company built out a legit newsroom (think: major investigative reports). Last year BuzzFeed’s global news division even won a Pulitzer. But like many newsrooms, BuzzFeed News bleeds money, to the tune of $10M a year. Now:

• Close: Some shareholders want BuzzFeed to ditch its news biz entirely, saying it could add $300M to its market cap.
• Shrink: BuzzFeed instead wants to cut costs by offering buyouts (the prelude to layoffs) to dozens of news staffers. Three top editors have already quit.
• Pivot to video: The company says it can help offset news losses by growing its e-comm biz, including producing and monetizing more vertical TikTok-esque videos.

• Jab: Moderna says it will ask for emergency authorization for its low-dose Covid vaccine for kids under 6 — the only age group not yet eligible. A green light would give Moderna a leg up on rival Pfizer.
• Cheerio: Cereal-aisle heavyweight General Mills reported higher-than-expected earnings thanks to price hikes and continued home-cooking demand. Shares spiked 4% as investors slurped it up.
• Chew: Beyond Meat and Pepsi have collabed to create a meatless jerky made from mung beans and peas. After spiking in 2020, sales of plant-based meat in grocery stores barely rose last year, while snacking is still going strong.
• Speed: Nvidia will debut a next-gen superchip next year specifically for data centers, saying it sees a total addressable market of $1T for its line of processors.
• Build: KB Home shares fell 5% after the homebuilder missed on earnings, sales, and homes completed, blaming supply-chain snarls and labor struggles for delaying construction.

• Weekly jobless claims
• March Madness: Sweet 16 round begins
• Earnings expected from: PetroChina, China Life Insurance, Nio, Darden Restaurants, Mister Car Wash, and Movado

Authors of this Snacks own: shares of Moderna, and Pfizer

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