Merry Christmas Eve Snackers,
Best Christmas team-up since Rudolph and Blitzen: KFC and Intel just announced a gaming console that also warms your fried chicken.
Stocks stayed close to record highs on Wednesday. But the President's political threats have put the 2nd Covid-19 relief bill and a potential government shutdown at risk.
FYI, markets are closed on Christmas day, so we'll be wrapped up in your inbox Monday morning. Have a great holiday, from all of us at Robinhood Snacks.
A new way for companies to go public could be the end of the IPO
Like eliminating the DH... The SEC (aka the police and rulemaker of public stock markets), just approved a new way for companies to go public — The "Primary Direct Floor Listing" (FYI, The New York Stock Exchange had asked for this.) And it includes the best of both worlds: Companies can raise money IPO-style and get the right price direct listing-style.
- It's IPO-ish: This lets companies create new stock and sell it to the public. They enjoy fresh cash to grow their business at the same moment they graduate from private to public.
- It's direct listing-ish: Instead of paying big fees to investment banks to guide their Initial Public Offering (IPO), companies simply release their stock into the wild, letting the markets decide the price.
Dilution, we have a problem... The major recent criticism of IPOs is that stock is getting mispriced by investment banks. Just this month, investment banks thought DoorDash and Airbnb's stocks were worth $102 and $68, but they were off by 86% and 113%. The losers to these mis-pricings were the companies that sold stock for way less than they could have — that results in unnecessary dilution of their stocks.
This new way to IPO is bad for investment banks... and the institutional investors who get special treatment with IPOs. Top i-banks earn hundreds of millions of $$$ in fees by advising IPOs — They're gatekeepers to public markets. Outspoken IPO-critic and VC investor Bill Gurley thinks this change will "unquestionably" lead to the end of traditional IPOs. Despite the news, stocks of the #1, #2, and #3 leading IPO banks rose yesterday: Goldman Sachs, Morgan Stanley, and Bank of America.
Hollywood studio MGM explores selling itself for around $6B
$18 for movie popcorn... ~$6B for the whole movie company. MGM Studios is reportedly trying to sell itself by betting on its #1 star: Content. We'd already heard that the movie studio was considering selling off just the latest James Bond movie earlier this year — now it's throwing in every prop on the set. Here are some of MGM's most entertaining money-making assets:
- Iconic franchises: James Bond, Rocky, Pink Panther
- Legendary Films: Terminator, Silence of the Lambs
- Quality TV: The Handmaid's Tale
- Surprise: MGM Studios is also part-owner of Survivor
This feels like a rerun... Because it is. In 2018, MGM's CEO tried to sell the studio for $6B to Apple — but then MGM fired him. Now with theaters closed, MGM's making the same exact move. If this sequel works, a $6B MGM sale would end happily with a payoff for its owners Comcast, Sony, and a cast of private equity firms. For context, Disney bought Marvel and Lucasfilm for $4B each in 2009 and 2012.
In the Streaming Wars, content has never been more king... Unlike MGM's first attempt to sell itself two years ago, you now face a dozen streaming options (HBO Max, Hulu, Disney+... we could go on). To catch up to Netflix's deep content library, a newer streamer could spend years starting from scratch by producing new characters, shows, and movies — or acquire a lineup of beloved franchises. Looking at you, Apple TV+ (and Apple's got the cash).
What else we’re Snackin’
- Veto: President Trump vetoes the $740B defense spending bill passed by Congress.
- Zucked: Amazon reportedly has an entire team dedicated to cloning furniture made by Wayfair and West Elm — it wants to offer 90% of what Wayfair sells.
- Slow: Vaccinations in the US are happening much slower than hoped/expected, with just 1 million so far.
- Tube: As FuboTV considers exclusive sports streaming deals, its stock soars (up 427% this year so far).
Thursday
- Today is the last trading day of the week — Stock markets are closed for Christmas
Disclosure: Authors of this Snacks own shares of Apple and Amazon.
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