Partying like it’s 1999 – Initial public offerings are back in Silicon Valley
economist.com
economist.com
> When the pandemic hit in March, initial public offerings, particularly those by technology startups, were predicted to be among the early victims. After all, who wants to go public in a once-in-a-century crisis? Quite a few people, it turns out. In the past couple of months ipos, which all but dried up until late May, have come back with a vengeance in America
And then presents a graph comparing YTD with previous years, showing more IPOs in 2020 YTD than any point in the last 15 years, with tech company IPOs in (eyeballed) the top quartile of the last 15 years.
I read this article as claiming:
1) The prediction was that IPOs would go down; they are not (any more).
2) IPO volume for YTD is historically strong, though not at '90s dot-com boom levels. (I'd have preferred their IPO volume chart to go back 25 years so that it showed the build-up to 1999, but that's a different complaint I think.)
Where are you getting the suggestion of an order of magnitude change?
Stocks are valued by growth unless they pay a lot of dividends, and dividends are rare today.
Not saying you're completely incorrect but there's room for a lot of companies in retail doing a lot of different stuff.
Tesla sales luxury cars during an economic recession. Walmart sells cheap food and household goods.
I’d buy Walmart stock before Tesla if I had to choose a long position on one or the other.
Nobody really has what Tesla sells.
5,000 massive scale physical retail buildings (at a time when other physical retail is being mauled), a brand with buyer loyalty that took half a century to create, operating on a 3% profit margin in a hyper low margin business, and excellent real-estate locations across most of the US.
Be sure to wave to Kmart, Penneys, FW Woolworth, JG McCrory's and Sears on the way to having what Walmart has.
No, you can't have what Walmart has.
Nobody can afford to replicate what Walmart has built up over time. And if you try to compete with them via ecommerce instead of physical retail (thinking that will somehow be cheaper), you'll need to spend tens of billions of dollars on distribution to do it (and good luck competing with Amazon).
If you had to choose who to compete with, Walmart & Amazon or Tesla, that's a comically easy choice. That's why companies like Nikola or Rivian exist (and 37 Chinese Tesla clones), and absolutely nobody is eager to build a thousand new giant physical retail stores to go after Walmart (besides, you can't get the money to do it, there are no funding sources for that financially suicidal move).
No you wouldn't, just buy a Chinese scooter (sub $1500) and see how much of a headache their electronics are on something you need for transportation. They make EV ones, too, which would probably be the best gauge with its limited range.
Its a horrible experience, they honestly have no QA/QC to speak of in their vehicle division(s) they just build and ship them like that in masse, its so wasteful as they will most likely end up in a landfill when problems arise as they're priced at near disposable level.
They may have processors and subsequently phone's down, but the amount of errors on an EV would make me want to drive the thing into a wall.
As for the Tesla stock price, I think its pretty high given where they are in terms of CURRENT scale. I put a deposit down for a Cybertruck knowing full well its QA-QC won't be sorted until 1-3 years after the release as its an entire new chassis, but those funds help make that happens and even in the interim they're pretty good about repairs/returns provided they can get the parts for them.
Its stock price is am indication of just another way to park hot money in the economy, at least its going into something of actual value and helping the environment rather than inflating another commodities bubbles that fomented war and revolution all of the World, as we saw in 2008.
It may not be rationale given the constraints of their CURRENT production capacity, but their Manufacturing presence in 3 different continents and their supercharger network alone didn't seemed priced in with its stock at below $500 in my opinion.
I told people to buy more during the 'Bankwupt' joke at mid 200s, Elon is a total troll Online/Twitter but I've been in the Auto Industry for quite some time and went to Interview several times at the factory in Fremont and they are not a car company, they seem more like an Electrical/Battery manufacturer that uses cars to sell its core product(s). The guys I met with in the Supply Chain are the real deal, once the constraints of Model 3 lines and ramp up happened what they undertook was nothing short of immense.
I hope the guys at the factory are slowly cashing out some of their positions as the Manufacturing guys are not paid very well and this money after the shut down is probably needed.
Buy the EV scooter, and put your money where your mouth is and post your progress as you use it (and only it) as a daily then. I'll gladly take back my words if you make it work. It may work temporarily and intermittently, but it's unreliability is what underscores that 'meme' to me.
> It's some basic car components, some motors and a battery, more or less.
Yes, but the notion of making it reliable is something that is simply not in the Chinese DNA of Manufacturing. Cutting corners everywhere and mass producing and saturating the Market with an inferior, albeit low priced, compromised product is what takes precedence and stealing the IP to mass produce an imitation isn't the same as developing something with your own in-house RD department and then refining and iterating as you ID problems and address them as you scale up production. Because with Chinese products once its shipped, its 'out of sight, out of mind.'
But, I don't have an EE degree so I'd like to see this challenge be met. I was however a privateer driver and mechanic in Motorsports since I was 16 until my mid 20s and spent quite a bit of my Auto career in 2 of 3 of Germany's Big 3 Manufactures in various roles onward after that--VW and BMW which are also known to be plagued with unreliable electronics. And then went to Nissan (which his what I drove/worked on all along) after that, so I know how to diagnose and wrench. A trend you should notice is how I followed the EV program development/transition of each manufacturer.
And those 'basic components' like batteries are something even Nissan Japan couldn't get right for nearly the first decade of the Leaf program and have only recently been able to achieve better reliability due to the arduous, and tireless refinement process as they were the first mover in the Industry.
I doubt anything with 4 wheels, EV and Made in China is going to make it to the US right now, and rightly so, given the current stance (which is still incredibly weak in my opinion) on the CCP.
So 2 wheels will have to do.
Clarity: I'm not a protectionist and I'm actually a staunch proponent of Free Markets, what I'm not in favour of is the CCP which is anything but Free Market.
Aren't batteries mostly purchased from large battery mfgs now? Tesla doesn't quite make their own batteries, they partner with battery manufacturers. Because the battery pack is a major safety item, there's only so low China can go before they make something that won't get to market.
You like top quality stuff and that's great. I don't care. I'm happy to save money and buy something that is as good as I need it to be.
Also they are somewhat delayed because someone figured that it would be a good idea to create a lot of new software(a whole new OS?) specifically for this car.
Fake FSD, the real profit center. They can't recognize the revenue, but the market has realized they don't need to. They never have to deliver.
Even then I don't know if an $8,000 scam feature is enough margin for a 1,000 PE ratio.
But, pricing is not what “people” are willing to say since the biggest funds really dictate the valuation of equities. They tend to try to have a long outlook, so they are betting that covid is short-term, the recovery will be quick, and Trump will be re-elected. Most people don’t believe these things, but most money is betting on those things.
The Fed is just going to keep printing as much money as is necessary to meet its full employment mandate (which is physically impossible at this stage due to automation). Employees all over the world are currently going round in circles and digging holes and filling them back up. Any white collar worker who takes their job seriously at this stage needs to wake up... What's going on is so obvious.
Just bring in UBI and abolish the Fed. Better have idle people getting paid to do nothing than busy people getting paid to pretend to do something and engaging in self-deception... And let's not forget all the people who can't get a job because their useless skills are not useless in exactly the right way as demanded by their equally useless employers.
I've seen many people get rich who have about the intelligence of a wild macaque and I've also seen very smart people struggling to make ends meet.
Here's a piece on the origin of the quote: https://quoteinvestigator.com/2011/08/09/remain-solvent/
To be fair, getting rid of SALT was a good move. It makes the tax code more fair. There is no reason for the federal government to subsidize someone who lives in California or New York.
This made unemployment skyrocket and arguably caused the rise of Hitler.
https://en.wikipedia.org/wiki/Weimar_Republic#Br%C3%BCning's...
EDIT: I'm not sure why all the downvotes, maybe because it looks like I Godwin-ed the thread? I was just paraphrasing the rest of the wikipedia section:
"In 1933, the American economist Irving Fisher developed the theory of debt deflation. He explained that a deflation causes a decline of profits, asset prices and a still greater decline in the net worth of businesses. Even healthy companies, therefore, may appear over-indebted and facing bankruptcy.[57] The consensus today is that Brüning's policies exacerbated the German economic crisis and the population's growing frustration with democracy, contributing enormously to the increase in support for Hitler's National Socialist German Workers' Party"
Even if you google "weimar republic _deflation_" emphasis mine, the first hit is https://en.m.wikipedia.org/wiki/Hyperinflation_in_the_Weimar...
> A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.
I was not previously familiar with the events you referenced. It sure seems like the Chancellor made very poor choices when the Great Depression began, perhaps because he was terrified of inflation happening again.
Well in a thread about the re-emerging dominance of idiocy in silicon valley, consider it more supporting evidence.
I thought we were talking about the latter.
I could still be wrong, and if you have any data on the value of the mark used at the time, I'd be willing to move on my position.
Ultimately what I'm asking here I guess, is do we have any evidence that what Brüning was trying to do worked?
And the German Papiermark was not the default reserve currency for the entire global financial system.
At some point something will give. It is frankly stunning to me that merchants accept ongoing crisis level debts from the US as part of the normal order of things. Someone thinks they are owed something and in real terms they aren't going to get it.
https://www.businessinsider.com/weimar-germany-was-destroyed...
I think you might be thinking of the hyperinflation of 1923? That's when Germany printed money to pay off war debts. But the hyperinflation was over long before 1929.
How much of the recent stock market gains are due to a hidden inflation thanks to the trillions of dollars being borrowed (or printed) by all the governments around the world?
Get ready for 2 dollar eggs and 20 dollar loaves of bread!
But it probably means hot markets like nyc, sf, la will remain very expensive.
It really is hard to say what will happen as the banking system is so different today than in the past. I do think we will see continued leaking of all the new money that is being printed out into hard assets, but beyond that I have no idea.
There aren't many markets like this in the US and they're all expensive. NYC, Northern Virginia/DC. Overheated, maybe, but not by much.
All of those cities are seeing price declines.
SF will probably bottom out in 6-8 months. Depending on how long these fires burn prices could go down quite a bit.
E.g. own 5 properties, each 50% mortgage, 50% equity, and 30% of equity immediately available keeping max LTV under 80%.
They could immediately buy 1.5 equivalent properties and work out the financing later.
They might even get better financing terms because they negotiate without the pressure of "I need you to give me a mortgage, otherwise I can't buy this hot property".
If you received two identical offers, 1 contingent on financing, the other cash, you'd take the cash offer.
However much sense stable, realistic home prices make in the long term, it makes sense in the short term for each president to continue propping up the market -- which president wants to inflict wide-scale harm on 2/3 of the households in the US?
There is also the not insignificant risk that we may also face lightweight socialism at the national level in January. Who knows what the Fed will do under pressure from a Left leaning administration in the White House?
QE basically artificially raises the value of assets, but those assets still need to be sold/traded for it to have an effect on the economy.
It's not instant.
New Hampshire can be quiet lovely.
In fact California specifically does not tax ex-residents for income arising from the disposition of stock acquired with ISOs, which is usually the way pre-IPO employees acquire shares. This is true even if the ISOs were granted for work performed in California.
It's a 1% tax hike on income over $1M, 3% on over $2M, and 3.5% on income above $5M.
I wouldn't call that enormous.
3% is enormous on top of existing sky high CA numbers...
The Silicon Valley company I worked at for a long time started out with ISOs, then as the company grew scrapped ISOs in favor of NSQ (nonqualifed options) and then later scrapped those and just gave RSUs.
The move from ISO->NSQ had some tax advantage to the company even though it is obviously worse for the employees.