April Monthly Market Commentary
April Showers: It Rained IPOs (Plus, Blockbuster Flicks, Streaming and More!)
The ol’ adage about April showers certainly came to fruition this past month, especially in terms of IPOs. A bunch of consumer brands went public and there was a sense of excitement in the financial world that we haven’t seen in quite some time.
Personally, I’ll be pumped when literal raindrops stop falling on my head here in not-so-sunny SF, but that’s another story. (In reality, “Karl” is much easier to manage—yep, the fog in SF indeed has a name and a sassy Twitter account ).
Another juicy IPO for San Franciscans is that of Beyond Meat. The plant-based meat startup IPO’d Thursday morning with its initial public offering at $25/share , which implies a market valuation of $1.46 billion. You don’t need to be vegan to give that a look.
But, not everyone is benefitting. Some are worried San Francisco will drown in new millionaires scooping up the last remaining residential real estate, driving the average price of a home north of $1.3 million . Others think it’s sensationalist . Regardless, a lot of us in the Bay pay 3X the rent of 10 years ago—and would prefer the reverse.
Speaking of IPOs and reverse—a bunch of folks ended up buying the wrong stock when Zoom IPO’d. That’s a moment some investors wished they could CTRL+Z, and you might have experienced some well-placed schadenfreude yourself.
It’s just one more reminder to check the ticker when buying a new stock. Pretty sure the wireless communications company in China isn’t mad its shares rose 47,000% —a watershed event for the wrong company.
All About Streaming
Netflix, Hulu, & Disney — oh my! Competition is getting REAL in video streaming services, for good reason. Millennials are growing up and paying up for online everything, especially online video . Traditional TV still has a stronghold for news and sports, but when 17.8 million people watch a single episode of Game of Thrones , much of it on streaming devices, the trend is clear.
To help steer the ship, Disney has also brought on former Goldman Sachs player Michael Cerda as Vice President of Product for its Disney+ platform.
Disney is also slated to launch the first live-action Star Wars show , The Mandalorian. Which means my household (and so many more) are about to have a new subscription service. Part of this shift to streaming is that “originals” coming from these services are getting major dollar backing.
Here’s how they’re stacking up:
• Netflix invested $12 billion last year, and is slated to spend even more this year
• In Q1 alone Amazon spent $1.7 billion is on pace to continue that trajectory
• Hulu is spending considerably less, about $2.5 billion in 2018 on original content
• Hulu is outpacing Netflix in terms of user growth , making market share moves with lower pricing, and introducing Marvel shows to reach new audiences
• Disney is eclipsing Hulu in investments in orders of magnitude but also has a 10% stake in Hulu—and the 21st Century Fox stake could mean even more
Disney seems to be flying extra high right now with the massive success of its Marvel subsidiary’s Avengers: Endgame, which grossed over $1 billion in ticket sales its first weekend. Superpowered, indeed.
Music to Spotify’s Ears
Spotify is now officially the. biggest. music. streaming. service. with a whopping 100 million subscribers. This leaves Apple Music lagging a bit behind with a paltry 50 million users—still no slouch. Spotify continues to ascend—in spite of reporting a loss during the first quarter of this year.
With more and more people opting to stream their music as opposed to downloading it or buying it (still love a good mix CD, not gonna lie), it’ll be interesting to see how things play out this year with Spotify and its rival Apple Music. (Especially on these shores where the music industry still reigns supreme.)
5G: So Hot Right Now
5G Tech company Qualcomm reached a settlement with Apple, and the fruit is paying up an undisclosed amount. Wait, Apple isn’t invincible? Qualcomm’s stock rose over 20% after the settlement was announced, and the two have also reached a six-year licensing deal.
While those two settled down, Intel tapped out of 5G tech development — and Qualcomm’s stock price moved even higher. Seems like they have market share on lock for the foreseeable future.
What even is 5G? Some say it’s the latest and greatest cellular technology. Others say it produces dangerous electromagnetic fields developed to fry our brains. Either way, it seems to be the future, for now.
What to know:
• The smartphone market in the US alone is 273 million , and with a world population of over 7.5 billion and smartphone penetration increasing to over 3 billion people , and growing. Hello singularity.
• AT&T , Verizon , T-Mobile , & Sprint are releasing a small-scale version in select cities in 2019—with hopes of a nationwide release in the future.
• If you’re worried about electromagnetic fields, here’s some tin-foil hat inspo — just in case.
The Fed: Everyone’s Favorite Cocktail Party Fact
The powers that be at the Fed met this week to discuss…you guessed it, federal interest rates! Trump has been calling for them to lower it, saying rising interest rates have slowed economic growth, but they’ve voted unanimously to hold steady for now.
April was a big month, with a lot of celebrations. Employees and investors alike celebrated IPOs, Easter and Passover. May is coming in hot with one tasty IPO already under its belt, and much more to come, including the much anticipated Uber Technologies , which (as seemingly ever) is in the throws of leadership woes while former CEO Travis Kalanik is primed to make billions on the public offering.
Stay tuned for more!
The opinions and analysis expressed here are those of Gladie Helzberg as of May 2, 2019 and are for informational purposes only. Views may change as market, economic, and other conditions change. This information isn’t financial advice. Investment decisions should always be based on specific financial needs, goals and risk appetites.
SoFi isn’t affiliated with the organizations discussed in this article.
SoFi Wealth LLC, a registered investment advisor. SoFi Securities LLC, member FINRA /SIPC
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