Friday,
November 13, 2020

Market recap

Dow Jones

29080.17

-317.46 (-1.08%)

S&P 500

3537.01

-35.65 (-1.00%)

Nasdaq

11709.59

-76.84 (-0.65%)

Walmart

$148.23

$0.25 (0.17%)

Moderna

$87.32

$4.88 (5.92%)

Pfizer

$37.295

-$1.205 (-3.13%)

Amid evolving news + uncertainty surrounding COVID-19, your financial needs are our top priority. For more information on COVID-19 and your finances click here.

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Top Story

A Wave of Tech IPOs Is Coming Before the End of the Year

Forging Ahead

A number of high-profile tech companies are planning to go public before the end of the year. Big names like Airbnb and DoorDash will likely make their filings public in the next week. Wish, an ecommerce company specializing in unique discount nik naks, and Roblox, a kid-focused gaming company, are also expected to announce their filings imminently.

Each of the four companies confidentially filed paperwork with the SEC earlier this year. The pandemic has accelerated certain parts of the IPO process. Before the pandemic, companies would embark on a roadshow, visiting investors across the country and giving in-person presentations before their public debuts. Now this process is entirely virtual, and it takes a matter of days, not weeks, which speeds up the entire process of a company going public.

Conditions are also favorable for tech IPOs at the moment, and the four companies want to push ahead with their debuts in case circumstances change.

Airbnb’s Roller Coaster Year

Airbnb, the biggest name planning to go public in the coming months, has had a roller coaster year. The home rental company was planning to go public earlier in 2020, but when the pandemic shut down the travel industry, Airbnb faced significant financial strain. The startup slashed 1,900 jobs, about 25% of its workforce. It raised $2 billion in high-interest debt to stay afloat, and its value dropped by about 16% to $26 billion.

Despite these initial struggles, Airbnb has made an impressive comeback, taking advantage of consumers looking to work remotely in new locations. The company earned more than $200 million in June—a 25% increase compared to the same month a year prior.

DoorDash, Roblox, and Wish Help Customers Navigate the Pandemic

DoorDash, which is valued at $16 billion, has seen demand for its services surge during the pandemic. The company has also captured more market share recently, accounting for 49% of US meal delivery sales in September. That is more than twice Uber Eats’ (UBER) market share. The pandemic has also led to booming demand for Roblox’s games as parents look for ways to entertain their kids during school closures and lockdowns. Through its IPO, Roblox expects to double its $4 billion valuation. Wish, valued at $11.2 billion, has also witnessed surging demand for its ecommerce services during the pandemic. The company currently has about 70 million active users.

2020 has already been a significant year for tech IPOs, with Snowflake (SNOW), Unity (U), and others making their debuts. Palantir (PLTR) and Asana (ASAN) also began trading via direct listings. The wave of companies going public is not over yet, and investors will be eager to see how four important IPOs unfold heading toward the end of the year.

Dream Renovations Do Come True

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Checking in on the Urban Real Estate Market

Younger Renters Trickle Back to Cities

The COVID-19 pandemic has upended the way people work, socialize, and raise families, which has led to dramatic changes in the real estate market.

Early in the pandemic, many people left apartments in urban centers like San Francisco and New York to stay with family or to buy houses in areas with more space. However, because of dramatic price drops, the urban residential real estate market is now showing signs of life.

In Manhattan, though offices remain largely closed and many wealthier, older New Yorkers have not come back to the city, some younger renters are beginning to trickle back even as the city implements new safety precautions due to rising COVID-19 cases.

Vacancies Remain High

Recent data shows that new leases in Manhattan climbed by 33% in October. The median net effective rent, meaning the rent including discounts in Manhattan, is now $2,868 per month—down 19% compared to a year ago. Smaller apartments, popular among younger renters, have seen even more significant price drops, with rents for studios declining by 21%.

Still, in October there were 16,145 vacant apartments in New York, an all-time high. Normally the vacancy rate in the city is about 2%, but currently it is over 6%.

The Impact on Banks

Urban real estate vacancies are having ripple effects across many sectors, including the lending industry. Banks used to see lending to landlords and business owners in places like Times Square and SoHo as very safe, but now, many of these borrowers are struggling to make loan payments.

If banks in the US absorb losses on their $2 trillion in commercial real estate loans, there would be significant negative impacts for the rest of the economy. As worries about defaults and bankruptcies rise, banks are becoming more conservative about their lending practices, leaving cash-strapped businesses in difficult positions.

Rising cases and new lockdown measures in cities could cause even more business closures and vacancies in the upcoming months. However, Pfizer (PFE) and BioNTech (BNTX) recently shared positive results from their COVID-19 vaccine trial, which could give the real estate industry and other sectors of the economy much-needed relief.

Friday Fundings: Nuro, Menlo, and JumpCloud

$500 Million in Funding for Autonomous Delivery Startup

Nuro, an autonomous delivery startup, just secured $500 million in a Series C round. The company, founded by two former Google (GOOGL) engineers, differs from some of its autonomous vehicle peers because it focuses on transporting cargo, not people. Nuro has partnered with companies including Kroger (KR), CVS (CVS), Walmart (WMT), and Domino’s (DPZ) to test its delivery systems.

Demand for affordable, safe delivery systems is growing as a result of the COVID-19 pandemic. Nuro’s leadership said that with the company’s new funding, they believe that their technology will be a part of consumers’ everyday lives in the near future.

The funding round was led by funds and accounts advised by T. Rowe Price Associates. New investors, Fidelity Management & Research Company and Baillie Gifford also participated, along with existing investors including SoftBank Vision Fund 1 (SFTBY) and Greylock.

P.S. SoftBank is also a SoFi investor

Cybersecurity Company Raises $100 Million

Menlo Security raised $100 million in a Series E funding round led by Vista Equity Partners with participation from Neuberger Berman funds, JP Morgan (JPM), General Catalyst, and other investors.

With the rise of remote work, demand for cybersecurity solutions like the ones Menlo provides has surged. Investors are also piling into the industry. So far this year, funding for cloud security, cybersecurity, and network security in the US has hit $5.5 billion, up from $4.7 billion in all of 2019.

This recent round brings Menlo’s total funding to over $260 million and its valuation to $800 million. Menlo’s CEO said that this may have been the company’s last round of funding before it goes public.

Cloud Directory Service Raises $75 Million

JumpCloud, a cloud directory service, raised $75 million in a Series E funding round led by BlackRock (BLK) with participation from General Atlantic. The company has now secured over $166 million in funding.

The pandemic caused many companies to move their operations to the cloud for the first time, and JumpCloud has helped them make those transitions. JumpCloud has about 100,000 users. 3,000 of them pay for the company’s services and the rest use its free tier.

With the new funding, JumpCloud plans to hire 200-250 new employees in the next year. The company’s leadership wants diversity and inclusion to be at the forefront of this hiring process. In order to find people from a wide variety of locations and backgrounds, many of the new positions will be fully remote.

Not-So-Breaking News

  • The pet care market in the US has seen substantial growth during the pandemic. Walmart (WMT), which already sells pet food and supplies, will now sell pet insurance through Petplan and will help pet owners find sitters and walkers for their furry companions through Rover.
  • The price of bitcoin briefly climbed above $16,000 yesterday for the first time since January 2018. The cryptocurrency has more than doubled in value this year, in part due to pandemic-related uncertainty.
  • Shares of Moderna (MRNA) climbed yesterday after the drug company announced it has sufficient data from its late-stage COVID-19 vaccine trial to present to independent analysts. Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Disease has said that Moderna’s vaccine could be as effective as Pfizer’s (PFE).
  • Cano Health, a company that provides health care services to senior citizens, is going public through a merger with the SPAC Jaws Acquisition Corp. (JWS) at a valuation of about $4.4 billion. Joe Biden has pledged to lower the age for Medicare enrollment from 65 to 60, which could help Cano Health gain more clients.
  • Initial jobless claims hit 709,000 last week, below 757,000 the week prior. This is the fourth consecutive week that the total has fallen, though it is still above the pre-pandemic record of 695,000, set in 1982.
  • With a little creativity, elbow grease, and resilience you too can turn a fixer-upper into the house of your dreams, right? Visit SoFi Learn for things to keep in mind when buying a fixer-upper.

Financial Planner Tip of the Day

“The cost of renovations can seem overwhelming, but remember: you’re bringing out your home’s maximum potential for both you and any potential future sale.”

Brian Walsh, CFP® at SoFi

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