Friday,
April 16, 2021

Market recap

Dow Jones

34,035.99

+305.10 (+0.90%)

S&P 500

4,170.42

+45.76 (+1.11%)

Nasdaq

14,038.76

+180.92 (+1.31%)

Delta Airlines

$46.82

-$1.35 (-2.80%)

Dell Technologies

$98.92

+$6.22 (+6.71%)

PepsiCo

$142.31

+$0.20 (+0.14%)

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 Big Week for the IPO Market

Mobile Gaming Company Raises $1.8 Billion

The IPO market had a busy week, with crypto exchange operator Coinbase (COIN) raising $86 billion. This record-setting listing wasn’t the only major public debut. Several other startups also joined the ranks of public companies, including AppLovin (APP).

AppLovin is a mobile games startup backed by the private equity firm KKR (KKR). It raised $1.8 billion yesterday in its IPO, giving it a market capitalization of $28.6 billion. AppLovin, which owns more than 200 titles, is capitalizing on the boom in demand for video games created by the pandemic. With people stuck at home, gaming became a popular way to pass time and socialize.

Autonomous Trucking Startup Raises $1 Billion

TuSimple (TSP), an autonomous truck maker, also went public this week, raising around $1 billion. The company is going after the long-haul trucking industry, which could be revolutionized by self-driving technology. The long-haul trucking market is attractive for autonomous vehicle makers due to the nature of trucking routes. Long-haul trucking relies on trucks driving on interstate highways for long stretches. It is easier to program vehicles to do this kind of driving than to make shorter, more complicated trips.

TuSimple priced its shares at $40 each, giving it a valuation of roughly $8.5 billion. The startup previously raised $850 million in funding and has facilities in China, California, and Arizona.

Alkami and Karat Packaging Make Public Debuts

Other important IPOs this week included Alkami Technology (ALKT) and Karat Packaging (KRT). Alkami Technology, a technology platform used by banks, raised $180 million in its offering and is now valued at $2.9 billion. The fast-growing cloud-based startup had previously raised $421 million in venture funding.

Meanwhile, Karat Packaging, a company making environmentally friendly disposable foodservice products, priced its IPO at $16 per share. Proceeds are being used to pay down $30 million in debt.

The IPO market is picking up steam across a variety of industries. Investors seem enthusiastic about backing startups, which is good news for several more startups getting ready to tap the public markets in the coming months.

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Recent Data Shows Economic Recovery Is Beginning

Retail Sales Surge 9.8% in March

Retail sales, a measure of purchases at stores, online, and in restaurants, jumped 9.8% in March, surpassing economists' forecasts for growth. The results are the latest sign that the US economy is rebounding thanks to stimulus from the federal government and fewer restrictions on businesses. The increase in retail sales marks the largest monthly gain since May of 2020.

A decline in layoffs and an uptick in factory outputs are also contributing to the spring spending surge. Consumer spending is the biggest driver of economic activity. The strong showing in March is fueling optimism about economic growth this summer.

Retail Sales Surge is Broad Based

The March retail sales gains were led by purchases of sporting equipment, apparel, and food. Restaurants and bars saw a 13.4% increase in sales from February to March and 36% year-over-year growth. Meanwhile, sales of sporting goods increased 23.5% and apparel sales were up 18.3%.

The boom in retail sales comes as consumer confidence in the US hit its highest level since the pandemic began.

Jobless Claims Fall

In addition to better-than-expected retail sales, there were also other encouraging data points released yesterday. The US Labor Department reported 200,000 fewer initial jobless claims last week than the week before. Jobless claims, which are a proxy for layoffs, dropped from 769,000 to 576,000, which is the lowest number of initial jobless claims since March 2020. Meanwhile, industrial production, which measures the output of factories, utilities, and mines, rose 2.7% in March compared to February.

These data points reflect a US economy which is improving after more than a year of pandemic induced downturn. Vaccinations are rolling out, people are going back to work, and consumer spending is increasing. Economists are hopeful that these trends will continue in the months to come.

Friday Fundings: Scale AI, Tempo, and Slice

AI Startup Raises $325 Million in Funding

Artificial intelligence startup Scale AI raised $325 million in venture funding, giving it a valuation of $7.3 billion. Scale AI helps companies gather the data they need to train AI applications. As AI gains popularity, the startup’s services have been in high demand.

The latest round of funding was led by Dragoneer, Greenoaks Capital, and Tiger Global. Other participants in the round included Wellington Management and Durable Capital. Since its inception in 2016, Scale AI has raised more than $600 million.

Home Fitness Gym Maker Raises $220 Million

Tempo, a home fitness equipment startup, raised $220 million in venture funding. SoftBank led the Series C round, but other investors included Bling Capital, DCM, General Catalyst, Norwest Venture Partners, and Steadfast Capital Ventures.

Tempo is among the startups that stepped up to fill a void during the pandemic when gyms were forced to close. Though some gyms are beginning to reopen, the company is still seeing high demand for its products. Tempo’s complete home gym includes a touchscreen and a 3D motion camera that scans and tracks users as they work out. The startup plans to use the money it raised to strengthen its supply chain, to create more content, and for research and development.

P.S. SoftBank is also an investor in SoFi.

Pizza Ordering Platform Raises $40 Million

Slice, a mobile pizza ordering platform, raised $40 million in a round of venture funding led by Cross Creek. The fundraising round also included participation by KKR (KKR), GGV Capital, and Primary Ventures.

Started in 2009 in New York, Slice helps pizzeria owners accept online orders and payments. Its services were helpful during the pandemic when restaurants had to shift their operations online. Slice has emerged as a leader in those efforts, partnering with 14,000 pizzerias across the country. The company didn't disclose its current valuation from the latest fundraising round but it was valued at around $82 million last May.

Not-So-Breaking News

  • Charter Communications (CHTR) and Comcast (CMCSA) are becoming formidable players in the mobile phone service market. Cable TV providers are the fastest growing mobile phone carriers in the US. Currently, over 5 million Americans pay their mobile phone bills through their cable companies.
  • Delta Air Lines (DAL) reported losses for its first quarter as demand for international and business travel remained muted. However, the air carrier expects to break even in June as demand increases. Delta also shared that its domestic leisure bookings rebounded to around 85% of 2019 levels in the first quarter.
  • Dell Technologies (DELL) is spinning off its majority stake in VMWare (VMW), a cloud-software company. VMWare will pay a special cash dividend of between $11.5 billion and $12 billion to shareholders. Dell holds about 81% of VMWare and could net as much as $9.7 billion.Proceeds will be used to pay down Dell’s debt.
  • PepsiCo's (PEP) earnings beat Wall Street expectations despite weather-related issues in the US and challenges with its international business. The food and beverage company’s net sales increased 6.8% to $14.82 billion.
  • Thermo Fisher Scientific (TMO) is buying the clinical research service provider PPD (PPD) for $17.4 billion. Thermo Fisher is paying $47.50 per share and assuming $3.5 billion in debt.
  • You probably already feel like you’re paying too much on your student loans—but do you know how much you’re overpaying? Use our Student Loan Calculator to see how much you could save by refinancing your student loans with SoFi.

Financial Planner Tip of the Day

“While refinancing your federal student loans will eliminate you from federal protections and benefits, it’s worth noting that some private lenders offer their own benefits and protections.”

Brian Walsh, CFP® at SoFi

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