WEBVTT - Peloton Tumbles and the IPO Market Warms Up 0:00:01.520 --> 0:00:06.800 From Mahart where Innovations, Money and Power Collie in Silicon Valley, NBN. 0:00:07.160 --> 0:00:11.200 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:26.000 --> 0:00:28.520 I'm Caroline Hyde a Bloomgg's World headquarters in New York, 0:00:28.960 --> 0:00:30.880 and I'm Ed Ludlow in San Francisco. 0:00:31.160 --> 0:00:32.880 This has been by Technology. 0:00:32.760 --> 0:00:36.720 Coming up Peloton tumbling after predicting another decline in sales. 0:00:36.880 --> 0:00:40.040 We'll discuss where the companies come back efforts went wrong. 0:00:40.720 --> 0:00:43.960 The landscape for IPOs starting to heat up, or dig 0:00:44.000 --> 0:00:47.159 into m Are Sports which starts trading today. 0:00:46.840 --> 0:00:50.159 And the world's biggest seller of smartphone processes starting to 0:00:50.159 --> 0:00:53.840 see a recovery. We'll speak the CEO of Qualcom, Cristiano 0:00:54.000 --> 0:00:56.520 am But first that's checking on these markets and for 0:00:56.600 --> 0:00:59.040 a stick in the world of sports and health and 0:00:59.080 --> 0:01:01.920 exercise for a moment, and Amma Sports shares indicated at 0:01:01.920 --> 0:01:04.840 thirteen to fourteen dollars each. The IPO price, remember was 0:01:04.880 --> 0:01:07.840 thirteen dollars. That's actually way off the mid market range. 0:01:07.880 --> 0:01:09.880 So this is a company that's coming to the market 0:01:10.200 --> 0:01:12.959 selling new shares. Of course, this is Wilson Tennis Rackets. 0:01:13.080 --> 0:01:15.440 This is like a Solomon ski boots as well. And 0:01:15.480 --> 0:01:17.679 a big exposure to China. We'll dig into that IPO 0:01:17.760 --> 0:01:19.720 story and a little bit on the show, but first 0:01:19.760 --> 0:01:23.399 let's returned to the woes that are really expressing themselves 0:01:23.400 --> 0:01:25.520 in the share price of Peloton today. Mark German is 0:01:25.560 --> 0:01:28.319 here with more and look, they can't seem to catch 0:01:28.319 --> 0:01:30.839 a break in terms of people wanting to use the app. 0:01:30.840 --> 0:01:33.319 In particular, I mean, where are they seeing some of 0:01:33.319 --> 0:01:33.959 the pain points? 0:01:34.000 --> 0:01:38.839 Mark, They're seeing pain points essentially everywhere. A free cash 0:01:38.840 --> 0:01:42.360 flow is not where they want. Revenue beat Wall Street 0:01:42.440 --> 0:01:45.399 expectations by about twenty million, but of course it was 0:01:45.440 --> 0:01:49.200 another annual decline for the company. App subscriptions were down 0:01:49.400 --> 0:01:54.680 sixteen percent. They're still reporting a net loss. So this 0:01:54.760 --> 0:01:57.000 is not where the company once was. They were a 0:01:57.120 --> 0:02:00.720 high flyer at the height of the pandemic. They were 0:02:01.080 --> 0:02:04.200 a billion dollar plus quarter after quarter. 0:02:04.560 --> 0:02:05.920 Now their revenue, as you. 0:02:05.840 --> 0:02:07.800 Can see, it was in the mid seven hundred millions, 0:02:07.840 --> 0:02:14.600 down six percent even a loss. Just no real growth 0:02:14.720 --> 0:02:18.400 or momentum here for the company. And they're not expecting 0:02:18.440 --> 0:02:20.480 free cash flow to get to where they want, real 0:02:20.560 --> 0:02:24.600 profitability now, real growth until the end of the year, 0:02:24.760 --> 0:02:27.720 until their fourth quarter, right, so certainly they're not in 0:02:27.720 --> 0:02:28.919 a good place at this moment. 0:02:29.680 --> 0:02:32.880 Yeah, I think we're still asking what is Peloton right? 0:02:32.960 --> 0:02:36.000 Is it a content company? Is it a hardware company? 0:02:36.000 --> 0:02:39.160 They've had all these different strategies. They include partnerships, the 0:02:39.240 --> 0:02:42.680 TikTok one being the most prominent that Karen and I've discussed. 0:02:42.880 --> 0:02:44.720 And then they turn around to say, you know what, 0:02:44.840 --> 0:02:47.720 let's look at universities. That's a big market. You know, 0:02:48.120 --> 0:02:51.320 from a gym equipment perspective, that hasn't worked either. So 0:02:51.680 --> 0:02:54.040 sum up Barry mccarthyy's strategy here, Mark. 0:02:54.800 --> 0:02:57.639 Yeah, the strategy is to go all in on content 0:02:57.760 --> 0:03:00.920 and subscriptions. But this big revamp that they rolled out 0:03:01.400 --> 0:03:04.320 a few months ago was a failure. It led to 0:03:04.919 --> 0:03:08.320 a large decrease in subscribers. They had some issues with 0:03:08.400 --> 0:03:11.560 their algorithm as well. You know, my personal take is 0:03:11.720 --> 0:03:14.440 maybe you wind down the hardware business completely. That's a 0:03:14.480 --> 0:03:18.360 lot of where your lack of profitability, a lot of 0:03:18.360 --> 0:03:19.480 where your net loss. 0:03:19.240 --> 0:03:19.840 Is coming from. 0:03:20.160 --> 0:03:23.080 Go all in on content, but then you're just an app. 0:03:23.400 --> 0:03:25.840 But I think if you're a pure content play, you 0:03:25.919 --> 0:03:29.639 have this really nice, really great subscriber base of nearly 0:03:29.960 --> 0:03:31.680 seven hundred and fifty thousand users. 0:03:32.080 --> 0:03:34.440 Maybe that's something that's interesting to. 0:03:34.480 --> 0:03:37.960 A Spotify or a Netflix, or an Apple or an Amazon, 0:03:38.160 --> 0:03:41.800 where you can buy this pretty gigantic fitness content library, 0:03:42.160 --> 0:03:44.720 you can buy this application, You could buy the patents 0:03:44.720 --> 0:03:47.720 and the technology there, and you can make your Netflix 0:03:47.760 --> 0:03:51.040 subscription or your Spotify subscription or your Amazon product subscription 0:03:51.440 --> 0:03:54.280 more valuable and interesting to consumers by spending a few 0:03:54.280 --> 0:03:57.880 billion and buying all the Peloton's content arm Maybe that's 0:03:57.920 --> 0:04:01.280 the real long term play, at least if I was CEO. 0:04:00.960 --> 0:04:04.520 That's what it would be at this Until you are CEO, Mark, Well, 0:04:04.600 --> 0:04:07.280 we'll stick to on letting on also the areas the 0:04:07.320 --> 0:04:09.800 wealth of expertise you have in other companies. We are 0:04:09.840 --> 0:04:12.240 all waiting with baited brest and big earnings after the bell, 0:04:12.320 --> 0:04:14.440 and Apple is key among them. What are you expecting? 0:04:15.640 --> 0:04:19.080 Yeah, so our estimates indicate that Apple is going to 0:04:19.400 --> 0:04:24.360 avoid a fifth quarter in a row of a decline 0:04:24.640 --> 0:04:27.400 in an earnings decline. That would be something that hasn't 0:04:27.440 --> 0:04:31.440 happened since the original iPod days over. 0:04:31.279 --> 0:04:32.560 Twenty something years ago. 0:04:32.720 --> 0:04:36.240 So any growth I think is going to be hugely 0:04:36.279 --> 0:04:40.200 impressive to the stock. What we're really looking for is 0:04:40.240 --> 0:04:43.400 a sizeable beat on iPhone. If you remember, at the 0:04:43.480 --> 0:04:46.440 end of twenty twenty two, the iPhone fourteen pro ran 0:04:46.480 --> 0:04:51.200 into some serious COVID related headwinds. So at this point, 0:04:51.279 --> 0:04:54.640 given the performance of the iPhone fifteen, concerns in China, 0:04:55.000 --> 0:04:58.160 given that this is a redesigned handset, given that they 0:04:58.200 --> 0:05:00.839 have not had any production issues, you should be looking 0:05:00.880 --> 0:05:02.760 at a pretty clear beat on iPhone. 0:05:02.800 --> 0:05:04.880 So that's what we'll be paying attention to. 0:05:05.560 --> 0:05:09.000 In addition to hopefully for the company a record around 0:05:09.080 --> 0:05:11.800 digital services given all the app store noise right. 0:05:11.720 --> 0:05:15.799 Now, highly recommend that you follow the top live blog 0:05:15.800 --> 0:05:18.440 on the terminal for Mark's reporting and also his ex 0:05:18.760 --> 0:05:20.880 because it's a big Super Bowl moment for him. After 0:05:20.920 --> 0:05:23.279 market close, thank you to Bloomberg to Mark German, but 0:05:23.360 --> 0:05:25.600 let's keep the convo going. Bring in all Spring Global 0:05:25.600 --> 0:05:30.159 Investments chief diversity officer and head of active Equity, and 0:05:30.279 --> 0:05:33.159 Meletti for more. You know, I said a little early 0:05:33.240 --> 0:05:35.440 in the show and that if there was a lesson 0:05:35.480 --> 0:05:39.240 to be learned from Alphabet and Microsoft, it was that 0:05:39.320 --> 0:05:41.919 this was a high bar earning supporter. Investors kind of 0:05:41.920 --> 0:05:44.960 wanted to see some tangible effect from all of the 0:05:45.000 --> 0:05:49.400 AI chat an investment of the last twelve months. Now 0:05:49.440 --> 0:05:52.040 we have Apple, Amazon, and Meta on deck. Do you 0:05:52.160 --> 0:05:53.640 frame this as a high bar order? 0:05:55.360 --> 0:05:58.960 I do, Thanks for having me on the show. It's 0:05:58.960 --> 0:06:02.520 a high bar quarter cause although fundamentals were really strong 0:06:02.560 --> 0:06:06.880 and twenty twenty three, multiple expansion also took place in 0:06:06.920 --> 0:06:09.279 a big way. And so when you have that multiple 0:06:09.279 --> 0:06:13.320 expansion and good earnings growth growth in twenty twenty three, 0:06:13.880 --> 0:06:17.080 the bar is now set for growth on top of 0:06:17.120 --> 0:06:20.520 what we saw, and that multiple expansion is gonna be 0:06:20.560 --> 0:06:23.640 harder to get. And so I think that's where, you know, 0:06:23.920 --> 0:06:25.960 the game of expectations really comes into play. 0:06:27.560 --> 0:06:30.200 There is other technology in the world outside of this. 0:06:30.320 --> 0:06:32.920 We call it the Magnificent seven, and maybe Tesla gets 0:06:32.960 --> 0:06:36.200 taken out and it's the Magnificent six. Are we not 0:06:36.200 --> 0:06:37.680 looking in the right place right now? 0:06:39.360 --> 0:06:42.039 We think the mar markets should broaden out, you know, 0:06:42.080 --> 0:06:45.240 we we really believe that in the t the back 0:06:45.279 --> 0:06:48.240 half of last year, and as we look forward, we 0:06:48.279 --> 0:06:53.240 think that's true. Look, there are really good earnings prospects 0:06:53.360 --> 0:06:56.120 for several areas of the market. If you look at 0:06:56.160 --> 0:07:01.560 historic discounts between small and in large cap companies, those 0:07:01.640 --> 0:07:06.440 historic discounts are really pretty wide, And you're right, there's 0:07:06.600 --> 0:07:11.840 really good companies, technology companies, healthcare companies, other companies that 0:07:12.440 --> 0:07:17.160 go down market cap that just don't have the multiples, 0:07:17.160 --> 0:07:20.240 that didn't get the multiple expansion. Even some that have 0:07:20.440 --> 0:07:23.480 really high free cash flow did put up good fundamentals 0:07:23.520 --> 0:07:25.040 last year. And so those are the parts of the 0:07:25.040 --> 0:07:27.280 market that we're much more attracted to right now. 0:07:28.160 --> 0:07:31.560 Do the same drivers of growth apply though, on the 0:07:31.600 --> 0:07:34.280 smaller side of the market capitalization is it that you 0:07:34.320 --> 0:07:37.280 want to hear from CEOs, how they're leveraging AI, how 0:07:37.280 --> 0:07:40.720 they're thinking about cost discipline, how ultimately they're replacing people 0:07:40.760 --> 0:07:42.880 with machine. 0:07:43.560 --> 0:07:48.040 Absolutely, AI is not something that's going to go away, 0:07:48.480 --> 0:07:50.520 and I think we saw the first wave of it, 0:07:50.640 --> 0:07:54.200 certainly led by these large companies. I still think that 0:07:54.200 --> 0:07:57.440 the large companies are going to lead. But what we're 0:07:57.480 --> 0:08:00.360 going to do is start to see AI application be 0:08:00.400 --> 0:08:05.080 applied across the broader economy. And when that happens, you're 0:08:05.080 --> 0:08:09.640 going to see productivity and other things continue to rise. 0:08:10.080 --> 0:08:12.240 But it does take a while for it to play out, 0:08:12.280 --> 0:08:18.240 and so we're looking for individual companies that are applying AI, 0:08:18.600 --> 0:08:23.040 but not just AI, also other tools, also other capabilities 0:08:23.040 --> 0:08:26.840 that they have to really work through the current environment, 0:08:26.880 --> 0:08:29.760 which we all know, you know, is likely to be 0:08:30.040 --> 0:08:31.240 still a little bit bumpy. 0:08:31.240 --> 0:08:32.640 Here, let's talk. 0:08:32.520 --> 0:08:35.160 About that current environment and on the macro for us. 0:08:35.200 --> 0:08:37.840 And because is it therefore the job's data that you 0:08:37.880 --> 0:08:40.720 look to at the moment, is it still any hint 0:08:40.760 --> 0:08:43.920 of direction of FED policy that really dictates trade here overall? 0:08:45.559 --> 0:08:48.600 You know, I think the FED policy. You know, it's 0:08:48.640 --> 0:08:53.120 interesting the FED talk has maybe added a little bit 0:08:53.160 --> 0:08:57.960 of confusion, but the expectations for five to six rate 0:08:58.000 --> 0:09:00.360 because for the year we're just higher than what we 0:09:00.520 --> 0:09:03.839 believed would actually happen. So yesterday wasn't so much of 0:09:03.880 --> 0:09:07.240 a surprise to us here at all. Spring What I 0:09:07.240 --> 0:09:09.800 would say, though, is we are watching the labor market 0:09:09.920 --> 0:09:13.319 really carefully and how that might be tied to company profits. 0:09:13.400 --> 0:09:15.720 And if we just go back to twenty twenty two, 0:09:16.320 --> 0:09:21.040 the technology companies actually were cutting back on labor some 0:09:21.080 --> 0:09:24.400 of those meg seven stocks you talked about that led 0:09:24.440 --> 0:09:27.960 them and set them up pretty well to produce good profits. 0:09:28.000 --> 0:09:32.840 In twenty twenty three, with some recovery, we are, you know, 0:09:32.920 --> 0:09:36.319 at the end of an inflationary cycle, pricing power starts 0:09:36.400 --> 0:09:38.600 to slip away. There starts to get to be some 0:09:38.679 --> 0:09:44.720 margin pressure amongst many companies, and so what then tends 0:09:44.760 --> 0:09:49.320 to happen is they start to unwind labor because that's 0:09:49.360 --> 0:09:52.080 where the biggest costs come from. So how closely are 0:09:52.120 --> 0:09:54.840 profits and labor tied? I think they're pretty closely tied. 0:09:55.240 --> 0:09:58.920 So we'll have to watch profits very carefully and within 0:09:59.080 --> 0:10:02.200 each industry. Then also what that might mean for the 0:10:02.280 --> 0:10:03.000 labor market. 0:10:03.520 --> 0:10:05.600 There's been a lot of talk of cuts this particular 0:10:05.679 --> 0:10:07.520 earning season when it comes to the labor force. All 0:10:07.520 --> 0:10:10.000 Spring Global Investments Chief Diversity officer and of course head 0:10:10.000 --> 0:10:13.200 of actually Active Equity and Maletti. Great to catch up 0:10:13.240 --> 0:10:14.280 with you and what we got. 0:10:15.000 --> 0:10:15.160 Well. 0:10:15.200 --> 0:10:16.600 Coming up on the show, we're going to have a 0:10:16.600 --> 0:10:21.480 post earnings conversation with AMD CEO Lisa Sue. Really interesting 0:10:21.520 --> 0:10:25.000 AI name to watch right now, that's next, This is Bloomberg. 0:10:26.040 --> 0:10:29.079 Here's why AMD is optimistic well, revenue in the current 0:10:29.120 --> 0:10:31.840 period will be shorter of analyst estimates. The chip maker's 0:10:31.880 --> 0:10:34.320 confident is going to book more than three point five 0:10:34.320 --> 0:10:37.439 billion dollars this year from its line of AI accelerators. 0:10:37.480 --> 0:10:40.400 That's up from its earlier projection of two billion. I 0:10:40.440 --> 0:10:44.200 caught up with AMD CEO Lisa Su yesterday to understand 0:10:44.240 --> 0:10:44.959 why I have a listen. 0:10:45.520 --> 0:10:48.600 When I look at the potential of AI is really 0:10:48.720 --> 0:10:52.240 the single most important you know, sort of you know, 0:10:52.320 --> 0:10:55.880 technology innovation over the last fifty years. So AI has 0:10:56.240 --> 0:11:00.400 so much potential to change the way our business has work, 0:11:00.520 --> 0:11:03.719 to change our personal productivity, to really change the way 0:11:03.720 --> 0:11:06.840 we do research, and a whole bunch of things. You know, 0:11:06.880 --> 0:11:10.800 from our standpoint, we see the aim growing to upwards 0:11:10.800 --> 0:11:13.400 of you know, four hundred billion by twenty twenty seven. 0:11:14.120 --> 0:11:16.840 I think from an AMD standpoint, you know, you were 0:11:16.880 --> 0:11:18.320 at our launch ed in December. 0:11:18.920 --> 0:11:19.720 It was a great. 0:11:19.600 --> 0:11:22.920 Coming out party for the A M D you know, 0:11:22.960 --> 0:11:26.520 AI capabilities, and it's gone really well. I think our 0:11:26.679 --> 0:11:32.800 customer interactions, our product qualifications, our ramp have gone really well. 0:11:33.320 --> 0:11:35.800 So we were able to update you know, some of 0:11:35.800 --> 0:11:38.600 our numbers this this past week. 0:11:39.240 --> 0:11:41.839 I think a lot of folks focused on that ramp 0:11:41.880 --> 0:11:43.520 and how it went in the quarter. You know, you 0:11:43.600 --> 0:11:46.199 exceeded the four hundred million that you'd told me about 0:11:46.520 --> 0:11:49.720 at that event, So it's three point five billion dollars 0:11:49.720 --> 0:11:54.000 of sales this year form I three hundred. What's interesting 0:11:54.080 --> 0:11:57.760 here is kind of your ramp relative to what's happening 0:11:57.800 --> 0:12:00.439 on the supply side, And I wanted how big a 0:12:00.520 --> 0:12:03.559 factor supply will be in matching or beating that number 0:12:03.559 --> 0:12:04.240 in twenty four. 0:12:05.440 --> 0:12:05.720 Yeah. 0:12:05.760 --> 0:12:10.360 Absolutely, And this is the fastest product ramp you know, 0:12:10.400 --> 0:12:13.360 in our history. So you know, we exceeded our numbers 0:12:13.400 --> 0:12:17.280 in Q four over four hundred million. We're going to 0:12:17.320 --> 0:12:20.079 grow into Q one, and we update our full year 0:12:20.120 --> 0:12:22.400 forecasts from two billion to three and a half billion. 0:12:23.000 --> 0:12:25.040 The way we think about that is that's a customer 0:12:25.120 --> 0:12:28.439 demand statement, So that is customers that we've engaged in 0:12:28.960 --> 0:12:32.120 who have made commitments to us, who have placed orders 0:12:32.120 --> 0:12:36.160 with us. We're planning for a much larger number as 0:12:36.160 --> 0:12:37.320 it relates to the supply chain. 0:12:37.360 --> 0:12:38.160 This is what we should do. 0:12:38.200 --> 0:12:41.160 We always plan for success. So you know, my view 0:12:41.320 --> 0:12:43.920 is it's still very very early in the in the 0:12:43.920 --> 0:12:48.200 innings for AI accelerators and particularly for I three hundred, 0:12:48.720 --> 0:12:51.000 but this is an opportunity for us to you know, 0:12:51.040 --> 0:12:55.200 continue to build a major growth driver as we work 0:12:55.280 --> 0:12:57.719 with our top customers on their AI plans. 0:13:00.600 --> 0:13:04.920 That was a MDCO Lisa Sue. This is talking tech. 0:13:05.000 --> 0:13:08.360 Elon Musk is making moves to deepen his presence in Texas. 0:13:08.400 --> 0:13:11.760 After asking followers on x he plans to bring shareholders 0:13:11.800 --> 0:13:15.800 in for a vote to shift its incorporation from Delaware 0:13:15.840 --> 0:13:19.319 to Texas. This comes after a Delaware judge voided his 0:13:19.440 --> 0:13:22.720 fifty five billion dollar compensation package. And in other news, 0:13:22.880 --> 0:13:25.120 this is something I reported last night. A battery plant 0:13:25.120 --> 0:13:27.800 in Nevada's in the works. According to our sources, the 0:13:27.840 --> 0:13:31.959 plant will use equipment from China's c ATL, otherwise the 0:13:32.000 --> 0:13:34.800 biggest company making sales in the world. The move comes 0:13:34.840 --> 0:13:38.400 mid heightened scrutiny by Washington and collabs with Chinese firms. 0:13:39.800 --> 0:13:41.840 S go quick check on his market, said Apple on 0:13:41.960 --> 0:13:44.040 deck for after the bell, We're up five tens percent, 0:13:44.280 --> 0:13:46.800 but could we have a fifth straight decline in revenue? 0:13:47.000 --> 0:13:49.839 We have seen those sorts of consecutive declines and revenue 0:13:49.840 --> 0:13:51.679 sin's all the way back to nineteen ninety eight. We've 0:13:51.720 --> 0:13:54.120 had four straight. But can they inch out that one 0:13:54.120 --> 0:13:57.040 percent revenue growth that the market is anticipating qualcom of 0:13:57.120 --> 0:13:58.840 by more than four percent. We've got a key conversation 0:13:58.880 --> 0:14:01.640 coming in Cristiano and Man just in a few moments time. 0:14:01.720 --> 0:14:04.040 But this is they managed a guide that Look Mobile 0:14:04.120 --> 0:14:06.720 is recovering in terms of their chips, but what about autos, 0:14:06.720 --> 0:14:09.320 what about connected devices? Not so good? Peloton of by 0:14:09.360 --> 0:14:12.160 twenty three percent after of course, what has been a 0:14:12.280 --> 0:14:16.640 painful set of well lack of growth numbers once again. Meanwhile, though, 0:14:16.640 --> 0:14:18.959 we want to be talking about some other areas of sport, 0:14:19.080 --> 0:14:22.560 not just Peloton exercise area, but what about Wilson tennis rackets, 0:14:22.600 --> 0:14:25.960 what about well areas of well the areas are skiing 0:14:25.960 --> 0:14:28.400 for your boots. A Mere Sports they've just been ipoing 0:14:28.640 --> 0:14:31.720 and look, it's below the marketed range in terms of 0:14:31.760 --> 0:14:33.720 the midpoint, but they are coming out. It seems to 0:14:33.760 --> 0:14:36.600 be pricing in the thirteen to fourteen dollars per share mark. 0:14:36.960 --> 0:14:38.520 Let's talk about what this means to the rest of 0:14:38.560 --> 0:14:40.160 the IPO market and some of the tech names within 0:14:40.200 --> 0:14:43.120 Itationalit in vessects with us. And what's interesting about a 0:14:43.200 --> 0:14:46.640 Mere Sports is that they have big Chinese backers in particular, 0:14:47.280 --> 0:14:49.760 and they have exposure to the Chinese market. What does 0:14:49.800 --> 0:14:51.520 this read across the rest of the IPO market. 0:14:51.640 --> 0:14:54.040 Yeah, a listen, we did see this becoming the biggest 0:14:54.080 --> 0:14:57.240 IPO since we've seen berkenstackt so big consumer names coming 0:14:57.240 --> 0:15:00.120 to market. It's not just about the Chinese consumer. If 0:15:00.160 --> 0:15:01.960 you look at where a bulk of their revenues come from, 0:15:02.000 --> 0:15:05.000 they're very heavily exposed to your Caroline, to the Americas 0:15:05.040 --> 0:15:07.160 as well as the Europe, Middle East and Africa region, 0:15:07.160 --> 0:15:09.600 the EMEA region, And so this is a very large 0:15:09.600 --> 0:15:12.560 global brand going out of public, going public at a 0:15:12.560 --> 0:15:14.360 time where people are kind of worried about the global 0:15:14.400 --> 0:15:16.720 economy and the strength of the consumer. Now, some of 0:15:16.760 --> 0:15:20.880 these brands tend to lean more affluent, like Arctics. Anyone 0:15:20.880 --> 0:15:23.760 who's bought Arctics gear knows that you're paying a little 0:15:23.800 --> 0:15:26.120 more for it than say you are a Patagonia. But 0:15:26.160 --> 0:15:28.000 it shows in the numbers, and they've really been able 0:15:28.040 --> 0:15:31.520 to expand revenue as people get back on the slopes 0:15:31.560 --> 0:15:34.640 and back out there playing sports and traveling around the 0:15:34.640 --> 0:15:38.080 world for a lot of these types of categories here 0:15:38.120 --> 0:15:38.840 in athletics. 0:15:40.560 --> 0:15:43.560 All right, Bloomberg Shnaali Bassite with the breakdown on MS Sports. 0:15:43.560 --> 0:15:46.120 We're still watching that for the opening, but it's certainly 0:15:46.120 --> 0:15:49.120 one to watch and don't miss Lady Shnali's live interview 0:15:49.480 --> 0:15:53.000 with the CEO of MS Sports, James Sheng, which coming 0:15:53.080 --> 0:15:55.320 up in the next hour. Let's keep Agun. The IPO 0:15:55.440 --> 0:15:57.400 landscape is a conversation that we need to have and 0:15:57.400 --> 0:16:00.720 we're joined by Greg Martin, co founder and manager director 0:16:00.760 --> 0:16:04.640 of rain Makers Security. It's a curious one, right sports. 0:16:04.960 --> 0:16:08.880 I'm into my pickleball, so Wilson, that's an interesting read over. 0:16:09.200 --> 0:16:11.480 But the back is of some big Chinese tech names. 0:16:13.120 --> 0:16:15.600 Your view on what this is is a signal to 0:16:15.680 --> 0:16:19.640 the market. This I PO from m A Sports. 0:16:19.800 --> 0:16:22.440 Well, I mean it is. It is a data point 0:16:22.520 --> 0:16:26.320 for sure. You know the brands and a Mare Sports owns. 0:16:26.400 --> 0:16:29.360 You know, our venerable brands have been around for a while. 0:16:29.720 --> 0:16:32.680 The company showed good growth in both revenue and EBAD, 0:16:32.720 --> 0:16:35.160 but it was laiden with debt. It was a highly 0:16:35.240 --> 0:16:37.840 leveraged company. And you know, the market has been punishing 0:16:37.920 --> 0:16:41.000 highly leveraged companies for a long time. Even though rates 0:16:41.000 --> 0:16:43.560 have come down, there's still there's still you know, still 0:16:43.640 --> 0:16:46.800 relatively high, relatively where there were a few years ago. 0:16:47.560 --> 0:16:49.760 And so you know, I think the market is still 0:16:49.800 --> 0:16:54.360 taking away and see approach. I think underwriters clearly misjudged demand. 0:16:54.400 --> 0:16:57.200 In fact, in this case, what was interesting is sixty 0:16:57.200 --> 0:17:00.320 percent of the IPO was bought by insiders. Normally that's 0:17:00.360 --> 0:17:04.760 a really strong signal that should stimulate demand. So this 0:17:04.760 --> 0:17:08.480 this IPO is almost you know, completely carried by inside investors. 0:17:08.720 --> 0:17:12.080 There was very shockingly little outside of interest. So this 0:17:12.200 --> 0:17:14.399 is a data point. It's a different type of company. 0:17:14.400 --> 0:17:17.239 I think when we see some more traditional, you know, 0:17:17.359 --> 0:17:19.520 companies that are you know, maybe a little bit earlier, 0:17:19.600 --> 0:17:22.680 but with real growth stories and unlevered, I think that'll 0:17:22.720 --> 0:17:25.399 be a better benchmark as to how the IPO market 0:17:25.440 --> 0:17:26.400 really is right now. 0:17:27.440 --> 0:17:32.679 Is it a starter gun for the five or so 0:17:33.560 --> 0:17:36.600 actual technology companies that are waiting in the wings as 0:17:36.680 --> 0:17:37.760 IPO candidates. 0:17:39.480 --> 0:17:40.240 Well, I wouldn't. 0:17:40.520 --> 0:17:42.760 It doesn't really feel like a big breath of wind 0:17:43.480 --> 0:17:45.440 when they priced, you know, twenty three and a half 0:17:45.480 --> 0:17:48.359 percent below the midpoint of their filing range. 0:17:48.720 --> 0:17:50.000 We'll see how they trade today. 0:17:50.040 --> 0:17:52.800 I mean, you know, let's let's let's hold out a 0:17:52.920 --> 0:17:54.080 verdict until we see. 0:17:53.880 --> 0:17:54.600 How it trades. 0:17:55.200 --> 0:17:58.200 But I wouldn't say it's it's it's a big starter gun. 0:17:58.440 --> 0:18:00.359 Doesn't mean the IPO market's going to close. 0:18:00.400 --> 0:18:03.480 And we had another sort of poorly performing IPO last 0:18:03.520 --> 0:18:06.040 week with bright Spring that's traded down fifteen percent in 0:18:06.080 --> 0:18:08.520 a week and also price below it's midpoint. 0:18:08.520 --> 0:18:10.680 Of its range. But both of those companies, as I said, 0:18:10.680 --> 0:18:12.000 were highly levered. 0:18:12.040 --> 0:18:15.360 So I don't draw a lot of conclusions frankly from 0:18:15.400 --> 0:18:18.399 either of these two IPOs. I would like to see how, 0:18:18.840 --> 0:18:20.359 you know, I think Reddit might be one of the 0:18:20.359 --> 0:18:22.240 next companies to come out. I would like to see 0:18:22.240 --> 0:18:24.840 how more traditional tech companies that are venture backed, that 0:18:25.200 --> 0:18:28.040 you don't have a long history and have significant leverage. 0:18:28.200 --> 0:18:29.880 I'd like to see how those companies price. 0:18:29.960 --> 0:18:32.760 So I don't think there's a ton to learn right 0:18:32.800 --> 0:18:34.880 now from either of these two IPOs. 0:18:35.280 --> 0:18:38.040 Let's therefore focus in on the reporting that was of 0:18:38.040 --> 0:18:41.199 this week. The Reddit is looking at coming in the 0:18:41.640 --> 0:18:43.960 near future at a trying to get a sense of 0:18:44.000 --> 0:18:47.359 what market capitalization, whether it's five billion or so, which 0:18:47.400 --> 0:18:51.280 is a significant haircut from where they last raised money at. 0:18:51.280 --> 0:18:53.440 But you've been highlighting some of the names that might 0:18:53.480 --> 0:18:55.280 well come to the market as well as Reddit. You've 0:18:55.280 --> 0:18:59.399 got Striped, churo Chime, Data, Bricks Service, Titan. Are we 0:18:59.600 --> 0:19:02.800 likely to say see some pain for previous rounds of 0:19:02.880 --> 0:19:04.880 late stage investors and what recompense did. 0:19:04.760 --> 0:19:06.480 They get it? 0:19:06.720 --> 0:19:09.080 It's a really interesting question. You know, reddis last round 0:19:09.119 --> 0:19:11.880 valuation was ten billion. You know, in sort of the 0:19:11.920 --> 0:19:14.760 height of the market in twenty twenty one. You know, 0:19:14.960 --> 0:19:18.159 I think that given their they performed reasonably well. They 0:19:18.160 --> 0:19:19.879 bolved for IPO at the end of twenty one, they 0:19:19.920 --> 0:19:21.600 said they were going to do a billion of revenue. 0:19:21.600 --> 0:19:24.320 In twenty twenty three they did sounds like by reports 0:19:24.320 --> 0:19:25.920 somewhat closer to eight hundred million. 0:19:26.320 --> 0:19:28.359 So they are growing growing reasonably well. 0:19:28.359 --> 0:19:31.919 But you know, I think that would suggest evaluation, you know, 0:19:31.960 --> 0:19:34.240 in an IPO in the you know, four to six 0:19:34.320 --> 0:19:37.919 billion range. So how do last round investors who paid 0:19:38.000 --> 0:19:41.160 ten billion feel about that. It'll be an interesting discussion 0:19:41.200 --> 0:19:45.320 between last round investors and current investors and potentially you know, 0:19:45.640 --> 0:19:48.720 IPO investors. But this is a problem that's good that 0:19:48.760 --> 0:19:51.080 a lot of companies are facing. We saw, you know, 0:19:51.119 --> 0:19:53.200 Instacart when they went public, they had a thirty nine 0:19:53.240 --> 0:19:55.840 billion dollar you know, last round valuation. Then they went 0:19:55.920 --> 0:19:59.560 public at around ten billion. So this is the medicine 0:19:59.560 --> 0:20:01.280 that I think companies are going to have to take 0:20:01.359 --> 0:20:03.800 to get to the I p O markets. But we're 0:20:03.800 --> 0:20:06.200 going to see a lot of interesting negotiations between last 0:20:06.280 --> 0:20:08.960 round investors and and underwriters at this point. 0:20:09.119 --> 0:20:11.119 And the reason Greg we have your expertise on the 0:20:11.119 --> 0:20:13.840 show is because you are there helping make markets in 0:20:13.960 --> 0:20:17.080 pre i PO names, and I'm interested is to what 0:20:17.240 --> 0:20:19.600 appetite is like at the moment, what sort of valuations 0:20:19.640 --> 0:20:21.440 you're tending to see in these transactions. 0:20:22.800 --> 0:20:25.280 Yeah, I mean we've we've definitely seen a significant drop 0:20:25.280 --> 0:20:28.320 off and valuations over the last couple of years, you know, 0:20:28.640 --> 0:20:32.280 with with a couple of exceptions. Clearly the AI space 0:20:32.960 --> 0:20:37.040 has been a rocket ship, as has the rocket company SpaceX, 0:20:37.520 --> 0:20:39.240 you know, so there's been a couple of exceptions, but 0:20:39.560 --> 0:20:42.879