Today's big stories

Airbnb has filed paperwork for an initial public offering
There's one particularly big risk to your investments in the upcoming US election – Read Now
Ecommerce giant Alibaba reported strong second-quarter results

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Love Thy Neighbor

What’s Going On Here?

It’s about to be a beautiful day in a whole new neighborhood for Airbnb: the vacation rental marketplace filed papers for its long-awaited initial public offering (IPO) this week.

What Does This Mean?

The filing was confidential, so we won’t get to take a look at the company’s much-discussed financials for a while yet. But it goes without saying that the pandemic-driven collapse in vacation travel has hit the company hard: it shored up its finances in April by raising $1 billion, and let go of 25% of its staff a month later.

Now though, as travel starts to come back(ish) and staycations boom in popularity, Airbnb looks like it’s on surer footing – hence the IPO. Its filing suggests the rental marketplace could “go public” by the end of the year, but there’s no detail on how many shares it’ll sell and at what price. And given that Airbnb went from a $31 billion valuation in 2017 to just $18 billion in April, those are the questions on every investor’s lips.

Why Should I Care?

For markets: Roommate wanted.
Airbnb was reportedly considering a “direct listing”, which partly cuts investment banks out of the process and doesn’t actually raise any money from the sale of new shares. An IPO, on the other hand, typically sees banks “underwrite” and “stabilize” new shares, which means they buy up any unwanted ones to keep their price from falling too far. Given the still-uncertain future of travel, Airbnb might’ve opted for the latter so it’d have flexibility to raise more money if it needs to – as well as a safety net in case markets get volatile.

For you personally: Renter’s remorse.
Just a heads up: the average day-one rise of a new stock in the US is 18%, but most of that benefits existing investors as new ones drive up the stock price (tweet this). What’s more, 60% of IPO stocks will be trading below their initial price five years down the line.

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2/3 Premium

The Election Effect

What’s Going On Here?

Fresh data out on Thursday underlined the precarious state of the US economy right now – and looking ahead, the result of elections due in just 10 weeks’ time may be crucial.

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3/3

Smug Life

What’s Going On Here?

Come at Alibaba, bro: the internet giant announced better-than-expected second-quarter earnings, even as its rivals try to knock it down a peg or two.

What Does This Mean?

There’s a good reason Alibaba is known as China’s answer to Amazon: it likewise depends on bustling ecommerce and cloud computing segments for the majority of its income. It’s fortunate, then, that ecommerce’s revenue – which has now fully recovered from the pandemic’s impact – was 34% higher than the same time last year, while cloud computing’s was up 59%. And just like long-time rival and second fiddle JD.com, Alibaba partly had a rise in customer numbers to thank for the revenue bump. That’s where the similarities stop, mind you: Alibaba boasts 742 million customers on its platform, where JD.com only has 420 million.

Why Should I Care?

The bigger picture: British re-failers.
The second quarter’s shown that the biggest retailers in both the US and China have held up pretty well during the pandemic. But where Chinese retail sales data has recently fallen short of expectations, America’s spending is back to pre-pandemic levels. Still, at least neither’s in the UK’s position: sales are improving, sure, but several major retailers are reportedly hanging by a thread. Case in point: 136-year old retailer Marks & Spencer said this week it’d be cutting 7,000 jobs, while prestigious department store chain John Lewis announced plans to permanently shut eight of its stores.

For markets: Investors are coming, look busy.
Hang Seng Indexes Company announced this month that it’ll be adding Alibaba’s recently locally listed shares to the key Hong Kong stock market index. When it does, investors and exchange-traded funds that track the index will be forced to buy the ecommerce giant’s shares – which Goldman Sachs analysts reckon will create $1.2 billion worth of new investment. That might sound promising, but it won't make much difference to Alibaba's current $700 billion valuation.

Spot opportunity: Why now’s the time to invest in China.

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💬 Quote of the day

“Life is not like water. Things in life don’t necessarily flow over the shortest possible route.”

– Haruki Murakami (a Japanese writer)

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😭 In case you missed it

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📚 What we're reading

Pandas do love a belly rub (National Geographic)
Would you want to live for a million years? (Scientific American)
Inside Disney World during a pandemic (Rolling Stone)

Finimize - 🏘 Airbnb's new neighborhood

Today's big stories

Love Thy Neighbor

What’s Going On Here?

What Does This Mean?

Why Should I Care?

The Election Effect

💪 Protect your money with Privacy

Smug Life

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🏀 We have hoop dreams

😭 In case you missed it

Older messages

📈 US stocks hit record high

😡 TikTok: Oracle vs. Microsoft

😶 Billionaire biotech forgets about vaccines

👾 Apple versus Fortnite

🎉 New Events: The Rise Of Young China, Self-Taught Investor & Is The Worst Over For Oil?

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