Startup investors making hay while the sun shines. Public in blindly exuberant feeding frenzy. But the IPO ETF is down 3.0% today, on too much hot air?
By Wolf Richter for WOLF STREET.
Food-delivery outfit DoorDash sold 33 million shares to institutional investors yesterday for $102 each, raising $3.37 billion, for an initial market value of $38 billion. Shares [DASH] started trading mid-day today, went on to around $190, for an initial pop of 86%, giving it briefly a ridiculous market value of $70 billion, before backing off. In 2018, the company had a “valuation” of $1.4 billion.
But this was only the third-largest public listing this year, behind Bill Ackman’s $4 billion SPAC (special-purpose acquisition company), a blank-check outfit that will attempt to buy something later, and Snowflake’s $3.86 billion IPO.
DoorDash was only one of seven public offerings that started trading today, joining two other IPOs and four SPACs, this being a historic SPAC bubble:
- C3.ai [AI], enterprise AI software: IPO price $42, hit $109 in early trading, for 160% initial pop.
- PubMatic [PUBM], platform for internet ad sales: IPO price $20, hit $32 in early trading for a 60% initial pop.
- Altitude Acquisition Priced [ALTUU], a SPAC targeting firms in the travel industry: Offer price $10, now at $10.25.
- Nebula Caravel Acquisition [NEBCU], another SPAC, this one targeting the tech sector: offer price $10, now at $10.36.
- HumanCo Acquisition [HMCOU], another SPAC, targeting the health and wellness sector: offer price $10, now at $10.74.
- Frazier Lifesciences Acquisition [FLACU], another SPAC, targeting biotech: offer price $10 now at $10.28.
And more offerings are being lined up before the well-deserved holidays, including another mega-deal: Airbnb, whose expected IPO offering price keeps getting raised amid red-hot exuberance for IPOs. The latest expectations of an offering price would value it at $42 billion, and would raise $3.3 billion. The offering is expected to price later today and start trading on Thursday.
The Renaissance IPO ETF [IPO], which attempts to track the Renaissance IPO Index, had roughly tracked the S&P 500 index over the past five years, and in early March had fallen enough to wipe out any gains since the end of 2015. But since March 18 through the close on Tuesday, the ETF has gained over 200%, completely blowing away the also roaring S&P 500 (data via YCharts):
SPACs are having a wondrous year as well. In 2020 so far, 218 SPACs started trading, raising $74.2 billion, over five times the amount raised in 2019, which had been the best year in SPAC Insider’s data going back to 2009:
A SPAC is an alternative to an IPO. The SPAC undertakes a public offering and raises funds by selling shares, typically at $10 each, and warrants. These funds may eventually be used to acquire a startup company, which is the startup’s way of going public. There are still some hoops to jump through, but fewer hoops than in an IPO. But at the time when the SPAC goes public, investors have no idea what it will buy. They’re just giving it a “blank check,” hence “blank check companies.”
Blind exuberance along with a total repudiation of risk, math, and reality are needed to cause IPO prices to soar, which then allow these companies to extract many billions of dollars in cash from the blindly enthusiastic public, thus also allowing long-term and not-so-long-term investors to unload their shares at a huge profit.
This IPO window is now wide open, a rare event, and IPOs are now flying out, giving early and not-so-early investors a chance to exit with huge profits.
Including the DoorDash IPO, but not the Airbnb IPO and the other IPOs still coming this year, the total amount raised by public offerings in 2020 on US exchanges already exceeds $160 billion, a record according to Bloomberg.
But the IPO boom at this very moment is wheezing a bit it seems. The Renaissance IPO ETF is down 3.0% today, on too much hot air? But hey, there’s always tomorrow for the next pop.
Well, not markets. Fed-managed paper exchange. Read… Junk Bond Yields Hit Record Low: Most Distorted Markets Ever
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Imagine an IPO where the company actually makes a profit!
“DoorDash Reports $149M in Losses out of $1.9B Revenue after Releasing S-1 for IPO – Nov 13 2020”
Sandwich delivery shop valued at $67 Billion dollars.
Loaded up on puts today in usual suspects. 3, 6, 12 months out.
MAGA!
Wolf, I meant Microsoft, Amazon, Google, and Alphabet!
Seems like a good day to do it. Good luck!!
Feels that way.
Thanks Wolf!
The funny thing is I don’t even get why Doordash is a long term sustainable business, it’s essentially a food delivery app, Ok, I get the idea of Coivd and delivery, but seriously????
SPAC is nuts, but hey, it’s brought you Nikola, Virgin Galactic, among other companies. I wonder when they are going to insert the letter N between the A and the C
Food delivery is here to stay, but, may not maintain current levels post pandemic. The real question is why a company that doesn’t own anything, but, a name, a boilerplate app, and alot of debt is worth anything. When, if it became successful, alot of new companies without debt, would pop up.
These companies are easy to replicate without the already acquired debt. In the own nothing app industry, creating or growing the industry, doesn’t indicate any measure of future success.
Why the f*ck would anyone ever buy Doordash (or similar) if they can’t be profitable now, in the best possible environment for a delivery company?
The world wonders.
The public stock markets can help the average guy build wealth over time if you have a simple diversified portfolio as Jack Bogle taught.
If you are average guy buying and selling in the stock market is a way for somebody that knows the game to clean you out at the poker table.
I miss the oriental markets and even the European ones where you walk out and buy the fresh stuff to cook today. I could do that now if I wanted to drive a few miles. Now I go once a week.
Doesn’t anyone cook anymore? It’s more healthy and creative.
The delivered stuff is mostly crap. How can a company survive delivering that stuff? Who would invest in that? I don’t understand.
A free pick-up produce market will never be able to be financialized like all the things in the US have been.
Hell, I must be a throwback.
Addendum – That’s why I hang out in immigrant communities. More real. I may just jump over current US culture and go directly to Cyberpunk 2077.
Thanks for the article Wolf. A retired guy like me looks at this stuff and I just shake my head. When will all this craziness explode? Where is all the money coming from to buy into these farces?
Probably in a hyperinflation. Why own paper if you can own stuff. Better to have a house.
Most stocks are owned by rich people who already own a house or several and need to put their money somewhere. Alot of stocks are owned by people who let others manage their money for them, almost always those managing the money for the average jo, don’t have the interest of the average jo in mind.
So right about others managing money seldom have an investor’s best interest in mind. Been there and learned.
I don’t see how investors could keep up will all the IPO action. I can barely keep up with a most fixed income portfolio of CEFs, preferreds, and ETD. All of which move pretty slowly. Retired also I just shake my head.
At some point the tide will go out. Money printing and deficit spending is keeping it all alive, but it will not go on forever. If you are an investor and not a gambler, none of these are in your portfolio. Sure some will get rich riding the wave, but it’s not rational for building retirement portfolio.
Yield-hungry players come from all over the world to surf the wave of hype denying the economic fundamentals.
Short-term trading needs no fundamentals – only volume, volatility and momentum.
But you know what? In the world totally automated by robots, what other occupation will the humans keep, besides the home flipping and the delivery service?
70 billion for a food delivery company. I guess if they make $10 for every meal they only have to deliver 7 billion orders. If every household in the US had a takeaway every day that total could be reached in just a few months.
“Billions and billions (theoretically) served!”
(Cue McDonalds theme music)
Wrong!!! The goal of the business is two fold:
1. Never make money
2. Make enough to justify further stock/bond sales.
As I read through the list I realised not one of those companies provide a necessary service. It’s all fluff. Create a demand……
Food delivery service, health and wellness, Air B&B……. all BS.
Paulo,
The $6 Trillion “American Hot Air Produce”! Has found its home”The great Casino “.
GS is predicting “the market “ will appreciate by an extra %25 in 2021!
You know what that means, the next tranche of Hot Air will duly finds its way to the same home.
So,come on if Jesus’s company is worth upwards of $550 billion now.
you can’t begrudge the likes of door dash and the soon coming ( door hash)! A few billion dollars can you ;)
David –
I ordered a pizza last week while staying in a nice hotel in a great little town in Arizona. Good pie, and I tipped the guy well. The next day, I noticed that there was a $4.00 delivery charge! Probably for a delivery service getting their cut so I ended up paying twice the cost for the pizza.
Live and learn…no mention of the charge up front but that was probably the first, and last time I’ll be hoodwinked when there were other options…
The delivery charge fee was probably mentioned on their website in very small print down at the bottom of the page.
A lot of places implemented a delivery charge a decade ago when oil was hitting 140/barrel and like most temporary things, became permanent.
I am going to call up the business school where I got my MBA in the early 80’s and tell them I want my money back. Why on earth were they teaching us things like Net Present Value, Return on Investment and Earnings per share as the basis of valuation when clearly now none of those things matter a bit. I should have gotten a degree down at the Carnival as it would apply to todays world better.
I got my MBA in 1981 going to night classes while working as an engineer. I’ll bet all my instructors are dead now and are rolling over in their graves. I wonder what subjects are being taught in grad school to get an MBA today? Maybe no one gets one anymore?
Anthony A.
Article yesterday record MBA students this year.
Its interesting to see the dedication and commitments people made to succeed in life only to see who gets the trophy now.
My daughter is in middle “zoom” school and was very upset she had a project on health and invested time, energy and research wrote up 12 page presentation to get “wow that was thorough” from the teacher only to compete with the next student who sang a song, yes a song that wasn’t even hers about health to be received via joy from the teacher jumping up and down and screaming how awesome that was?
My favorite MBA teacher (back in 1980) told us to beware the multinational corporations. They were destinerd to rule the globe. And he was right.
Yeah, no potential student loan problems there with the “record MBA students this year.”
At least it’s not a school for coding….
Nyuk nyuk nyuk. BUY GOLD
Mine was 90. By late 90s I saw value really declining. Now dime a dozen unless from top top tier school. Even then not sure what they are teaching.
Seneca’s Cliff
That means most likely you went to school when USA was still a capitalist country and fundamentals applied
Worst its free now – They still teach that in high quality high schools where kids are telling the teacher your a clown none of that matters on my RH phone account MR teacher, but, but fundamentals..
S,
My guess is that these things are being sold to marginal price setters who have never-in-a-million yrs heard of NPV, ROI, EPS, or, apparently, basic math.
The mystery is how such people manage to exist in any appreciable numbers 40+ yrs after the rise of finance degrees and 20+ yrs after the internet.
Or perhaps it is all being driven by Sith-side MBAs who know they are pushing other people’s money into incinerators but will grab whatever asset mgt fees they can before decamping to non extradition countries.
But, after 2000 and 2009, how are there any appreciable numbers of people blindly entrusting their money to advisors?
And while ZIRP can prod people into madness at bayonet pt…even that has its limits as some/many of these valuations are facially suicidal.
You probably learned about the archaic concept of GAAP.
It seemed like a lot of recent hot stocks dropped in unison today. Maybe the Robinhood’s were raising cash to jump the DoorDash and AirBnB IPOs
Fundamentals don’t seem to matter anymore. It’s all about sentiment. Or I should say Zoomer sentiment. They’re the ones behind these nosebleed valuations.
Zoomer Zuicide.
Which in turn will serve as the entire justification for the next “emergency” round of ZIRP.
I have no problem with herds of RobinHoods, millennials and FOMO investors subsidizing food delivery to people too lazy to go out and get it.
Here in NYC all “to go places” have no customers only delivery persons.
The new addition to the rat race.
Its been such a wacky trend watching the store clerks and managers playing referee with the delivery persons shouting at each other for how this is my delivery not yours tug of war, or hey man how much longer for the order I cant just sit here waiting, and even more wacky is having a birds eye view to the store owner, staff, delivery person who cant make a delivery because a 3rd party delivery service is taking there potential earnings and person sitting behind a screen waiting for the delivery from a stranger who is in a rush to drop off and get the next one.
I’m one of these guys that don’t believe in using any of these services sure I stand there and say maybe I’m a fool lets use the delivery persons time to pick up and deliver but maybe I actually like the idea of going for a walk or physically to a place away from my screen and maybe I don’t like the idea of these no business models playing shakedown to small business owners fees like Grub – how come you cant just pick up a phone and call yourself?
We have cash discounts to combat aggressive 4% credit card fees here (but funny in “parts” of Brooklyn cash is banned) maybe owners should start considering discounts for not using any of these services.
Now whos wacky – I have one of those buy 10 one is free on us cards I just cashed in after a year and the store owner was laughing – I said let me guess I’m the first person to get a freebie – CORRECT!
Just don’t like strangers coming to my door and handing me things, Covid or no Covid. Yeah – get some fresh air.
How much are these delivery guys making each week after expenses? I have never seen so many door dash, grubhub etc in Queens.
I don’t understand this trend in either go to a sit down restaurant or take out the food and bring it home yourself.
Not really related to the IPO, but I avoid all of these services, Doordash, Uber Eats, Grubhub, and the like, and call the restaurants directly. The percentages these services charge the already-struggling restaurants are obscene.
My friend who owns 6 Burger Kings in Houston told me Door Dash gets a 25% discount off list price of the food item. My friend also has to pay a royalty fee of 8% of gross sales to BK franchise management. So he makes no profit from a Door Dash order. Plus, Door Dash orders get priority in the order process over walk ins or through the drive thru.
Exactly. All for running a website and handling billing. My favorite pan-Asian restaurant has its own online ordering site, and gives you 10% off if you order that way. More sites should do that, even if it’s only 5%, to encourage people to avoid the big boys.
After the first DD order, how come restaurants can’t simply cut DD out of the loop by communicating directly with the buyers? (ie, stick a coupon/email come on inside the meal order).
This would seem to be basic blocking and tackling and I don’t think DD could do much about it (rummage through every order?)
Cas127, I asked my friend why he can’t cut DD out and tell them to pound salt. He said that Corporate BK set the deal with DD and his (and all) franchisees must comply or lose business to other fast food vendors.
Apparently, some BK restaurant owners have several hundred locations and they bowed under to corporate pressure on this and all operators had to follow suit.
AA,
I can see where some large chains may have contractual exclusivity agreements with DD (although I wouldn’t be shocked to discover cheating…) but the zillions of indie restaurants are worst hit and 1) I don’t know they would agree to some DD exclusivity clause, 2) they would be most likely to cheat, and 3) they would hardest for DD to catch.
Also, some DD exclusivity clause (in perpetuity?) doesn’t sound like it would survive the legal system.
Especially one that forbids indie restaurants’ *own* direct communications with customers.
It is all rather weird.
Any restaurant owners on the board?
I don’t get it. If the Door Dash orders get a 25% discount, why are they given priority? Shouldn’t they be last in line after full-price customers? Is a bribe or implicit extortion involved somehow?
In cochella valley ( palm desert area, ca ) wal mart uses DD for lots of deliveries. Food prices the same, no delivery charge, option to tip driver. Don’t know otherwise how it works. But usually 1 to 2 hours to delivery from order on web. Often same driver. Works really well. Don’t know where money for DD is made?
Wolf,
Any insight into what the possible appeal of SPACs/blind IPOs might be to institutional buyers (the only ones I think these things are really marketed to)?
I get they have “name” mgt teams…but many/most corporates have crap operational records so that ain’t much of a blanket recommendation.
Maybe it has something to do with the SPAC warrants…as a way to exploit the IPO pop, long before the IPO?
Maybe there is some obscure tax benefit to blind pools?
A 1031 analogue for equity mkt investors looking to get the hell out of a 40 PE SP 500 but having to keep the money parked in “equity”?
Maybe we should just call Goldman and say, “I inherited $25 million shortly after a recent lobotomy. Do you have anything good to buy?”
An aside, in the information age, it is not information that matters, it is the speed of information. Does it really matter if the info you get is right or wrong if you receive it before anyone else? Algorithms set to parse news annoucements belie the point.
Will the restaurant delivery industry be much of a business after this coming June or July or whenever things begin to open up, and we again feel safe going out to dinner?
Wow. You really think this is gonna be ov er by the summer? They really have you fooled.
Things are open outside of a very select group of places. People aren’t going voluntarily.
Uh yes it was already booming well before the pandemic.
As somebody once said: what could possibly go wrong?
Have faith my fellow WolfStreet fans. This is just a crazy cycle that will end soon and the next generation of gamblers will be taken to the wood shed when the music ends.
I’ve heard soon since 2010. Please show scientific proof.
Google the 18 year real estate cycle. It’s pretty clear that this is all based on the credit cycle and more particularly how loosening credit drives land prices. When credit collapses the whole thing implodes. Outside of the 25-30 period (45-75) when government was run competently and the tax structure recycled excess profits into domestic improvements this cycle has held steady since 1800. I believe it was put forth in the 30s but most recently published in the Harvard Review.
Who is going to force this credit cycle to end? Not anyone in the States surely.
you are so wishful thinking. CB has unlimited bullets and can afford missing the target for most of them.
20 DoorDashes = 1 Tesla
3 DoorDashes = 1 Palantir
I Snow = 4 DoorDashes
And that’s just today. Wait until tomorrow
“SPACs are having a wondrous year as well. In 2020 so far, 218 SPACs started trading, raising $74.2 billion, over five times the amount raised in 2019, which had been the best year in SPAC Insider’s data going back to 2009″…..And it will continue to be so because Chairman Powell’s “tool in the tool box” a la $120,000,000,000/per month paid directly to his ultra rich friends.
It ain’t over until TUPAC sings. SPAC just does not cut it. Also wait for FEDPAC. The market will top when a SPAC mistakenly acquires a political PAC ;)
Musk just said that the problem is too many MBA’s. He also threw in some ‘I’m a shirt sleeves guy’ saying he finds it more productive to wander the factory floor than to pore over numbers.
A lot of people are wondering what will be the pin that punctures the biggest bubble since 1929. I suspect it will be Tesla. I seem to remember Elon saying he wasn’t coming back to the market for more cash. Then he just raised another 5 billion. He has to keep coming back. Where else would the company get money?
From the mouth of Elon himself, as he asked the team to ‘save 50 cents here or 20 cents there’: ‘Our share price could collapse like a wet souffle.’
But why pick on Tesla instead of say Bitcoin?
Tesla is a company making a tangible product and can be valued with MBA metrics. BC can’t be. Valuing BC is like valuing art. If people are willing to pay a million for Pollock’s splashes of paint, it’s pointless to argue that this is overvalued. The fact that a lot of people think they can splash paint just as nicely is irrelevant.
There is a limited number of splashes by Pollock, much less than 21 million.
Neither BC or art can be valued using math.
Tesla can be. If investors stopped lending it money and it HAD to be valued with the normal metrics, somewhere between 90 and 95 percent of its ‘value’ disappears immediately.
It happened to Lehman and we know what happened next.
Don’t forget Tesla is going to be included in the S&P soon. Maybe it will blow the later to smitherens, but then again Biden might copy some moves from China and deem Tesla to be one of America’s national champions?
Tesla raises more money by announcing a new model and taking deposits that they use to handle current deficits. It’s a Ponzi.
Warren Buffett’s opinion on BC : “Rat Poison Squared”
Charlie Munger’s opinion on BC: “Trading Turds”
– from Dan Lyons’ book “Lab Rats”
In some ways it’s like the story of needing to be faster than the other guy about out running the bear. At some point the Fed will have to allow capitalism to return and the tide will go out and the fake companies stock will go to zero. Companies with strong balance sheet will live to fight another day.
Wolf, could you please help us with your thoughts regarding Tesla and S&P.
Tsla will be added to s&p on Monday pre market. So all funds will have to buy it on ot before Friday dec. 18th. Which is also option expiration day. I think we will see new highs on the 18th.
DoorDash’s debut on the NYSE today was gobsmacking, valuing the company roughly equivalent to FedEx. Congrats to new multi-billionaire Tony Xu, CEO of a company that suffers from intrinsic business model weaknesses that have plagued the on-demand, last-mile delivery businesses for decades: low productivity, high costs of customer acquisition (for diners and restaurants), low economies of scale, low stakeholder satisfaction and loyalty, intense competition, undifferentiated service, low barriers to entry, and of course chronic losses.
Belying its rosy IPO prospectus, Doordash and its equally challenged competitors have been failing for years to create sufficient value to adequately reward all stakeholders — consumers, couriers, restaurants, and company shareholders — forcing the company to play one off against another, in what has become a long-running pursuit of profitless growth. I fear that we’re entering the dangerous territory of irrational exuberant IPO’s — a mistake we’ve painfully made before.
I really cannot understand how such services employing delivery people can be profitable outside of maybe some affluent areas where people don’t care about the added cost.
A few years ago I was working as a consultant with the domestic postal service in my country, and I recall that they budgeted the all-in employee costs of their delivery people at about 90 USD per hour. To compensate the employee, and to cover administrative overhead, debt service costs and vehicle and insurance costs, and on top of that to charge enough to create a reliable profit margin, I suspect they will have to make some insane number of deliveries per hour for it not to add a cost to the items delivered that most people would balk at and that competitors wanting to grab market share would not quickly undercut.
DD is designed to lose money not make money, in terms of operations. It is a creature of the Venture Capital business.
There is a nice article in the New Yorker Magazine (11/30 issue) last week on this phenomena. Puts WeWork under the microscope, as a case study. ….Designed to lose money on operations while grabbing market share then the IPO occurs and the VC people leave the scene.
I hope this reference to a publication is Ok with this site’s rules.
They don’t employ any delivery people. The delivery people are all independent contractors.
Their cost must still be baked into the price of the service if the company wishes to turn a profit.
Using their own cars, like UBER.
Was reading that it probably was around $4 on average for Amazon to deliver a package. I would assume food delivery is less efficient so maybe $5 – $6. It seems like a niche market to me.
However, things change. I remember when McDonald’s starting the drive thru was revolutionary.
A self described middle class woman from Indian once told me that when it came time for a meal or any other casual shopping need like cigarettes, she just opened the front door and the ten or so street urchins clamored to be the one chosen to be the runner that day. She thought it was an utterly sensible system.
Once this whole house of cards comes down we can do away with the apps and get our children out and about for some healthy exercise.
Wayne Gretzky’s rookie card $1 Million
Bob Dylan’s song book…..$300 Million
flags flags Red flags….
Central Banker’s gift to us all…….
I remember in 1999 start ups without earnings soared in value, then came the crash. Amazon was started in 1994. It did not earn a penny until 2001. Some IPO’s will succeed.
This totally reminds me of the Dot Com Bubble of later 90’s. I remember what happened in March 2000 as I got smashed pretty good. It was a good lesson of irrational exuberance as Greenspan once said, but while the printers are going “brrrrr” this will continue. The Fed is the culprit in allowing all this easy money, but it also shows how fragile our economy still is since the 2008 disaster that interest rates are STILL low.
It was amazing to see PLTR go up 5 points on news of a 44 million dollar government contract. Given that they have roughly 1.6 billion shares outstanding that is about 8 billion in market cap that was added for a few peanuts. ( and erased in the last couple days )
At the moment, there are only 400 million shares (20%) of PLTR that can be traded. Three days after the next CC in January the remaining 1 billion shares will unlock. Should be interesting to watch. Also, senior execs are allowed to trade during the lockout. So, Thiel sold right at the top in the 30s. Who knows, silicon valley has so much money, I suppose they’ll swoop in and buy those shares billion shares at premium prices. A glut of shares from doing 17 years of VC rounds I guess. One more round on the public I guess…
Why wouldn’t airbnb be worth billions? A company providing a service people are terrified to use in a country that can never get rid of coronavirus. Makes total sense.
Will Airbnb transform into an property management company? The maintenance crew gig workers using the app? There must be something they can provide for all those who used to use their site.
The UK is now saying that you should NOT take the Pfizer vaccine if you have severe allergies …. whatever that means. Apparently 2 people got the shot and went into anaphylactic shock.
So the virus wasn’t tested on people with allergies, pregnant women, and children. Well done.
People who have such allergies that they die from eating peanuts or getting a bee sting should not take the vaccine. 99% of people with allergies will not have to worry. Nothing new.
This is what it looks like when the wealthy goes in to grab a piece of the trillions of excessive capitals, eventually they are going to dump it on the greedy ordinary to make the wealth transfer… and the rich gets richer, the poor bites the dust? When Biden gets in, will he throw in more cash like expected by the optimistic crowd? Will the senate block it to fight with the Dem? What’s the economy going to look like when covid is over? Will stagnation appear again and drag the market down for a decade like 50 years ago?
Tessssla’s best play will be when Elon wraps up SpaceX, Solar panel town and Tessssla into 1big package and unloads it onto Uncle Sam as the ultimate replacement for NASA with potential ability to take man to Mars….??????
….to be administered under the auspices of the United States Space Postal Service, as in keeping with the situation.
File it together with the rushes into companies undergoing bankruptcy proceedings. Norwegian Air shares have more than doubled the past couple of days after entering bankruptcy protection in both Ireland and Norway. The shares will very likely end up being worth just about zero, but in the meantime I guess there are plenty of bag holders to harvest for the unscrupulous.
Everyday there are more and more signs that the true value of the dollar is cratering. Real estate values are obscene, valuations given to questionable startups is over the moon, the quality of takeout food has gone down but the price has gone up – along with similar quality/price ratios in plenty of other areas. Homeowners have seen a trillion dollars in valuation growth since the pandemic started. All of this points out the one thing that very few people have said. Dollars are buying less. Money is worth less. Meanwhile, every 30-seconds another American dies from a disease that never should have gotten the foothold it did – but hey, gotta re-open, right? This is a genocide situation combined with hidden hyperinflation and ultimately, that doesn’t even matter to Joe or Bob or Carol or Mike because in the time I spent writing this, the four of them died of Covid-19.
I would separate real dollars (earned and held) from fake dollars (extended on promises to pay back). The fabulous fakes have increased prices and reduced values, but this is dependent upon expanding the credit lines to maintain the level of spending. Temporarily, dumping cash into people’s bank accounts might be covering up a tightening of credit if that is in play. Sure, the free income crowd believes this can simply go on endlessly, but is that true? And wage increases are largely eaten up by the RE jumps so that can’t possibly take care of the cash gap from falling credit. Of course this is the real reason they are trying to shove electro-plastique living down the throats of those who are still resisting that dumb culture…if they run out of suckers it tumbles taking down spending and causing real dollars to become valuable, something the Fed works at avoiding 25 hours per day. All the other goings-on is just slight of hand to confuse everyone.
I am setting up a new SPPS* (ticker VAPR, pronounced vay-purr) that will only invest in SPACs. Qualified, unqualified, and brain-dead investors welcome.
* Special Purpose Ponzi Scheme
Good one, Lisa. It will soar 70% from its initial asking price at the open.
Is this second level marketing?
Once again, we need the British military band at their Yorktown surrender to the Yanks to play: “THE WORLD TURNED UPSIDE DOWN”. This is strictly Story Investing where greed and fear of missing out overpower any rationale analysis of how the company is going to generate positive cashflow. Can these companies live off of ultra-cheap Equity Financing indefinitely without generating enough cash to pay their annual obligations and operating expenses??? ME THINKS NOT.
Although history does not repeat itself to the letter, today’s IPO and SPAC markets remind me of the late 1990’s with anything related to tech and the internet was as hot as a shooting star. The NASDAQ was then the posterchild for RAMPANT SPECULATION (and Greenspan’s infamous phrase of IRRATIONAL EXUBERANCE) with a doubling & tripling in prices within just a few years. AND WE ALL KNOW HOW THAT STORY TURNED OUT. Wasn’t it a 70% decline from the top??
Today’s new issue market is just another sign of a pending market top. When money is practically free to the speculator and he or she cannot earn an inflation beating return anywhere else (they haven’t looked hard enough!!), then the Utility of Money goes into the crapper. I am sure some of this red hot money is borrowed, so leveraging up a portfolio very late in the cycle where the Fat Lady (just an expression!) is clearing her voice to sing is a recipe for FINANCIAL DISASTER. There will be a surplus of Walmart Greeters from this crazy investing crowd.
A Fool and His Money Are Soon Parted. One phrase could not be more true today in U.S. equity markets. For those with nerves of steel and deep pockets, IT IS THE SHORTING OPPORTUNITY OF A LIFETIME.
When I read about these SPAC’s the first thing I thought of was a line in Charles McKay’s Extraordinary Popular Delusions and the Madness of Crowds promoting “A company for carrying on an undertaking of great advantage, but no one to know what it is,” during the South Sea Bubble. The mastermind of this brilliant scheme managed in five hours to take in deposits valued at 2000 pounds before closing up shop and absconding to the Continent the next day.
There’s nothing new under the sun.
“but no one to know what it is”
Yep, me too…any BA in business or MBA has heard the story.
That’s why I asked Wolf if he knew of any inside baseball, f*ckery pokery behind SPACtacular 2020 (tax dodges, IPO gaming, etc.).
Given historical knowledge it is very hard to believe that institutional investors are hysterically clamoring for blind pools (unless there is a locked down gimmick involved).
“Food delivery, why didn’t I think of that!”…says nobody…
In China, a food delivery app makes sense especially with the high population density in any given area. The chance that multiple orders will need to be delivered to the same area is VERY high. In the States through where people are more spread out especially after Covid, every single delivery will cost dearly.
Correct me if I’m wrong but Doordash (DD) appears to work the same way as Uber and Lyft.
The business model is solid insofar as the doordashers are paid nothing and our miserable “Great Recession II economy”, will provide millions of homeless workers who live in their cars.
What the valuation does not take into account is that DD workers may unionize in the future, or that state governments may classify them as actual employees. Not to mention the fact that although there is a model, anyone with a pulse can replicate it. This has Blue Apron written all over it.
Mediocre company with a lame vision. Compared to Bill Gates or Steve Jobs these people are essentialy being handed billions for doing nothing. Even Tesla looks really good compared to DASH.
We have way too much money in this system.
I had a wine delivery scumbag dump a broken wine bottle that was slated for deliver to someone else, onto my property. He left the packaging. I tracked it down to a company Drizzy.com in Boston, Mass. They said the distrubuter who was located in my area hires people right off the street to do these deliveries in unmarked cars. They are not bonded nor insured. A heard a lot of them are ex cons. The company said they were not responsible for the behavior of these contractors. Why would anyone want these people to come to their door? How lazy can you get!
Why? Because of more important considerations………
“Nobody will miss out on a memory because they were schlepping to a liquor store.” – Cosmopolitan
And stoners must have their “essential” products available (for tax monitorization) – As Weedmaps Will Go Public Through Silver Spike SPAC Merger
IF Hunter Thompson were alive, wonder what his thoughts would be on the creative financing s#it show that comprises America.
i love delivery apps! Back in august I received an offer for $20 in credits as I had not used their services for a while. I promptly ordered 2 burrito bowls from Chipotle (pickup) for a net cost of $1. Received a similar offer a week later and ordered a burrito for around 70¢.
Thank you shareholders for the free meals :)