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ANALYSIS

Reddit Gears Up for 2024 IPO Amid a Tech-Listing Drought

Reddit, the online discussion forum, is advancing plans for an IPO in March 2024, according to insider sources. This move follows years of contemplation and a stalled and confidential filing in 2021 due to unfavorable business climates. The proposed IPO, paving the way for potential IPOs like Stripe and Shein, will sell approximately 10% of Reddit's stock, though the target valuation is still unset.

📝 Analysis: We believe that one of the main reasons for the timing of the IPO decision is…upgrade to Limited Partner to read our view.

MARKETS

Growth Stocks Set to Flourish if Interest Rates Dip Below 4%

⚡️ Quick: With potential interest rate cuts in 2024, low-interest environments could favor growth stocks over value shares, reversing a long-established trend since the Great Financial Crisis.

Interest rates impact consumer expenses and investment outcomes, notably the performance of growth and value stocks. Growth stocks thrive in low interest rate environments, while value stocks often lead when 10-year Treasury rates surpass 4%. With the U.S. Federal Reserve likely to implement rate cuts in 2024, growth-focused investments are poised to gain favor, potentially revising the long-standing dominance of value shares since the Great Financial Crisis.

💡Why this matters: If we enter a sub 4% interest rate environment, growth stocks should lead again. This could spur a resurgence in more risky, expansion-minded business strategies, changing market dynamics. Companies may pursue aggressive growth, leveraging cheaper credit to fund expansion and outperform value-oriented strategies.

EARNINGS

Netflix Q4 Earnings Outshine Wall Street Projections

Netflix achieved a Q4 record with 13.1 million new subscribers, pushing their total membership to 260.28 million globally.

• Q4 revenue grew 12% to $8.83 billion

• The company inked a 10-year deal with WWE

• Q4 saw the release of 99 original seasons

• Plans in place for extensive 2024 program lineup

• Believes it has a lot more room to grow, especially in the subscription advertisement sector

Storytel Aims for Profitability, Strong Q4 Boosts Revamped Financial Targets.

After strong Q4 2023 earnings, Storytel is focusing more on profitability and planning workforce reductions and company write-downs.

• 13% workforce reduction planned

• Non-cash write-down of 632 MSEK

• Upgrades in 2026 financial targets

• Strong performance in Q4 2023

• Increase in profitability and enhanced cash flow

NORDICS

FDJ Proposes €2.45bn Takeover of Kindred To Create European Gaming Titan

FDJ has proposed a €2.45bn acquisition offer to Kindred Group, which Kindred "unanimously" recommended for approval by shareholders. The deal is perceived as being value-adding for FDJ's shareholders, potentially leading to over 10% growth in dividends per share starting 2025. However, it relies on 90% of Kindred shareholders accepting the offer. FDJ also anticipates the deal will enhance its strategy to become a significant operator in Europe's gaming sector.

ECONOMICS & MACRO

Global Trade Bottlenecks: Shipping Costs Surge Amid Canal Disruptions

Increased shipping costs, due to bottlenecks in the Suez and Panama canals, may lead to higher inflation rates. The Panama Canal Authority has restricted passage due to low water levels, and Houthi militant attacks on the Suez Canal's access route have escalated shipping prices. These factors worry policymakers, as a similar trend occurred in mid-2020, contributing to a surge in inflation. However, unlike the previous period, no pressure is felt elsewhere in the economy, leaving business leaders more relaxed.

Fed's Bostic Cautions on Slower Inflation Progress Amid Global Tensions

Federal Reserve President Raphael Bostic indicates a slower progression of inflation to anticipate, warning that it may decelerate towards the central bank's 2% target. Bostic highlighted concerns over recent events in the Suez Canal, which may influence shipping costs and impact the cost structure for businesses.

Possibility of Immediate Fed Rate Cut Dwindles Amid Market Shifts

A previously expected March 2024 rate cut by the Federal Reserve now seems less certain, with market predictions wavering due to strong growth data and non-committal messaging from Fed officials. Estimated odds for a March rate cut declined from 81% in January to a current 60%. Confidence for cheaper money hinges on further evidence of sustainable low inflation.

📝 Analysis: Investors should approach the current market with…upgrade to Limited Partner to read our view.

TECH

Microsoft's AI-Powered Bing Struggles to Dent Google's Dominance

Microsoft's integration of OpenAI's ChatGPT into its Bing search engine last February led to an initial increase in usage, with US monthly active users more than doubling to 3.1 million in 2Q2023. However, Bing still barely made a dent in Google's global search market dominance, ending 2023 with a mere 3.4% share. Despite Microsoft's optimism around generative AI changing search habits, Google remains the standard tool for online information queries.

Meta's $47B Metaverse Venture to Fully Materialize in a Decade: Exec

Despite nearly $50 billion in losses, Meta continues to significantly invest in the metaverse, expecting a ""fully realized vision"" within a decade, said Meta executive Nicola Mendelsohn at the World Economic Forum. The tech titan's umbrella encompasses AI and hardware for metaverse as well as Meta's VR operations.

US Court Resumes Sales Ban on Apple Watch Series 9, Ultra 2 Over Patent Infringement

The US Court of Appeals reinstated a sales ban on Apple Watch Series 9 and Ultra 2, citing patent infringement on blood oxygen features held by Masimo. Apple intends to disable the contentious feature via a firmware update, thus allowing continued sales of the watches within regulatory guidelines. Existing owners are unaffected.

STARTUPS & VENTURE

SoundCloud Eyeing $1B Sale Amid Ongoing Profitability Struggles

SoundCloud, the music streaming platform majority-owned by Raine Group and Temasek Holdings, is reportedly scouting for sale opportunities, with a valuation reaching $1 billion. Continual struggles with profitability and multiple waves of layoffs have marred the company's progress since the funds' investment. As part of this strategic shift, SoundCloud's COO and CFO Drew Wilson is reportedly exiting after three years. This development reflects the struggling trend among independent music streaming platforms, further underscored by Bandcamp's recent sale and layoffs.

AI-Powered Brex Cuts 20% Staff, Announces Executive Reshuffling

AI-powered fintech firm Brex will cut a fifth of its workforce, affecting 282 employees. This decision marks the second round of layoffs for the company, following a purge of 136 staff in 2022. In a move towards "high-velocity," Brex has promoted Camilla Morais to the COO role, while previous COO Michael Tannenbaum transitions into a board position. Affected staff will receive severance packages and job support assistance.