Tag Archives: IPO

Secretive Crypto Firm Opens Books For 1st Time To Reveal Enormous Profits

Crypto prices surged on Wednesday after Beijing-based Bitmain published its long awaited IPO prospectus, publicly disclosing for the first time just how enormously profitable the purveyor of crypto mining rigs and chips has become since it was founded in 2013 by crypto billionaires Jihan Wu and Micree Zhan. The company, which controls roughly 85% of the market for crypto mining rigs and chips, has seen its profits expand from just $12.3 million at the end of 2015 to more than $700 million during the first six months of 2018 alone. Importantly, its revenues and profits have continued to expand, even as the market for cryptocurrencies has cooled since the start of the year.

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According to MarketWatch, the company’s profits increased by more than 800% from the prior year to $700 million. It revenues, meanwhile, expanded ten fold to $2.8 billion.

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Bitmain was founded in 2013 by Wu and Zhan just as bitcoin was entering the mainstream. The price of a single coin peaked at around $2,000 in November of that year before plunging to around $200 following the spectacular collapse of Mt. Gox in February 2014. At the time, Gox was the largest crypto exchange in the world.

Speculation about an IPO has been metastasizing for years, but many believed that the secretive company would shelve its plans following the $600 billion drop in aggregate crypto valuations.

According to its prospectus, Bitmain’s business model revolves around the design of ASIC chips for both crypto mining and AI purposes. According to a consulting firm cited in the prospectus, Bitmain is one of the largest ASIC-based crypto mining company. Still, the success of its IPO is far from certain. As Bloomberg points out, two of the company’s biggest rivals, Canaan Inc. and Ebang International Holdings Inc., are also pursuing IPOs. And some analysts cited by BBG fear that the company could lose its competitive edge. If it follows through with the IPO (which is a big if considering Hong Kong’s benchmark index has fallen 16% from its January highs), analysts will view the offering as the first big test of investor appetite for crypto firms working on an industrial scale.

But like we said – that’s still a big if.

Read the prospectus below:

Source: ZeroHedge

2017 Was The Biggest “Money For Nothing” IPO Year Since Pets.com

Over 80% Of 2017 IPO’s Had ‘Negative’ Earnings – Most Since Dot-Com Peak

2017 was a banner year for many things – record low volatility, record high complacency, and record amounts of money printed by the world’s biggest central banks, among many others.

All of which heralded the belief in the super-human, ‘can-do-no-wrong’ venture capitalist… and of course the ‘exit’ cash-out moment.

108 operating companies went public in the U.S. in 2017 with the average first day return a healthy 15.0% – well above the average 12.9% bump seen since the start of the 21st century.

But of most note in years to come, we suspect, is the fact that over 80% of IPOs in 2017 had negative earnings… the most since the peak of the dot-com bubble in 1999/2000…

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Put a slightly different way, 2017 was the biggest “money for nothing” year since Pets.com… consider that the next time you’re told to buy the dip. Remember the only reason “the water is warm” is because it has been ‘chummed’ by the the last greater fool ready for the professional sharks to hand their ‘risk’ to…

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Source: ZeroHedge

It’s Over For Tech Start-ups

It’s over for tech start-ups — just look at today’s earnings reports

  • Blue Apron and Snap had disappointing earnings reports on Thursday.
  • Both companies have been targeted by one of the Big Five — Blue Apron by Amazon, Snap by Facebook.
  • Start-ups and investors should look to the margins, or prepare to face the tech giants.

Two newly public tech companies reported earnings on Thursday, and both were ugly for their investors.

Meal-kit preparer Blue Apron missed earnings expectations by a wide margin in its first earnings report since going public in late June. It reported a 47 cent per share loss instead of the expected 30 cent loss, blaming high customer acquisition costs and staffing a new distribution plant in New Jersey.

The stock dropped 17 percent and is now trading at about half its IPO price.

In its second earnings report as a public company, Snap disappointed Wall Street with its user growth numbers for the second consecutive time and fell short on earnings.

The stock dropped about 17 percent after hours. It’s now off about 33 percent from its IPO price.

Blue Apron and Snap have a lot in common. They’re consumer focused. They have devoted followers. They’re losing money hand over fist.

And both were targeted directly and aggressively by two of tech’s biggest companies.

Between the time Blue Apron filed for its intial public offering, on June 1, and when it went public, on June 28, Amazon announced that it was buying Whole Foods. The speculation that Amazon would use the purchase to improve its home delivery service sent demand for Blue Apron’s IPO down, and the company slashed its IPO range from $15-$17 down to $10-$11.

Then, reports emerged that Amazon had already launched a meal kit, which was on sale in Seattle.

In the case of Snap, it was Facebook. Mark Zuckerberg and company had been fighting to blunt Snap’s growth ever since its co-founder, Evan Spiegel, rejected his buyout offer in 2013. It began to see progress with the launch of Instagram Stories in August 2016, which duplicated Snapchat’s own Stories feature. Over the next year, it gradually copied nearly every major Snapchat feature in its own products.

Less than a year after launch, Instagram Stories has 250 million daily users and is growing at a rate of around 50 million every three months. Snap has 173 million and grew only 7 million during the quarter.

The experiences of these companies are discouraging for start-up investors and founders who dream of someday creating an Amazon or Facebook of their own.

The five big tech companies — Alphabet (Google), Apple, Amazon, Facebook, and Microsoft — have attained unprecedented wealth and power, with trillions of dollars in combined market value and tens of billions of dollars in free cash flow.

They also need to satisfy Wall Street’s appetite for growth, which means they have to get new customers or earn more money from existing customers, quarter after quarter, year after year. One way to do that is to expand into new markets.

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They’ll gladly outspend their smaller competitors on product development and hiring while undercutting them on price.

That doesn’t mean curtains for Blue Apron or Snap. Both companies could come up with a leapfrog innovation that catapults them (for a while). Young nimble companies overtake older and slower companies all the time — that’s how the Big Five started. Microsoft disrupted IBM. Google and Apple disrupted Microsoft. And so on.

But companies and tech investors need to be wise about the risks of betting on upstarts that are going up against these giants.

If you hope to make money through online advertising, you’ll be challenging Google and Facebook. If you’re doing anything in e-commerce, logistics or delivery, you’ll run into Amazon. In cloud computing, get ready to see Amazon, Microsoft and Google. If you’re building hardware, Apple likely stands in the way.

It might be better to focus on the niches that the Big Five don’t yet dominate. Their health-care efforts are still in early stages, and none is playing heavily in financial tech, drones or robotics. Microsoft’s power in enterprise software is blunted to some degree by other old giants like IBM, Oracle and SAP, plus newer players like Salesforce.

It’s always been hard to build a successful start-up. With the increasing dominance of the Big Five, it’s harder than ever.

By Matt Rosoff | CNBC