IPO watch: Volvo Cars seeks $23bn valuation on public launch


In one of the largest IPOs of 2021, Volvo Cars is going public. Here’s what you need to know about the Gothenburg carmaker’s stock market debut.

Volvo IPO

Volvo Cars hopes to raise $2.9bn in initial public offering

Chinese-owned Volvo Cars will make its public stock market debut on October 28th, 2021.

The company has set its sights on a $23bn valuation when it debuts on the Nasdaq Stockholm stock exchange in ten days.

In its prospectus, Volvo said it would be offering shares priced between 53-68 krona ($6.12-7.86) per share, initially offering $2.9bn worth to investors. Volvo Cars’ offering is made up of 367,647,058–471,698,113 newly issued common class B shares.

The transaction, including expected converted investments by investors AMF and Folksam, was seen resulting in a free float of about 19.5% to 24.0%, Volvo said.

That would give its owners, Geely Motors, a substantial ROI. The Chinese firm picked up Volvo from the ailing Ford back in 2010 for a cool $1.8bn.

Part of Volvo’s potential valuation is the fact it owns 50% of EV spinoff Polestar. Polestar is preparing its own IPO, which is expected to place a $20bn valuation on the premium electric car brand, due to launch in 2022.

Geely and Volvo also jointly own 8.2% of Volvo Trucks.

Volvo enjoys strong brand recognition and sales in key markets, such as China, mainland Europe, the UK, and the US.

The Swedish carmaker sold 770,000 vehicles last year, spearheaded by the popular XC family of SUVs. If it can pull of that $23bn target, Volvo would sit firmly alongside premium contemporaries like Daimler and BMW in terms of market cap, if not cars sold.

BMW shipped 2.3m cars worldwide in 2020. Mercedes-Benz shipped 2.2m.

Volvo’s electric outlook

Raising capital to develop its EV product offer and production capabilities is one of the key reasons behind this IPO. Volvo is aiming for annual car sales of 1.2m per year – an increase of 56% against 2021’s numbers.

“Volvo Cars believes that its unique structure and focused strategy makes it one of the fastest transformers in the global automotive industry, with mid-decade ambitions dedicated to electrification, sustainability and digitisation.” the Swedish company said in a statement.

As with pretty much all legacy car manufacturers, Volvo is looking to electrify its line up away from the Polestar brand. New electric models from Volve Cars will be badged as such. Think of Polestar as the premium of the premium. Volvo Cars are more in line with midrange BMW models, like the 1, 2 and 3 series, although it does offer models that can compete in the saloon and SUV/Crossover classes.

Could Volvo become one of the top EV stocks to watch?

The float, if successful, will help fund Volvo’s electric ambitions.

By 2030, Volvo aims to have removed internal combustion engines from its range. It expects 50% of total sales to come from electric-powered vehicles by 2025. In an interesting move, the auto manufacturer also expects 50% of its sales to come from online via the Volvo website by this time too rather than bricks-and-mortar dealerships.

“There is no long-term future for cars with an internal combustion engine,” Henrik Green, Volvo Cars’ Chief Technology Officer, said earlier in the year. “We are firmly committed to becoming an electric-only car maker and the transition should happen by 2030.”

September saw global Volvo sales fall 30% year-on-year. Supply chain chaos, chipset shortages, and worker COVID-19 breakouts all impacted manufacturing and delivery at this time. Volvo has said all workers have been given vaccines in its Southeast Asia factories, but it will still be hampered by semiconductor supply constraints.

IPO Watch: Warby Parker & Olaplex line up public debuts


Two fresh IPOs together worth a projected $13bn come next week as Warby Parker and Olaplex start public trading. 

IPO trading – stocks to watch 

Warby Parker 

First up is Warby Parker which is expected to launch on the New York Stock Exchange on September 29th. 

The direct-to-customer e-commerce eyewear brand is forecast to garner a $3bn valuation when its IPO lands. 

Recent guidance and results for 2021 so far suggest Warby Parker is in rude health. Its first half results saw a 53% year-on-year increase in revenues for a total of $270.5m. The business did incur a $7.5m loss during trading but said this could be attributed to Covid-19 lockdowns at the tail end of 2020. 

Full year projections put revenue growth at 35-36% for 2022. Revenues are forecast to clock in at between $532-537m. Additionally, the business is hoping to expand its bricks-and-mortar offer in order to support its core online business by opening 30-35 new stores. That would bring the total number of locations up to 160. 

According to co-founders and joint CEOs Neil Blumenthal and Dave Gilboa, Warby Parker is targeting 25% revenue growth for 2022. 

In a statement, the pair said: “The outlook we’ve provided underscores our belief that delivering remarkable customer experiences, making a positive impact on all stakeholders, and living our core values will lead to continued long-term sustainable growth.” 

There’s plenty of reasons to be optimistic – but as ever there are lots of reasons to be cautious too.  

The e-commerce format where Warby Parker made its mark is not the most lucrative for eyewear manufacturers against the broader industry. According to Forbes, online sales of eyewear and glasses has grown at a CAGR of 4% against 18% for e-commerce as a whole. 

It seems shoppers may still prefer to purchase their eyewear in person. It is true that Warby Parker is committed to growing its physical store numbers, as mentioned above. There are still question marks over the sustainability of its online business, despite recent successes.  

Is a $3bn valuation an over optimistic target? 

The US eyewear business is notoriously fragmented. As a $35bn a year industry, it’s big fairly big business, but it’s made up of a wildly different variety of independents, mom-and-pops, and smaller firms. No one business has really been able to dominate. Of course, that does present an opportunity for Warby Parker which it is not doubt keen to grasp. 

At the moment, Warby Parker controls 1% of the market space. Vision Source and Luxotica control 8% and 6% of the market respectively.  


Olaplex, the premium hair products brand, is forecast to launch its own public offer September 30th. 

Despite challenges thrown up by the COVID-19 pandemic, the business reported a 90% increase in sales across 2020 for a total of $282.3m. EBITDA rose 98% over the same period to reach $199.3m. 

In its IPO filing, Olaplex reported first half net sales had reached $270.2m. Things are looking good for the Advent Capital-owned luxury brand. 

The filing also revealed Olaplex’s initial offer plans. 67 million shares priced between $14 and $16 each to retail customers once public. At the top end of the range, Olaplex would raise $1.07 billion in the IPO.  

Olaplex was acquired by Advent International in 2019. The filing shows Advent would control 79.6% of the combined voting power of our common stock, or 78.2% if underwriters exercise their options in full. Prior to the offering, Advent owns 89.3% of shares, followed by 6.8% owned by Mousse Partners. Emily White, the President of Anthos Capital, owns 3.6% of shares. 

Wise IPO: everything you need to know


Fintech firm Wise is planning its initial public offering. No date has been set yet, but with the original May deadline now passed, observers think the IPO is coming very soon. Here’s what to watch out for. 

Wise IPO: what to watch 

What is Wise? 

Previously known as TransferWise, Wise is an online money transferring service. The company was founded in London by Estonians Taavet Hinkirus and Kristo Käärmann in 2010 and has since expanded considerably.  

Wise allows customers to send money abroad at real mid-market exchange rates, as opposed to higher bank-transfer rates, plus low fees. 

As an example, Wise charges less than $8 in fees for sending $1,000 to Europe. Going via a bank would cost $26. This is done on a peer-to-peer basis.  

February’s rebranding away from TransferWise lets us see where Wise wants to go. It is no longer just for money transfers.  

Wise now offers a multi-currency account, designed to make it easier for people to relocate and let them pay with local currencies when ordering goods online, alongside a debit card service.  

How is Wise performing financially? 

As of 2020, Wise’s revenues were totalling $300m annually, with a 70% year-on-year growth rate. It boasts over 10 million customers worldwide and employs around 2,200 workers in 11 countries.  

Ahead of the IPO, Wise is valued at an estimated $5bn – but the float may take its valuation as high as £9bn according to some of the more over-optimistic forecasts. 

Looking at financials, Wise appears very healthy. 

Its pre-tax profit for the financial year ended March 2020 to £20m from £10m in 2019. As mentioned above, revenues also jumped 70% between 2019 and 2020.  

Profitability within the tough challenger bank and money transfer spheres suggest Wise’s upper management is pursuing a successful strategy. Impressive y-o-y revenue growth and an expanding customer base reinforce this. 

Because Wise straddles two worlds, challenger banks and money transferring, it has a variety of competitors. In terms of money transfers, Western Union, MoneyGram, WorldRemit, Remitly, and PayPal are Wise’s chief rivals. In the alternate challenger banking space, Wise’s competitors include Monzo, Revolut and Starling Bank. 

Against its rivals, Wise has been praised for the transparency of its fees structure. Offering true mid-market exchange rates is also a big selling point for the brand, reflected in the growing volume of transactions handled by the firm. Wise processed £67bn worth of customer payments in 2020 – nearly double 2019’s £36bn. 

Where will Wise be listed? 

Wise is likely to go public via a direct listing on the London Stock Exchange. This is something of a coup for the LSE, as it could imply incoming rules changes, such as the introduction of a dual-class share structure and lower float requirements, are enticing more tech firms to list in London.  

The London-listing Wise is pursuing will be one of the largest European tech listings since Spotify went public in 2018. 

A direct listing means Wise will be offering shares via the London Stock Exchange without the need for any intermediaries. There are several potential reasons why Wise is pursuing such a strategy. Wise could be looking to avoid share dilution, for example, or might be wanting to avoid lock-up periods. It may be a money-saving move too, as direct listings tend to be cheaper than IPOs. 

Commentators believe Wise could be pursuing a dual-class share strategy – something that has proven unpopular on other London tech listings, such as Deliveroo. Will it prove the same for Wise? 

When will the Wise IPO go live? 

As touched on earlier, the original May 2021 IPO deadline has passed. Even so, the market is expecting Wise to go live on the London Stock Exchange very soon. 

Open your account to start trading Wise IPO CFDs as soon as they go live. 

Trading carries risk of capital loss. Only start trading if you are comfortable taking any potential losses. 

Coinbase says Q1 earnings jumped to $1.8bn ahead of Nasdaq direct listing

  • Coinbase says revenues up nine-fold in Q1 
  • Company updates investors ahead of direct listing on Apr 14th 
  • Net income seen at $730m to $800m 

Coinbase estimated first quarter revenues rose by nine times year-on-year to $1.8bn as the company provided updated guidance for 2021 ahead of its stock market debut next week. 

In Q1, management estimated the number of verified users rose to 56 million with active users – so-called monthly transacting users (MTUs) – of 6.1 million 

Assets held on the platform was estimated at $223 billion, representing 11.3% of crypto asset market share, which currently stands at about $2 trillion. This includes $122bn from institutions 

Trading volumes rose to $335 billion, while total revenue jumped nine-fold to approximately $1.8 billionNet income surged from £32m last year to somewhere in the range of $730 million to $800 million. The company also reported adjusted EBITDA of approximately $1.1 billion. 

Coinbase also provided guidance for the rest of the year based on three scenarios based on the number of monthly transacting users (MTUs). 

In its SEC filing in February the firm reported total revenues rose to $1.3bn in 2020 from $533k in 2019, while net income rose to +$322k last year vs a loss of $30k in the prior year. The number of users had risen to 43m. We looked at this filing in detail here.

Meanwhile on Wednesday, DA Davidson raised its price target on the stock to $440 from $195 previously. 

Whilst Coinbase has clearly been riding the crypto boom to date, the reliance on the crypto market and on prices makes this stock as risky as the crypto assets it deals in. 

Read our 5 things we learned from the Coinbase IPO

Robinhood IPO: what you need to know


Millennial-friendly, no-fee trading app Robinhood is preparing an IPO. Here’s what you need to know before it goes public. 

What you need to know about the Robinhood IPO 

What is Robinhood? 

If you’ve not been keeping up with the Reddit-led, meme stock headlines. Robinhood has been one of the key players in the GameStop short squeeze. 

It’s a US-based stock trading app, currently used by 13 million users. According to its website, Robinhood is on a mission to “democratize finance for all”. It hopes to create and guide a new generation of US investors, through no commission, fractional share dealing, and an easy-to-use application. 

Robinhood has been a bit of a market disruptor.  Since launching in 2013 and growing its user base, it has forced other US brokers to lower their commissions to remain competitive, and even instigated mergers between previous leading brokers, such as Morgan Stanley’s acquisition of E*TRADE in October 2020. 

Many Reddit traders have chosen to use Robinhood to buy and sell the latest meme stocks, like GameStop and AMC. While Robinhood halted trading of these stocks during the height of the GameStop frenzy, it is subsequently offering them again at the time of writing.  

It’s also been the app of choice for many investors interested in Dogecoin, a cryptocurrency that originally started as a joke but is gaining traction as a legitimate digital token. 

What is Robinhood’s business model? 

Instead of charging commissions, Robinhood makes its money through payments for order flow. This practice involves directing investors to different parties, in this case market makers. While payments for order flow is usually priced per-share, Robinhood instead employs a fixed rate per-spread. It’s higher than the rate its competitors receive.  

Robinhood generated $180m from trades in Q2 2020.  

These “behind-the-scenes” activities are banned in the UK and Europe. Regulators in these geographies believe it creates a conflict of interest, as firms are thought to offer direct client trades to partners providing the biggest kick-back, rather than ensuring clients receive the best available price. 

Other revenue sources include Robinhood’s “Gold” service, which offers users additional benefits for a $5 monthly fee, margin lending, and securities lending. 

Part of the company’s remit is to try and capture a younger audience than other brokers. This appears to be working. The average age of Robinhood investors is 31 years old. Millennial investors are apparently particularly drawn to Robinhood’s sleek, easy-to-use app interface. 

How much is Robinhood worth? 

We won’t know the full Robinhood valuation until its IPO launches, but we can look at its capital raising efforts to date to get a clearer picture. 

Since being founded in 2013, Robinhood has raised $2.2bn. Also, like many competitor investment platforms, Robinhood has seen a surge in demand during the pandemic, as retail clients head into the stock market on hopes of a later market recovery. 

The timing of its IPO, sometime in Q1 2020, means Robinhood is banking on capturing as much of this pandemic-led investment activity as possible, and could boost its valuation.   

Forecasts have placed Robinhood’s IPO valuation at $12bn – in the same league as what Morgan Stanley paid to acquire E*TRADE, although E*TRADE did control assets worth north of $3 trillion at the time of the acquisition. That’s roughly 30 times the value of assets Robinhood currently controls. 

Robinhood does, however, outstrip competitor platforms when it comes to daily average revenue trades (DARTs). Here’s how the app ranks against other US brokers: 

  • Robinhood – 4.3m DARTs 
  • TD Ameritrade – 3.8m DARTs 
  • Interactive Brokers – 1.9m DARTs 
  • Charles Schwab – 1.8m DARTs 
  • E*TRADE – 1.1m DARTs 

Is this sustainable? Bear in mind Robinhood’s user base contains a lot of users coming from /r/Wallstreetbets recommendations and hope to capitalise on events like the GameStop short squeeze. Market volatility is also likely to return to normalcy post-pandemic, which could put a slow down on client acquisition and their trading activity. 

Challenges for Robinhood 

Sustaining its enormous growth will be a top challenge for Robinhood for reasons explained above. But there are other issues at play here. 

One is transactional value and encouraging users to invest more capital into the platform. For instance, Robinhood’s average client balance is $1,500. Its competitor Charles Schwab’s average sits at $135,000. 

This might be a problem of perception. Robinhood’s entire ethos is based around it helping the “little guy”: younger investors with limited capital to share, who are potentially more susceptible to tips from sources like /r/Wallstreetbets subreddit.  

When Robinhood withdrew AMC and GameStop trading at the height of the squeeze, it also drew criticism and investor outrage. Subsequent outages have also resulted in lawsuits. It may have to pay $26 million in regulatory fees resulting from the Reddit-led fiasco.  

Investors may also lose trust in Robinhood. In December 2020, Robinhood paid $65 million to settle charges from the feds that it misled users about how it was making money and failed to deliver the best execution it had promised on trades. Not a great look. 

As younger investors become wiser to the ways of the market, and better informed, Robinhood may suffer. And, despite bursting onto the scene, its competitors have lowered their commissions, so Robinhood may not be the cheapest option out there anymore. 

It’s certainly an interesting IPO to watch. Robinhood as made great ground over the past decade, growing its user base from 100,000 investors to the 13 million it boasts today. Can it keep going? 

The Robinhood IPO is expected to launch in Q1 2021. 

Open an account to begin trading Robinhood CFDs as soon as they become available 

Airbnb IPO coming this year: what you need to know


Airbnb is pressing ahead with its stock market listing with the company filing its S-1 form at the US Securities and Exchange Commission and a planned IPO date before the end of 2020. Will it be another unprofitable dog of a tech unicorn or a GOAT (Go Out And Travel) favourite in 2021?

The company reports it made a profit of $219 million in the third quarter, on $1.34 billion in revenue. In a filing on Monday, November 16th, management explained this was down fractionally from the $227 million in profit during the same quarter last year, which was its only profitable quarter in 2019, coming on $1.65 billion in revenue.

However, the onset of lockdowns due to the pandemic made for a very challenging first half of 2020 for Airbnb as it chalked up net losses of $916 million on revenue of $1.18 billion.

The company, which plans to list on the Nasdaq under the ticker ABNB, provided detailed customer and revenue figures. Here’s a snapshot of the key metrics and financials.

Pandemic booking trends

Gross nights and experiences booked

  • Material contraction on a year-over-year basis, with a low in April 2020, down 72% year over year.
  • From April through June 2020, the company saw a steady rebound in gross nights and experiences booked before cancellations and alterations, which were down 21% in June relative to the same period in the prior year.
  • From July through September 2020, gross nights and experiences booked have been stable, down approximately 20% relative to the same period in the prior year.

Cancellations and alterations

  • Dramatic increase after the COVID-19 outbreak, as guests were either unable to travel or uncomfortable doing so.
  • While the number of nights and experiences cancelled in January 2020 was 13% of the gross nights and experiences booked that month, the number of nights and experiences cancelled in March and April 2020 exceeded the number of gross nights and experiences booked during those months.
  • From April to September 2020, cancellations and alterations as a percentage of gross nights and experiences booked initially declined significantly and then have remained relatively stable for the past several months.

Nights and Experiences Booked

  • Negative in March and April 2020.
  • By May 2020, gross nights and experiences booked had begun to recover, while cancellations and alterations began to fall, resulting in a return to positive Nights and Experiences Booked from May to September 2020.
  • From July through September 2020, Nights and Experiences Booked have been stable, down 28% relative to the same period in the prior year.
Monthly Nights & Experiences Booked Trends
2019 2020
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
In millions (except percentages)
Gross nights and experiences booked 30.5 28.3 28.4 38.3 32.8 19 8.7 16.4 26 28.3 26 23.9
 % YoY Change 31% 30% 35% 25% 17% -42% -72% -50% -21% -19% -21% -23%
(-) Cancellations and alterations 3.9 3.6 3.9 5 4.9 23.1 9.4 7.2 6.5 6.6 5.4 4.4
Cancellations and alterations as a % of gross nights and experiences booked 13% 13% 14% 13% 15% 122% 108% 44% 25% 23% 21% 18%
Nights and Experiences Booked* 26.6 24.7 24.5 33.9 27.9 -4.1 -0.7 9.2 19.5 21.7 20.6 19.5
 % YoY Change 31% 30% 35% 22% 12% -114% -103% -68% -31% -28% -28% -28%

Airbnb define Nights and Experiences Booked as net of cancellations and alterations.

Gross daily rate

  • Represents GBV per Night and Experiences Booked, all before cancellations and alterations. This measure is a useful proxy for the average daily rate (ADR) trend over this period; because the net metrics reflect elevated cancellations and were negative in March and April 2020, the net daily rate was not meaningful for those periods.
  • The year-over-year increase in gross daily rate from May to September 2020 was driven by faster recovery in North America and Europe, the Middle East, and Africa (EMEA) during this period, which have historically higher daily rates than Latin America and Asia Pacific.
  • The gross daily rate was also impacted by a mix shift toward entire home listings in non-urban destinations, which have higher daily rates.

Gross Booking Value before cancellations and alterations

  • Followed a similar trend to gross nights and experiences booked, materially declining on a year-over-year basis between March and May 2020.
  • GBV before cancellations and alterations recovered in June 2020, growing 1% year-over-year driven by the increase in gross daily rate.
  • From July through September 2020, GBV before cancellations and alterations has been stable, down less than 10% compared to the same periods in the prior year.

Gross Booking Value

  • Declined and rebounded as a result of the trends described above.
  • In September 2020, GBV was down 17% on a year-over-year basis, less than the 28% decline in Nights and Experiences Booked due to the growth in gross daily rate.
  • GBV reflects bookings made in a period for future nights or experiences and is a leading indicator for revenue, which is recognized during the period that stays and experiences occur.
Monthly Nights & Experiences Booked Trends
2019 2020
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
$ in billions (except percentages & gross daily rate)
Gross daily rate $110.20 $110.23 $110.36 $122.51 $122.63 $104.35 $91.69 $135.73 $145.72 $133.84 $132.24 $127.84
 % YoY Change -1% -1% 0% 0% 1% -12% -21% 18% 27% 19% 21% 18%
Gross Booking Value before cancellations and alterations 3.9 3.6 3.9 4.7 4 2 0.8 2.2 3.8 3.8 3.4 3.1
 % YoY Change 13% 13% 14% 26% 19% -49% -78% -41% 1% -4% -4% -9%
Gross booking Value 26.6 24.7 24.5 4.2 3.5 -0.9 -0.6 1.1 2.7 2.8 2.7 2.5
 % YoY Change 31% 30% 35% 24% 15% -127% -119% -69% -17% -19% -14% -17%

Airbnb define Gross Booking Value as net cancellations and alterations.


Year Ended December 31st Nine Months Ended September 30
2017 2018 2019 2019 2020
In thousands (except share amounts)
Consolidated Statements of Operations Data
Revenue $ 2,561,721 2,651,985 4,085,239 2,698,239 2,518,935
Costs & expenses
Cost of Revenue 647,690 864,032 1,196,313 902,695 666,295
Operations & Support 395,739 609,202 815,074 600,788 548,369
Product Development 400,749 579,193 976,695 693,796 690,677
Sales & marketing 871,749 1,101,327 1,621,519 1,184,506 545,510
General & administrative 327,156 479,487 597,181 490,262 421,082
Restructuring charges n/a n/a n/a n/a 136,969
Total costs & expenses 2,643,083 3,633,241 5,306,782 3,872,047 3,008,902
Income (loss) from operations -81,362 18,744 -501,181 -173,604 -489,967
Interest income 32,102 66,793 85,902 68,661 23,830
Interest expense -16,403 -26,143 -9,668 -6,801 -107,548
Other income (expense), net 6,564 -12,361 13,906 42,130 -115,751
Income (loss) before income taxes -59,099 47,033 -411,703 -69,614 -689,436
Provision for income tax 10,947 53,893 262,636 253,187 7,429
Net loss $ -70,046 -16,880 -674,339 -322,081 -696,865
Net less per share attributable to Class A and Class B common stockholders, basic & diluted $ -0.27 -0.07 -2.59 -1.24 -2.64

What we have learned from the filing

  • Revenue growth was declining before the pandemic – from around 80% in 2016 to just 32% in 2019.

Management conceded: “Our revenue growth has slowed in recent periods and there is no assurance that historic growth rates will return. Our year-over-year growth rate in revenue decreased in 2019 as compared to 2018 and also decreased in 2018 as compared to 2017.”

  • Regulation is becoming more of a headache as cities clamp down on short-term lets.

Management say: “Laws, regulations, and rules that affect the short-term rental and home sharing business may limit the ability or willingness of hosts to share their spaces over our platform and expose our hosts or us to significant penalties, which could have a material adverse effect on our business, results of operations, and financial condition.

“We are subject to a wide variety of complex, evolving, and sometimes inconsistent and ambiguous laws and regulations that may adversely impact our operations and discourage hosts and guests from using our platform.”

  • It’s never been profitable

“We have incurred net losses in each year since inception, and we may not be able to achieve profitability. We incurred net losses of $70.0 million, $16.9 million, $674.3 million, and $696.9 million for the years ended December 31, 2017, 2018, and 2019, and nine months ended September 30, 2020, respectively. Our accumulated deficit was $1.4 billion and $2.1 billion as of December 31, 2019 and September 30, 2020,” the filing states.

  • It’s not doing as badly as peers – other booking sites have fared worse – the pandemic has made the Airbnb private getaway more appealing than staying in a hotel/resort. However, Experiences have not done as well as hoped – there is no breakout of the figures for this despite launching four years ago.

But…the outlook is much stronger for 2021 now that vaccines are coming. Airbnb could benefit from the GOAT trade.

For more information on how to trade IPOs, please see our guide.

JD.com raises $3.9 billion in 2020’s second-biggest IPO so far


JD.com, the second-largest online retailer in China, has raised $3.9 billion during its secondary listing on the Hong Kong Stock Exchange.

The company is pricing its IPO at HK$226 per share, HK$10 below the top end of its indicated range. JD.com already trades on the Nasdaq.

Shares will start trading in Hong Kong on Thursday 18th – the same day as the company holds its massive annual Anniversary Sale (known as 6.18). Last year JD.com reported sales of almost $30 billion – this week’s event will be a key test of demand as China continues to recover from lockdown and battles a fresh outbreak of Covid-19 cases.

The JD.com IPO follows a public offering by NetEase which raised $2.7 billion. Together the two tech giants have raised $6.6 billion – almost double what the rest of the Hong Kong IPOs have raised all year.

NetEase shares ended their first day of trading up 5.7%, closing HK$7 higher than its offer price of HK$123.

Hong Kong IPOs get a boost on US-China tensions

Increasing tensions between Washington and Beijing have helped stoke the Hong Kong IPO market recently. The US House of Representatives is considering a bill that would mandate US-listed Chinese companies to undergo financial audits, which could result in a number of companies being delisted.

This has prompted many companies whose shares are already traded in the US to seek a secondary listing in Hong Kong as a precaution.

NetEase acknowledged the impact that rising tensions could have in its IPO filings. Baidu founder and chairman, Robin Li, also acknowledged recently that his company could consider a secondary listing in Hong Kong if the US government tightens regulations surrounding Chinese firms.

More IPOs on the way

This could be the start of a reawakening for the IPO market in Hong Kong. China Bohai Bank Co is looking to raise over $2 billion, while both Smoore International Holdings and SK Biopharmaceuticals are expected to raise around $800 million.

Upcoming Hong Kong IPOs

  • JD.com
  • China Bohai Bank
  • SK Biopharmaceuticals
  • Hygeia Healthcare Holdings
  • Kangji Medical Holdings
  • Smore International Holdings
  • Zhenro Services Group

European equities rally as euro, pound crack lower

Morning Note

European markets were on the front foot on Friday morning despite a weak cue from the US and Asia as currency weakness and expectations for yet lower interest rates fuelled risk appetite. Asian shares plumbed a three-week low but European bourses are trading up again. The FTSE 100 continued the good work from Thursday to hit 7400 and make a clear break out of the recent range. With the move north a decent case to make for the 7450 area, the 61.8% retracement of the August retreat.

The S&P 500 declined quarter a percent to 2977.62 against a back drop of political uncertainty in Washington. Markets won’t like these impeachment hearings but ultimately the risk of Mr Trump being ousted by Congress appears very slim indeed.

Another stinker of an IPO – Peloton shares priced at $29 but were down $2 at $27 on the first tick and ended 11.2% lower at $25.76. First day nerves maybe but this stock has fad written all over it. Think GoPro.

On the matter of dodgy prospectuses and dubious IPOs… S&P has downgraded WeWork debt another notch, and slapped a negative outlook on for good measure.

FX – the euro now looks to be on the precipice, on the verge of breaking having made fresh two-year lows on EURUSD. Whilst the 1.09 level may still hold, the banging on the Sep 3/12 lows at 1.09250 has produced a result with overnight tests at 1.09050. We’ve seen a slight bounce early doors in Europe but the door is ajar for bears. The Euro is under pressure as ECB chief economist Lane said there is room for more cuts and said the September measures were ‘not such a big package’. How much more can the ECB feasibly do?

Sterling is tracking lower against the broader moves in favour of USD. There is a chance as we approach crunch time on Brexit that GBPUSD pushes back to the lower end of the recent range, the multi-year lows around 1.19. Bulls have a fairly high bar to clear at 1.25. At time of publication, the pound had cracked below yesterday’s low at 1.23, opening up a return to 1.2280 and then 1.2230. The short-covering rally is over – time for political risk to dominate the price action.

Bank of England rate setter Saunders made pretty dovish comments, saying it’s quite plausible the next move is a cut. In making the case for a cut now it conforms to the belief in many in the market that the Bank is barking up the wrong tree with its slight tightening bias in its forward guidance. The comments from Saunders are clearly an added weight on the pound.

On Brexit – there’s a lot of noise of course and all the chatter is about MPs’ use of language and how could Boris possibly still take the UK out of the EU by October 31st without a deal. The fact is he can and he intends to. There is some serious risk that GBP declines from here into the middle of October on the uncertainty and heightened risk of no deal. This would then be the make or break moment – extension agreed and we easily pop back to 1.25, no deal and it’s down to 1.15 or even 1.10.

Data to watch today – PCE numbers at 13:30 (BST). If the core CPI numbers are anything to go by, the Fed’s preferred measure of inflation may point to greater price pressures than the Fed has really allowed for. Core durable goods also on tap, expected -1.1%. Plenty of central bank chatter too –de Guindos and Weidmann from the ECB follow Lane and then Quarles and Harker from the Fed. Should keep us busy this Friday.

Oil is in danger of entirely fading the gap back to $54.85, the pre-attack close, having made a fresh low yesterday at $55.40. There’s still a modicum of geopolitical risk premium in there though, but bearish fundamentals are reasserting themselves over the bullish geopolitics. WTI was at $56.10, ready to retest recent lows at $55.40. Bulls require a rally to $57.0 to mark a gear change. However we are now touching the rising trend support line drawn off the August low at $50, so could be finding some degree of support.

Gold is pretty range-bound now, but we are seeing it test the $1500 level which could call for retreat to near $1482, the bottom of the recent range and key support.

WeWork sets the bar lower as existing investors push to postpone IPO


Co-working firm WeWork is on the brink of IPO, but it seems like We might have some problems.

It seems that being a fast-growing tech company isn’t enough anymore; investors need a well-defined path to profitability as well.

Which has been a real kicker for the likes of Uber, Lyft, and IPO-hopeful WeWork, none of which is anywhere near actually making a cent.

WeWork was last valued at $47 billion during a private round of funding. But now it’s rumoured that WeWork will be seeking a $20 billion valuation or lower at IPO – and that’s if it even goes ahead at all.

Do existing investors want to halt the IPO?

Last week it was reported that CEO Adam Neumann had flown to Tokyo to meet with SoftBank Group – one of the company’s biggest investors. Amongst the ideas floated was the possibility SoftBank could provide another capital injection so that the IPO could be postponed until 2020.

Whether SoftBank will or not remains to be seen. The company might be feeling stung at having committed to investing $4 billion at a valuation of $47 billion when there is no chance WeWork will hit that kind of market capitalisation when it goes public.

SoftBank has to be careful. The company’s largest investment was in Uber – pouring billions into yet another dire tech company float would not reflect well on a company look to raise money to launch a second tech-focussed Vision Fund.

It isn’t just in conversation with SoftBank that the idea of shelving the IPO has been raised. Some existing investors, perturbed by the reception the IPO prospectus has garnered are suggesting putting things on hold.


Executives at WeWork showed they are not entirely unaware of the market reaction to unprofitable tech companies. Both Uber and Lyft are well below their initial offer price. But they were wrong if they thought even more-than-halving the valuation would be enough to placate concerns –especially when similar-sized competitor IWG is profitable and yet only valued at $4.6 billion.

There are other issues bothering investors anyway, who have concerns over the way the business is run, it’s structure, and the huge concentration of power.

WeWork’s share structure includes three classes; CEO Adam Neumann owns 2.4 million class A shares (<1.5%), 113 million class B shares (98%) and 1.1 million class C shares – that’s all of them. Class A shares give one vote, class B and C each grant 20. Neumann’s total holdings equates to 2.27 billion votes.

The co-founder occupies a large amount of space in the Risks section of the company’s S-1 filing due to potential conflicts of interest. Neumann has, or had, significant operational interest in several of the locations WeWork leases. He also charged the company almost $6 million to use the We trademark (WeWork is owned by The We Company – the structure is very complicated and has created further unease amongst investors).

WeWork scrambles to avoid becoming the next IPO flop

At the start of the year, Uber and Lyft seemed like exciting prospects. Markets looked likely to get swept along by the spiel of these cash-burning, lossmaking companies. But it seems Uber and Lyft failed to provide a convincing response to the profitability question.

It shouldn’t be a surprise, then, that when WeWork released its prospectus, complete with an admission it may remain unprofitable ‘for the foreseeable future’, investor response has been cold.

WeWork seems to have realised that its current offering isn’t enough to get the market onboard. But with expectations that its roadshow could begin this week, does the company have enough time to fix such deeply-entrenched issues as corporate structure and distribution of power, let alone its financial outlook, in time to avoid becoming 2019’s next big IPO flop?

Morning Note: Market selloff, Uber tanks again, Vodafone grasps the nettle

Morning Note

It was another, more brutal sell-off on Wall St led Asian shares lower overnight, setting us up for a nervy session in Europe. Futures right now look positive but we may well see selling pressure re-emerge.

SPX closed 2.41% lower, taking it back to March levels. This was its worst decline since the turmoil at the start of January. The Nasdaq suffered its worst day since December as tech stocks were the worst hit from the fallout of the US-China spat. The Dow shipped over 600 points, to end around 25,324, with some of its biggest hitters affected by the China trade story directly (Boeing, Apple).

Risks for now seem very much skewed to the downside until we see some kind of equilibrium achieved again. The market is seeing the window for a deal causing tightly, although with tariffs not taking effect yet we could yet see some improvement in relations. If this is the third shoulder of a giant triple top in the market there is a hell of a long way to go lower. But we are probably not at that stage yet. The Fed remains on side – bets on a cut this year have shot up from around 50/50 to around 75%.


Gold spiked higher as a risk-off proxy. Prices which had dithered around $1280 level for a while drive up through the big round number at $1300 and was last just down a shade beneath this.

Oil had risen amid escalating tensions in the Persian Gulf. However the reality of the trade war began to hit home later and crude prices slid again. Brent, which had leapt clear of $72, was last holding just shy of the all-important $70.60 level. This is a level we have talked about time and time again and it is proving something of magnet for Brent right – a decisive break in either direction could signal a fresh direction.

FX markets are completely ignoring the whole stooshie, although there a touch of movement in the Chinese yuan, but not a lot. Little movement for now as central bank liquidity is onside to keep volatility low. BoJ now also talking more stimulus should consumer prices lose momentum.

Uber stock reels post-IPO

It was a bruising session for Uber with shares down by more than 10% on the day. Adding insult to injury, they fell further after market to trade below $37.

Following the Uber and Lyft debacles, there are now questions over whether some remaining unicorns choose to lust this year. The likes of Airbnb and WeWork could decide to pull their planned IPOs until there is more certainty.

Moreover current market conditions do not seem favourable for listings right now and companies may prefer to wait for a rebound in the broad market before listing. That said, it’s too easy to lump all IPOs into the same basket and see a read across.

There have been notable positives in the latest round of IPOs – Beyond Meat, Zoom and Levi’s shares rising firmly from the strike price post-IPO. Perhaps it’s just a case of good old fashioned stock picking and valuations after all.

Vodafone cuts dividend

Vodafone has bowed to pressure and cut its dividend. Or rebased to use the euphemism. The dividend was cut from 15 eurocents to 9, which is a very hefty cut indeed and investors will punish this move. Unlike some notable others, though, Vodafone has grasped the nettle and chosen to put the future of the business ahead of short-term returns to yield hungry investors. Now it’s not great news, but at least it shows the new CEO is willing to think longer term and is seeking to manage the debt.

On top of controlling debt, one of Vodafone’s key problems is the very large investment needed for 5G rollout. Auctions in Italy and elsewhere (Sweden, Australia) indicate the enormous costs and further divestments to shore up the dividend whilst still investing enough in capex seems inevitable. It is very likely Vodafone will flog its towers as part of this strategy, or to use another euphemism in today’s update – monetise. Vodafone also announced that it will sell its NZ business for $2.2bn in a move that frees up some cash.

Today’s results were full of euphemisms actually. The raw results showed a 6.2% decline in revenues and a loss for the year of €7.6bn. But instead management is directing us to ‘alternative performance measures’, which show far healthier EBITDA growth of 3.1% and group services revenues rising by 0.3%. Caveat emptor. In addition to the 5G cost, Vodafone faces a number of competitive headwinds in Italy, Spain and South Africa. There’s a lot of restructuring going on amid big changes in the industry with 5G. Management seems to be grasping the nettle and should be allowed time to deliver on the strategy


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