Tech Triumphs: The 2023 IPO Tales of Arm and Instacart

Synopsis:
In 2023, global IPOs declined, but tech firms like Arm and Instacart stood out. Arm's IPO reached a notable $65 billion valuation, while Instacart navigated valuation challenges to secure $10 billion. Their stories underscore the importance of adaptability in a shifting financial landscape.

An initial public offering (IPO) refers to offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors.

The IPO Landscape:

In the first half of 2023, the global IPO volumes fell 5%, with proceeds down 36% YOY*

The US had its most extensive offering since November 2021*

• Asia-Pacific continues to dominate with an approximate 60% share of global IPOs*

The first half of 2023 recorded 615 IPOs with US $60.9b capital raised, a 5% and 36% decrease year-over-year (YOY), respectively. However, some emerging markets are booming with IPO activities, as they benefited from the global demand for rich mineral resources, their vast population, growing unicorns or entrepreneurial SMEs.

The technology sector has continued to be the leading sector in IPO activities to date in 2023.

Valuation of IPO

The valuation of the IPO is done by its investment bankers or underwriters. These entities go through the company’s financials, like the assets, liabilities, performance, and the ability to generate revenue. The data is carefully analysed over a period and is sent for an audit.

They carefully consider few factors to find a fair valuation for the IPO

In the dynamic world of finance, commodities stand tall as the backbone of global trade. These essential goods, ranging from precious metals like gold to agricultural products like wheat, play a vital role in everyday life and present lucrative investment opportunities.

The top commodities include Crude Oil, Coffee, Natural Gas, Gold, Wheat, Cotton, Corn, Sugar, Silver, and Copper.

What are Commodities?

Commodities are the lifeblood of the global economy. These essential goods, categorised into hard and soft commodities, are crucial for various industries and consumer needs. Hard commodities include natural resources like gold, silver, oil, and copper, while soft commodities comprise agricultural products such as wheat, corn, coffee, and cotton.

What is Commodity Trading?

Commodity trading is a thrilling journey into price speculation and risk management. It involves buying and selling physical commodities or their derivatives on exchanges, such as futures contracts.

The broad categorisation of commodities includes:

Agricultural:

Wheat, corn, soybeans, coffee, and more.

Energy:

Crude oil, natural gas, heating oil, and gasoline

Metals:

Gold, silver, copper, platinum, and more.

Livestock and Meat:

Live cattle, pork bellies, and others.

Why do firms go for an IPO?

The main reason for a company to launch its share in the public is to raise capital for business.

The recovery from the Covid-19 pandemic and the response to the global energy crisis has significantly boosted global clean energy investment.

But the story is more than that.

If the existing investors wish to liquidate their interest partially or entirely, listing on a stock exchange can provide a solution.

A successful IPO provides a company with value, reputation, status, and additional finances for funding any merger and acquisition deals.

Mentioned are the recently popular IPOs released.

The Much-awaited Tech IPO

The entrance of the chip designer and an initial public offering (IPO) that caught the eye of the biggest tech companies, Apple, Samsung, and Intel, all signalled their interest.

It was the ARM IPO

A sharp global growth slowdown and concerns about an impending global recession have driven the decline. However, individual commodities have seen divergent trends amid differences in supply conditions and their response to softening demand.

Source: Statista

Commodity Outlook 2023

Energy: International Energy Agency estimates that around USD 2.8 trillion will be invested in 2023 in this field. More than USD 1.7 trillion is going to clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements, end-use renewables, and electrification. The remainder, slightly over USD 1 trillion, is going to unabated fossil fuel supply and power, of which around 15% is to coal and the rest to oil and gas.

The recovery from the Covid-19 pandemic and the response to the global energy crisis has significantly boosted global clean energy investment.

Gold: In the first half of the year, gold increased by 5.4% in USD. Gold not only contributed positive returns to investor portfolios but also helped dampen volatility throughout H1, especially during the mini-banking crisis in March.

Behind gold’s performance was a combination of factors:

A relatively stable US dollar and interest rates3

Event risk hedging

Continued central bank demand

When bullish on gold, you are essentially making a trade where you are hoping for a weaker USD and lower US yields. We may be past the peak of central bank hawkishness as the Fed and other central banks attempt to decrease the rate of rate increases.

Key food commodities:

Renewal of the Black Sea Grain Initiative continued to help grain exports from Ukraine reach global markets. The initiative, better harvests in other major grain-producing countries, and lower energy prices have helped reduce agricultural commodity prices from their early-2022 peaks. Stock-to-use ratios for grains have fallen but remain adequate. This ratio is a rough indicator of the supply of grains relative to projected demand.

Agricultural and Cereal Price Trends (Nominal Indexes)

Source: Statista

Metals: Metals and mineral prices are expected to remain steady over the forecast period, with upside risks in the long term. Metals and mineral prices gained 10 per cent in 2023Q1, driven by iron ore and tin gains. This reflects optimism for a strong recovery in China and improved global growth prospects at the start of the year. Prices are expected to average 8 per cent lower in 2023, compared to 2022, and decline further in 2024.

The Growth of Commodity Trading

Over the last few years, the commodity trading landscape has witnessed significant growth. Factors contributing to this expansion include globalisation, market liberalisation, technological advancements, and increasing awareness of commodities as a separate asset class.

Globalisation and market liberalisation have opened new markets and avenues for commodity trading, making it a truly global affair. Increased cross-border trade has boosted the demand for commodities, thereby driving the growth of commodity trading.

Technological advancements have reshaped the commodity trading landscape, making it more accessible and efficient. Fintech, machine learning, and AI developments have helped better market analysis and decision-making, thus encouraging more participants to engage in commodity trading.

The Journey Ahead

Trading commodities might seem daunting due to the myriad factors influencing their prices. However, a disciplined approach, thorough understanding, and regular monitoring of market trends can lead to potentially rewarding outcomes.

In conclusion, commodity trading offers an attractive proposition to enhance and diversify the portfolio of the investor.

Start this exciting journey in commodity trading in different platforms like Century Trader App, Trade Room, MT5 Platform, CQG Platform, and TWS Platform.