Weekly Market Expectation | 24.08.2020

Weekly Market Expectation 

Starting week: 24/08/2020

Apple is the First US Company to Reach Market Cap of $2 Trillion  

  • Two years ago on August 2nd, 2018, Apple was the first publicly traded U.S. company to reach a $1 trillion market cap. On Wednesday, August 19th, Apple has done it again. It reached the $2 trillion market cap.  
  • Apple’s stock, which will undergo a 1-4 stock split in the coming weeks, has increased 50% in the last 8 months. 
  • Also moving closer to the $2 trillion marks are Amazon and Microsoft who both are valued at about $1.6 trillion. 
  • The Bottom Line: While this mark is largely symbolic, it does underscore CEO Tim Cook’s success at changing the company’s story. Apple now has increased focus on its services business that includes Apple Music, Apple TV+, iCloud, and the App Store. In 2017, Cook outlined his goal to double 2016 services revenue by 2020, which he achieved six months ahead of schedule. With iPhone sales plateauing worldwide, Cook’s pivot has investors valuing Apple less like a hardware company and more like a software one as indicated by Apple’s quickly rising price-earnings ratio, which is now over 33. 
  • Impact on Small to Midsized Businesses: The profound impact on small to midsized business owners in the technology space is that investors usually consider these large-cap stocks to be conservative investments and this new mark set by Apple adds to their credibility. 

Sources: CNBCNYTimes

 

Rise in Biotech IPOs 

  • As per Crunchbase data for venture-backed companies2020 is seeing the highest number of North American biotech IPOs in years so far. Offering sizes are also up for North American companies, with many posting big aftermarket gains to boot. 
  • A few of these biotech deals worth noting are: 
  • New Jersey-based Legend Biotech, a developer of cellular therapies backed by a host of large-cap pharmaceutical companies, raised $424 million in its June IPO and was recently valued at around $4 billion. 
  • Relay Therapeutics, a company applying its expertise in protein motion to the drug discovery process, just raised $400 million in a late July offering. Shares of the Massachusetts company are trading for roughly double the initial offering price. 
  • Pliant Therapeutics, a developer of therapies for the treatment of fibrosis, raised $144 million in its June IPO. Shares of the South San Francisco, California-based company have fallen from late June highs, but are still up more than 50from the initial IPO price. 
  • The Bottom Line: Biotech IPOs are not the only IPOs up in 2020. Venture funding to life science companies is up as well. Furthermore, the search for COVID-19 therapies and vaccines has led to heightened public and investor interest in the inner workings of biotech. There’s good reason to presume that will only intensify should biotech innovation be the force that eventually puts the pandemic behind us. 
  • Impact on Small to Midsized BusinessesFor small to midsized businesses in the biotech and life science space, the recent rise in IPOs not only demonstrates the tremendous growth opportunities of the industry but also the boost for start-ups to eye future offerings.  

Sources: Crunchbase

 

Travel Platform Omio Secures $100M To Push Through Pandemic 

  • Though the outlook travel industry remains gloomy, investors are eyeing the Berlin-based Omio shown through a new $100 million investment. 
  • Omio, the travel platform formerly known as GoEuro, provides a search tool that enables users to find the fastest, cheapestand best travel options. 
  • With the new funding and based on the company’s direction with it—organic growth and potential M&A activities—it looks like the company is poised to acquire similar businesses that may be struggling in the current environment. 
  • The company already has a presence in 37 countries in Europe and North America. Omio launched in the U.S. and Canada in January, offering ticketing for more than 23,000 train and bus routes, as well as flights. 
  • The Bottom Line: Investors are interested in Omio’s business modelCEO and founder Naren Shaam, has written in a statement that based on the unique strength of the Omio products which includes all modes of transport across multiple markets, there will be a continued promising recovery in the business. He plans to address the changing consumer expectations and help lead the travel industry to new and improved standards with new products focused on sustainability.  
  • Impact on Small to Midsized Businesses: For small to midsized businesses in the travel industry, this $100 million investment towards Omio increased the stakes to secure funding and much-needed fresh capital during these unprecedented times. 

Sources: Crunchbase

 

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