🤩 IPO Season Is Back

+ Echelon Of Earnings From Broadcom, Costco & Adobe

December 12, 2024

Good afternoon! Rupert Murdoch's real-life "Succession" drama took center stage in a Nevada courtroom, where a commissioner rejected his attempt to amend a family trust in favor of his eldest (most conservative) son,The ruling labeled Murdoch and Lachlan's efforts a "carefully crafted charade," leaving control of the $17 billion media empire unresolved.

Behind closed doors in one of Nevada’s most private legal systems, the battle wasn’t about money but power. The trust, which gives Murdoch’s eldest four children equal votes, is now a powder keg of diverging political and corporate views. As the next steps play out in secrecy, the ruling has left the family to wrestle not just with their father's legacy, but with how much of "Succession" was art imitating life—or vice versa.

MARKETS

  • Wall Street hit a speed bump Thursday as inflation data came in hotter than expected, shaking up investor confidence. The Nasdaq dropped 0.66%, slipping below 20,000, while the S&P 500 fell 0.54%—its fourth loss in six days. The Dow wasn’t spared either, shedding 234 points for its sixth straight decline.

  • Adding to the unease, unemployment claims rose more than expected, hinting at cracks in the labor market. With inflation pressures lingering, markets are left questioning what’s next for interest rates and the broader economy. The rally that’s defined much of the year now faces a tough test.

STOCKS
Winners & Losers

What’s up 📈

  • ServiceTitan soared 42.25% in its public market debut on the Nasdaq, raising $625 million in its IPO. ($TTAN)

  • Warner Bros. Discovery surged 15.43% after announcing plans to split its cable TV business from its studio and streaming wings. ($WBD)

  • Celsius Holdings rose 7.49% on a JPMorgan "overweight" rating, citing strong energy drink demand. ($CELH)

  • Riot Platforms climbed 4.76% after activist investor Starboard Value took a stake, pushing for the company to diversify into big data-center users. ($RIOT)

  • Beverage Stocks like Coca-Cola, PepsiCo, and Keurig Dr Pepper gained over 1% after Deutsche Bank upgraded the sector to "buy," expecting stronger impulse purchases and restaurant traffic. ($KO, $PEP, $KDP)

What’s down 📉

  • Adobe tumbled 13.69% on disappointing full-year revenue guidance, amplifying investor concerns over AI investments. ($ADBE)

  • Agios Pharmaceutical fell 11.99% after disclosing liver injuries in two patients during a drug trial. ($AGIO)

  • FTAI Aviation declined 9.75% following news that Wellington Management Group reduced its stake in the company. ($FTAI)

  • Nordson Corp slid 8.19% due to weak full-year revenue guidance, citing challenges in farm equipment demand. ($NDSN)

  • Oxford Industries dropped 6.61% after issuing weaker-than-expected fourth-quarter earnings guidance. ($OXM)

EARNINGS
ServiceTitan Shares Soar 42% in Blockbuster IPO

The IPO drought may finally be lifting.

ServiceTitan, a cloud software provider for home and commercial trades, made a blockbuster debut on the Nasdaq under the ticker $TTAN, with shares soaring 42% from their $71 IPO price to close at $101.

The move gave the Glendale, California-based company a market cap of nearly $9 billion, offering a glimmer of hope for a tech IPO market that’s been in hibernation since 2021.

From Plumbers to Public Markets

Founded in 2007 by two sons of tradesmen, ServiceTitan offers software tools to help electricians, plumbers, and landscapers manage scheduling, payments, and customer service. The company serves over 8,000 customers and generated $614 million in revenue for fiscal 2024, up 31% year-over-year, though it still operates at a net loss of $195 million.

The successful IPO reflects strong investor confidence in the company's growth potential, particularly as demand for its cloud solutions climbs. ServiceTitan’s cloud infrastructure business saw 52% year-over-year growth, cementing its position as a rising star in the tech sector.

Navigating IPO Challenges

ServiceTitan’s road to the public markets wasn’t purely strategic—it was partially financial. A prior funding round included steep "compounding ratchet" terms, pushing the company to go public to avoid dilution penalties.

he IPO raised $625 million, with a portion allocated to buy back preferred stock and pay off early investors. Despite the urgency, the IPO’s reception suggests strong market enthusiasm, with retail investors driving early gains.

What’s Next for IPOs?

ServiceTitan’s debut isn’t just a win for its founders or venture backers like ICONIQ Growth and Bessemer Venture Partners—it’s a potential green light for other fintech and tech startups waiting in the wings. Analysts see the IPO as a sign that investor appetite for high-growth tech stocks is returning, even amid tighter monetary conditions.

For ServiceTitan, the next chapter includes leveraging its IPO proceeds to fuel growth, pursue acquisitions, and edge closer to profitability. As co-founder and CEO Ara Mahdessian noted, “Investors value durable growth and cash flow positivity—qualities we’re proud to deliver.”

With the Nasdaq Composite closing at record highs and tech giants thriving, ServiceTitan’s IPO success might just be the spark needed to reopen the IPO floodgates.

NEWS
Market Movements

  • 🚨 Trump rings NYSE bell to cheers of ‘USA’: President-elect Donald Trump rang the NYSE opening bell, flanked by family and business leaders. Trump touted plans for economic incentives and tax cuts while promising a manufacturing-focused corporate tax rate of 15%. The event drew Wall Street heavyweights, including Goldman Sachs’ David Solomon and Citigroup’s Jane Fraser. ($GM)

  • ⚖️ Nvidia lawsuit moves forward after SCOTUS decision: The Supreme Court allowed a securities fraud lawsuit alleging Nvidia misrepresented its revenue dependency on cryptocurrency mining to proceed. ($NVDA)

  • 💳 Walmart’s fintech startup reaches $2.5B valuation: Walmart-backed financial services startup One secured $300M in funding, reaching a valuation of $2.5B by leveraging Walmart’s customer base. ($WMT)

  • 🤖 Google introduces Deep Research AI tool: Google launched Deep Research, an AI tool for Gemini subscribers that generates detailed web-based reports for enhanced productivity. ($GOOGL)

  • ⚡ Nio targets 20,000 monthly deliveries by 2025: Nio plans to double sales by March 2025, implementing cost controls to achieve 20,000 monthly deliveries of its Onvo brand. ($NIO)

  • 💊 Eli Lilly partners with Ro for affordable weight-loss drug: Ro is collaborating with Eli Lilly to offer Zepbound vials at $399–$549/month, undercutting the $1,000+ autoinjector price. ($LLY)

  • 📜 Australia requires tech giants to pay for news content: New rules mandate Meta and Google compensate publishers for news, sparking criticism from Meta over voluntary participation. ($META, $GOOGL)

EARNINGS
Echelon Of Earnings

⚡️Broadcom Powers Up on AI Hype: Broadcom’s latest earnings call was an AI lovefest, with the chipmaker reporting a jaw-dropping 220% surge in AI chip revenue, hitting $12.2 billion for the fiscal year. CEO Hock Tan wasn’t shy about the company’s future, forecasting a $90 billion addressable market for AI components by 2027. While the broader semiconductor business is feeling a bit sluggish, AI is doing the heavy lifting.

In Q4 alone, total sales reached nearly $14.1 billion, driven by the booming demand for AI processors and networking chips. Investors cheered, sending the stock up 14% in after-hours trading. Broadcom’s secret sauce? Two new hyperscaler clients and a growing AI infrastructure footprint that keeps it in the same conversation as Nvidia. ($AVGO)

🤘🏼 Costco Keeps Rolling Despite Consumer Caution: Turns out, bulk-size everything is recession-proof. Costco smashed Wall Street’s expectations with a $4.04 per share profit last quarter, thanks to its die-hard member base and a strong showing from both food and discretionary sales. Same-store sales jumped 7.1%, and online sales played a starring role in the retailer’s continued growth.

Even as inflation forces some retailers to fight for scraps, Costco’s Kirkland brand and jumbo-sized deals are still luring customers through the doors. Seasonal items like furniture and jewelry are flying off the shelves, while food and groceries continue to edge out dining out. Investors liked what they saw—Costco’s stock is up 50% year-to-date, with no signs of slowing down. ($COST)

🥊 Adobe Faces the AI Critics: Adobe is finding out that even being a generative AI pioneer doesn’t guarantee smooth sailing. The company’s FY2025 guidance sent shares tumbling 13%, marking its worst day in two years. While Q4 results—$5.61 billion in revenue and $4.81 per share in profit—beat analyst estimates, the future is less certain. Investors are jittery over competition from AI startups like OpenAI, which are encroaching on Adobe’s turf with creative tools that could siphon market share.

Adobe isn’t sitting still, though. Its AI tool, Firefly, has been integrated across key products like Photoshop and Premiere, logging a whopping 16 billion uses. Executives are betting on a new, higher-priced Firefly tier to boost margins in 2025. But Wall Street’s patience is running thin, with many still questioning whether Adobe can defend its position in an AI-driven world. ($ADBE)

Calendar
On The Horizon

Tomorrow

Tomorrow’s agenda is looking light on action, with the earnings calendar taking a breather as companies and investors alike ease into holiday mode.

On the economic side, the spotlight lands on the Import Price Index—a measure of how much US buyers are shelling out for foreign goods. October saw the steepest climb in six months, and another bump could signal inflation sticking around longer than anyone’s holiday wish list would like.

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

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