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The Fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Index. The Index, designed by IPO research firm Renaissance Capital International, LLC (the Index Provider), is a portfolio of companies that have recently completed an initial public offering (IPO) and are listed on a U.S. exchange. IPOs are a category of unseasoned equities under-represented in core equity indices. The Index is designed to capture approximately 80% of the total market capitalization of newly public companies. At each quarterly rebalance, new IPOs are added to the index and companies that have been public for three years are removed. Constituents are weighted by tradable float with individual weights capped at 10%. The Index has been constructed using a transparent and rules-based methodology.

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ByteDance, the parent company of the globally popular app TikTok, has set its valuation at a whopping $300 billion. This marks one of the highest valuations the company has seen to date.
What Happened: ByteDance&#8217;s valuation was established in a recent share buyback offer. This move indicates the company&#8217;s optimistic outlook on its growth trajectory, despite the potential ban on TikTok in the U.S., a decision mandated by a law signed by President Biden earlier this year.
According to a report <a href="https://www.wsj.com/tech/tik-tok-byte-dance-value-9796a8d4">by</a> the Wall Street Journal, ByteDance&#8217;s valuation has consistently been on the rise in recent share buybacks over the past year, reflecting the company&#8217;s rapid global growth.
In October 2023, ByteDance valued itself at nearly $225 billion, which was further boosted to $268 billion in a December 2023 buyback.
Interestingly, the return of President-elect Donald Trump to the White House is seen as a positive development for TikTok&#8217;s future in the U.S. by ByteDance investors. 
Also Read: <a href="https://www.benzinga.com/news/24/09/40866761/is-amazon-eyeing-tiktok-for-a-possible-acquisition">Is Amazon Eyeing TikTok For A Possible Acquisition?</a>
Trump, who had initially supported a ban on the app, reversed his stance during his recent campaign after a meeting with billionaire Jeff Yass, a major ByteDance investor.
ByteDance has been actively buying back shares at approximately $180 per share, a strategy that provides liquidity to investors and early employees, especially in the current lukewarm IPO market.
Why It Matters: The company&#8217;s high valuation and optimistic outlook come despite the looming threat of a TikTok ban in the U.S. This potential ban, initiated by President Biden, could significantly impact the company&#8217;s user base and revenue.
However, the return of Donald Trump to the presidency and his reversal on the TikTok ban, following a meeting with a major ByteDance investor, has brought a ray of hope for the company&#8217;s future in the U.S. market.
ByteDance&#8217;s strategy of buying back shares at a high price point not only reflects its confidence in its growth trajectory but also provides liquidity to its investors and early employees, a crucial factor in the current tepid IPO market.
Read Next
<a href="https://www.benzinga.com/news/24/04/38348328/tiktok-sale-or-ban-social-media-giants-future-hangs-in-balance-as-house-passes-controversial-bill" target="_blank" rel="noreferrer noopener">TikTok Sale Or Ban? Social Media Giant's Future Hangs In Balance As House Passes Controversial Bill</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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News

Tech

Bytedance Valuation Soars To $300B Despite Threat Of US TikTok Ban

Editor&#8217;s Note: This article has been updated with the company&#8217;s response.
In a surprising turn of events, Games Global Ltd, a UK-based company known for its online casino games, has decided to pull its initial public offering (IPO) from <a href="https://www.benzinga.com/topic/initial-public-offering">the U.S</a>.
What Happened: Games Global <a href="https://www.businesswire.com/news/home/20240513132745/en/Games-Global-Postpones-Initial-Public-Offering">announced</a> on Monday that it has postponed its initial public offering in the United States. While investor interest was strong, the decision was made due to the continued positive performance of the company's underlying business and the anticipated trajectory following its recent entry into the U.S. gaming market. 
According to the company, the board of directors believes delaying the offering is in the best interests of stakeholders and will continue to monitor the timing for the proposed offering, while evaluating all strategic opportunities that align with the company's long-term strategy.
A Games Global spokesperson told Benzinga, &#8220;Our team remains committed to delivering the most innovative games on the market. We will continue to monitor the capital markets going forward and make the appropriate reconsiderations as to an IPO in the future.&#8221; 
See Also: <a href="https://www.benzinga.com/markets/cryptocurrency/24/05/38776144/jpmorgan-reports-760k-spot-bitcoin-etf-holdings-even-as-ceo-jamie-dimon-called-for-shuttin?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">JPMorgan Reports $760K Spot Bitcoin ETF Holdings Even As CEO Jamie Dimon Called For Shutting Down Crypto</a>
The company, which was founded in 2021, had planned to raise $254 million through its IPO. The proposed price range was <a href="https://www.benzinga.com/insights/ipos/24/05/38793038/preview-games-global-limited-set-to-ipo-tomorrow">$16 to $19 per share</a>, which would have valued the company at around $2.0 billion. The IPO was expected to be listed on the NYSE under the symbol GGL.
Why It Matters: Games Global&#8217;s decision to withdraw its IPO comes as a surprise, especially after the company had set the terms for its IPO just a week ago. The company announced plans to offer 14.5 million shares, with 59% of the <a href="https://www.renaissancecapital.com/IPO-Center/News/104515/Online-casino-games-developer-Games-Global-sets-terms-for-$254-million-US-I">shares</a> being secondary.
Games Global&#8217;s decision to withdraw its IPO also comes after the company had secured an exclusive deal with the UFC for branded slot games, as reported by <a href="https://news.worldcasinodirectory.com/games-global-secures-exclusive-deal-with-ufc-for-branded-slot-games-113295">World</a> Casino Directory. This partnership is expected to further boost the company&#8217;s standing in the online gaming industry.
Before that, Games Global and AreaVegas Games launched a new game, Area Link&#x2122; <a href="https://europeangaming.eu/portal/latest-news/2024/05/07/158478/games-global-and-areavegas-games-unleash-the-mythical-beast-in-area-link-dragon/">Dragon</a>, adding to its extensive portfolio of more than 1,300 games.
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/24/05/38753994/cardano-founder-charles-hoskinson-says-voting-for-biden-is-a-vote-against-american-crypto-?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Cardano Founder Charles Hoskinson Says Voting For Biden Is A &#8216;Vote Against American Crypto Industry&#8217;</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Games Global Withdraws US IPO Plan (UPDATED)

The U.S. initial public offerings (IPO) market is experiencing a significant surge with an increasing number of companies choosing to go public, as stated by New York Stock Exchange President, Lynn Martin.
What Happened: During an interview, Martin expressed her opinions in the IPO market&#8217;s surge in recent times. The NYSE Group Inc. has seen around 25 IPOs of operating companies on the NYSE this year, she revealed, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-05-13/nyse-president-sees-more-us-companies-pursuing-public-offerings">reported</a> on Monday.
"I'm incredibly optimistic given the amount of proceeds that have been raised so far in the markets,"&nbsp;she said. 
Following a slump in 2023 due to high interest rates and recession fears, the IPO market has bounced back. Two major deals, Reddit Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RDDT#NYSE">RDDT</a>) and Galderma Group AG, collectively raised approximately $3 billion in March. The total funds raised in U.S. debuts in 2024 through late last month have exceeded $13.7 billion, tripling the amount from the same period last year.
See Also: <a href="https://www.benzinga.com/news/24/05/38776670/the-disparate-treatment-of-trumps-fake-electors-is-a-serious-concern-says-legal-expert-its-so-unusua?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">The Disparate Treatment Of Trump&#8217;s Fake Electors Is A Serious Concern, Says Legal Expert: &#8216;It&#8217;s So Unusual To Have This Situation&#8217;</a>
According to Martin, more growth-oriented companies are finding a path to profitability through public markets. 
&#8220;Companies that are either profitable or have a path to profitability are getting rewarded,&#8221; she stated. 
However, she also noted that corporations are being more strategic about their public debut timings.
Based on the current trend, Martin anticipates 2024 to be a typical year for IPOs, following two years of slowdown. She also hinted at a potential IPO market closure near the U.S. presidential election, as has been customary in the past.
Why It Matters: The resurgence of IPOs in 2024 comes <a href="https://www.benzinga.com/markets/equities/24/02/37215731/ipo-revival-in-2024-plaid-chime-and-kim-kardashians-skims-among-potential-market-movers">after a couple of subdued years in 2022 and 2023,</a> when rising inflation and interest rates impacted the market, making it difficult to price IPOs and leading many companies to pull or postpone planned IPOs.
Furthermore, market advisors echo Martin&#8217;s sentiments that the November presidential elections would cause a <a href="https://www.benzinga.com/general/politics/24/04/38515952/us-presidential-election-impact-on-ipo-market-timing">brief slowdown in the IPO</a> market. However, this is not anticipated to be a major disruption to the overall momentum of public listings.
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/24/05/38753994/cardano-founder-charles-hoskinson-says-voting-for-biden-is-a-vote-against-american-crypto-?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Cardano Founder Charles Hoskinson Says Voting For Biden Is A &#8216;Vote Against American Crypto Industry&#8217;</a>
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NYSE President 'Incredibly Optimistic' About More IPOs In 2024: Over $13.7B Raised So Far

CNBC&#8217;s Jim Cramer has expressed his support for the initial public offering of Viking Holdings Ltd (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VIK#NYSE">VIK</a>), despite its high valuation.
What Happened: Cramer, on his show &#8220;Mad Money&#8221; on Thursday, discussed the IPO of Viking, a luxury cruise line, which is the largest IPO of the year so far, <a href="https://www.cnbc.com/2024/05/02/cramer-says-hes-willing-to-pay-up-for-viking-biggest-ipo-of-the-year.html">reported</a> CNBC. 
He noted that Viking&#8217;s stock is more expensive than its peers but still believes it&#8217;s a good investment.
Viking&#8217;s IPO was priced at $24 per share and began trading at $26.15 on Wednesday, closing at $26.10. The stock further rose to $26.99 on Thursday.
"Even though Viking's somewhat hot start has made its stock more expensive than its cruise line peers, I am willing to pay up for this one, because I think it's going to be a winner," he said.
Cramer highlighted Viking&#8217;s unique selling points, such as its ships not having casinos and being adults-only, as well as its focus on affluent customers and niche destinations. He believes these factors give Viking a competitive edge.
"Viking's got a cleaner balance sheet than its peers, differentiated brand, it caters exclusively to high-end customers &#8230; part of the business I expect to hold up better than the mass market side of things," he said.
Despite Viking&#8217;s preliminary first-quarter results showing a slowdown in growth since the pandemic, Cramer remains optimistic about its future. He acknowledged that Viking&#8217;s balance sheet isn&#8217;t perfect, but he sees it as a better option compared to other publicly traded cruise lines.
See Also: <a href="https://www.benzinga.com/news/24/04/38490818/if-you-invested-1000-in-chipotle-mexican-grill-a-decade-ago-this-is-how-much-itd-be-worth-now?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">If You Invested $1000 in Chipotle Mexican Grill a Decade Ago, This is How Much It&#8217;d Be Worth Now</a>
He suggested that investors buy Viking stock at its current price, even though he would prefer it to be more in line with its peers, which he estimates to be around $20. Cramer believes Viking&#8217;s unique business model and target audience justify its premium valuation.
Why It Matters: Viking&#8217;s IPO comes at a time of optimism for the stock market. In March, Bank of America&#8217;s technical strategist, Stephen Suttmeier, predicted that the S&amp;P 500 could <a href="https://www.benzinga.com/markets/equities/24/03/37926504/stock-market-could-rally-another-34-by-2026-says-bank-of-america">surge by 34%</a> by the end of 2026, with no end in sight for the secular bull rally.
Moreover, the cruise industry has been innovating to attract new customers. For instance, Virgin Voyages recently introduced <a href="https://www.benzinga.com/news/24/04/38104334/workplace-on-waves-richard-branson-launches-remote-work-boat-with-virgin-voyages-extended-sea-workat">a month-long cruise package</a> specifically designed for remote workers, combining work and travel in an unprecedented way.
Read Next: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38540161/is-bitcoin-heading-for-a-dip-ahead-of-fomc-analyst-predicts-potential-cascade-towar?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Is Bitcoin Heading For A Dip Ahead Of FOMC? Analyst Predicts Potential &#8216;Cascade Towards $55-58K&#8217; Before Rebound</a>
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Equities

Jim Cramer Backs Viking's IPO Despite Premium Price: 'I Think It's Going To Be A Winner'

Investors eager to support former President Donald Trump&#8217;s social media venture, Truth Social, may face disappointment, according to Helaine Olen, author and columnist.
What Happened: <a href="https://www.benzinga.com/markets/equities/24/03/37931071/trump-medias-stock-rockets-19-in-premarket-ahead-of-nasdaq-debut-whats-going-on">Truth Social went public today</a>, following its approved merger with the little-known publicly traded Digital World Acquisition Corp. (DWAC). The merged entity will trade under the name and stock symbol — DJT — of Trump&#8217;s media company, Trump Media &amp; Technology Group Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/DJT#NASDAQ">DJT</a>).
Despite the prospect of the new company being valued at approximately $5 billion, <a href="https://www.msnbc.com/opinion/msnbc-opinion/trump-truth-social-djt-stock-price-rcna144715">MSNBC&#8217;s</a> Olen advises caution. She highlights Trump&#8217;s history of financial failures and the modest user base of Truth Social compared to its rivals.
See Also: <a href="https://www.benzinga.com/news/24/03/37903308/former-white-house-communications-director-says-wall-street-bankers-are-laughing-at-trumps-fundraisi?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Former White House Communications Director Says Wall Street Bankers Are Laughing At Trump&#8217;s Fundraising Efforts</a>
Olen points out that Truth Social&#8217;s revenue is meager, and its user base is a mere fraction of Twitter&#8217;s estimated 500 million. The public offering via a special purpose acquisition company (SPAC) also raises eyebrows due to the lack of financial transparency required compared to traditional IPOs.
Despite these warnings, Trump&#8217;s ardent supporters, who have previously turned Digital World Acquisition into a meme stock, are expected to ignore these warnings. The stock has already seen an increase of over 180% this year, although it fell nearly 6% after the merger announcement.
Going public via a special purpose acquisition company (SPAC) is not a guaranteed financial success. Many SPACs have failed, resulting in significant potential losses for investors. Despite these risks, Trump is <a href="https://www.benzinga.com/news/24/03/37903082/trump-linked-dwac-is-a-meme-stock-on-steroids-says-herb-greenberg-as-former-president-set-to-get-ric">set to gain $3 billion</a> based on Digital World Acquisition&#8217;s current stock price.
See Also: <a href="https://www.benzinga.com/news/24/03/37904554/bidens-2024-re-election-chances-increasingly-vulnerable-gallup-poll-finds-ahead-of-trump-rematch?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Biden&#8217;s 2024 Re-Election Chances &#8216;Increasingly Vulnerable,&#8217; Gallup Poll Finds, Ahead Of Trump Rematch</a>
However, there is a lockup period of six months when insiders will not be permitted to sell or borrow against shares after going public. This means that Trump&#8217;s potential gain could be much lower after the lockup period.
&#8220;His fans won't see the truth: Trump is not only a serial fraud, he is one who takes advantage of those who believe in him the most. Stock trading on the ironically named Truth Social is highly unlikely to change that sad fact,&#8221; she wrote.
Why It Matters: The merger between DWAC and Trump Media &amp; Technology Group was first announced in October 2021 and <a href="https://www.benzinga.com/m-a/24/03/37915923/trump-spac-merger-approved-set-for-imminent-public-debut-the-profits-some-investors-missed">has faced several setbacks and delays.</a>
Truth Social, founded by Trump after his Twitter ban, has significantly fewer users than its rivals, with an estimated 5 million active users compared to Twitter&#8217;s 500 million. Its revenues are also considerably lower.
Wall Street financier and prominent Republican donor, Jeff Yass, has reportedly been identified as a <a href="https://www.benzinga.com/news/24/03/37907541/trump-linked-digital-world-acquisition-counted-billionaire-wall-street-financier-jeff-yass-firm-as-l">significant shareholder in DWAC.</a>
Read Next: <a href="https://www.benzinga.com/news/24/03/37904501/donald-trumps-surprising-cash-declaration-shakes-up-new-york-fraud-case-i-currently-have-almost-500m?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Donald Trump&#8217;s Surprising Cash Declaration Shakes Up New York Fraud Case: &#8216;I Currently Have Almost $500M</a>
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Is Donald Trump's Truth Social's Public Debut Worth The Hype? Expert Urges Caution

At the recent Benzinga Virtual Healthcare Summit, Laura Chico, Ph.D., senior vice president of equity research at Wedbush Equity Research, shared her optimistic views on the 2024 biotech IPO market and the current M&amp;A trends in the industry. 
Chico&#8217;s discussion happened against the backdrop of a fluctuating market that has seen its share of highs and lows in recent years, particularly in light of the impact of the COVID-19 pandemic on health care.
<h1 class="wp-block-heading">A Promising Year For Biotech IPOs</h1>
According to Chico, the biotech IPO scene is experiencing a notable uptick in 2024, with six IPOs already priced and performing well in the market. This marked a positive shift from previous years, when the number of IPOs significantly declined.
&#8220;So far, in 2024, we&#8217;ve had six IPOs price, and I think, relatively speaking, they&#8217;ve held up pretty well in market performance,&#8221; Chico stated.
See Also: <a href="https://www.benzinga.com/markets/equities/24/03/37878531/reddit-shares-jump-62-on-debut-investor-analyst-reaction-on-social-media">Reddit Shares Jump 62% On Debut: Investors, Analysts React On Social Media</a>
<figure class="wp-block-image size-full is-resized"><a href="https://www.benzinga.com/events/cannabis-conference/"><img loading="lazy" decoding="async" width="300" height="250" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/21134153/2231044_CCCFloridaGIF_V2_031124-28.gif" alt="" class="wp-image-261181" style="width:428px;height:auto" /></a></figure>
<h1 class="wp-block-heading">M&amp;A Landscape</h1>
Chico also highlighted the heightened activity in biotech M&amp;A, noting that the industry witnessed a higher-than-normal rate of acquisitions in recent months. This was underscored by recent high-profile acquisitions such as AstraZeneca&#8216;s (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AZN#NASDAQ">AZN</a>) purchase of Fusion Pharma.&nbsp;
&#8220;Even yesterday, we got the announcement that Fusion Pharma was being acquired by AstraZeneca for one and a half billion dollars,&#8221; she mentioned.&nbsp;
<h1 class="wp-block-heading">Election Year Considerations</h1>
As the U.S. heads into an election year, the biotech sector often faces uncertainty that can impact market performance. She observed that historically, biotech tends to underperform in the months leading up to a presidential election but sees a boost in the subsequent months.&nbsp;
&#8220;This has been true for almost every presidential election in the past five cycles. We&#8217;ve seen higher performance in the three months after the election,&#8221; she explained.
Chico&#8217;s discussion at the Virtual Healthcare Summit painted a cautiously optimistic picture for the biotech industry in 2024. There was an expected rise in IPOs and continued robust M&amp;A activity despite the potential headwinds of an election year.
The&nbsp;<a target="_blank" href="https://www.benzinga.com/events/cannabis-conference/" rel="noreferrer noopener">Benzinga Cannabis Capital Conference</a>&nbsp;is returning to Florida in a new venue in Hollywood on April 16 and 17, 2024. The two-day event at&nbsp;<a target="_blank" href="https://www.benzinga.com/events/cannabis-conference/" rel="noreferrer noopener">The Diplomat Beach Resort</a>&nbsp;will be a chance for entrepreneurs, both large and small, to network, learn, and grow.&nbsp;
Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars — this conference is the go-to event of the year for the cannabis world. <a href="https://www.benzinga.com/events/cannabis-conference/" target="_blank" rel="noreferrer noopener">Get your tickets now on </a><a href="http://bzcannabis.com/" target="_blank" rel="noreferrer noopener">bzcannabis.com</a><a href="https://www.benzinga.com/events/cannabis-conference/" target="_blank" rel="noreferrer noopener"> – Prices will increase very soon!</a>
Read Next: <a href="https://www.benzinga.com/general/biotech/24/03/37859130/is-eli-lilly-winning-the-war-on-weight-loss-drugs-zepbound-overtakes-wegovy-in-us-prescriptions">Is Eli Lilly Winning The War On Weight Loss Drugs? Zepbound Overtakes Wegovy In US Prescriptions</a>
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EXCLUSIVE: 2024 Witnesses Increase In Biotech Initial Public Offerings

Popular social media platform, Reddit Inc., and its investors are reportedly targeting a substantial $748 million in an <a href="https://www.benzinga.com/general/social-media/24/03/37432524/reddit-targets-6-5b-valuation-in-ipo-shares-priced-at-attractive-31-34">upcoming initial public offering</a> (IPO), which could rank among the year&#39;s largest.
As <a href="https://www.bloomberg.com/news/articles/2024-03-10/reddit-s-planned-ipo-is-said-to-seek-up-to-748-million?srnd=homepage-americas&amp;sref=TBDibEcD">Bloomberg reported</a> on Thursday, Reddit plans to sell 22 million shares, each priced between $31 and $34. This move is speculated to value the company at a hefty $6.5 billion.
Approximately 1.76 million shares in the IPO will be set aside for Reddit&#39;s early users and moderators. These shares will not be subject to a lockup period, allowing owners to sell them on the opening day of trading, as per&nbsp;Reddit&#39;s filings with the U.S. Securities and Exchange Commission.
See Also:&nbsp;<a href="https://www.benzinga.com/news/24/03/37482430/from-hating-reddit-ipo-to-shorting-the-stock-a-polarizing-debate-emerges-among-redditors">From Hating Reddit IPO To Shorting The Stock: A Polarizing Debate Emerges Among Redditors</a>
&nbsp;
The journey to listing has been a long one for Reddit, initially filing back in 2021. Despite the market&#39;s ups and downs and the hurdles of the global pandemic, the company&#39;s IPO is set to make a splash on this year&#39;s list of new public offerings.
Reddit has been a significant player in the social media space since its inception in 2005. With an impressive average of 73.1 million unique visitors logging in daily during the fourth quarter, the platform&#39;s main shareholder is Advance Magazine Publishers Inc., which is a part of the Newhouse family&#39;s publishing empire that also owns Conde Nast.
Leading the IPO are notable financial institutions Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase &amp; Co., and Bank of America Corp. Reddit&#39;s shares are expected to trade on the New York Stock Exchange under the symbol RDDT.
Read Next:&nbsp;<a href="https://www.benzinga.com/news/24/03/37447086/jim-cramer-says-successful-reddit-ipo-could-spell-trouble-for-market-those-who-want-the-bull-to-cont">Jim Cramer Says Successful Reddit IPO Could Spell Trouble For Stocks: &#39;Those Who Want The Bull To Continue Must Root Against This Deal</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock

Reddit Eyes Mega IPO, Aiming To Raise $748 Million

<h4>Key Takeaways:</h4>
<ul>
<li>Premium tea chain Auntea Jenny has filed to list in Hong Kong, reporting its profit nearly tripled in the first three quarters of last year to 320 million yuan&nbsp;</li>
<li>The company uses a franchise business model, similar to many of its peers that have also filed for similar recent listings&nbsp;</li>
</ul>
By Lau Chi Hang
&ldquo;Today is cruel, tomorrow will be even crueler. The day after tomorrow is beautiful, but most people will die tomorrow night,&rdquo; once said Jack Ma, Chinese internet legend and founder of Alibaba.
While Ma may have been talking about Alibaba&rsquo;s core e-commerce business, his words could also apply to China&rsquo;s overheated premium tea market these days. And his words may not even be strong enough for a turbulent sector that has produced at least four Hong Kong IPO candidates since the start of the year alone.
Instead, a more apt modification of Ma&rsquo;s words for this frothy sector might be: &ldquo;Today is very cruel, tomorrow will be even crueler. The day after tomorrow may not be beautiful either, but that doesn&rsquo;t matter because most premium tea chains will be dead by then.&rdquo;
The past decade has seen China&rsquo;s premium tea market explode, with hundreds of thousands of stores popping up selling a wide range of products to just about anyone with money to spare in this nation of 1.4 billion. As companies tap out investors for new money to fund their expansions, many are now turning to Hong Kong&rsquo;s stock market for new money to keep growing.
Nayuki&nbsp;(2150.HK) was the lone Hong Kong-listed company from the group for several years, but Mixue Bingcheng and Guming have all recently filed to join it. Now, the folksy-named&nbsp;Auntea Jenny (Shanghai) Industrial Co. Ltd.&nbsp;has also jumped on the bandwagon, formally applying for a Hong Kong IPO earlier this month.
A good story is a must for the crowded field of premium tea chains. Nayuki&rsquo;s started with a blind date, while Auntea Jenny is the business child of Shan Weijun and Zhou Rongrong, a former pair of big company middle and senior managers. After moving to Shanghai from Shandong province in 2011, they one day noticed people crowded in a small store to buy milk tea with red glutinous rice. In that single bright flash, they realized that this business could become something big.
Shan went on to visit Taiwan to study its thriving milk tea industry. He found it had 20,000 tea stores in a place with only 23 million people, and realized that meant the Mainland could probably support millions of such shops. Not long afterwards in 2013 he opened his first Auntea Jenny, a brand originally known for its signature grainy-textured milk tea. He later expanded by adding fresh fruit teas to the menu in 2019.
As of the third quarter of last year, the company had 7,297 stores covering more than 300 cities across China, according to&nbsp;<a href="https://www1.hkexnews.hk/app/sehk/2024/106243/documents/sehk24021400100.pdf">its prospectus</a>filed earlier this month. Nearly all of those &ndash; 99.3% to be exact &ndash; are franchised, meaning its revenues mostly come from the sale of goods and provision of services to its franchisees.
The company&rsquo;s revenue rose from 1.64 billion yuan ($228 million) in 2021 to 2.2 billion yuan in 2022, with profits of 83.4 million yuan and 150 million yuan in those two years, respectively. Revenue for the first three quarters of last year rose 54% year-on-year to 2.54 billion yuan, while its profit nearly tripled to 324 million yuan. Its gross margin of 31.2% is similar to Mixue Bingcheng&rsquo;s 30% and GoodMe&rsquo;s 31%, showing how difficult it is to differentiate these companies.
<h4>No clear advantage</h4>
Auntea Jenny made a name for itself across China in just 10 years, but so have many others. In addition to Mixue Bingcheng and GoodMe, others lining up to list include Modern China Tea, Chagee, Chabaidao, Shuyi Shaoxiancao, Xinshiqi and Chabaidao, which&nbsp;<a href="https://thebambooworks.com/chabaidao-joins-hong-kong-ipo-tea-party/">filed a new prospectus</a>&nbsp;just last week. In such a crowd, how can Auntea Jenny swim to the top in an ocean of tea?
In its listing application, the company emphasizes its large network in China&rsquo;s smaller cities, its deep understanding of consumers and its ability to provide high-quality and diversified products. It also spouts about its comprehensive franchisee platform and win-win franchising model, strong supply chain management capabilities, integrated membership rewards program, and experienced senior management team.
But none of these selling points really differentiate it from its peers. In fact, Auntea Jenny is far smaller than Mixue Bingcheng in terms of business size, and inferior to the more premium quality of higher-end brands like HeyTea and Nayuki. There&rsquo;s no shortage of rivals in the middle of the market where the company currently floats.
<h4>Complaint leader</h4>
The franchise model that Auntea Jenny claims as one of its strong selling points is also nothing special among its peers. The only question is who is doing best in managing their vast franchisee networks. In that regard, Auntea Jenny only seems to lead its rivals in the number of customer complaints it gets, which often reflects poor management of franchisees.
On the Heimao complaint platform of the popular Sina web portal, Auntea Jenny has accumulated 2,200 complaints as of February this year. While that&rsquo;s far less than the 6,000-plus complaints for Mixue Bingcheng, we should also note that Mixue Bingcheng has 36,000 outlets, roughly five times those of Auntea Jenny. And Auntea Jenny leads Chabaidao&rsquo;s 1,300 complaints and GoodMe&rsquo;s 1,200.
Some complaints even snowballed into scandals, including one last year where the company was blasted for allegedly backtracking on its promise to distribute free coupons. Such scandals reflect management problems on the one hand, and also insufficient supervision, guidance and training for franchisees in recent years as it races to open more stores.
<h4>Lower popularity</h4>
Auntea Jenny also seems to lag behind some of its peers in terms of brand awareness. A recent report on the market from iMedia Research show that Auntea Jenny only ranked ninth among consumers&rsquo; 10 favorite brands of new-style teas, with only a 15.3% favorable rating.
Auntea Jenny is also losing ground in products. The niche-product nature of its signature grainy-textured milk tea led the company to try to reach a bigger audience with its addition of more mainstream fresh fruit tea products five years ago. But it was quite late to that game, having to compete with more established products like HeyTea&rsquo;s &ldquo;succulent grapes&rdquo; and Nayuki&rsquo;s &ldquo;domineering series.&rdquo;&nbsp;
Overall, we have yet to see any qualities that make Auntea Jenny a standout in this homogenized market, which will be critical for it to stay afloat and keep growing until the market finally starts to cool.
This article is from an unpaid external contributor. It does not represent Benzinga&#39;s reporting and has not been edited for content or accuracy.

Auntea Jenny Steeped By Rivals In Flood Of Bubble Tea IPOs

<h4>Key Takeaways:</h4>
<ul>
<li>Chabaidao&rsquo;s revenue grew 34.8% to 5.7 billion yuan in 2023, as the company has been consistently profitable over the last three years</li>
<li>The premium tea chain operator plans to keep growing through greater penetration in lower-tier cities, expanding overseas and by diversifying into coffee</li>
</ul>
&nbsp;&nbsp;
By Hugh Chen
Add yet another newcomer to the increasingly crowded party of premium tea makers hoping to whet investor appetites in Hong Kong with yet another rapid growth story.
This time it&rsquo;s&nbsp;Baicha Baidao Industrial Co. Ltd.,&nbsp;which filed&nbsp;<a href="https://www1.hkexnews.hk/app/sehk/2024/106264/documents/sehk24022301162.pdf">a new IPO prospectus</a>&nbsp;with the Hong Kong Stock Exchange on Friday, following its initial filing last August. The move puts Baicha Baidao into direct competition with a growing list of chains to file for Hong Kong IPOs since the start of this year, alongside&nbsp;<a href="https://thebambooworks.com/mixue-brews-up-renewed-ipo-bid-tempting-investors-with-overseas-expansion/">Mixue Group</a>,&nbsp;<a href="https://thebambooworks.com/guming-joins-chinas-tea-market-party-with-ipo-bid/">Guming</a>, and&nbsp;Auntea Jenny (Shanghai) Industrial.
Founded in 2008 and based in Southwest China&rsquo;s Sichuan province, Baicha Baidao, which operates its stores under the Chabaidao name, is one of China&rsquo;s largest tea drink chains. According to third-party data cited in its prospectus, it ranked third in the country&rsquo;s market for freshly-made tea chains in terms of retail sales with 6.8% of the industry&rsquo;s 247.3 billion yuan ($34.8 billion) in sales last year.
Chabaidao&rsquo;s position as a top-three player could certainly attract investors, though they will also be paying close attention to how the company navigates its next growth phase in the highly competitive market. Staying ahead of the competition is increasingly important, given signs that China&rsquo;s premium tea market is quickly becoming saturated, filled with dozens of chains selling products in a variety of flavors at a wide range of price points. Growing consumers caution with China&rsquo;s slowing economy is throwing a new ingredient into the mix.
Chabaidao is controlled by founder Wang Xiaokun and his wife, who hold 18.02% and 5.74% of the company&rsquo;s shares, respectively. They also jointly control Hengsheng Herui, the company&rsquo;s largest shareholder with 67.67% ownership.
After completing its latest fundraising round last June, the company attained a valuation of 17.5 billion yuan, according to financial media Caixin, meaning it could get a market cap of more than $2 billion if it completes its IPO this time. The company conducted two rounds of fundraising during the year totaling 970 million yuan.
Like many of its competitors, Chabaidao has rapidly expanded its store network by using a franchising business model, allowing it to grow rapidly by leveraging franchisee investments rather than relying solely on its own funding.
Chabaidao&rsquo;s store count reached 7,927 at the end of 2023, covering most of China in both large and smaller cities. According to a recent report from the research group Zhaimen Canyan, this count made Chabaidao the third-largest tea chain in China after Mixue and Guming, which had over 36,000 and 9,028 stores as of January, respectively.
Chabaidao&rsquo;s sales have expanded rapidly in recent years with its growing store network, including a 34.8% rise to 5.7 billion yuan last year from 4.2 billion yuan in 2022 and 3.6 billion yuan in 2021.
The company primarily targets the mid-range tea market, with most products priced between 10 yuan and 20 yuan, or the equivalent of $1.50 to $3. That segment happens to be one of the most competitive, also served by Guming, Auntea Jenny and Shuyi Shaoxiancao, among others, which have all posted similarly rapid growth using a franchised business model.
<h4>Gross margin outperformer</h4>
Franchised locations account for nearly all of Chabaidao&rsquo;s footprint, as well as those of Auntea Jenny and Shuyi Shaoxiancao &ndash; the fourth and fifth largest chains in China with 7,613 and 6,843 stores respectively, according to Zhaimen Canyan. Companies using the franchising model mainly generate revenue by selling equipment and materials for tea production to their franchisees, making cost control paramount to be competitive.
One key metric shows Chabaidao may be outperforming its rivals in that regard. Its gross profit margin consistently exceeded 34% between 2021 and 2023, ahead of Auntea Jenny at 31.2% for the first nine months of 2023, and Guming at a similar 31% over the same period.
Chabaidao has also consistently been profitable over the past few years despite pandemic-related challenges. Its net profit reached 1.1 billion yuan in 2023, while the figure for the previous two years was 756 million yuan and 954 million yuan, respectively. Guming and Auntea Jenny have also remained profitable, with Guming earning 990 million yuan and Auntea Jenny 324 million yuan for the first nine months of 2023.
With the market quickly saturating, all of the chains will feel pressure to show investors how they can continue growing while also remaining profitable.
Chabaidao detailed several such strategies in its prospectus, including boosting its penetration into China&rsquo;s smaller, underserved cities and expanding overseas. The company cited third-party data saying freshly-made tea shop sales in lower-tier Chinese cities reached 179.8 billion yuan in 2023, comprising over 70% of the total premium tea market, and is expected to grow to 408 billion yuan by 2028.
Chabaidao said it plans to bolster its presence in such smaller cities through incentives for its franchisees, such as discounted franchise fees and complimentary operations and management training courses.
On the overseas front, a major priority for Chabaidao would be Southeast Asia, where the market is expected to grow from 32.9 billion yuan in 2023 to 78.3 billion yuan in 2028, according to third-party research cited in the prospectus.
Another strategic priority for the company to maintain its growth involves expanding its product mix into the coffee segment that is also quickly becoming saturated with players like Starbucks (SBUX.US) and Lavazza at the high end, and Luckin (OTC: <a class="ticker" href="https://www.benzinga.com/stock/lkncy#OTC">LKNCY</a>) and Manner at the lower end. Last month the company launched its first self-operated coffee shop branded Coffree. Chabaidao said it plans to progressively offer freshly-made coffee products under that independent sub-brand, aiming to leverage its operational expertise to diversify beyond tea.
At the end of the day, the crowded state of the market means that execution will determine whether Chabaidao&rsquo;s strategies can succeed. After all, the company is hardly alone in pursuing growth by expanding in smaller cities, diversifying its product mix, and moving overseas.
The lower-tier markets Chabaidao is targeting are already focus areas for Guming, Auntea Jenny, Shuyi Shaoxiancao and even premium brands like&nbsp;Nayuki Holdings&nbsp;(2150.HK) and&nbsp;Heytea. All of those must also contend with entrenched leader Mixue, which targets the super low-end of the market. Southeast Asia remains a crowded priority destination as well.
And as we&rsquo;ve noted, a move into the coffee space will just take Chabaidao into another highly competitive realm. The bottom line is that China&rsquo;s separate but similar coffee and tea parties are rapidly boiling over, making consolidation almost inevitable in the crowded market. &nbsp;
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

Asia

LKNCY

Chabaidao Joins Hong Kong IPO Tea Party

Alibaba Group Holding Ltd (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>) co-founder Joe Tsai expressed optimism about the company&#8217;s future despite recent setbacks.
What Happened: Tsai acknowledged the challenges Alibaba has faced in recent times. These include internal changes, the cancellation of a cloud computing IPO, and increasing competition in the e-commerce sector, according to an <a href="https://www.cnbc.com/2024/02/26/after-doubts-about-alibabas-future-co-founder-joe-tsai-says-were-back.html">interview</a> with CNBC.
&#8220;Now with the restructuring and with the new management in place, we feel a lot more confident in placing as one of the top e-commerce players in China,&#8221; Tsai said. 
&#8220;Where we didn&#8217;t feel as confident as before, we felt the competitive pressure, but now we&#8217;re back.&#8221;
See Also: <a href="https://www.benzinga.com/markets/equities/24/02/37305196/could-a-second-trump-presidency-disrupt-the-stock-market-capital-economics-analyst-weighs-in?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Could A Second Trump Presidency Disrupt The Stock Market? Capital Economics Analyst Weighs In</a>
He also predicted that e-commerce penetration in China would surpass 40% in the next five years, up from the current 30%.
Despite the challenges, Tsai remains confident in Alibaba&#8217;s future. He and fellow co-founder Jack Ma have recently purchased over $200 million worth of Alibaba shares. Tsai also addressed the company&#8217;s plans for an IPO of its logistics business, Cainiao, stating that they are waiting for a more opportune time.
Why It Matters: The recent developments at Alibaba are significant in the context of the company&#8217;s recent challenges and changes. In January, Ma and Tsai&#8217;s increased stakes in the company coincided with a management reshuffle, <a href="https://www.benzinga.com/news/24/01/36754606/alibabas-jack-ma-and-joe-tsai-amplify-stakes-sparking-stock-surge-amid-management-shakeup">including the appointment</a> of a new acting CEO for Alibaba&#8217;s South Asian online retailer, Daraz Group.
In February, Alibaba announced a <a href="https://www.benzinga.com/markets/asia/24/02/36998776/alibaba-chairman-says-not-in-a-hurry-for-cainiao-freshippo-ipos-due-to-challenging-market-conditions">halt on the IPOs</a> of its logistics arm, Cainiao Smart Logistics, and brick-and-mortar chain Freshippo due to challenging market conditions. This decision was communicated by Tsai during an earnings call, where he cited unfavorable market conditions as the primary reason for the delay.
Amid these challenges, Alibaba has been facing increased competition, with rivals such as PDD Holdings which owns Pinduoduo and Temu <a href="https://www.benzinga.com/news/23/11/35995320/jack-ma-calls-for-alibabas-strategic-shift-lauds-rival-pdds-moves-in-an-internal-memo">temporarily surpassing Alibaba</a>&#8216;s market capitalization. The recent announcement by Tsai, however, indicates a potential turnaround for the company, with a renewed focus on e-commerce and confidence in the future.
Read Next: <a href="https://www.benzinga.com/news/24/02/37254871/how-a-chance-encounter-with-alibaba-founder-jack-ma-made-this-77-year-old-wall-street-titan-pledge-5?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">How A Chance Encounter With Alibaba Founder Jack Ma Made This 77-Year-Old Wall Street Titan Pledge $500M</a>
Alibaba Photo by zhu difeng on Shutterstock
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BABA

Alibaba Co-Founder Joe Tsai Optimistic About Future Amid Recent Challenges: 'We're Back'

Reddit&#39;s recent <a href="http://www.benzinga.com/markets/cryptocurrency/24/02/37278939/reddit-reveals-bitcoin-ethereum-investment-as-social-giant-files-for-5b-ipo">strategic move to invest</a> in Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) and Ethereum (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/eth/usd">ETH</a>) has not just made headlines but has also ignited a fiery debate across its own vast network of forums.
What Happened: Following the announcement of Reddit&#39;s investment in cryptocurrencies, the platform&#39;s subreddits are&nbsp;dissecting this decision from every conceivable angle.
Especially in light of the company&#39;s upcoming initial public offering (IPO), users remain skeptic.
&quot;This sounds like a stupid decision,&quot; one user writes in the subreddit r/Buttcoin.
In the thread titled &quot;Why is Reddit investing in crypto?,&quot;&nbsp;another one&nbsp;states:&nbsp;&quot;Diving into the volatile crypto market now seems like a gamble, especially pre-IPO. What&#39;s the strategy here?&quot;
Another discussion, under the banner &quot;This is awkward,&quot; has users pointing out the irony of Reddit&#39;s decision.
&quot;For a platform that houses critical views on crypto, to then invest in it? The irony is palpable,&quot; shared a Redditor, highlighting the platform&#39;s complex relationship with cryptocurrency.
Environmental concerns have also emerged as a hot topic.
A poignant comment from a user read, &quot;The environmental impact of mining Bitcoin is well-documented. Is Reddit now contributing to this issue?&quot;
Also Read:<a href="https://www.benzinga.com/markets/cryptocurrency/24/02/37262900/is-bitcoins-future-doomed-european-central-bank-says-yes-offers-stark-warning">&nbsp;Is Bitcoin&#39;s Future Doomed? European Central Bank Says Yes, Offers Stark Warning</a>
Why It Matters: Reddit&#39;s foray into cryptocurrency investment is not just a financial maneuver but a reflection of the broader tech industry&#39;s growing entanglement with digital currencies.
The discussions within Reddit&#39;s community underscore the diverse perspectives on cryptocurrency&#39;s role and impact, from environmental sustainability to market volatility.
These debates shed light on the broader societal and ethical considerations that companies face when diving into the crypto space.
They also highlight the power of community platforms like Reddit to amplify these critical conversations, influencing public opinion and potentially the decisions of other companies.
What&rsquo;s Next: As Reddit marches towards its IPO, the community&#39;s reaction to its cryptocurrency investment could influence not just the platform&#39;s financial strategies but also how it positions itself within the broader tech and financial ecosystems.
The ongoing discussions among Reddit users are a testament to the platform&#39;s dynamic community, capable of challenging and potentially shaping corporate decisions.
This dialogue between Reddit and its users represents a fascinating intersection of finance, technology, and community engagement, setting the stage for <a href="http://www.benzinga.com/news/24/02/37275981/reddit-sets-stage-for-major-2024-ipo-targets-march-launch-on-nyse">future interactions between tech companies</a> and their user bases.
Read Next:<a href="https://www.benzinga.com/markets/cryptocurrency/24/02/37262360/shiba-inu-killer-wif-to-go-turbo-parabolic-analyst-identifies-final-resistance-level">&nbsp;&#39;Shiba Inu Killer&#39; WIF To Go &#39;Turbo Parabolic?&#39; Analyst Identifies Final Resistance Level</a>
Image: Shutterstock

Coverage of Bitcoin, Etherum, Ripple and all the latest digital currencies.

Cryptocurrency

$BTC

$ETH

Did Reddit Bet Its IPO On Bitcoin? 'Sounds Like A Stupid Decision,' Redditor Says

For a long time, going public has been a &ldquo;badge of honor&rdquo; for numerous startup founders, and a synonym of prestige and validation in most innovation ecosystems. This stands true, even if M&amp;A exits have gradually become more appealing and <a href="https://www.sciencedirect.com/science/article/abs/pii/S037842661930278X">occur more frequently</a> than public listings.&nbsp;
Since the beginning of 2022, the IPO market <a href="https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-after-touch-and-go-2023-ipos-step-carefully-into-2024">has slowed down</a>, due to a variety of factors including rising interest rates and ongoing concerns of a recession. Yet, it is a more recent development that has the potential to prompt founders to reassess their priorities, and posit a much-needed question&mdash;Are public equity offerings still worth it?&nbsp;
You might have heard the latest about Elon Musk&rsquo;s $56 billion pay package, and how, after a lawsuit filed by a Tesla shareholder, was <a href="https://www.reuters.com/legal/judge-rules-favor-plaintiffs-challenging-musks-tesla-pay-package-2024-01-30/">recently voided by a judge</a>. Given Musk&rsquo;s public profile and status as one of the icons of Silicon Valley and beyond, this news made me wonder whether founders will now think twice before aiming for an IPO, and consider the financial and regulatory consequences and responsibilities that this comes with. Here are three reasons why, from my perspective, an IPO may not be worth it.&nbsp;
<h2>Three arguments against an IPO</h2>
<h3>#1: Trading restrictions</h3>
A common constraint entrepreneurs are likely to face after an IPO is the lockup period. During this timeframe, corporate insiders, investors, or employees are prohibited from selling or redeeming their shares.&nbsp;
The length of this lockup period is frequently under dispute. On the one hand, investors and employees prefer shorter periods, as this allows them to cash out early and get liquidity. On the other hand, underwriting banks tend to favor longer timeframes. By preventing insiders from selling their stock, financial institutions mitigate the risk of a drop in the stock price.
While companies might aim to balance this conflict of interests, from my experience, prices usually fall after the lockup period. And even if both the market and the company grow, the difference <a href="https://www.nasdaq.com/articles/what-happens-to-ipos-over-the-long-run-2021-04-15">might not be in your favor</a>.&nbsp;
<h3>#2: The company&rsquo;s valuation becomes heavily dependent on external factors</h3>
When a company is private, its market cap is the result of its own merits and achievements. However, once it becomes public, this value will be affected by several factors over which it has little or no control, including macroeconomic factors, industry trends, whether the company is part of an index and how this index performs, and the rating it is given by credit rating agencies.&nbsp;
Even news events surrounding the firm&rsquo;s competitors have an impact on the stock price. For example, last year, Amazon stock <a href="https://www.usatoday.com/story/money/2023/10/25/amazon-stock-drops-alphabet-earnings/71316177007/">fell over 5%</a> after Alphabet&rsquo;s earnings report fell short of expectations. Even more recently, Apple shares <a href="https://www.cnbc.com/2024/01/02/apple-stock-slips-more-than-2percent-after-barclays-downgrade.html">plunged 4%</a> after a Barclays analyst downgraded the stock rating and lowered its price target from $161 to $160.&nbsp;
<h3>#3: Excessive accountability requirements</h3>
Once your company is public, everything you do will be subject to public scrutiny. Similarly, the company will be subject to stringent regulations, governing everything from financial reporting to statements made by top management.
As a company representative, you will be obligated to disclose information, including profits and financial statements. Any lack of transparency or conflicts of interest that affect investors&rsquo; confidence can trigger stock crashes, damaging your company&rsquo;s market value.
<h2>The bottom line</h2>
While an IPO still serves as a milestone that vouches for a company&rsquo;s success by a large number of independent third parties, going public requires careful consideration. Alternatives such as an M&amp;A deal or staying private might be more in line with a company&rsquo;s interests.&nbsp;
For instance, if you are looking for liquidity and exit via an acquisition, you might obtain part of the proceeds immediately, even if a fraction of the payment is stretched over time. Sure, there might be cases in which the situation might be different, as you might be paid with shares of the acquiring company. But if your goal is immediate cash, an IPO might not be the solution many tout it to be.&nbsp;
Reporting and disclosure requirements&mdash;such as those mandated by the SEC/FCA/FCC, etc&mdash;are substantially less strict for private companies. This is important not only because of the &ldquo;freedom&rdquo; aspect, but because it allows you to make fast decisions when needed. Especially in today&rsquo;s fast-paced startup world, swift execution is key, and public companies could be hindered by bureaucracy. All in all, not all that glitters is gold, and before aiming to list your firm in the public markets, it is worthwhile to make sure that it is really what you need.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

All That Glitters Is Not Gold: Three Reasons Why an IPO Is Not The Best Strategy For Your Startup

SoftBank Group Corp (OTC:<a class="ticker" href="https://www.benzinga.com/stock/SFTBY#OTC">SFTBY</a>) (OTC:<a class="ticker" href="https://www.benzinga.com/stock/SFTBF#OTC">SFTBF</a>) backed Cohesity has agreed to the acquisition of the data protection business of Veritas Technologies LLC. The deal is valued at $3 billion, creating a combined entity worth $7 billion.
What Happened: Cohesity, a U.S.-based data security software company, is set to acquire the data protection business of Veritas, a subsidiary of Carlyle Group Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CG#NASDAQ">CG</a>). The deal, comprising cash and stock, is expected to be finalized by the end of the year, as per source-based report by Reuters.
The acquisition is anticipated to bolster Cohesity&#8217;s growth margins and facilitate its expansion into international markets. The combined annual revenue of the two firms is estimated at $1.6 billion.
CEO of Cohesity, Sanjay Poonen, highlighted the potential of the merged entity, and said, &#8220;You&#8217;ve got the fastest growth on our side and the best profitability on their side, combined together to be a profitable growth machine that&#8217;s innovating with AI.&#8221;
See Also: <a href="https://www.benzinga.com/news/24/02/36971942/former-trump-challenger-chris-christie-not-ruling-out-running-as-an-independent-would-need-to-see-a?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Chris Christie Is Not Ruling Out Independent Run To Challenge Donald Trump</a>
Notably, Cohesity&#8217;s AI-powered software is designed to help organizations safeguard and manage their data against cyber threats. The company has secured approximately $1 billion in equity and $2 billion in debt from investors, including Haveli Investments, Premji Invest, and Madrona, to finance the deal.
Cohesity and Veritas did not immediately respond to&nbsp;<a href="http://pro.benzinga.com/" target="_blank" rel="noreferrer noopener">Benzinga</a>'s&nbsp;request for comment.
Why It Matters: The acquisition of Veritas&#8217; data protection business is a significant move for Cohesity, especially in the context of its industry competition. The company&#8217;s biggest rival, Rubrik, is reportedly preparing for a stock market flotation in the near future.
This development also comes at a time when another SoftBank-backed company, Invitae Corporation, is <a href="https://www.benzinga.com/news/24/02/36938401/softbank-backed-genetic-testing-invitaes-descent-from-7b-valuation-to-near-bankruptcy">facing financial challenges</a>. Invitae, a medical genetics company, is reportedly considering filing for bankruptcy due to a substantial $1.5 billion debt burden.
On the other hand, SoftBank has been actively involved in the tech industry, with its <a href="https://www.benzinga.com/news/large-cap/23/09/34587555/softbanks-masayoshi-son-talks-ai-future-at-arms-historic-ipo">founder discussing the future of AI</a> at ARM Holdings PLC&#8216;s historic IPO in 2023. 
Read Next: <a href="https://www.benzinga.com/markets/equities/24/02/36974161/billionaire-investor-leon-cooperman-says-tesla-ceo-elon-musk-is-a-genius-but-hes-overcompensated?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Billionaire Investor Leon Cooperman Says Tesla CEO Elon Musk Is A Genius &#8216;But He&#8217;s Overcompensated&#8217;</a>
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NVTA

SFTBF

SFTBY

Softbank-Backed Cohesity To Acquire Veritas Data Security Unit For $3B: Report

&nbsp;Kyverna Therapeutics, Inc. (Kyverna), a patient-centered clinical-stage biopharmaceutical company focused on developing cell therapies for patients suffering from autoimmune diseases, today announced the pricing of its upsized initial public offering of 14,500,000 shares of its common stock at an initial public offering price of&nbsp;$22.00&nbsp;per share. All of the shares are being offered by Kyverna. The gross proceeds from the offering, before deducting underwriting discounts and commissions and other offering expenses payable by Kyverna, are expected to be&nbsp;$319.0 million. Kyverna&#39;s common stock is expected to begin trading on the Nasdaq Global Select Market on&nbsp;February 8, 2024&nbsp;under the ticker symbol &quot;KYTX.&quot; The offering is expected to close on or about&nbsp;February 12, 2024, subject to the satisfaction of customary closing conditions.

KYTX

Kyverna Therapeutics Prices Upsized Initial Public Offering 14.5M Common Shares At $22/Share

Perfect Moment Ltd. (&quot;Perfect Moment&quot;) (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PMNT#NYSE">PMNT</a>), a luxury lifestyle brand that combines fashion and technical performance for its ranges of skiwear, outerwear, swimwear and activewear, today announced the pricing of its initial public offering of 1,334,000 shares of its common stock at a public offering price of $6.00 per share, for gross proceeds of approximately $8 million, before deducting underwriting discounts and offering expenses. In addition, Perfect Moment has granted the underwriters a 45-day option to purchase up to an additional 200,100 shares of common stock to cover over-allotments, if any, at the public offering price, less the underwriting discount.

PMNT

Perfect Moment Prices Initial Public Offering Of 1,334,000 Common Shares At $6/Share For $8M In Gross Proceeds

Alibaba Group Holding Ltd (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>) has decided to put the initial public offerings (IPOs) of its logistics arm Cainiao Smart Logistics and brick-and-mortar chain Freshippo on hold due to challenging market conditions.
What Happened: Alibaba&#8217;s Chairman Joe Tsai announced the decision during an earnings call on Wednesday, citing unfavorable market conditions as the primary reason for the delay.
&#8220;Market conditions currently are just not in a state where we believe we can really truly reflect value, the intrinsic value of these businesses,&#8221; Tsai said.
&#8220;Having said that, we continue to explore value creation through separate financings of large business units,&#8221; Tsai said. 
&#8220;But given the challenging market conditions, as I said, we&#8217;re not in a hurry on the timing of these transactions.&#8221;
See Also: <a href="https://www.benzinga.com/markets/cannabis/24/02/36964863/dea-poised-to-reschedule-cannabis-this-week-somethings-brewing-in-the-white-house-says-this-insi?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">DEA Poised To Reschedule Cannabis This Week? Something&#8217;s Brewing In The White House, Says This Insider</a>
Alibaba&#8217;s Cainiao Smart Logistics Network Ltd. had previously <a href="https://www.benzinga.com/news/23/09/34918351/alibabas-cainiao-smart-logistics-network-files-for-hong-kong-ipo-what-investors-need-to-know">filed for its Hong Kong IPO</a> in September, with the first-time share sale expected to raise a minimum of $1 billion. However, the Chinese securities regulator requested additional financial and asset information in November.
Freshippo, on the other hand, began preparing for a public offering in April last year. The group&#8217;s CFO, Toby Xu, confirmed that Alibaba has a &#8220;strong&#8221; balance sheet with a &#8220;certain portion&#8221; of offshore cash, along with other options such as leveraging for the share buybacks.
Why It Matters: The decision to delay the IPOs of Cainiao and Freshippo comes after Alibaba reported a <a href="https://www.benzinga.com/news/earnings/24/02/36979600/why-is-alibaba-stock-trading-lower-wednesday">5% year-on-year revenue growth</a> for the third quarter of its fiscal year 2023, slightly missing analyst forecasts. The company&#8217;s new share buyback plan, aimed at boosting investor confidence, brings its total repurchase program to $35.3 billion over the next three fiscal years.
Despite the challenging market conditions, Alibaba&#8217;s other major business units, including the Local Services Group, Cloud Intelligence Group, and Digital Media and Entertainment Group, all reported growth. The company&#8217;s International Digital Commerce Group reported a 44% year-on-year revenue increase, surpassing Refinitiv analysts&#8217; estimates for 37.9% growth.
Alibaba&#8217;s decision to postpone the IPOs of Cainiao and Freshippo comes amid a series of strategic moves. Earlier this month, the company announced plans to <a href="https://www.benzinga.com/news/24/02/36912036/alibaba-plans-to-sell-off-grocery-and-retail-assets-doubles-down-on-e-commerce-core">sell off several consumer sector assets</a>, including Freshippo and retailer RT-Mart, to focus on its core e-commerce operations. This decision aligns with Alibaba&#8217;s strategic pivot under Tsai and CEO Eddie Wu towards focusing on its core e-commerce operations and shedding non-essential, unprofitable units.
According to data from <a href="http://pro.benzinga.com">Benzinga Pro</a>, Alibaba shares closed 5.87% lower at 73.64 apiece in the U.S. on Wednesday and plummeted 6.81% during the early trading hours in Hong Kong on Thursday.
Read Next: <a href="https://www.benzinga.com/markets/asia/24/02/36953993/china-stocks-surge-after-beijing-announces-new-measures-xi-jinping-steps-in?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">China Stocks Surge After Beijing Announces New Measures, Xi Jinping Steps In</a>
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Earnings

Citigourp Global Markets 2% Protected Notes Linked To The Djia

Alibaba Chairman Says 'Not In A Hurry' For Cainiao, Freshippo IPOs Due To 'Challenging Market Conditions

In a recent episode of CNBC&#8217;s &#8220;Mad Money,&#8221; host Jim Cramer warned investors to stay away from the initial public offering (IPO) of Amer Sports, citing the company&#8217;s &#8220;less than ideal&#8221; balance sheet.
What Happened: Amer Sports, the parent company of renowned sports brands such as Wilson and Arc&#8217;Teryx, saw its IPO debut on Thursday, <a href="https://www.cnbc.com/2024/02/01/cramer-tells-investors-to-stay-away-from-amer-sports.html">reported</a> CNBC. Despite the company&#8217;s initial stock price of $13.40 per share, which resulted in a $6.3 billion valuation, Cramer advised against investing in it. The company had initially aimed for an $8.7 billion valuation. 
Cramer highlighted Amer Sports&#8217; substantial debt of $2.1 billion, describing its balance sheet as &#8220;less than ideal.&#8221; He also raised concerns about the company&#8217;s overreliance on the Chinese market and the potential impact of the country&#8217;s economic struggles.
"So far, this is looking like another out of favor IPO, even if its lowball price allowed the stock to get a like, I guess you could call it a decent pop," he said. 
"And, I've got to tell you, Amer Sports is a great example of the kind of deals I wish we weren't seeing."
Despite acknowledging Amer Sports&#8217; recent growth, Cramer attributed much of it to the lifting of lockdowns in China, which he deemed as unsustainable.
See Also: <a href="https://www.benzinga.com/markets/cryptocurrency/24/01/36828433/forget-gamestop-stock-now-theres-a-gamestop-memecoin-and-its-worth-millions?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Forget GameStop Stock, Now There&#8217;s A GameStop Memecoin And It&#8217;s Worth Millions</a>
Why It Matters: Amer Sports&#8217; IPO is the latest in a series of IPOs that have failed to meet market expectations. This trend has raised concerns about the overall health of the IPO market.
Earlier in January, <a href="https://www.benzinga.com/news/24/01/36773387/sheins-backers-look-to-offload-shares-at-30-discount-amid-fading-hopes-for-ipo">Shein&#8217;s backers struggled to offload shares at a 30% discount</a>, casting doubts over the company&#8217;s much-anticipated IPO in the U.S. Companies such as <a href="https://www.benzinga.com/news/24/01/36841529/volkswagen-hits-brakes-on-battery-unit-sale-and-ipo-amid-ev-market-slowdown">Volkswagen have postponed their IPOs</a> due to concerns about the electric vehicle (EV) market.
The IPO market has been experiencing significant turbulence since 2021, with the valuations of numerous companies debuting on the U.S. stock market dropping by 63%. This volatility has been a <a href="https://www.benzinga.com/markets/equities/23/10/35362319/ipos-were-crushed-this-year-and-venture-capitalists-are-worried">cause for concern in the venture capitalist</a> community.
Despite this, <a href="https://www.benzinga.com/insights/ipos/24/01/36868094/amer-sports-inc-ipos-tomorrow-heres-what-you-need-to-know">Amer Sports&#8217; IPO took place</a> on the NYSE exchange under the ticker AS. The company offered shares at an expected price between $16.00 and $18.00 per share with an insider lock-up period of 180 days ending on July 30. This development was closely watched as it was seen as a barometer for the health of the IPO market.
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/24/01/36838892/dogecoin-killer-shiba-inu-burn-rate-skyrockets-over-1-500-on-new-plan-to-integrate-1000-ne?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">&#8216;Dogecoin Killer&#8217; Shiba Inu Burn Rate Skyrockets Over 1,500% On New Plan To Integrate 1000 New Projects To Shibarium</a>
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Jim Cramer Advises Investors To Steer Clear Of Amer Sports Amid 'Hit Or Miss' IPO Market: 'The Kind Of Deals I Wish We Aren't Seeing'

Volkswagen AG (OTC:<a class="ticker" href="https://www.benzinga.com/stock/VWAGY#OTC">VWAGY</a>) has decided to postpone the sale of a stake in its battery unit and its initial public offering (IPO) due to a slowdown in the electric vehicle (EV) market.
What Happened: The German automaker has put discussions with potential investors on hold and is no longer prioritizing the sale of its PowerCo business, <a href="https://www.bloomberg.com/news/articles/2024-01-30/vw-postpones-battery-unit-stake-sale-ipo-plan-as-ev-uptake-cools">reported</a> Bloomberg on Tuesday. The company&#8217;s preference shares experienced a 1% drop following the announcement.
The decision comes amid concerns about VW&#8217;s ability to produce batteries at scale. The company is reevaluating its plans for the long-term funding of PowerCo, a unit set up in 2022 to challenge Tesla Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) in the EV market.
See Also: <a href="https://www.benzinga.com/markets/equities/24/01/36817515/is-it-time-to-buy-tesla-stock-after-thursdays-bloodbath-heres-what-one-long-term-technical-chart?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Is It Time To Buy Tesla Stock After Thursday&#8217;s Bloodbath? Here&#8217;s What One Long-term Technical Chart Says.</a>
Despite the current setback, VW is still preparing for &#8220;investor readiness from 2024 onwards,&#8221; according to a statement to Bloomberg News.
Why It Matters: The EV market has been showing signs of a slowdown. In December, VW-backed JAC began <a href="https://www.benzinga.com/news/23/12/36410374/volkswagen-backed-jac-begins-mass-production-for-sodium-ion-battery-powered-ev-in-china">mass production of the Yiwei EV</a>, the first EV in the world to be powered by a sodium-ion battery. The Yiwei EV is expected to start delivering vehicles in January 2024.
In January, VW announced that <a href="https://www.benzinga.com/news/24/01/36549317/volkswagen-adds-chatgpt-in-the-drivers-seat-for-these-models-but-only-in-europe-for-now">it would incorporate ChatGPT</a>, developed by OpenAI, into all its car models equipped with the IDA voice assistant. The rollout, set for the second quarter, will begin in Europe.
However, despite these advancements, the EV market has been showing signs of slowing down. In the same month, QuantumScape Corp., a company VW is partnering with to develop solid-state batteries, saw <a href="https://www.benzinga.com/news/24/01/36831997/whats-up-with-quantumscape-stock">its shares surge after VW&#8217;s PowerCo </a>provided positive results from tests using QuantumScape&#8217;s solid-state battery. But the stock pulled back steadily from the move&#8217;s strength in the following weeks.
Read Next: <a href="https://www.benzinga.com/news/24/01/36820985/teslas-fremont-factory-once-left-for-dead-by-gm-and-toyota-during-great-recession-tops-north-america?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Tesla&#8217;s Fremont Factory, Once Left For Dead By GM And Toyota During Great Recession, Tops North American Production For 3rd Straight Year</a>
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TSLA

VWAGY

Volkswagen Hits Brakes On Battery Unit Sale And IPO Amid EV Market Slowdown

Online social platform, Reddit, is reportedly being encouraged by potential investors to aim for a valuation exceeding $5 billion <a href="https://www.benzinga.com/news/23/11/35973172/reddit-eyes-2024-ipo-amid-volatile-market-estimates-15b-valuation-report">in its impending initial public offering (IPO)</a>.
As per a report from <a href="https://www.bloomberg.com/news/articles/2024-01-28/reddit-advised-to-target-at-least-5-billion-valuation-in-ipo">Bloomberg</a> on Sunday, Reddit could go public as soon as March. The success of the IPO, however, will hinge on the state of the IPO market, which has experienced difficulties in recent years.
While Reddit&#39;s current private market valuation is estimated to be below the $5 billion mark, there were hopes in late 2021, when the company first began preparing for its IPO, that it could reach as high as $15 billion.
See Also:&nbsp;<a href="https://www.benzinga.com/markets/equities/24/01/36817481/rivian-poaches-apple-executive-involved-in-early-stages-of-tech-giants-self-driving-project-repo">Rivian Poaches Apple Executive Involved In Early Stages Of Tech Giant&#39;s Self-driving Project: Report</a>
Investors remain hopeful that 2024 will signal a more active year for the IPO market, buoyed by profitable tech startups such as Instacart and Klaviyo going public last year. Further optimism is driven by the possibility of rate cuts by the Federal Reserve and a weakening M&amp;A market.
Reddit&#39;s intended valuation indicates a departure from the era of sky-high social media company valuations. The last social media company to go public was Pinterest in 2019, with a valuation of $10 billion.
Launched in 2005, Reddit, often referred to as &quot;the front page of the internet&quot;, was sold to Cond&eacute; Nast for a mere $10 million in 2006. The company has experienced significant growth, particularly during the pandemic, when it birthed the meme-stock craze.
Read Next:&nbsp;<a href="https://www.benzinga.com/news/23/12/36057047/reddit-co-founder-shares-how-he-landed-an-iconic-cybertruck-at-delivery-event-elon-musk-is-all-heart">Reddit Co-founder Shares How He Landed An &#39;Iconic&#39; Cybertruck At Delivery Event: Elon Musk Is All Hearts</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock

Reddit Aims For Hefty $5 Billion Valuation In Upcoming IPO

The highly anticipated initial public offering (IPO) of Shein, a global online fashion giant, is facing a significant setback as investors are struggling to sell shares at a 30% discount in private market deals.
What Happened: Investors are finding it challenging to offload Shein shares in private market transactions, with the company&#8217;s valuation dropping to as low as $45 billion, <a href="https://www.bloomberg.com/news/articles/2024-01-25/shein-backers-offer-to-sell-at-30-discount-as-ipo-prospects-dim">reported</a> Bloomberg on Thursday. This is a significant decrease from the $66 billion valuation Shein achieved during a fundraising round in May.
Despite the reduced valuations, finding buyers for the shares has proven to be a challenge, raising concerns about further devaluation. These developments are casting a shadow over Shein&#8217;s much-anticipated IPO in the U.S., which was expected to reach a valuation of up to $90 billion.
Shein, which was once a dominant player in the cut-rate apparel market, is now facing stiff competition from Temu, a direct rival launched by Chinese e-commerce giant PDD Holdings Inc about a year ago. Additionally, major clothing brands have accused Shein of copyright infringement.
See Also: <a href="https://www.benzinga.com/markets/cryptocurrency/24/01/36729981/bitcoin-ethereum-dogecoin-drop-as-grayscale-gbtc-outflows-rise-to-billions-of-dollars-anal?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Bitcoin, Ethereum, Dogecoin Drop As Grayscale GBTC Outflows Rise To Billions Of Dollars — Analyst Says King Crypto Saw &#8216;Violent Moves&#8217;</a>
These challenges have led to a significant drop in Shein&#8217;s valuation, in line with the broader trend of declining valuations for startups and technology companies as investors grow wary of riskier assets amid an uncertain economic outlook.
Why It Matters: Shein&#8217;s IPO prospects have been under scrutiny for some time. The company, known for disrupting an industry dominated by Zara and H&amp;M, confidentially planned to go public in the U.S. in 2023. It <a href="https://www.benzinga.com/markets/equities/23/11/35974241/online-fashion-and-lifestyle-retailer-shein-plans-us-ipo-with-up-to-90b-valuation-report">raised $2 billion at a $66 billion</a> valuation and aimed for a valuation of up to $90 billion.
However, the company&#8217;s IPO plans have been under fire, with U.S. lawmakers launching an inquiry into Shein&#8217;s data privacy practices and its relationship with the Chinese Communist Party. This inquiry, led by Rep. Cathy McMorris Rodgers (R-WA) and Rep. Gus Bilirakis&nbsp;(R-FL.), comes amid concerns about the rising popularity of these platforms in the West and the <a href="https://www.benzinga.com/government/23/12/36340412/alibaba-rival-sheins-ipo-plans-under-fire-congressional-inquiry-into-companys-data-privacy-and-force">risks they pose to e-commerce</a>, consumer safety, and data privacy and security.
Additionally, Shein has been facing <a href="https://www.benzinga.com/news/23/12/36231203/alibaba-rival-temu-takes-shein-to-court-what-does-this-mean-for-us-fashion-retail">legal challenges from Temu</a>, which filed a lawsuit against Shein, alleging intensified anti-competitive practices. This legal action reignited a previous conflict between the two companies, each having withdrawn earlier lawsuits against the other.
Read Next: <a href="https://www.benzinga.com/markets/cryptocurrency/24/01/36707323/trump-against-cbdc-shiba-inus-whale-transaction-volume-soars-dogecoin-predicted-to-hit-5-m?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Trump Against CBDC, Shiba Inu&#8217;s Whale Transaction Volume Soars, Dogecoin Predicted To Hit $5 Mark And More: This Week In Crypto</a>
Image Credits &#8211; Shein
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