Overview
This episode of "What Are Your Thoughts?" covers the resurgence of IPO activity, the current dynamics in public and private markets, major trends in AI and tokenization, market performance highlights, and key stock analysis, with guest expert Aaron Dylan providing deep insights on IPOs and private company valuations.
IPO Market and Private Company Trends
- The IPO window has reopened, with notable successes from companies like CoreWeave and Circle.
- Timing and market conditions are crucial, as demonstrated by Circle’s well-timed IPO aligned with legislative action (Genius Act).
- Concerns persist about IPO pricing and how much cash is left on the table for employees and early shareholders.
- The secondary private market is active but relationship-driven, enabling trading of major private companies like SpaceX, OpenAI, Stripe, and Anduril.
- Debt financing is increasingly used by AI and data firms to build infrastructure without further equity dilution.
Notable Pre-IPO Companies and Sectors
- Safe Super Intelligence (spun out of OpenAI) draws high valuations and attention.
- Stripe and Databricks remain large, private, and slow to IPO due to founder preferences.
- Defense tech (e.g., Anduril) is highlighted as a future hot IPO, appealing for its AI and hardware integration backed by strong investors.
- AI application layers are starting to emerge, including legal sector-focused Harvey AI.
- Meta is aggressively recruiting AI talent from startups, signaling competition and consolidation in the space.
Tokenization and Market Innovation
- Robinhood’s launch of tokenized versions of private company shares (e.g., SpaceX, OpenAI) could be a game-changer for broadening access to private equity.
- Tokenization is expected to allow 24/7 trading, fractionalization, and global access, especially benefiting investors outside the US.
- Robinhood’s growth and innovation place it as a leader over traditional brokerages and crypto players for retail access to tokenized assets.
US and International Market Performance
- The S&P 500 reached new all-time highs; top-performing stocks came from diverse sectors, including AI, utilities, industrials, and financials.
- International markets significantly outperformed US stocks year-to-date, partly due to a sharply weaker US dollar and actual earnings growth abroad.
- Defensive sectors provided stability during drawdowns, while technology saw sharp corrections but quickly recovered.
Investor Psychology and Market Patterns
- Data indicates investing at all-time highs historically results in better average returns than waiting for pullbacks.
- Bull markets often feature speculative excesses, but these are generally side effects rather than core risks.
Featured Stock Analysis
- Toast (TOST) is highlighted for its rapid growth in restaurant POS and software, recent profitability, and upsell opportunities in the hospitality industry.
- Risks include restaurant sector cyclicality, competition, and rising costs from new service rollouts.
Key Decisions
- Feature tokenization: Robinhood's move to tokenize private and, eventually, public shares is positioned as a strategic leap for retail investing access.
Action Items
- TBD – Viewers/Listeners: Visit agdillon.com/subscribe for IPO and private market research updates.
- August – Monitorers of Toast stock: Watch for Toast's next earnings report as a potential breakout catalyst.
- TBD – Compound team: Return to tokenization discussion as the sector evolves and more assets are included.
Questions / Follow-Ups
- Will Robinhood’s tokenization initiative create sustained investor demand and liquidity for private company tokens?
- How will broader access to private equity through tokenization change the market landscape for both retail and institutional investors?
- Will international outperformance persist, and how will US investors respond in terms of future fund flows?