ColumnFabulous New Issues

Christoph Bruns
Christoph BrunsLyndon French

A flood of new issues is currently pouring over the American stock market. Whether Unity Software, Snowflake, Luminar, Door Dash or Airbnb, to name just a few, on the stock exchange you almost beat yourself up to get hold of pieces from such wonder companies. The market capitalizations of the mentioned IPOs are sometimes gigantic. Snowflake and Airbnb have a market value of over $ 100 billion each. In the case of Airbnb, it does not matter that the company, like almost all tourism companies, is actually one of the losers of the corona pandemic. Investors did not long suffer from such problems and immediately appreciated the supposedly rosy long-term perspective.

The relations are particularly blatant with Snowflake. This software house aims to make $ 500 million in sales and a loss of $ 220 in 2020. The company’s market value is now a whopping $ 100 billion and Warren Buffets Berkshire Hathaway has a stake of a good 12 percent.

Snowflake Inc share

Snowflake Inc Share Chart
Course provider: L&S RT

Luminar Technologies is no less fat. The provider of recognition technology for self-driving cars has hardly had any sales so far, but can boast with a market capitalization of over 9 billion dollars. A special feature of Luminar is the type of IPO, because Luminar was privately acquired from an exchange shell (Spac) and thus brought to Wall Street. It was similar before at Nikola Corp., the electric truck visionary from Arizona. In the meantime, the market capitalization here reached $ 20 billion, although the company has not yet made any sales.

Magician Elon Musk

The above examples show the optimism with which investors are currently traveling on Wall Street, especially when it comes to companies in the software, Internet, digital and electric drive sectors.

The rosy stock exchange climate for so-called technology stocks has not gone unnoticed by companies already listed on the market. For the second time within a few weeks, the magic company Tesla used the fairytale price upswing of its papers to raise money from investors by means of a capital increase. In this way, the magician Elon Musk turns paper profits into real money. Once again, this proves his pragmatic cleverness. The native South African had also shown himself to be a true master when collecting government subsidies – whether in California, Nevada or Brandenburg. The combination of vision and pragmatics has made the thoroughbred entrepreneur the second richest person in the world. Certainly the big German carmakers, who together are not even worth a third of what Tesla is currently bringing to the top, will be amazed and green with envy.

Compared to the madnesses on Wall Street, the development in Germany is comparatively moderate. After all, there has also been a revival in the market for new issues in this country if you think of Teamviewer, Siemens Energy, Hensold, Compleo Charging, etc. That is also necessary, because the price list on the Deutsche Börse has been shrinking for years due to takeovers and mergers. But at least the new issues make the market more interesting.

Christoph Bruns is fund manager, board member and main shareholder of the investment company Loys AG. Here you will find more columns by Christoph Bruns


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