Market RoundUp: CrowdStrike Strikes A Chord With Its IPO

in Market RoundUp by

Today’s Headlines:

  • CrowdStrike Closes 70% Above Its IPO price
  • The Woes Of Walmart With Jet.com
  • FuelCell Energy Climbs Charts On Exxon Licence Agreement
  • Beyond Meat Rallies Back
  • Big Tech’s Been Beat This Month

June 12th, 2019 Market Close

S&P
2,879.83 -0.20%
Dow
26,004.90 -0.17%
Nasdaq
7,792.72 -0.38%
CRWD
58.00 +70.6%
FCEL
0.51  +59.4%
BYND
141.97 +5.9%

CrowdStrike Closes 70% Above Its IPO Price

What to know:

CrowdStrike (CRWD) closed its first day trading with a share price of $58.00, posting over 70% gains from its IPO price of $34.  The IPO generated over $612 million in total gross proceeds, over 62% more than anticipated. CrowdStrike provides its cloud-based security software to customers like Credit Suisse, Amazon Web Services, and Tribune Media. As such, it’s no surprise the company’s market cap pushed past $11 billion today, nearly quadruple the valuation from its last private round in 2018. After the dust settled, Warburg Pincus owns a stake worth over $3 billion, Accel a stake over $2 billion, and Alphabet’s CapitalG controls shares worth over $1 billion.

Why it matters:

Although CrowdStrike has yet to be profitable, it has had impressive revenue growth:

Additionally, the company maintains that they have defined a new category called the Security Cloud, which would enable them to transform the security industry in a similar manner as cloud transformed CRM, HR, and service management industries. If true, CrowdStrike could post impressive earnings throughout this year, especially with its strategic partnership with Dell in consideration. The company also has more than 2,500 subscribed customer worldwide, including 37 of the top 100 global companies and 9 of the top 20 major banks.

Read more: https://www.marketwatch.com/story/crowdstrike-ipo-5-things-to-know-about-the-cybersecurity-unicorn-2019-05-14

The Woes of Walmart With Jet.com

What to know:

Walmart has announced plans for a sweeping overhaul of Jet.com, the e-commerce startup it had purchased for $3.3 billion in 2016. The overhaul will integrate any remaining Jet.com staff into its operations and still maintain the website.

Why it matters:

Walmart acquired Jet.com in order to improve its ability to reach urban and millennial shoppers. The Jet overhaul is the latest indication of Walmart’s attempts to rearrange the ways it reaches shoppers. For instance, earlier this year, Walmart ended a delivery partnership with Deliv.

Overall, Walmart’s online sales have surged almost every quarter since the Jet.com deal, as Jet’s people have infused speed into Walmart’s once slow digital services. However, Jet sales of $689 million in 2019 have fallen well short of its forecasted revenue of $1 billion. Despite this, Walmart e-commerce CEO Marc Lore still states that, “Jet continues to be a very valuable brand to us, and it is playing a specific role in helping Walmart reach urban customers.”  

Read more: https://www.cnbc.com/2019/06/12/jetcom-president-simon-belsham-to-step-down-as-walmart-eliminates-role.html

FuelCell Energy Climbs Charts On Exxon Licence Agreement

What to know:

FuelCell Energy (FCEL) is up 59.1% after announcing a new licence agreement with ExxonMobil. The agreement grants a non-exclusive, worldwide licence to Exxon to use FuelCell Energy’s “patents, data, know-how, improvements, equipment designs, methods, processes… to research, develop and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources.”

Why it matters:

This is not the first partnership between the two companies. ExxonMobil also partnered with FuelCell Energy in 2016 to advance technology that could improve its carbon dioxide capture and storage (CCS) abilities and the efficiency of large natural gas-fired plants. Yesterday’s announced licensing agreement comes right in line with the multiple production-increasing projects that Exxon highlighted in its shareholder meeting last Wednesday. Exxon expects to increase its annual earnings potential by more than 140% and double potential annual cash flow from operations by 2025 (from 2017 adjusting earnings), and this new partnership with FuelCell may help them achieve that.

Beyond Meat Rallies Back

What to know:

Despite being down over 30% last market close, Beyond Meat (BYND) has rallied back 12.6% after Tim Hortons declared that it will sell the company’s product throughout its 4,000 restaurants in Canada. The chain plans to offer the Beyond Meat sausage patty in three of its breakfast sandwiches.

Why it matters:

Last year, Beyond Meat struck a similar deal with burger chain A&W to offer their plant-based products in the chain’s restaurants. Demand quickly overwhelmed Beyond Meat’s ability to supply, indicating that plant-based eating is going more mainstream. Yesterday’s partnership makes Tim Horton’s the second Canadian restaurant to offer Beyond Meat’s products. Despite criticisms of Beyond Meat’s inability to make profit thus far, the Tim Horton’s deal could indicate profitability coming in the near future.  

Read more: https://www.cnn.com/2019/06/12/business/beyond-meat-tim-hortons/index.html

Big Tech’s Been Beat This Month

What to know:

Surprisingly, the information technology sector has taken second seat to the materials sector this past June to date. As of Wednesday evening, the materials sector is up 9.5% (while the tech sector is up only 6.3%) and is heading towards its best monthly gain since October of 2015 where it gained 13.45%. Materials represents companies involved in the discovery, development, and processing of raw materials.

Why it matters:

Despite having a rough May with stock prices falling, the materials sector has had a large rebound due to hopes that global central banks will loosen monetary policy argue Wall Street Analysts. In addition, the Federal Reserve Chairman Jerome Powell said he would consider altering policy to maintain economic growth. Quincy Krosby, chief market strategist at Prudential Financial, states, “The market started to sense that the Fed was starting to transition from a pause to a more actively dovish stance.” Announcements that seem to strengthen the economy-sensitive materials sector can bring changes in stock performance.

Read more: https://www.marketwatch.com/story/this-sp-500-sector-is-having-its-best-month-in-about-4-years-trouncing-tech-stocks-2019-06-12

Financial Term of The Day:

initial public offering (IPO): The process of offering shares of a private company to the public for the first time. Companies will typically use IPOs to raise capital.


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