“The old gray mare, she ain’t what she used to be,From the children’s rhyme: The Old Gray Mare
Ain’t what she used to be, ain’t what she used to be,
The old gray mare, she ain’t what she used to be,
Many long years ago…”
Remember when the term “IPO” and “Unicorns” conjured up images of riches; for some not just riches, but mega-riches?
Oh, how the times have changed.
It is hard to fathom just how utterly ridiculous the narrative for investment riches, business ethics and more have morphed from a once laudable pursuit to a complete and utter cesspool of lies, deceit, and in my opinion – outright criminal fraud. This is what the “disruptive world of tech” has brought us.
Painting with a broad brush? Of course I am, but that doesn’t mean I’m far from right. For if you want a little of the “finer points” as they say. I have two words for you: San Francisco. How are all those “riches” doing for you there? Hint: It’s going to get a whole lot worse for both if the current “IPO” revelations stick around half as long as the excrement on its sidewalks.
The very idea that a company, any company, was allowed to come to the public markets with: no net profits, no understandable metrics to ever achieve them, and last, but certainly not least, to openly state they may never become profitable –ever – was not only a ludicrous notion, but I’ll say it again, in my opinion – outright criminal.
The only aspect in all of this that makes these accusations themselves appear minor in comparison (which is no small feat by any measure) is that these entities were told/sold to be worth not just $Billions (unicorns), but for some 10’s of $Billions (deca-corns), and for the one that was suppose to be the “unicorn of unicorns” Uber™, a media fueled whisper of over 120 $Billion. I coined that to be a “farce-icon.”
Below is a “picture” as they call them in “The Valley” for a representative sample of just how all these “prancing ponies” of mythical stature have been doing as of late. You know, when these so-called “markets” have not only recovered any prior losses, but have now been “juiced” once again with rate cuts, an ending of balance sheet normalization, and more promises of “do what ever it takes” from central bankers across the globe.
By right, in the words of the late Rick Ocasek, it should be the optimal time to once again, “Let the good times roll,” yes? To wit:
Maybe a better quote would be from Bob Dylan, “For the times they are a-changin’.”
For those that think I’m just singling out just the obvious to make my point (which by definition should eliminate any surmises) here a few more of these once magical wealth enhancers, again, to wit:
The first is Spotify™, then “Slack™, followed by Snap™. The time frames represented are by weeks, except for the center and is via a daily. This was so I could fit them all together nicely showing their performance (or lack thereof) since their IPO debut.
What needs to be pointed out here (or reminded) is that the above downward progression in the above is happening precisely during the time that the Federal Reserve has not just signaled, but actually implemented, a complete reversal to once again provide the circumstances that was supposedly the ideal “wind beneath their hoofs” as to help propel these mythical business models to even higher heights. And the results? Just look to the above for clues.
Now some of you may be looking at that chart on the right of the above (e.g., Snap) and saying to yourself, “But, but, but…that’s going up?!” Yes it is, and it’s precisely why I included it to help further knock down any sort of accusations that I’m surmising.
Remember the Snap IPO media frenzy in 2018? You remember, don’t you? Remember all the mainstream business/financial media talking heads on TV showing you just how “Amazingly fantastic!” it was to be able to put cartoon donkey ears, rabbit eyes and more over your face, “And in real time!!”
This was the illusion (more like delusion) that helped build a narrative that this company was worth $billions, upon $billions, upon $billions. Hint: I think it lost that narrative – along with those $billions.
By the end of 2018 Snap had a stock value of under $5. It was on a fast progression (as in lost 2/3rd’s of its remaining value in mere months and was then less than $4 away) from needing to be reclassified to a “Penny Stock,” with the very real possibility of being a future candidate for de-listing.
So here’s the question: Did you hear any of this over those ensuing months? And for those of you that found this “investment” residing in your retirement account on the advice of “You need exposure to growth companies such as this to protect you from inflation for a true diversified investment strategy?” You have my condolences.
Here’s what you have heard of late (paraphrasing the same “press”) “Snap is on fire! Its stock has now doubled in value!!” Now, a few months later bringing us to today “Snap’s stock has nearly doubled again! It’s nearly quadrupled in value in 2019. This shows this stock is back!!”
Here’s what they’re not saying: It’s still only worth about 1/2 of what some that “bought in” to all that hype on its IPO debut. That’s why I wanted to make sure I included it in the above. For it’s a far cry from what you’re hearing or told/sold across much of the same media sources. Oh yeah, and their “glasses” are back also. You know, because they’re supposedly a “camera company.” So there’s that I guess, because it worked so well the first time around.
The only reason (my conjecture) they have bounced, is at that valuation (or should I say little?), it’s an obvious buy-out, or take-over play in some consolidation deal, or as the media likes to push “Merger Monday!” feature.
I believe many of the more prudent short sellers covered leaving it the ability to float back up via pure speculative positions on any possible buy-out. Any remaining shorts (i.e., those waiting for zero, or just speculators) are just enabling the algos to engage the hunt, seek and destroy program attacking any higher positioned resting orders.
But I think the days of dreaming of riches (let alone getting back to its debut highs) are about as probable as their newest foray to re-introduce their “glasses” has in succeeding. We shall see.
Speaking of we…
We can not finish today without bringing up what may go down in unicorn IPO history as the company that may single-handedly bring down the entire farce that is “It’s different this time” disruptive tech.
Ladies and gentlemen I bring you , WeWork™.
But I would like to leave you with not my words about the above, but rather, what appears to now be obvious to anyone with modicum of business acumen. Those words?
Hint: read the aforementioned link article and decide for yourself. Then apply the same to all of them and rethink everything you’ve been told/sold all while remembering…
“You don’t need a weatherman to know which way the wind blows.”
What most needed was an honest broker to both steer them and keep their retirement accounts clear of these storm depressions of investment when they first appeared on the horizon.
But that’s just like asking for another mythical creature, is it not?
© 2019 Mark St.Cyr