Cheat Sheet: Palantir, Ant and Other Tech Listings
Cheat Sheet: Palantir, Ant and Other Tech Listings
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Your tech listing cheat sheet
The past few days have seen a flurry of tech companies file to go public, taking advantage of investors’ hunger for high-growth, high-tech businesses in an increasingly digital world — a shift accelerated by the pandemic. Here’s what to know about some of the most important offerings in the pipeline:
In short: The data-mining government contractor proudly declared that it wasn’t like other Silicon Valley companies, which is belied by its embrace of many of the trappings of big tech firms.
In its own words: “Our welfare and security depend on effective software.”
The plan: A direct listing on the New York Stock Exchange that, unusually, includes a lock preventing existing investors from selling until next year.
How much money is it losing? The company hasn’t turned a profit since its founding in 2003. Last year, its revenue grew by 25 percent, to more than $740 million, but it lost $580 million, about the same as it lost the year before.
What’s interesting: Alex Karp, Palantir’s co-founder and C.E.O., wrote a sharply worded letter to investors — a manifesto, really — in its prospectus that is making waves in tech, finance and policy circles. “Our company was founded in Silicon Valley. But we seem to share fewer and fewer of the technology sector’s values and commitments,” he said.
• Unlike other tech companies that harvest and monetize user data, a major part of Palantir’s business is selling software to governments with a mission to “to target terrorists and to keep soldiers safe,” he wrote. The company has “chosen sides,” Mr. Karp noted, and does not do business with any “adversaries” of the U.S. (read: China).
• Palantir still resembles its Silicon Valley brethren in important ways, and not just because it’s losing money. It plans to go public with several classes of shares, including “Class F” stock that give its founders — Mr. Karp, Stephen Cohen and the billionaire Peter Thiel — precisely 49.999999 percent of votes regardless of how many shares they own. Such ironclad control for founders is very on-trend for the Valley.
? ANT GROUP
In short: The Chinese payment giant, an affiliate of Alibaba, is poised for a mammoth offering.
In its own words: “We do not believe bigger is better; our pursuit is sustainable development that lasts at least 102 years.”
How much money is it losing? Unusually for tech companies coming to market in recent years, Ant is profitable — very profitable. The company’s prospectus is littered with huge numbers: Last year, it generated $17 billion in revenue and earned $2.5 billion in profit by handling $16 trillion worth of transactions on its Alipay network, $500 billion in investments and $290 billion in loans.
What’s interesting: The prospectus describes Alipay as a “ubiquitous super app,” which isn’t an overstatement: It has more than one billion users and is relied on by 80 million merchants. Thanks to its dominance in China, it is targeting a market cap above $200 billion, which would make it bigger than Goldman Sachs and Morgan Stanley combined.
In short: The company, co-founded by Dustin Moskovitz, who helped set up Facebook, makes project management software for companies, especially for remote teams (which so many are these days).
In its own words: “Our mission is to help humanity thrive by enabling the world’s teams to work together effortlessly.”
The plan: A direct listing on the New York Stock Exchange.
How much money is it losing? Its sales nearly doubled in the year to January, to $143 million, and its losses more than doubled, to $119 million, during that period. Of note: The company’s founders are pledging 100 percent of their equity for “philanthropic purposes.”
In short: The cloud-based data storage and software company both competes and cooperates with larger rivals such as Amazon and Microsoft.
In its own words: “The public cloud is becoming the new center of gravity.”
The plan: A traditional listing on the New York Stock Exchange.
How much money is it losing? Revenue nearly tripled in its latest fiscal year, to $265 million, while its losses doubled, to just under $350 million.
? UNITY SOFTWARE
In its own words: “We believe the world is a better place with more creators in it.”
The plan: A traditional listing on the New York Stock Exchange.
How much money is it losing? It lost $163 million last year, a bit more than the year before, on $542 million in revenue, up 42 percent on the previous year.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.
Here’s what’s happening
President Trump drew on his office’s trappings on the second day of the Republican convention, breaching the traditional boundaries between campaigning and governing. Speakers such as the first lady, Melania Trump, and Secretary of State Mike Pompeo cited his accomplishments. Tonight’s lineup includes Vice President Mike Pence, the senators Marsha Blackburn and Joni Ernst, and Mr. Trump himself (again).
More airline job cuts add pressure for additional aid. American Airlines warned that it may lay off up to 19,000 workers by October, on the heels of Delta preparing to furlough nearly 2,000 pilots. The embattled industry is trying to persuade Congress and the White House to provide another stimulus package.
McDonald’s is expanding its investigation of its former C.E.O. The company said it was examining whether Steve Easterbrook covered up misdeeds by other employees, in addition to accusing him in a lawsuit of lying about sexual relationships with staffers.
Federal prosecutors accused Teva of price-fixing. The pharmaceutical company’s U.S. division faces charges of conspiring with rivals to prop up prices for generic drugs. It is the latest case in a sprawling inquiry into pricing practices in the industry. The investigation has already yielded $426 million in criminal penalties.
One of soccer’s biggest stars is up for grabs, and millions are on the line. Lionel Messi told F.C. Barcelona, his club for two decades, that he wants to leave. That sets up a race to secure the 33-year-old’s talents — and a contract battle: The player wants to leave for no transfer fee, but Barcelona has reminded rivals that his “buyout” clause is 700 million euros, or about $827 million.
The inside scoop on Microsoft’s audacious TikTok bid
As TikTok scrambles to sell itself to an American company on orders from President Trump, Microsoft is still seen as the likeliest buyer. But how it ended up in talks to acquire the Chinese-owned video app is a complicated tale of coincidence and opportunity, Mike Isaac and Andrew report in The Times.
Microsoft was originally drafted in July as a potential minority investor, as ByteDance, TikTok’s parent company, and investors like Sequoia and General Atlantic searched for a way to mollify the Trump administration’s concerns over national security. The software giant was approached by Zhang Yiming, ByteDance’s C.E.O. and a former Microsoft employee.
The American company eventually saw an opportunity for a bigger deal. Microsoft has plenty of data on gaming and the workplace, but little from social media, which TikTok’s 100 million users could help supply. And the app could bolster Microsoft’s $7 billion ad business and provide a huge new client for its Azure cloud service.
A deal remains very far from certain. Not only are there other bidders — primarily Oracle, widely seen as Microsoft’s most credible rival — but talks have also run from selling just TikTok’s North American operations to all of the app’s business outside China. The price could run from $20 billion to $50 billion, and there’s a lot to hash out before a Sept. 15 deadline imposed by Mr. Trump (which is being fought in court, adding more uncertainty to an already convoluted process).
Gary Cohn gets on the SPAC train
The former Goldman Sachs banker and chief economic adviser to President Trump is the latest big name to get behind a “blank check” company. He’s partnering up with the investor Clifton Robbins to found a SPAC, according to a new filing. The company aims to raise $600 million in an I.P.O., but that figure may simply be a placeholder.
The acquisition vehicle could target a deal north of $3 billion, DealBook hears. The filing is vague about the kind of company it will target, but it’s worth noting that since he left the White House in 2018, Mr. Cohn has been an active investor in tech companies and joined a number of Silicon Valley boards, including Hoyos Integrity (a smartphone company) and Machine Zone (a mobile-gaming platform).
The I.P.O. filing touts Mr. Cohn’s banking and policy experience. He was chief operating officer at Goldman Sachs during the financial crisis. He later helped devise Mr. Trump’s 2017 tax cuts, which the filing argues “shaped the Administration’s efforts to grow the U.S. economy, create jobs and increase wages.” (The tax cuts’ true impact on those points are far from clear.)
The plan came together about a month ago, although Mr. Cohn and Mr. Robbins have known each other for years. Mr. Robbins had originally filed for his own SPAC, but refiled once he had Mr. Cohn on board. Mr. Robbins closed his $2 billion “friendly activist” hedge fund Blue Harbour in February, despite good performance, saying at the time that he wanted to do “something else.” Despite Mr. Cohn’s Goldman pedigree, the SPAC’s sole underwriter is Credit Suisse.
In other SPAC news: Trine, a SPAC run by the media investor Leo Hindery, agreed to merge with the 3-D printing company Desktop Metal in a $2.5 billion deal; the private equity group TPG is preparing to introduce two SPACs, raising around $700 million in total; the venture firm Ribbit Capital, which is active in fintech and cryptocurrencies, filed papers for a $350 million SPAC; and a tech-focused SPAC run by Léo Apotheker, former C.E.O. of HP and SAP, and Jim Mackey, a former tech banker at Citi, cut its fund-raising target by a quarter, to $300 million.
Amazon looks to cement its place in India
In Hyderabad, a booming tech hub in southern India, Amazon’s huge office — 1.8 million square feet — reflects the scale of the retailer’s ambitions in the country, The Times’s Geneva Abdul writes.
India’s e-commerce industry has enormous potential for growth, with around 120 million online shoppers out of a population of more than one billion. When Jeff Bezos visited India in January, he announced plans to invest an additional $1 billion in local operations, on top of the $5 billion that Amazon has spent since entering the country in 2013.
• The company’s campus in Hyderabad is expected to house up to 15,000 employees. It took four years to build and reportedly cost hundreds of millions of dollars (amenities include a cricket pitch and a helipad).
India is not an easy destination for Amazon. Foreign-owned retailers, like Amazon and the Walmart-controlled Flipkart, must act as neutral marketplaces as a condition of doing business in India. During Mr. Bezos’s January visit, regulators began investigating Amazon for potential antitrust violations, including using discounts and other measures to lift some sellers over others. Praveen Khandelwal of the Confederation of All India Traders, a small-business trade group, said that the Hyderabad campus represented Amazon’s “push for control and dominance over Indian retail trade in a more structured way.”
Britain revives an idea to reduce the racial pay gap
Nearly two years ago, the British government weighed a mandate for large companies to report on disparities in employee pay based on ethnicity, as they already do for gender. The idea was derailed by elections, Brexit and then the pandemic — but now it’s back, The Times’s Eshe Nelson reports.
The proposal regained urgency this summer amid a surge in anti-racism protests. Public petitions and comments from businesses to the government followed, prompting policymakers to promise an update on the idea by the end of the year. But worker privacy is a challenge, since employers would need staff to voluntarily disclose their ethnicity, and some companies may lack sufficient diversity to publish a breakdown of the data without jeopardizing anonymity.
“There are no quick fixes. That’s obvious,” Eshe tells us. “But this is one step. And companies that voluntarily publish this data are already setting targets for better diversity in their top ranks.”
The speed read
• Nasdaq has asked regulators to approve rule changes that would let companies raise new capital when going public via a direct listing. (Reuters)
• Aveva agreed to buy Osisoft, an industrial software company backed by SoftBank, in a deal valued at $5 billion. (Bloomberg)
• Creditors of Virgin Atlantic agreed to take a 20 percent haircut as part of a plan to restructure the British airline’s finances. (FT)
Politics and policy
• New York’s attorney general, Letitia James, sued the Trump administration to stop disruptions at the Postal Service. (WSJ)
• Why Mr. Trump’s plan to deliver $400 in extra weekly benefits to unemployed Americans is off to a slow start. (NYT)
• Verily, the health care company owned by Alphabet, plans to start offering a form of health insurance. (The Verge)
• Google engineers conceded that the company “confuses users” about privacy settings, according to internal documents cited in an Arizona lawsuit. (Arizona Mirror)
Best of the rest
• A former member of the Navy SEALs who became a distressed-debt trader at Jefferies helped expose questionable behavior by Marble Ridge Capital in the bankruptcy of Neiman Marcus that led to the downfall of the hedge fund. (Bloomberg)
• “Covid-19 proves globalization is not dead.” (FT)
• How the British government restarted its restaurant industry: paying half the bill. (NYT)
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