
Instacart IPO:
- Instacart is going public in September and could raise up to $1 billion by selling 10% of the company's valuation.
- The company operates as a four-sided network, connecting supermarkets, users, advertisers, and delivery people.
- Instacart makes most of its profits from advertising revenue, with consumer packaged goods companies buying ad space on the app.
- They have been profitable for five straight quarters but are not experiencing significant growth in orders.
NVIDIA:
- NVIDIA has experienced unprecedented growth in its data center revenue, which went from around $1 billion per quarter to $10 billion per quarter.
- The company has seen massive upward revisions to earnings and revenue forecasts, leading to an increase in stock price and market value.
- Analysts have overwhelmingly positive outlooks on NVIDIA, with no sell ratings and over 93% of analysts giving buy recommendations.
- The stock is considered cheaper now than it was earlier this year despite a 250% increase in price.
Value Stocks vs. Growth Stocks:
- Vanguard points out that the ratio of growth stocks' fair value to value stocks' fair value is at an extreme level.
- Historically, when this ratio exceeds the upper limit of the estimated fair value range, there is a larger opportunity for market-beating returns in growth stocks.
- However, during recovery phases of the economy, value stocks tend to outperform growth stocks.
Goldman Selling Personal Financial Services Business:
- Goldman Sachs found a buyer for their personal financial services business (RIA business) within a week after announcing its sale.
- Peter Mallouk won the deal and is known for his expertise in building RIAs.
- This outcome is seen as positive because it keeps the RIA business within the RIA industry rather than being sold to another brokerage firm.
Earnings Revisions:
- Earnings revisions continue to trend upwards, indicating a positive outlook for equity markets.
- The S&P 500 has been correcting in price while forward 12-month earnings estimates continue to rise, which is considered healthy and bullish.
General Observations:
- Instacart's IPO will be a significant event for the market and could influence future IPO activity.
- NVIDIA's stock performance and growth have been exceptional, but it remains to be seen if this trend will continue.
- Value stocks have historically underperformed growth stocks, except during recovery phases of the economy.
- The advertising business model of Instacart is unique and relies on partnerships with supermarkets and consumer packaged goods companies.
- Goldman Sachs' sale of its RIA business to Peter Mallouk is seen as a positive outcome for advisors and clients.
- Verizon's stock has experienced a deep drawdown over the last 10 years, but it is an accidental high yielder with consistent dividend growth.