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.