IPO News You Can’t Use
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
Today is an exceptionally busy day on the podcast front, so we’re embracing brevity. Below we’re catching up on IPO news and chatting about OpenAI’s new path forward. Elsewhere, moves by the FCC to force a major news platform to the right could be extended, as the same buying entity (Paramount Skydance) is considering buying Warner Bros. Discovery, which owns CNN. Federal meddling in media is bad. Onward! — Alex
📈 Trending Up: Compromise … Discord’s international prominence … AI regulation … more AI regulation … AI lawsuits … startup dealmaking … tech earnings …
📉 Trending Down: Scale AI … cash life expectancy at OpenAI … South Korean views of the United States … US influence over China’s economy … free speech …
IPO News You Can’t Use
Unless you are an active investor, I suppose. Here’s the latest from IPO land this week, which was incredibly busy:
Klarna: After pricing above range and seeing its share price appreciate around 15% during its first day’s trading, shares of the Swedish BNPL giant have moderated their gains. Per early trading, Klarna is now up just ~10% from its IPO price.
Figure: Raised its IPO range, priced above it ($25 per share), and shot 24% higher during its first day’s trading. Once again, the market welcomed a fintech-themed IPO, adding to our growing roster of such debuts this year. Forget AI, fintech is driving the current liquidity melt.
Gemini: Priced its IPO above its raised range ($24 to $26) at $28 per share, raising around $425 million in the process. That puts its new worth at $3.3 billion. As with Via (see below), we have yet to see it trade. The enterprise crypto concern saw its valuation reach more than $7 billion back in 2021.
Via: The transportation technology company priced above its range — it’s a trend! — at $46 per share, affording it a valuation of $3.65 billion. That’s a hair above its 2021-era price of $3.2 billion (post-money). Thus while Klarna had to endure a sizable haircut to its peak-ZIRP price, Via does not. The implication? Probably that we’re seeing the healthier unicorns list, which partially underwrites previous fintech overinvestment while making other investments from the 2020-2021 period seem all the more specious. Where are their IPOs?
Things That Matter
OpenAI and Microsoft find a way to live with each other: As OpenAI’s commercial commitments to Oracle’s cloud lift the database company and Micorosft’s own AI models climb the charts and it flirts with Anthropic, the two tech giants have found a tentative way forward. Recall that Microsoft is a major backer of OpenAI, a company that needs to retool its corporate structure. Cue a scrap over rights, ownership, technology, and profit. It’s encouraging that OpenAI has found a way forward. Here’s wondering if it took long enough to hammer out that the company missed a step while negotiating.
The non-profit that will control OpenAI’s new public benefit corporation (PBC) will be granted more than $100 billion worth of equity in the combined entity. That’s a lot.
The NYTimes reports that a sticking point, a contractual clause that would have limited Microsoft if OpenAI reached ‘AGI’ has been modified, unsurprisingly.
Centralized planning sucks: As expected, the United States government’s stewardship of a ‘golden share’ in US Steel — a requirement for its deal with Nippon Steel — is leading to make-work jobs that won’t contribute to steel production. Hello, centralized inefficiency!
Similarly, Intel now cannot exit the foundry business, even if it wants to.
Microsoft realizes its workers are people: In a meeting last night, Microsoft’s CEO Satya Nadella answered an employee’s question about “a perceived lack of empathy in the company’s culture as of late and steps Microsoft is taking to rebuild trust with its workforce,” CNBC reports. Microsoft has regularly cut staff in recent quarters and is implementing stiffer return-to-office mandates. Nadella said that he appreciated the question, adding that he thinks his company “can do better.”
RTO mandates are seeing broadly as soft layoffs; cutting staff directly while also putting into place return-to-office policies, therefore, works out to two slices at the same apple.
Forced equity transfers may be limited: Texas Instruments, which received up to $1.6 billion from the CHIPS Act, appears to be set to avoid being forced to give the government eqiity in return for funded grants. As spied by The Transcript, during a public Q&A earlier this month, TI’s CFO was asked the following by Citibank’s Christopher Danely:
So I did get a few questions from some of your larger shareholders to ask. One of them is on just the whole move to manufacturer and the CHIPS Act money. I think you guys have taken some CHIPS Act money so far. Any risk -- this is direct from the shareholder. Any risk to the U.S. government taking a stake in TI as a result of CHIPS Act money?
To which, the CFO responded:
Nothing along those lines has been discussed, has been proposed. We have not been approached on any of that. As far as that goes, we have an arrangement, an agreement with the government that was signed under the previous administration. And then we reworked that agreement over the last six months or so with the new administration on some very minor things that were all favorable to TI. Frankly, there were little things they wanted to change, but nothing along the lines of what you're hearing from companies like Intel.
Is it better for the government to try and convert all grants to equity stakes, or just the ones it decides — at random? — it wants to? I am not sure, but I’ll cheer that Texas Instruments at least won’t become a new political tool of Washington.
Poor Intel.