The underground wealth beneath the Arctic city of Kiruna fuels Sweden’s economy and is a central cog in one of Europe’s core defense industries. It has also, quite literally, undermined the city’s foundation, prompting an unprecedented urban relocation project.
Kiruna is home to one the world’s largest deposits of iron ore, used to produce Swedish jet fighters and combat vehicles. Two years ago, mining officials announced that the city, about 90 miles north of the Arctic Circle, also sits on what could be the largest find of rare earths in Europe.
BERLIN—Bayer Chief Executive Bill Anderson said the company would bounce back quickly from a recent spate of bad news, and warned that a breakup of the pharmaceutical and agricultural company was no universal cure for its ailments.
A stream of negative news has rekindled calls from investors for Bayer to unlock value by spinning off its units into separate businesses. But in an interview with The Wall Street Journal this week, Anderson said the company couldn’t be distracted from the tough restructuring to fix the businesses.
In a strange flashback to the demise of Bed Bath & Beyond Inc., WeWork Inc.’s stock soared on its over-the-counter debut this week, just days after the office sharing company filed for chapter 11 bankruptcy protection.
WeWork WEWKQ, +23.02%
filed for Chapter 11 in New Jersey on Monday and the beleaguered company’s stock was halted before the open that day. The New York Stock Exchange started the delisting process for WeWork that same day.
Trading resumed over the counter on Wednesday, with WeWork shares ending their first session as an OTC stock up 91.5%.
A similar scenario happened when shares of Bed Bath & Beyond began trading over the counter in May after the Nasdaq started the delisting process for the bankrupt home-goods retailer and sometime meme-stock darling. Despite Bed Bath & Beyond’s well-documented woes, the stock ended its first session as an OTC stock up 30.4%. Bed Bath & Beyond’s shares were canceled in September.
In June Overstock.com acquired Bed Bath & Beyond’s intellectual property, and began operating as Bed Bath & Beyond, before changing its corporate name to Beyond Inc. BYON, +2.06%.
Like Bed Bath & Beyond, WeWork has continued to attract investor attention even as the company’s problems mounted. In mid-September WeWork’s stock saw a record run-up amid meme stock chatter, just weeks after WeWork warned that it may not be able to stay in business.
Users on social media noted the activity in WeWork’s share price this week, with Twitter user @asunapg warning Thursday that the OTC markets are “much more volatile and often a death trap for a lot of companies.”
“Here we go again” tweeted @B2Investor Friday, with popcorn and clown emojis.
WeWork’s stock ended Thursday’s session down 21.3% and the stock is down 12.7% Friday, compared with the S&P 500 index’s SPX
gain of 1.3%.
Tom Bruni, head of content at StockTwits, a social platform for investors and traders, told MarketWatch that, from what he is seeing, there doesn’t seem to be broad interest in the stock.
“Unlike Bed Bath & Beyond and others where it seemed possible to restructure and continue operating, the current situation for WeWork is mainly a math equation,” he told MarketWatch. “It’s looking most likely that it’ll be bought out, the question is at what price and how much cash (if anything) does that leave for common shareholders to receive? The consensus right now is that all value from its 52 million shares of common stock will be wiped out.”
Set against this backdrop, short covering could be driving the stock price up in the short term, according to Bruni. “Many market participants don’t want to risk being squeezed by unexpected good news, so they’d rather take their gains than ride it all the way down to zero,” he said. “Should that high short interest start to create sustainable upside momentum (more than a few days), then we’d likely see other traders get involved on the long side.”
“But for now, with earnings season in full swing, there’s plenty of volatility and news elsewhere for investors/traders to focus on,” he added.
Iconic German sandal maker Birkenstock Holdings Ltd.’s stock fell 10% out of the gate in its trading debut Wednesday, signaling that investors remain cautious about new deals and the casual-footwear market remains competitive.
The company’s initial public offering priced at $46 a share late Tuesday, a bit shy of the midpoint of its expected range. The company BIRK, -11.63%
is trading on the New York Stock Exchange under the ticker “BIRK.” Goldman Sachs, JPMorgan and Morgan Stanley were the lead underwriters on the deal.
The deal was expected to prove the latest test for the IPO market, which recently saw three key deals perform strongly on their first day of trade, only to fall back in subsequent sessions.
Chip maker Arm Holdings Ltd. ARM, -1.09% ; Klaviyo KVYO, -3.11%
a digital marketing company; and Instacart, which trades as Maplebear Inc. CART, -7.04%
; all enjoyed strong gains on their first day of trade but pared those in the following sessions. Instacart was quoted at $25.50 on Wednesday, well below its issue price of $30.
Birkenstock clearly has its fans, as its customers are brand loyal, with 70% of existing U.S. consumers, for example, purchasing at least two pairs of its shoes, according to its filing documents.
A survey found 86% of recent purchasers said they wanted to buy again, while 40% said they did not even consider another brand while buying.
But as Kyle Rodda, Senior Market AnalystatCapital.com, said the Birkenstock deal was to be a good measure of broader market sentiment and sentiment toward consumer-sensitive stocks.
“It might tell us, too, whether cashed-up millennials like to buy the stocks of products they commonly find on the bottom shelf of their wardrobes,” he said in emailed comments.
The valuation of around $8.6 billion also looks rich, he said. Based on the company’s latest revenue release, the stock’s price-to-sales ratio is above 6, “which is at the higher end of comparable consumer discretionary companies on Wall Street.
“In a higher interest rate environment, these multiples may be hard to sustain in the short term, especially if consumer spending slows as expected next year as interest rate hikes bite households,” Rodda said.
David Trainer, Chief Executive of independent equity research company New Constructs, said ahead of the deal that the valuation was far too high, noting that it was higher than peers such as Skechers USA Inc. SKX, -0.67%,
Crocs Inc. CROX, -0.12%
and Steve Madden Ltd. SHOO, +0.60%.
“Even more shockingly, the only footwear companies with a larger market cap are Nike Inc. NKE, +0.80%
and Deckers Outdoor DECK, -0.07%,
” he said, referring to the maker of Uggs.
“While Birkenstock is profitable, we think it is fair to say that the $8.7 billion valuation mark is too high, especially for a company that was valued at just $4.3 billion in early 2021. Not a whole lot has changed since then,” Trainer said in a report.
“We don’t doubt that Birkenstock has strong brand equity and produces stylish sandals, but there is really no reason for this company to be public,” said Trainer. “We don’t think investors should expect to make any money by buying this IPO.”
The Renaissance IPO exchange-traded fund IPO
has gained 29% in the year to date, while the S&P 500 SPX
has gained 13%.
Iconic German sandal maker Birkenstock priced its initial public offering at $46 a share late Tuesday, a bit shy of the midpoint of its expected range, as investors remain cautious about new public debuts and the casual-footwear market remains competitive.
With that pricing, Birkenstock would fetch a valuation of around $8.6 billion. The company did not immediately respond to a request for comment.
Birkenstock had expected to sell more than 32 million shares at an IPO price of between $44 and $49 a share. The company is expected to start trading on the New York Stock Exchange on Wednesday under the ticker “BIRK.” Goldman Sachs, JPMorgan and Morgan Stanley are the lead underwriters.
The roughly 250-year-old company would make its debut as other large shoe makers, such as Nike Inc. NKE, +0.76%
and Adidas ADDYY, +1.44%,
try to capitalize on a broader consumer shift toward more casual sneakers and attire. Birkenstock, which unlike many IPOs is profitable, describes itself as a company that has been welcomed across a variety of scenes over the decades — hippies in the 1970s, environmentalists in the ’80s and, in the ’90s, women inspired by the feminism movement looking for relief from high heels.
“Today, consumers turn to Birkenstock in their search for healthy, high-quality products and as a rejection of formal dress culture,” the company said in its IPO filing.
More recently, Birkenstock’s Boston clogs have enjoyed a rebound in popularity. The “Barbie” movie, which features the sandal, has also spurred greater interest. And the company, which depends on the Americas and Europe for a lot of its sales, has been investing more in e-commerce.
Still, Birkenstock faces “material indebtedness,” and “material weaknesses” in its financial controls, according to its IPO filing. And its debut would follow some shakier performances from other recent IPOs, like Maplebear Inc. CART, +9.16%,
better known as the online grocery delivery service Instacart, and chip designer Arm Holdings ARM, +2.69%.
Shares of those companies are down since their debuts.
Renaissance Capital Founder and CEO Bill Smith said Birkenstock was hoping to appeal to investors based on a “combination of profitability and growth, along with widespread brand recognition.”
“We don’t doubt that Birkenstock has strong brand equity and produces stylish sandals, but there is really no reason for this company to be public,” he said. “We do not think investors should expect to make any money by buying this IPO.”
SmileDirectClub Inc. shares plummeted in the extended session Friday after the company said it had voluntarily filed for Chapter 11 bankruptcy protection as founders seek to recapitalize the teeth-straightening business.
SmileDirectClub shares SDC, which had been halted while up 0.9% in after-hours trading pending news, promptly dropped as much as 85% when trading in the stock reopened.
The grocery-delivery app Instacart on Monday priced its IPO at $30 a share, at the upper end of its expected range, raising $660 million with a fully-diluted valuation of around $10 billion after backing away from a stock-market debut last year.
The company said it plans to begin trading on the Nasdaq Global Select Market on Tuesday under the ticker symbol “CART.” It will offer 22 million shares in the IPO. On Friday, Instacart had said it expected to price the offering at between $28 and $30 a share.
Goldman Sachs and J.P. Morgan are acting as lead book-running managers for the offering. Instacart said it also granted the underwriters a 30-day option to purchase up to an extra 3.3 million shares at the IPO price. The offering is expected to close on Thursday.
The debut would come amid what appears to be a thaw in the IPO market, following a year of concerns about inflation and the broader economy. But the public debut of chip designerArm Holdings ARM, -4.53%
last week made big waves. The digital-marketing platform Klaviyo is set to debut this week as well.
Instacart’s valuation in 2021 stood at $39 billion. Last year, as pandemic-era digital demand fizzled, the company cut its valuation multiple times, but raised it this year, according to The Information.
Instacart, in its IPO filing, said the way people shop for groceries is undergoing a “massive digital transformation.” Evercore analysts have said the company controls around a fifth of the U.S. online grocery-delivery market.
Klaviyo Inc. is reportedly raising the target of its upcoming initial public offering to more than $550 million.
Bloomberg News reported late Sunday that Klaviyo has decided to raise the target range for its shares to $27 to $29, up from its previously stated range of $25 to $27 a share. At the top of that new range, the IPO would raise $557 million, with the company valued at about $8.7 billion, according to Bloomberg.
priced its initial public offering at $51 a share. That’s at the top of the expected range of $47 to $51, giving the chip design company a valuation of $54.5 billion on a f…
Arm Holding Ltd. priced its initial public offering at the high end of its expected range late Wednesday following intense interest.
The British chip-design company priced shares at $51, raising $4.87 billion, following earlier reports that Arm would be pricing its IPO at $52 a share. A source close to the deal confirmed to MarketWatch that $52 had been the expected price, but that it was reduced to $51. That puts the chip designer at just over a $52 billion valuation. Recently, Arm had stated a targeted range of $47 to $51.
The second week of September, as in the NFL, marks a kickoff of sorts for the tech year.
Headlined by Apple Inc.’s AAPL, +0.72%
seminal iPhone event on the second Tuesday of the month at Apple Park, and anchored by Salesforce Inc.’s CRM, +0.33%
wildly popular Dreamforce conference up the road in San Francisco, these several days set a tempo as well as establish a road map for the industry over the next 12 months. They also open the floodgates on tech conference season, with shows stacked up over the next several weeks for Facebook parent Meta Platforms Inc. META, +3.33%,
Microsoft Corp. MSFT, +1.21%,
and Oracle Corp. ORCL, +0.32%.
Oh, and there’s that initial public offering from Arm Holdings Plc, the chip designer owned by SoftBank Group Corp. 9984, +3.86%
that is expected to value Arm at $50 billion to $54.5 billion on a fully diluted basis. Another IPO candidate, delivery startup Instacart, also plans a public offering that would value it at $7.5 billion. Both deals could jump-start what has been a somnolent tech IPO market the past few years.
For that reason alone, this jam-packed tech week might hold even more import, and consequences, than previous years. A confluence of legal tussles, macroeconomic conditions, a trade war with China, and regulatory bluster have raised the stakes.
“It’s a tale of two cities with this week’s events highlighting both the issues and opportunities in tech,” Silicon Valley analyst Maribel Lopez said in an interview, assessing the week. “Arm’s IPO showcases the strength of tech and AI at a time when the AI forum and Google-DoJ shine a light on the concern that a few companies are wielding tremendous power for the future of the world.”
GOOG, +0.47%
Google faces off with the Justice Department in a federal court in Washington, D.C.
Justice Department officials argue that Google illegally leveraged agreements with phone makers such as Apple and Samsung Electronics Co. 005930, +0.71%
and with internet browsers like Mozilla to be the default search engine for their customers, thus preventing smaller rivals from gaining access to that business.
“This is a backwards-looking case at a time of unprecedented innovation, including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before,” Google General Counsel Kent Walker said in a statement.
The following day, Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., convenes an all-star panel of CEOs from Meta, Microsoft, Google, OpenAI and Palantir Technologies Inc. PLTR, +4.82%.
As lawmakers ruminate on how to harness AI responsibly, bipartisan legislation is in the works. Sens. Richard Blumenthal, D-Conn., and Josh Hawley, R-Mo., are among those crafting a bill.
Even Apple and Salesforce aren’t immune from recent events: Apple has endured a relatively rough patch of disappointing (for them) revenue and iPhone sales while balancing risk/reward with its huge investment in China, and Salesforce CEO Marc Benioff has threatened to relocate Dreamforce to Las Vegas after more than two decades in his hometown of San Francisco if drug use and homelessness disrupt this year’s event.
The most pressing concern, when all is said and done, is AI — which hovers like the Death Star over the tech landscape.
“The biggest concern is the forum is behind closed doors, which could lead to regulatory capture, where dominant players in the industry help influence the regulations being imposed,” Kimberlee Josephson, associate professor of business administration at Lebanon Valley College (Pa.), said in an interview. “It’s almost as if it puts them in the hot while giving them a seat at the table at the same time.”
“At the very least, it sends the signal that something is being done,” she said. “Antitrust cases are so subjective. What constitutes barriers to entry? DoJ adds a level of seriousness.”
Arm Holdings is set for a blockbuster initial public offering which will test market appetite for an important technology company. However, its targeted valuation suggests it is accepting it won’t be the next
Nvidia
Arm Holdings Ltd.’s initial public offering could give the company a valuation between $50 billion and $55 billion in what may be the biggest offering of the year.
The British chip designer, whose circuit designs lie inside billions of electronic devices, intends to start meeting as early as Tuesday with prospective investors ahead of its stock-market debut on the Nasdaq exchange the following week, according to a Wall Street Journal report, which cited multiple unnamed sources.
Shares of investment giant Blackstone Inc. and vacation-home rental platform Airbnb Inc. rallied after hours on Friday after both won the nod to join the S&P 500 index SPX
later this month.
The announcement, from S&P Dow Jones Indices, said that the change would take hold before the start of trading on Monday, Sept. 18. The move, among others announced Friday, will “ensure each index is more representative of its market-capitalization range,” according to a release.
Airbnb ABNB, +0.87%
currently has a market value of $83.98 billion, and its shares are up 64.7% so far this year. Blackstone BX, -1.77%,
currently worth $129.29 billion, has seen its stock rise 43.6% year-to-date.
Shares of Airbnb and Blackstone were up 5.7% and 4.8%, respectively, after hours on Friday.
Blackstone and Airbnb will replace Lincoln National Corp. LNC, +2.14%
and Newell Brands Inc. NWL, +1.23%
in the index, S&P Dow Jones Indices said on Friday. In the process, Lincoln and Newell will join the S&P SmallCap 600.
“We’ve established an unparalleled global platform of leading business lines, offering over 70 distinct investment strategies,” Chief Executive Stephen Schwarzman told analysts. “We believe our clients view us as the gold standard in alternative asset management.”
Meanwhile, Airbnb last month said that travelers were seeking longer stays and bigger properties in pricier areas, as the rebound in travel endures despite a tidal wave of inflation last year. The company’s second-quarter results and third-quarter sales forecast topped Wall Street’s estimates.
Meanwhile, S&P 500 member Deere & Co. DE, +1.94%
will replace Walgreens Boots Alliance Inc. WBA, -7.43%
in the S&P 100, S&P Dow Jones Indices said on Friday. That change also takes hold on Sept. 18. S&P Dow Jones Indices said Walgreens “is no longer representative of the megacap market space” but will stay in the S&P 500.
Shares of Deere fell 0.2% after hours. Walgreens stock was up 0.4%.
on Wednesday issued new financial guidance after spinning out the consumer-health company
Kenvue
While its earnings and sales projections were lowered on an absolute basis, the company is maintaining its dividend and expects to increase its revenue at a faster pace.
Credit Suisse said it has abandoned its plan to launch an initial public offering for its Credit Suisse 1a Immo PK real-estate fund due to low trading volumes for listed Swiss real-estate funds.
The Swiss bank–now part of UBS Group–said Thursday that Credit Suisse Funds decided not to carry out the IPO, which had been planned for the fourth quarter of 2023, and that this will allow the newly formed real-estate unit within UBS Asset Management to coordinate its offer of real-estate investment services.
A fall in trading volumes on the market for listed Swiss real-estate funds would likely have meant higher volatility in the event of a listing, Credit Suisse said.
The bank last year postponed the IPO of the fund, citing market conditions and the high volatility.
Write to Adria Calatayud at adria.calatayud@dowjones.com
U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.
Adding to the gloom, Republic First Bancorp. Inc.’s stock FRBK, -41.90%
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.
S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.
And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon BK, -1.71%,
State Street STT, -1.59%
and Northern Trust NTRS, -1.73%.
The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.
Individual bank names are also performing poorly, with Goldman Sachs Group Inc. GS, -0.94%
and Citigroup Inc. C, -1.68%
down for 10 of the past 11 days and Charles Schwab Corp. SCHW, -4.84%
down 11 straight days.
Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.
The KBW Nasdaq Regional Banking Index KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index BKX
is down for seven straight days.
S&P downgraded Associated Banc. Corp. ASB, -4.20%,
Comerica Inc. CMA, -3.82%,
KeyCorp KEY, -3.58%,
UMB Financial Corp. UMBF, -2.42% % and Valley National Bancorp. VLY, -4.19%
by one notch and said the outlook on all five is stable.
The rating agency affirmed ratings on Zions Bancorp ZION, -4.17%
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp. SNV, -3.37%
and Truist Financial Corp. TFC, -1.36%
“We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.
“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”
The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.
However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.
The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.
S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.
KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.
As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.
KeyBank net customer flow (intraday). Source: BondCliQ Media Services
The next chart shows customer flow over the last 10 days.
Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services
The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.
Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services
Arm Holdings Ltd. filed its long-awaited initial public offering late Monday, following last year’s failed bid by Nvidia Corp. to acquire the U.K.-based chip architecture company.
Arm has reportedly been seeking to raise $8 billion to $10 billion at a valuation of $60 billion to $70 billion, making its IPO the biggest of the year so far, and a number of large tech companies, including Amazon.com Inc. AMZN, +1.10%, Intel Corp. INTC, +1.19%
and Nvidia NVDA, +8.47%,
are reportedly in the mix to be anchor investors.
At the time of the breakup, chips sales had hit record highs in 2021, surging 26.2% to a record $555.9 billion, fueled by pandemic-triggered shortages. But the chip industry has since swung to a glut.
Arm listed Barclays, Goldman Sachs, JP Morgan, Mizuho, BofA Securities, Citigroup, and Deutsche Bank Securities among the IPO’s underwriters.
Recent reports said SoftBank was in discussions to purchase the 25% stake in Arm that it does not outright own, which is held by its Vision Fund 1, ahead of the IPO.
Arm reported net income of $524 million, or 51 cents a share, on revenue of $2.68 billion for fiscal 2023, which ended March 31, compared with net income of $549 million, or 54 cents a share, on revenue of $2.7 billion, in fiscal 2022, and $388 million, or 38 cents a share, on revenue of $2.03 billion in fiscal 2021.
Arm uses an architecture that is different from the once-standard x86 one built by Intel in the early days of computing.
The company said it has shipped more than 250 billion Arm-based chips since its started in 1990 as a joint venture between Acorn Computers, Apple AAPL, +0.77%
and VLSI Technology. In fiscal 2023, Arm said it shipped 30.6 billion chips.
The company said it is going public as the “resources required to develop leading-edge products are significant and continue to increase exponentially as manufacturing process nodes shrink.” Transistors are expressed in scales of nanometers, with design costs running about $249 million for a 7-nanometer chip and about $725 million for a 2-nm chip.
“As the world moves increasingly towards AI- and [machine language]-enabled computing, Arm will be central to this transition,” the company said in the filing. “Arm CPUs already run AI and ML workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centers.”
Arm said it is working with Alphabet Inc. GOOG, +0.64%
Novartis said the planned spinoff of its Sandoz generic pharmaceuticals and biosimilars business is expected to occur on or around Oct. 4.
The Swiss pharmaceutical giant said Friday that the separation will take place through a proposed distribution of Sandoz shares to its existing shareholders. Novartis shareholders will get one Sandoz shares for every five Novartis shares held and one Sandoz American depositary receipts–or ADRs–for every five Novartis ADRs, the company said.
Novartis had previously said it expected the spinoff to happen early in the fourth quarter.
The Sandoz spinoff remains subject to approval by Novartis’s shareholders. Novartis has scheduled an extraordinary general meeting for Sept. 15 to vote on the proposed distribution of Sandoz shares and a reduction in its own share capital in connection with the spinoff, it said.
Following the separation, Sandoz would be listed in SIX Swiss Exchange, with an ADR program in the U.S., Novartis said.
Write to Adria Calatayud at adria.calatayud@dowjones.com
