Barron's : EV Start-Up VinFast Had a Hot Debut. Its Stock Price Is Indefensible.

VinFast Auto VFS –23.00% stock shot off the starting line after going public this past week, but the electric-vehicle start-up is likely to stall—and soon. Simply put: Shares are just too expensive.

After an epic first day of trading on the Nasdaq, VinFast (ticker: VFS), which came public via a special purpose acquisition company on Aug. 15, closed at $37.06, up 255%.
With that move, the Singapore-based company had a market capitalization of roughly $86 billion, more than the market cap of Ford Motor F +1.10% (F), General Motors GM +0.61% (GM), and Volkswagen VOW3 –0.21% (VOW3.Germany).
VinFast was also worth more than all U.S. EV start-ups combined and more than profitable EV start-up
Li Auto (LI), and, when including debt and cash, more than Chinese EV leader BYD 1211 –3.76% (1211.Hong Kong). It was a heady debut.

There’s a lot to like about VinFast. It has a strong backer in Vietnamese conglomerate Vingroup (VIC.Vietnam), and unlike many start-ups, it sells actual cars, some 11,300 EVs during the first half of 2023, with the capacity to build about 300,000 a year. It offers multiple EV models and has already entered the U.S. market—it sold 850 of its VF8 SUVs in California during the first half of 2023, and should roll out sales to the rest to the U.S. soon.

The VF8 is a nice EV. The base model can accelerate from zero to 60 miles an hour in about 5.5 seconds.
It gets about 264 miles of range per charge, based on EPA standards and testing, and starts at about $46,000.
Tesla ’s (TSLA) Model Y, which has a similar size, range, and acceleration specs, starts at about $48,000.

Still, $86 billion?
To put that in perspective, VinFast was valued at roughly $4.4 million for each car sold this year.
Rivian Automotive (RIVN), which sells more vehicles within a similar manufacturing footprint, trades at about $275,00 a car. Based on its capacity to produce, VinFast was valued at about $300,000 per car, while Rivian fetches just $93,000.

Other metrics tell a similar story. On Tuesday, the stock was valued at about 46 times the company’s projections of sales of about $1.9 billion in 2023, well above Tesla, which trades for about 7.3 times, and Li, which trades for about 2.8 times. An earnings comparison isn’t possible because VinFast isn’t profitable yet—it lost about $600 million in the first quarter and spent more than $1 billion building its business.

No matter how you look at it, VinFast appears expensive relative to its EV peers. Based on where it’s trading now, VinFast would have to produce BYD-like performance, selling a million EVs a year, while producing tens of billions in sales and generating operating profit margins of at least 5% to justify its valuation.

It’s hard to say why the stock shot up. A small fraction of shares is available to trade, roughly 17 to 21 million shares out of 2.3 billion outstanding, and a limited stock supply can lead to funny things. But there are better reasons to believe the stock will fall before it gets to BYD-like performance.

VinFast will need more capital—from Vingroup or from public investors—and that means more shares will get issued, diluting the ownership stake of existing shareholders. There is also no guarantee that VinFast will hit the sales and profit milestones required to justify the valuation, or that shares won’t fall after the initial euphoria fades.

VinFast stock has already begun to come back to earth, down 46% over the past two days and closing Thursday at $20 a share. Not because of anything the company did, but because of what the market did.

>>> Weekly Market Update

Weekly Market Update: Risk appetite remains weak amid China and CPI concerns


Global stock markets lost additional ground this week as rising interest rates and China worries continued to plague risk appetite. The Hang Seng officially fell into bear market territory after the S&P broke below its 50-day moving average earlier in the week. Chinese officials were forced to announce another round of patchwork stimulus measures and proclamations, while also intervening in foreign exchange markets to defend the yuan. On Friday, China’s Evergrande Group filed for Chapter 15 bankruptcy protection from creditors in New York, seeking approval to restructure >$19.0B in offshore debts.

Outside of China, signs suggested growth is holding up well, perhaps better than many had expected. Despite facing real headwinds, the US consumer appears to be resilient. US July retail sales came in well ahead of estimates while key earnings reports from Home Depot and Walmart remained solid. Strong Industrial production and housing starts data forced the Atlanta Fed to raise their Q3 GDP now forecast to a whopping 5.8%. UK CPI and wage data ran hot leaving the door open for additional BOE rate hikes. The FOMC minutes also reminded investors that a most Fed officials still believed there is work to be done on inflation when the met back in July. Against that back drop rates tracked significantly higher. Particularly at the long end of the US curve where buyers all but disappeared until Friday when safe have flows emerged. The US 30-year yield peaked above 4.4% for the first time since 2011, and the 10-year topped 4.3% resulting in ongoing de-inverting of the US curve. Most sessions saw weakness in technology and bank shares drag the major stock indices lower. For the week, the S&P lost 2.1%, the DJIA was off 2.2%, and the Nasdaq fell 2.6%.

Corporate news this week was led by earnings reports from a number of big box stores. Walmart beat expectations and raised guidance, saying inventory is in good shape and back to school sales are faring well. Target had mixed results, warning of continued near-term challenges on the topline. Home Depot held its ground with solid earnings, though management noted continued pressure in certain big-ticket, discretionary categories. Cisco Systems was a rare winner amongst big tech names this week as it reported strong quarterly results and said that a lot of large customers are making big commitments. Despite reporting strong earnings on Friday and raising guidance, shares of Deere got plowed under, erasing last month’s gains, due to concerns that the current cycle of rising demand for agricultural equipment may have peaked. Hawaiian Electric’s market cap was decimated as suspicions grew that its downed power lines may have contributed to a devastating wildfire on Maui, with reports suggesting the utility may seek refuge in restructuring actions. CVS shares experienced there biggest one day drop in years as Blue Shield of California announced a new pharmacy care model that would move toward using Amazon Pharmacy to fill prescriptions.

US Steel was the highlight of M&A news this week. Most of the American steel sector names jumped in the wake of US Steel announcing a strategic alternatives process after receiving 'multiple' unsolicited proposals and rejecting a $7.25B opening bid from Cleveland Cliffs.


SUN 8/13
X Cleveland-Cliffs proposed to acquire U.S. Steel in ~$7.25B cash-stock deal; the implied total consideration value is $35/share (~54% premium to prior closing price); the offer was rejected by U.S. Steel's board
X Announces strategic alternatives process after 'multiple' unsolicited proposals; Confirms received and rejected CLF offer; Cleveland-Cliffs refused to engage in the necessary and customary process to assess valuation and certainty unless US Steel agreed to the economic terms of the proposal in advance

MON 8/14
QCOM Said to have cut prices on chips for low-mid end 5G smartphones by 10-20% amid weak demand continuing - Taiwanese press
2317.TW Reports Q2 (NT$) Net 33.0B v 25.9Be, Op 30.9B v 33.2Be, Rev 1.31T v 1.34Te; Cuts FY23 Rev outlook
2317.TW Exec: Demand has returned to normal following COVID pandemic; AI server demand continues to strongly increase - post earnings comments
(US) US-Japan agreement to develop hypersonic missile interceptor expected to be signed at Biden-Kishida meeting on Fri, Aug 18th - press
(CN) China reportedly sets up taskforce for its largest asset fund manager, Zhongzhi Enterprise Group (ZEG) following missed trust payments - press
(CN) CHINA COMMERCE MINISTRY (MOFCOM) OFFICIAL: CHINA TO PUSH FOR NARROWING NEGATIVE LIST FOR FOREIGN FIRMS; STUDYING POTENTIAL REDUCTION OF IT
(CN) JPMorgan analysts see missed payments by Chinese trust firms may trigger a “vicious cycle” for China property developers’ financing and more delinquencies for trust products; See CNY2.8T (~$380B) trust assets face default risks
(IN) INDIA JULY CPI Y/Y: 7.4% V 6.4%E (moves back above target range for 1st time in 5 months)
(US) S&P Global: Demand conditions, which remain very depressed globally, declined at even sharper rates in Europe and the UK in July; North American demand conditions were less depressed than in June
(CN) China cities said plan loosening home purchase limits and to lower down payment for 2nd home buyers - Chinese press
(US) EIA: Forecasts US total shale regions oil production for Sept forecast -19K bpd to 9.415M bpd v -15K bpd expected in Aug; Output set to shrink for a second straight month in Sept for the first time since early 2022
X Esmark Inc. announces all-cash public offer for U.S. Steel shares for $35/shr
JBSS3.BR Reports Q2 (BRL) Net -263M v 356Me, Rev 89.4B v 90Be
(US) House Speaker McCarthy said to consider short-term continuing resolution to avoid Oct 1st shutdown - US press
(JP) JAPAN Q2 PRELIMINARY GDP Q/Q: 1.5% V 0.8%E; GDP ANNUALIZED Q/Q: 6.0% V 2.9%E
SLG Fitch cuts rating to BB+ from BBB- [lowest level of investment grade]; Outlook Negative
(CN) CHINA INJECTS CNY401B IN 1-YEAR MEDIUM TERM LENDING FACILITY (MLF); CUTS MONTHLY SETTING RATE BY 15BPS TO 2.50%
(CN) CHINA PBOC CUTS MLF RATE BY 15BPS TO 2.50% (not expected)
(CN) CHINA JULY INDUSTRIAL PRODUCTION Y/Y: 3.7% V 4.3%E
(CN) CHINA JULY RETAIL SALES Y/Y: 2.5% V 4.0%E [slowest growth since Dec 2022]

TUES 8/15
(UK) JUN AVERAGE WEEKLY EARNINGS 3M/Y: 8.2% V 7.4%E
(CN) CHINA SAID TO CONSIDER CUTTING STAMP DUTY TO REVIVE SLUMPING STOCK MARKET (**Note: would be the 1st time since 2008)
MKS.UK Q1 Trading Update: Expect H1 results to show 'significant improvement against previous expectations'
(UK) Kantar announces 12 week grocery market share and sales: UK grocery price inflation rose by 12.7% y/y in the four weeks to Aug 6th v 14.9% prior (biggest monthly drop since 2008 and 5th consecutive fall)
(CN) CHINA PBOC CUTS STANDING LENDING FACILITY (SLF) RATES BY 10BPS FOR THE OVERNIGHT, 7-DAY AND 1-MONTH MATURITIES [2nd cut this summer]
(US) Fitch analyst warns it may have to downgrade 'dozens' of US banks, even including banks as big as JPMorgan, in case of another one notch downgrade of US banking industry - CNBC interview
(CA) CANADA JULY CPI M/M: 0.6% V 0.3%E; Y/Y: 3.3% V 3.0%E (annual pace back above BOC target range)
(US) JULY ADVANCE RETAIL SALES M/M: 0.7% V 0.4%E; RETAIL SALES (EX-AUTO) M/M: 1.0% V 0.4%E
HD Reports Q2 $4.65 v $4.46e, Rev $42.9B v $42.3Be; Announces new $15B share buyback; Did see continued pressure in certain big-ticket, discretionary categories
HD Exec: As weather improved in Q2 we saw an increase in Spring sales, July comp sales were almost flat - earnings call comments
(US) AUG NAHB HOUSING MARKET INDEX: 50 V 56E
(US) Atlanta Fed GDPNow: Raises Q3 GDP forecast from 4.1% to 5.0%
A Reports Q3 $1.43 v $1.37e, Rev $1.67B v $1.66Be; Cuts FY guidance citing softer macroeconomic environment
(US) Weekly API Crude Oil Inventories: -6.2M v +4.1M prior
(US) UAW President says contract negotiations are going 'too slow'; UAW said to direct locals around the US to schedule strike authorization vote as soon as possible, likely next week, Send results to UAW International by day's end on Aug 24th - US financial press
COHR Reports Q4 $0.41 v $0.38e, Rev $1.21B v $1.15Be; Guides Q1 and FY24 below consensus
(CN) Zhongrong International trust said to miss 'dozens' of payments on various instruments – Press

WED 8/16
(UK) JULY CPI M/M: -0.4% V -0.5%E; Y/Y: 6.8% V 6.7%E (slowest annual pace since Feb 2022)
300750.CN Unveils new 'superfast charging' long-range battery Shenxing with 400km charged in 10 minutes; World's first LFP battery to achieve 4C superfast charging; Mass production expected by end-2023 - New product presentation
(CN) CHINA SAID TO BE ASKING SOME FUNDS TO AVOID NET EQUITY SALES THIS WEEK; SPECULATION IS GROWING THAT CHINA GOVT WILL ROLL OUT MORE STEPS TO PROVIDE SUPPORT - PRESS
700.HK Reports Q2 (CNY) adj Net 37.5B v 36.3Be, Rev 149.2B v 152.0Be
JD Reports Q2 (CNY) 5.39* v 4.06 y/y, Rev 287.9B v 279.2Be
TGT Reports Q2 $1.80* v $1.43e, Rev $24.8B v $25.4Be; Cuts FY23 outlook citing 'recent sales trends'; Expects continued near-term challenges on the topline
TJX Reports Q2 $0.85 v $0.76e, Rev $12.8B v $12.4Be; Raises FY24 outlook as Q3 is 'off to a very strong start'; Notes customer traffic increased at every division
Fitch: GDP in largest developed economies will not return to pre-COVID-19 pandemic path, even in medium-term
TGT CEO Cornell: Comp trends softened from backhalf of May into Jun before seeing a meaningful Jul recovery in traffic, comps - earnings call
(US) JULY HOUSING STARTS: 1.452M V 1.450ME; BUILDING PERMITS: 1.442M V 1.463ME
(US) DOE CRUDE: -6.0M V -1.5ME; GASOLINE: -0.3M V -1ME; DISTILLATE: +0.3M V 0ME
(US) Atlanta Fed GDPNow: Raises Q3 GDP forecast from 5.0% to 5.8%
X Reportedly ArcelorMetal is consulting with bankers about a potential bid for US Steel - press
HE Said to be talking with restructuring firms to deal with fallout from the Maui fires – press
CSCO Reports Q4 $1.14 v $1.06e, Rev $15.2B v $15.0Be

CSCO Exec: Cisco saw a lot of big customers making big commitments, which is a positive thing; Expects to see more normal ordering patterns - earnings call comments
(AU) AUSTRALIA JULY EMPLOYMENT CHANGE: -14.6K V +15.0KE; UNEMPLOYMENT RATE: 3.7% V 3.6%E (first negative jobs report since Apr, and largest fall since Dec 2022)
(CN) China Trust Co. Zhongzhi (ZEG) confirms plans for debt restructuring, hires KPMG to conduct audit of its balance sheet - financial press

THRS 8/17
992.HK Reports Q1 Net $176.5M v $516M y/y, Rev $12.9B v $17.0B y/y
(US) US reportedly set to escalate claim Mexico corn policy violates trade deal - press
(CN) China Commerce Ministry (MOFCOM): China evaluating impact of US Pres Biden's investment rules; Reviewing exporters' applications on rare chip metals; Welcomes US Commerce Sec Raimondo's planned visit to China
MAERSKB.DK Market Update: In recent weeks, we received an increased number of requests for adding inland shipping to ocean bookings; Peak shipping season for cargo travelling from China to Europe in line with previous years the network, expected to be very busy until Oct as retailers stock their shelves ahead of the holiday season
(US) BofA Institute: week-to-Aug 12th total card spending +0.6% y/y; Notes gas spending growth y/y, likely due to the pickup in gas prices, but spending dropped in many other major categories y/y
(US) San Francisco Fed: Estimates US consumers have ~$190B of excess savings left v ~$500B in early May 2023; Likely be depleted during the current quarter
(CN) CHINA REPORTEDLY TOLD STATE BANKS TO ESCALATE YUAN INTERVENTIONS THIS WEEK - PRESS
(US) US reportedly planning new tariffs on food-can metal from China, Germany and Canada - US press
WMT Reports Q2 $1.84 v $1.69e, Rev $161.6B v $159.8Be; Raises again FY24 outlook; Says in good shape with inventory
WMT Back-to-school categories performed well; US grocery inflation increased in high-single digits in Q2 but moderated 400bps q/q; Notes strong market share gains in grocery - earnings slides
LITE Reports Q4 $0.59 v $0.56e, Rev $370.8M v $368Me; Guides Q1 weak as expects current customer inventory correction cycle will continue and its shipments will be below end-market demand
CVS Blue Shield of California confirms new pharmacy care model designed to fix problems in today's 'broken prescription drug system' and save up to $500M in annual drug costs; Amazon Pharmacy will provide fast and free delivery of prescription medications
(US) INITIAL JOBLESS CLAIMS: 239K V 240KE; CONTINUING CLAIMS: 1.716M V 1.70ME
(US) AUG PHILADELPHIA FED BUSINESS OUTLOOK: +12.0 V -10.2E (1st positive print in 1 year); New Orders: +16.0 v -15.9 prior
(US) Mid August Manheim wholesale used vehicle Index at 212, +0.1% m/m, -7.8% y/y (first M/M increase in 4 months)
AMAT Reports Q3 $1.90 v $1.73e, Rev $6.43B v $6.16Be; Guides Q4 above consensus, but notes weakness in leading-edge foundry, logic, and NAND
(UR) US official: US has approved sending F-16s from Denmark and Netherlands to Ukraine as soon as pilot training is completed
(JP) JAPAN JULY NATIONAL CPI Y/Y: 3.3% V 3.3%E; CPI EX FRESH FOOD (CORE) Y/Y: 3.1% V 3.1%E
(US) Maui Emergency Management Agency Head Herman Andaya said to resign, effective immediately - local media
08/17 USD/CNY (CN) China PBOC sets Yuan reference rate: 7.2006 v 7.2076 prior

FRI 8/18
(CN) China Securities Regulator (CSRC): Vows to lower trading costs to boost capital market and investor confidence [as speculated]
(EU) EURO ZONE JULY FINAL CPI Y/Y: 5.3% V 5.3%E; CPI CORE Y/Y: 5.5% V 5.5%E
(UR) According to US intel community assessment, Ukraine’s counteroffensive will likely fail to reach key southeastern city Melitopol and will not fulfill its key objective of severing Russia’s land bridge to Crimea this year - WaPo
(US) UAW President Fain: Detroit Three automakers are still not serious in their responses so far to UAW union's economic proposals; Things have been moving slow; Sept 14th is a firm deadline
DE Reports Q3 $10.20 v $8.12e, Equipment Ops Rev $14.3B v $14.2Be; Raises most FY23 guidance; Notes stabilizing conditions in the supply chain
EL Reports Q4 +$0.07 v -$0.04e, Rev $3.61B v $3.49Be; Guides FY24 below estimates; Expect to return to Organic Rev growth in 2024 and deliver progressive margin recovery
(US) Weekly Baker Hughes Rig Count: 642 v 654 prior (-1.8% w/w)
(KR) US, Japan and S. Korea call for peace, stability in Taiwan Strait; To launch working group on N. Korea cyber threats, evasion of sanctions - Trilateral Summit

CrunchBase : The Week’s 10 Biggest Funding Rounds: Biotech Startup Abcuro Takes

The Week’s 10 Biggest Funding Rounds: Biotech Startup Abcuro Takes Top Spot

This is a weekly feature that runs down the week’s top 10 announced funding rounds in the U.S.

The week felt slow news-wise, but it actually did provide a handful of pretty big rounds. While they may not have come from some of the bigger names in the tech startup landscape — although one large round did go to a well-known AI startup — they were big nonetheless. We are heading into the final slow weeks of summer, so it’ll be interesting to see where things go from here.

1. Abcuro, $155M, biotech: Biotech took three of the top five spots last week and it takes the top spot this week.Newton, Massachusetts-based clinical-stage biotech startup Abcuro raised a $155 million Series B financing co-led by Redmile Group and Bain Capital Life Sciences.The company is developing therapies for the treatment of autoimmune diseases and cancer through precise modulation of specific T and NK cells.Founded in 2015, the company has raised nearly $215 million, per Crunchbase.

2. Teamshares, $124M, fintech: While the thought of an employee-owned business may be appealing to a retiring small-business owner, it can sometimes be difficult in practice. New York-based Teamshares raised a fresh $124 million Series D this week led by QED Investors to help with that.The company buys small businesses from retiring owners with the goal of making them 80% employee-owned within 20 years — providing the companies with new leadership, financial education, equity management software and financial products.The startup has grown from four companies with $10 million in revenue in January 2021 to 84 companies with over $400 million as of July. Founded in 2019, Teamshares says it has raised $245 million.

3. Pivotal Commware, $102M, telecommunications: Radio access networks startup Pivotal Commware locked up a $102 million Series D round led by Gates Frontier and Tracker Capital. The Bothell, Washington-based company’s Pivot 5G repeaters are able to extend the wireless coverage area of RANs. The company may be most famous for having Bill Gates as one of its early backers.Founded in 2016, the company has raised $201 million, per Crunchbase.

4. (tied) Anthropic, $100M, artificial intelligence: It seemed like the AI frenzy had calmed down slightly from when it was in overdrive during the spring. However, perhaps that was just a brief summer respite.This week, Anthropic — a ChatGPT rival with its AI assistant Claude — raised a $100 million round from SK Telecom, as South Korea’s largest telco looks to grow its AI-related telecommunications business.As part of the deal, the San Francisco-based AI startup will build a large language model customized for telcos.In the last 16 months, Anthropic has raised more than $1.4 billion, including a $450 million Series C led by Spark Capital in May.Founded in 2021, the company already has raised $1.6 billion, per Crunchbase.

4. (tied) BitGo, $100M, crypto: It was just a year ago that digital asset investment firm Galaxy Digital called off its proposed $1.2 billion acquisition of crypto custody firm BitGo — severing what would have been one of the largest deals in crypto history. Fast-forward to this week and Palo Alto, California-based BitGo was able to lock in an even higher valuation from investors, raising a $100 million Series C at a $1.75 billion valuation. The company did not disclose who participated in the round, outside of saying it was “new, outside strategic investors.”Previous investors include Valor Equity Partners, GS Growth and Redpoint Ventures.The round, however, is eye-catching considering how few nine-figure raises there have been this year in crypto. BitGo’s is only the sixth such round in a down year for crypto funding.Founded in 2013, the company has raised nearly $170 million, per Crunchbase.

6.ClassWallet, $95M, fintech: Miami-based ClassWallet, which offers a purchasing and reimbursement platform for public funds, raised a $95 million round led by Guidepost Growth Equity.Founded in 2014, the company has raised nearly $102 million, per Crunchbase.

7.Rondo Energy, $60M, energy: Alameda, California-based Rondo Energy, a maker of energy storage batteries, raised $60 million from several investors, including Microsoft Climate Innovation Fund.Founded in 2020, the company has raised $82 million, per Crunchbase.

8. Helm.ai, $55M, autonomous driving: Menlo Park, California-based Helm.ai, a software developer for autonomous driving and automation of robotics, closed a $55 million Series C led by Freeman Group.Founded in 2016, Helm.ai has raised $102 million, per the company.

9. Aether Bio, $49M, machine learning: Menlo Park, California-based nanoscale machinery company Aether Bio raised a $49 million Series A led by Natural Capital and Unless.Founded in 2017, the company has raised $49 million, per Crunchbase.

10.Mitra Chem, $40M, battery: Mountain View, California-based Mitra Chem, a producer of lithium-ion battery materials, announced it reached a $40 million first close of a $60 million Series B funding round led by GM.Founded in 2021, the company has raised $87 million, per Crunchbase.

Big global deals
While there were a lot of big, nine-figure rounds that went to U.S.-based startups, the largest round of the week happened abroad.
  • Ireland-based TechMet, a critical minerals investment company, raised a $200 million venture round.

WSJ : SoftBank Buys Vision Fund’s Stake in Arm at $64 Billion Valuation

SoftBank Buys Vision Fund’s Stake in Arm at $64 Billion Valuation
Japanese technology investor arranges deal ahead of the chip designer’s planned IPO, expected to be the largest of the year

SoftBank 9984 0.22%increase; green up pointing triangle Group recently bought a 25% stake in Arm Ltd. that was held by the Japanese technology investor’s Vision Fund unit, in a deal that values the chip designer at slightly more than $64 billion, according to people familiar with the matter.

The deal signals the valuation SoftBank could aim to achieve from Arm’s much anticipated initial public offering in New York next month.
The offering is expected to be the largest IPO this year.

Moving the stake from the Vision Fund to the parent company will amp up pressure on SoftBank to achieve or better that valuation level in the IPO.
SoftBank acquired Arm, whose chip designs are used in the vast majority of smartphones and mobile devices, for about $32 billion in 2016.
It subsequently sold 25% of the business for $8 billion to the Vision Fund, which was set up to invest in new technologies.

Through the deal, SoftBank effectively is buying out the Vision Fund’s Middle Eastern backers—Saudi Arabia’s Public Investment Fund and Mubadala Investment, an investment division of Abu Dhabi, which put up most of the money in the Vision Fund.
SoftBank itself put nearly $28 billion into the $100 billion fund.

SoftBank at a corporate level already owns the other 75% of the chip designer.
The deal more than doubles the value of the Vision Fund’s stake in Arm to more than $16 billion—a rare win for the fund, which has failed to live up to lofty expectations.

In the planned IPO, SoftBank intends to sell a minority stake of the U.K.-based business and list the shares on the Nasdaq. The offering gives SoftBank a way to sell down its holding in Arm over time to reap future gains if the stock appreciates. This plan comes after its $40 billion plan to sell the company to Nvidia, an artificial intelligence and graphics-chip maker, failed because of regulatory opposition.

The Japanese tech conglomerate, led by its billionaire founder Masayoshi Son, has spent much of the past two years selling off years-old investments to raise cash and pay down debt.
The Arm IPO would give SoftBank fresh capital to restart its wide-ranging investments in the tech startup space.
The company recently said it wants to renew its push for large-scale investments in artificial intelligence.

SoftBank is expected to lift the veil on Arm’s planned IPO as soon as Monday by making its so-called F-1 document public, some of the people said.
That filing will lay out details about Arm’s financials and operations. It likely won’t include any targets on valuation, IPO pricing or the amount to be raised from the issue.
According to some of the people familiar with the matter, SoftBank aims to sell roughly 10% of the company in the offering.

The company and its bankers will lay out a target valuation range in an amended filing, published right before the company kicks off its planned IPO roadshow in September, according to people familiar with the matter. The roadshow is several days long when the company meets with potential investors to pitch shares in its offering.

Reuters earlier reported that SoftBank was in talks to acquire Vision Fund’s stake in Arm.

The offering, because of its large size, will be closely watched by investors as further proof of whether the recent revival in the IPO market is sustainable. It will follow the successful, but smaller issues, in June by restaurant chain Cava Group and in July by Oddity Tech, a direct-to-consumer seller of makeup brands.

Arm has held talks with some of Arm partners and customers for the sale of small stakes in the IPO each worth up to $100 million, according to people familiar with the matter. It couldn’t be learned which, if any of these investors, plan to participate.

Companies sometimes invite strategic and big-name financial investors to invest in their IPO because of existing relationships or to help gain credibility with the broader market to boost demand for the issue.

*The Information : Verizon Has Talked With Disney About ESPN Partnership

Verizon Has Talked With Disney About ESPN Partnership

isney CEO Bob Iger has said he’s looking for strategic partners to help launch a streaming version of the ESPN cable channel. One key distributor, Verizon, has already thrown its hat into the ring.

The telecom giant has been in touch with Disney about potentially partnering on a new ESPN streaming service, according to people familiar with the matter. Verizon CEO Hans Vestberg has made no secret of his openness to such an arrangement. He told executives at sports leagues and teams about his interest in partnering with Disney on the distribution of a streaming version of ESPN earlier this summer, according to a person with direct knowledge of the matter.

THE TAKEAWAY
• Verizon is interested in partnering with Disney on ESPN streaming
• Disney wants partners to help with distribution and marketing
• Verizon is adding streaming bundles to help attract customers

That suggests Verizon could offer a streaming verson of the full ESPN channel to its nearly 100 million wireless subscribers as part of their wireless service, jumpstarting the new service's distribution.
Verizon’s interest is good news for Iger, who faces an uphill battle in reshaping Disney, which is grappling with declining TV subscribers and falling ad revenue in traditional TV, as well as losses and slowing growth in streaming. Iger has dropped hints that Disney is looking to sell its traditional TV networks, such as ABC, although he has emphasized that sports remains key to its future.

Iger has said he wants to retain control of ESPN. But as he told analysts last week, Disney was looking for partners that could help with “distribution, technology, marketing, and content opportunities” as it shifts ESPN from a cable channel to a streaming service. Iger added that Disney had “received notable interest from many different entities.” (Disney already has a streaming version of ESPN called ESPN+ which offers live games from the NHL, the Spanish pro soccer league La Liga, golf and other sports, but not marquee sports broadcasts, such as the NFL, NBA and national college football broadcasts, unless the user has already signed up for a pay-TV subscription.)

Spokespeople for Verizon and ESPN declined to comment.

Verizon was an early partner of Disney’s streaming services, offering Disney+ to its cellular customers and some of its cable customers free for a year when the service launched in 2019. It still offers the Disney streaming bundle of Disney+, Hulu and ESPN+ with its wireless service at a discounted price, along with several other streaming services. People close to the situation noted that as a result of these existing arrangements, Disney and Verizon executives are regularly in discussions.

Growth in the wireless market has stalled in recent years, and Verizon’s subscriber growth has flatlined even as rival firm T-Mobile, which has been more aggressive on discounting and building out its 5G network, has taken market share. Intense competition between wireless services has made add-on services like streaming more important as a way to attract consumers.

Verizon has struck distribution deals with various streaming services, including a recent announcement that it will offer YouTube’s NFL Sunday Ticket service for free to some new and existing wireless and internet customers ahead of the coming football season. In June, it launched a new package for wireless customers that included Netflix and Paramount+—the first time the two services have been bundled together—at a discounted price.

Top American sports leagues—the NFL, NBA and MLB—have also held talks with Disney about potential partnerships, according to people familiar with the matter. News of the leagues’ talks with Disney was first reported by CNBC. The talks are still in the early stages and the results could take many shapes: For instance, the leagues could provide more content to ESPN, said the people.

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Research Calls
  • Upgrades:
    • Foot Locker (FL) upgraded to Hold from Sell at Williams Trading; tgt lowered to $23
    • Strategic Education (STRA) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $90
  • Downgrades:
    • Ares Commercial Real Estate (ACRE) downgraded to Mkt Perform from Outperform at Raymond James
    • Beazer Homes (BZH) downgraded to Neutral from Outperform at Wedbush; tgt $32
    • Hesai Group (HSAI) downgraded to Neutral from Buy at Goldman; tgt lowered to $12.40
    • XPO, Inc. (XPO) downgraded to Hold from Buy at Loop Capital; tgt raised to $74
  • Others:
    • Acrivon Therapeutics (ACRV) initiated with a Buy at Jones Trading; tgt $26
    • AlloVir (ALVR) initiated with a Buy at BofA Securities; tgt $17
    • Blue Bird (BLBD) initiated with a Buy at BofA Securities; tgt $26.50
    • DocGo (DCGO) initiated with a Buy at BTIG Research; tgt $15