Thursday, Jun 2nd 2022

Three Things (6/2)

Commentary

"There's more beauty in truth, even if it is dreadful beauty.” - John Steinbeck

1) Private companies face markdowns: Fidelity Investments cut valuations for several of the year's most highly anticipated public offerings. Reddit was marked down by more than a third and Stripe was cut by 13%. The bleeding didn’t stop there as valuations were dramatically cut for additional investments such as TikTok owner ByteDance and grocery delivery startup Instacart.

Titan's Takeaway: Investing in late-stage private companies had been a winning strategy for many cross-over investors over the last decade, but as public peers have seen valuations slashed, we expect a reset of private valuations to happen in short order.

2) Job numbers provide a needed JOLT: Demand for workers remained at record highs with 11.4 million job openings, according to the latest JOLTS report. Job openings still outnumber job seekers by nearly 2 to 1. The labor market has added more than 6.5 million jobs in the past year and is on pace to return to pre-pandemic levels this summer.

Titan’s Takeaway: April’s job numbers indicate the labor market’s continuous strength despite headlines indicating pauses in hiring or broad layoffs. If the labor market maintains these levels, we see little reason for the Fed to deviate from its hawkish stance.

3) Losses for limited partners and execs: Tech investor SoftBank, slashed the wages of its top executives after its Vision Fund posted a $27.6 billion loss. Softbank has been battered by the tech rout, and CEO Masayoshi Son has pledged to take a more defensive approach going forward.

Titan’s Takeaway: Wages play an important role in attracting top talent, and top talent attracts the best deal flow. Son likes a seat at the most popular tables, so we imagine that he'll do what's necessary to keep his people happy in the end.

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