Hatch Weekly: The IPOs you don’t know are go go go!

The rise of thematic investing

If you know BlackRock (BLK), you know they’ve got ETFs to support almost any passive investing strategy. ETFs are a great way to diversify a portfolio quickly, and now BlackRock is increasing the sophistication of their offerings by launching a new suite of products that allow you to invest in the megatrends of tomorrow.

5 megatrends and counting

The five megatrend themes include technological breakthrough, demographic and social change, rapid urbanisation, climate change and resource scarcity, and emerging global wealth. Thematic future funds allow investors to tap into and benefit from the widespread adoption of new technology or fundamental shifts in demographics. These funds are the fasting growing segment of investing, and while BlackRock isn't the only player in the game, to date, they've been able to compete on cost so we'll be watching this space.

Trendy investing

These trendy new ETFs aren't necessarily meant to replace your core portfolio allocation – instead, they are options to "tilt" your portfolio towards future trends. As a way of investing, themes – like all approaches – will have ups and downs and it could take time to realise technological or societal shifts, but they can be beneficial for a buy and hold investor. ETFs expected to drop in the coming weeks include the iShares Cybersecurity and Tech ETF, and the iShares Genomics Immunology and Healthcare ETF. We think these will complement existing megatrend ETFs like ARK's Genomic Revolution ETF (ARKG) and the ROBO Global Robotics and Automation ETF (ROBO). Here’s to the future.

What is Hatch?

With Hatch, you can now buy and sell shares in over 2,900 companies & 500 exchange-traded funds, all listed on the US share markets. Invest dollar amounts to buy as much or as little of a company or ETF as you like, even if it’s a fraction of a share. Powered by Kiwi Wealth. See how it works

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Trump threatens markets? How cute

So,Trump is predicting a major market meltdown if he loses the presidency in 2020. Wow.

Keeping politics great again

Great style, threatening a global recession to rally supporters. If he’s right, and the share markets drop like “never before”, on a percentage basis, this means the share markets would lose more than 25% of their value post-election day. He’s warning of a more significant drop than the share market crash of 1929, which if you recall, kicked off on Black Thursday. In a single summary sentence, rising market growth led to consumer overconfidence and an equities asset bubble. Over a week of frenzied of selling, the share markets lost $14 billion in value, creating a crash that destroyed the economy and helped kick off the Great Depression. Good times.

Doom and gloom as a winning platform

There’s been a lot of talk of an impending recession, regardless of the presidency, so The Donald isn’t the only crystal ball reader right now. Analysts are predicting a recession within the next two years, starting with a downturn by the end of next year and point to recent months of market volatility and a sudden decline in consumer confidence as early indicators. Trade tensions between the US and China haven’t helped either, leaving many to wonder if Trump is promising a recession rather than warning of one.

2019: The year of the IPO

Flashback to a few weeks ago, recall the underwhelming IPO performances of Uber (UBER) and Lyft (LYFT)? Refresher: Uber went public at $45 a share and remains a little below that level while Lyft began at $72 a share and now trades in the low $60s. Now, let it go and look forward to a potentially rewarding future with Chewy (CHWY), CrowdStrike (CRWD), and Fiverr (FVRR) (and pssst: Slack this Thursday!).

IPOs go go go

Three very different kinds of companies have gone public in recent days, and the market is getting in on the newly IPO’d action. Sure Uber and Lyft were disappointing, but don’t be a Negative Nancy - several enterprise technology companies have had spectacular debuts this year, like Zoom Video Communications (ZM) and PagerDuty (PD) and let’s not forget Beyond Meat’s (BYND) meteoric share price rise.

Invest in what you don’t know?

So, who are the latest IPOs going from strength to strength in the markets? TBH, we’d never heard of them before: CrowdStrike Holdings is a cloud-based security firm who anticipated its IPO at $19 to $23 a share - the IPO priced at $34 and reached $68! The strong debut gives CrowdStrike a $13 billion market cap, 50 times its 2019 revenue, making it one of the most valuable security-software companies ever, even ahead of gargantuan Symantec (SYMC) which has 18 times CrowdStrike’s revenue. Then there’s Fiverr International, the small Israeli company that operates a marketplace for digital services, like logos and speeches. Fiverr expected to price at $18 to $20 a share and the share started at $21 but closed the first day of trading at $39.90. That’s a gain of 90% for those of you who are math-allergic. Lastly, we’ve got online pet food retailer aptly named Chewy. Its share started at $22 up from an original range of $17 to $19. At $22, Chewy was already valued at $8.7 billion, but wait. The first trade came swooping in at $36, boosting Chewy’s market cap to more than $14 billion. Do any of these public launches have staying power? 2019 is indeed turning into the IPO year we had hoped for. Airbnb, WeWork, SpaceX, Palantir, SoFi and Slack are on their way to a Hatch platform near you, what a time to be alive.

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