Fitbit shares surge in market debut
Shares in technology company Fitbit have risen more than 50% on their first day of trading on the NYSE.
The seven-year-old company is known for its smart devices that can be worn on the wrist and track a user’s movements, measuring activity and fitness levels.
Its initial IPO was $20 a share, which rose rose by over 50% to $30.04 in the early hours of trading. The company have raised $732m through the share sale.
Whilst a small rise in first-day trading is generally expected of newly listed companies, a jump as large as this is a trading debut is unusual; the average first-day rise for U.S.listed IPOs so far this year is 14%, according to Dealogic.
Fitbit has been the most highly anticipated IPO of the year, however there are suggestions that its success may be short-lived; similar products such as Mi-band from the Chinese smartphone marker Xiaomi, as well as Apple’s iWatch, will provide strong competition.
“What remains to be seen is how Apple’s arrival will change the landscape,” said
Ramon Llamas from IDC. “The Apple Watch will likely become the device that other wearables will be measured against, fairly or not. This will force the competition to up their game in order to stay on the leading edge of the market.”
China heading for biggest weekly fall since 2009
The Shanghai Composite Index fell 3.7 percent at the close yesterday, making it a drop of 7.4 percent for the week. This will be their largest weekly loss since 2009.
Technology companies led the slump, with the CSI 300 Index falling 4.1 percent and Hong Kong’s Hang Seng China Enterprises Index decreasing by 1.1 percent.
Analysts are increasingly warning that the stock market is in a bubble that llooks set to burst; the market has more than doubled in the past 12 months to reach its highest figures for seven years.
“Stocks have risen too much and valuations have reached critical levels,” Shen Zhengyang, an analyst at Northeast Securities Co. in Shanghai told Bloomberg. “Anything that’s slightly negative can impact the market.”
Yellen says “room for improvement” before interest rates can be raised
Forecasts released by the Fed yesterday showed most officials expect to begin raising short-term interest rates before the end of the year.
However, in their statement Fed policy makers reiterated that they must be “reasonably confident” that inflation will move back to their 2 percent target over the medium term before raising interest rates. Inflation minus food and energy decelerated to 1.2 percent for the year ending April, compared to 1.4 percent the year before.
Chairwoman Janet Yellen said that there was “room for further improvement” in the economy before interest rates would be raised. She cited signs of “cyclical weakness” in the labor market, and noted wage growth remains “subdued.”
Stocks rose after the Fed announcements, with the Standard & Poor’s 500 Index up 0.2 percent to 2,100.44 in New York. The Dow added 31.26 points, or 0.2%, capping a back-and-forth session for stocks. The S&P 500 rose 4.15 points, or 0.2%, and Nasdaq gained 9.33 points, or 0.2%.
EU “impossible” without Britain
A European Union without Britain would be “impossible”, says Italian Prime Minister Matteo Renzi.
This comment comes after Renzi met with David Cameron to discuss his plans to reshape Britain’s relationship with the EU before an in-out referendum.
“For us it is a priority (that) the UK can continue to work inside the European Union because a European Union without the UK is impossible,” Renzi said, after lunch with Cameron in Milan.
Reelected last month, David Cameron pledged to hold the referendum by the end of 2017. He is seeking changes to EU treaties, which it says are needed to achieve reforms to EU migrants’ access to welfare payments.
In the wake of Cameron’s plans, Ireland’s Minister for European Affairs Dara Murphy told BBC Radio on Wednesday that his country had begun contingency planning for a British exit from the EU.
Property crowdfunding: an alternative to equity?
For a crowdfunding investment with a potentially lower risk, property crowdfunding may be worth investigating. As interest in equity crowdfunding continues to rise, it was only a matter of time before the craze spread into the property market; arguably, the most popular area to invest.
There are several platforms online that offer property crowdfunding opportunities, including PropertyMoose, The House Crowd and Property Partner. Essentially, this service allows you to invest in a buy-to-let property without having to take on the additional responsibilities that come with being a landlord. It is popular among investors who want a slice of the property market but lack the capital to create their own portfolio; the Council of Mortgage Lenders show that the value of buy-to-let lending currently stands at £27.4bn.
Andrew Gardiner, chief executive of Property Moose, says “Crowdfunding opens up the market to everyone, so they can invest in property for a much-reduced commitment … Plus, it allows people to diversify across asset types and geographic areas, helping to spread risk and, hopefully, increase returns.”
So what are the benefits?
Compared to equity crowdfunding, where only 10% of the businesses are likely to succeed, putting money into the property market is a comparatively low risk investment. With both house prices and rent continuing to increase, especially in London,
Crowdfunding a property gives you access to a market that would otherwise be out of reach.
With crowdfunding, the properties have no mortgage; this means no exposure to interest rate fluctuation. You also have a legal charge on the property, increasing the safety of the investment should someone along the line go bankrupt.
Equally, for tenants, living in a crowdfunded property could mean more security – if one person wants to sell, there is no change of ownership none of the hassle for the tenant associated with a normal sale. Similarly, as ownership is unlikely to change and the house will always be for renting, there is more certainty as to the rental period.
And the problems…
There is no way to get your money back fast. Investments are for a fixed term, usually 5 years, and if the house needs to be sold, the process usually takes a minimum of three month. If you wish to just sell your share, what you receive for it depends largely on whether there is a secondary market interested in buying it.
Secondly, the fees on this sort of investment are high. The House Crowd will charge 5percent up front nd a profit share for thie manafagement company from the rent, and gains of “around 25 percent”. Property Moose charges you 5 percent up front as a finders’ fee, and then 15 percent of the yeield as well as 15 percent of any final capital gain. These charges all add up – there is the danger of an investment in this way not being value for money.
Whilst one of the advantages of property crowdfunding is easier access to the market, Royal Institution of Chartered Surveyors has expressed concern that such easy access to property investment could exacerbate volatility in the market.
Oil firms ahead of inventories
Oil prices are firmer before Crude Oil inventories that are expected to post the seventh consecutive weekly decline in stockpiles.
The sharp sell off earlier this year caused some producers to reduce output and the trickle down effects are now being felt in both inventories and the price of oil.
The weaker dollar has also supported prices. Prior consensus of a rate hike has been squashed causing the then strong dollar to weaken.
Oil has rallied over 40% from the lows observed in early 2015 but many analysts are still cautious and feel there could be further downside.
“We’re not in the clear as far as the supply-demand balance. In some ways, we think this whole situation is getting worse,” said Vikas Dwivedi, head of oil strategy at Macquarie.
Credit Suisse downgrades Tesco and Sainsbury
Over the first 3 months of the year the UK’s leading supermarkets staged a strong recovering rally from their distressed levels outperforming the FTSE 100 significantly.
Credit Suisse has today initiated coverage of UK food retailers with a negative stance rating both Tesco and Sainsbury’s at “Underperform” with aggressive price targets of 169p and 219p respectively – indicating the potential for a 20% collapse in Tesco’s share price and 15% pull back in Sainsbury’s taking them back to levels they were trading at 6 months ago.
Whilst Credit Suisse highlighted the continuing decline in like-for-like sales, the rate of decline in margins is even quicker as the price war continues saying “We see no obvious path back to recent margin levels”. In the note CS confirmed Tesco and Sainsburys had born the brunt of the price war.
Unbound: the future of publishing?
Unbound is a novel new crowdfunding site, allowing readers to fund books that they want to read. Marketing themselves as a ‘crowdfunding publisher’, the website aims to be a middle path between the traditional publishing route and self publishing, which comes with its own difficulties. In a world where the long term future of the published book is increasingly endangered by Amazon and e-Books, could this be the future of publishing?
Rather than following the equity crowdfunding model, if a person likes the look of a pitch they are invited to pledge money in return for various rewards, including special edition hardbacks, a name in the front of the book and lunch with the author. If the target is reached, around £10,000, production begins and sales begin by the traditional route; profits from the book are split 50:50 between Unbound and the author.
Unbound is the brainchild of successful author, Dan Kieran. The idea came after the financial crisis of 2008, when advances offered to him by publishers dropped to so little that his writing career became unsustainable.
“There weren’t millions but there were thousands who would buy a book I wrote if they knew it existed. So I saw that someone had to build a platform for an author to connect with their audience directly and have a relationship with them,” he told IBTimes.
Arguably, the site’s biggest success story is The Wake, by Paul Kingsnorth; a story detailing the resistance of the invasion of 1066, but written in its own language. Given this quirk it was perhaps unsurprising that mainstream publishers weren’t interested. However the Unbound community supported it wholeheartedly, wth 400 people pledging money towards it; it ended up being shortlisted for the Man Booker Prize.
Unbound is now publishing around 8 books a month, having published 40 to date. For more information, or to invest in one of the books, visit unbound.co.uk
Bitcoin surges as ‘Grexit’ looms
Bitcoin saw a 7 percent surge today, as concerns of a Greek exit from the EU drove Greek depositors into the decentralized digital currency.
The web-based “cryptocurrency” was invented six years ago, and is unregulated by government or central banks, meaning its value fluctuates according to demand. Today’s price increase willl signal the currency’s longest winning streak in 18 months.
Joshua Scigala, co-founder of Vaultoro.com, a Bitcoin-gold exchange told Reuters that over the past two months of Greek negotiations, there had been a 124 percent increase in inflows from Greek IP addresses.
“Some people aren’t waiting for the government to figure out an exit plan and are doing it for themselves,” Scigala said. “You have people worrying about their families’ wealth or their life savings, and worrying that their money might be locked up in banks… they would rather hold money in a private asset like gold or bitcoin.”
Sony embarks on record breaking crowdfunding project
Sony has raised a $2 million in one of the most popular rounds of crowdfunding ever. It broke the record for a video game raising $1 million in the shortest time frame. It received pledges of $1 million in 46 minutes, second only to Pebble Time Watch who raised $1 million in 30 minutes.
Sony is raising funds to develop computer game Shenmue 3 in collaboration with gaming end users. The pitch raised its minimum target of $2 million in just over 9 hours and now has 30 days to raise additional funds.
The crowdfunding project was announced at the E3 electronic entertainment expo in Los Angeles in Sony’s press conference.
Sony is the latest corporate to adopt a crowdfunding strategy, not only to raise funds, but to involve the fans and consumers in the development of new products and services.
Earlier this year, London listed Hornby launched an Airfix crowdfunding project that gave model enthusiasts the opportunity to select a vintage model they would like to be manufactured. The one with the most votes will be produced and the backers will receive a kit.
Sony and Hornby’s strategy is representative of a wider research and development trend.
Having the consumer decided which products they would will be willing to buy and financially backing the products, not only cuts development costs but also marketing expenses. We see this trend continuing and watch with interest to see the next innovative crowdfunding project from an established corporate.