Benner on Tech: Spring Stock Slump?
People are Talking About...
Can a technology conference be a harbinger of a market move?
Every spring the biggest investment banks hold a tech confab in San Francisco. Industry executives present to analysts and investors, and dealmakers pitch the techies on M&A, IPOs, secondary stock sales and other sorts of money-raising activities. It’s a time when suits and blazers converge. Depending on your point of view, it has the pace and feel of a batch processing center or an industrial slaughterhouse.
Attendees at the Morgan Stanley event -- one of the last of the season -- were buzzing this week about the market patterns that emerged after last year’s conferences. Right around this time in 2014, the Nasdaq and the S&P 500 began a six-week downward spiral, followed by another month or so of volatility until things took a definite turn higher in May.
The selloff was worse for high-flying tech stocks, especially richly-valued cloud companies like Splunk, Workday, Marketo and ServiceNow. Cloud and Internet stocks had a true correction, meaning a drop of 10 percent or more, and it took them weeks longer than it did the indexes to recover. The tremble injected some caution into the market for late stage, private investments, and it helped to derail initial public offerings, most notably the Box IPO.
Some of the Morgan Stanley attendees wondered if we’ll see a similar wobble this year. After spending a month or so surrounded by bankers, several tech companies held secondary stock offerings in the wake of last year’s conferences. Those sales can sometimes depress share prices. It stands to reason that similar sales will happen this year too.
Last February and last month, tech stocks zoomed after rallying for most of the previous quarter. The highs last year led to fervent talk of tech froth. Just this week Mark Cuban, the investor and owner of the Dallas Mavericks, penned an essay about why today’s tech bubble is worse than the one we saw in 2000.
There’s been chatter over the past year or so about a possible interest rate hike, which could hurt the markets. A rate move seems even more likely to happen in 2015, but sometimes even serious belief in a hike can hit stocks.
Maybe it’s pattern recognition. Maybe it’s superstition. But some people were talking about how to prepare for a stumble and wondering if a such a move would again delay IPOs and other fundraising events.
Ellen Pao v. Kleiner Perkins: The New York Times has one of the best summaries of the trial so far, including what’s at stake and how Kleiner’s reputation may be damaged even if they win this case. Kleiner partner John Doerr described Pao as having a “female chip on her shoulder,” whatever that means. The outside investigator who looked into Pao’s discrimination claims found some stuff that I’m sure Kleiner would be happy to keep out of view. Fortune takes a look at the jury.
FitStar, a digital fitness platform, will be acquired by Fitbit.
Lyft is offering to pick up passengers from pre-chosen locations and give them $3 dollar rides in San Francisco, reports Bloomberg. That’s only a little more than a ticket to use the city bus system, which operates on a similar model.
Nextdoor’s $210 million funding deal shows just how big late stage rounds have gotten, Bloomberg reports.
Xiaomi says that shipments will grow by 30 percent and revenue will reach at least $16 billion, the Wall Street Journal reports.
Formation8 was dropped as a defendant in a lawsuit that accuses its co-founder Joe Lonsdale of sexual assault, reports Reuters.
SaaS Capital closed its second fund with $58 million.
How hedge and mutual funds became big players in startup investing, as told by two charts from CB Insights.
People and Personnel Moves
AltSchool, an education startup, just poached some executives from high-profile companies, Business Insider reports. Bharat Mediratta, who was previously an engineer at Google, will be the company’s CTO. Michael Ginty, who was Uber's global security chief, will be AltSchool's head of safety. Sue Yoon, a former vice president of corporate development at Rocket Fuel, will become AltSchool’s VP of finance. Rajiv Bhatia, who was director of product at Zynga, will be VP of product.
The online retailer opened a store on Alibaba’s Tmall.com in a bid to reach Chinese consumers, Bloomberg reports.
A few lucky Facebook developers get to fine-tune Apple Watch apps in a sheltered lab with no connection to the outside world, reports Bloomberg. A revamped Beats-based music streaming service will debut at Apple’s Worldwide Developers Conference in June, according to 9to5Mac.
The networking company will have to make some serious acquisitions if it wants to improve its margin, Bloomberg reports. Palantir Technologies and Nutanix were floated as possible M&A targets.
Your “likes” count will drop next week, reports VentureBeat.
The long-anticipated insurance shopping website is here, reports the New York Times. The company decided not to participate in the Pentagon’s robot-building contest, even though the DoD wants to work with more commercial companies on advanced tech, the Wall Street Journal reports. The newspaper also says that the wireless carrier experiment could launch this month, but it will only work on Nexus smartphones.
The conglomerate acquired Yesco Electronics, a maker of light emitting diode displays, reports the Wall Street Journal.
The cybersecurity bill drafted by the Senate Intelligence Committee has hit a roadblock on privacy concerns, the Wall Street Journal reports.
Business Insider plans to spin off its consumer tech site, Digiday reports.
News and Notes
Inside the crazy business of mobile games. Come for the .gifs. Stay for the great Bloomberg feature story.
Gamergate critic Leigh Alexander is creating a website for women and minority gamers, Re/code reports.
Like Netflix, but for video games. Nvidia, maker of the Shield game console, is offering Shield a subscription game service, Bloomberg reports.
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