The hot tech IPOs just keep coming
Posted September 18, 2020 7:27 a.m. EDT
CNN — Snowflake isn't the only buzzy upstart to cash in on investors' enthusiasm for new software companies.
The latest: Unity Software, which makes programs for video game designers, priced its IPO at $52 per share on Thursday. The public offering will raise at least $1.3 billion. Just last week, the company said it expected to price shares between $34 and $42.
The stock is due to start trading Friday on the New York Stock Exchange under the ticker symbol "U."
Big picture: Snowflake made a splash earlier this week when it priced its initial public offering at $120 a share — well above the expected range of $100 to $110. Shares skyrocketed 112% on their first trading.
Another small software tools developer, JFrog, also went public Wednesday and did well. Shares rose nearly 50% from their IPO price.
Snowflake shares dropped 10% on Thursday, while JFrog held its ground.
Watch this space: Investors can't seem to get enough of new tech names right now. The Renaissance IPO ETF, which tracks US companies that have recently listed, has leaped nearly 60% this year. The S&P 500, for its part, is up roughly 4%.
Remember: The busy month for new listings is due to continue, with secretive data-analytics company Palantir and workplace app Asana on tap.
Can TikTok and Oracle bring it home?
A deal to keep TikTok running in the United States is inching forward, though it all rests on securing approval from Washington and Beijing.
What's happening: US regulators have tentatively agreed to a deal with the video app's Chinese parent company, ByteDance, and its potential American partner, Oracle, a person familiar with the matter told CNN Business.
Details, details: If the arrangement gets a formal green light, ByteDance would continue to be the majority shareholder in the short-form video app, my CNN Business colleagues Brian Fung and Selina Wang report. TikTok would establish its headquarters in the United States, while Oracle will host TikTok's user data and review TikTok's code for security.
Under the proposal, the US government would approve members of TikTok's board, and the company would plan to file for an initial public offering on a US stock exchange in about 12 months, the person said.
But plenty of uncertainty remains — which means it's a good moment to take a step back.
How did we get here?
The frenzy kicked off in early August when Trump signed an executive order that would effectively ban TikTok in the United States unless ByteDance could find an American owner for its US operations by Sept. 20.
The Trump administration expressed concerns that the hugely popular app could be used as a spying tool by Beijing. TikTok has denied those allegations. The company has said its data centers are located entirely outside of China and that none of that data is subject to Chinese law.
The Oracle announcement came days before the executive order was due to take effect. Some experts think the proposed deal could be helped along by Trump's ties to cofounder Larry Ellison, a supporter of the president. CEO Safra Katz has also donated to Trump's reelection bid.
Why does it matter?
The fight over TikTok is bigger than who owns an app popular with Generation Z. It's also about the future of US-China relations, and the murky new rules businesses are forced to navigate as tensions between the world's two biggest economies ramp up.
You can read a full explainer from CNN Business here.
The warehouse chain outperforming Amazon
For years, Costco has dominated the warehouse club universe, where members pay an annual fee to buy large quantities of goods at low prices. But a much smaller chain is gaining steam as shoppers load up on groceries in the pandemic: BJ's Wholesale Club.
Scoreboard: The chain grew sales at stores open for at least one year by 24% to $3.9 billion during its latest quarter, faster than growth reported by Costco and Walmart-owned Sam's Club in the same period, my CNN Business colleague Nathaniel Meyersohn reports. BJ's said its "digitally enabled sales" — including same-day delivery through Instacart and curbside pickup — grew by more than 300%.
Investors are paying attention. BJ's shares are up nearly 72% this year, outpacing Amazon, which has gained 63%, and Costco, which is 15% higher.
BJ's experienced sluggish growth before the pandemic. Sales ticked up around 3% in the past two years. But the chain has benefited from two key trends: consumers eating more meals at home as restaurants closed, and consumers buying in bulk when they shopped.
"The mentality of the consumer during the peak months or moments of the pandemic perfectly aligned with the club model," Morgan Stanley analyst Simeon Gutman told Nathaniel.
The University of Michigan survey on US consumer sentiment for September posts at 10 a.m. ET.
Coming next week: Can a wobbly economic recovery continue as global deaths from coronavirus approach 1 million?