over 2 years ago • 3 mins
Wise announced plans on Thursday to make its debut on the London Stock Exchange, and the payment transfer company is confident it’s going places.
What does this mean?
The artist formerly known as TransferWise is eyeing a direct listing, which – unlike an initial public offering (IPO) – cuts out investment banks (and their exorbitant fees) and lets the company list without raising cash. That route makes more sense for Wise: the company sees $7 billion in transfers every month, it’s been profitable since 2017, and it’s doubled its revenue in the past two years. In other words, it doesn’t need cash from investors.
The direct listing means we won’t know Wise’s valuation until investors set it on the day. But the company was last valued at $5 billion in a private fundraising round last year, and one report suggests it might’ve climbed to $12 billion.
Why should I care?
For markets: Pros and cons.
Wise’s stock market debut will be the first direct listing of a tech company in London – a big win not just for the UK, but retail investors too. Direct listings, after all, don’t give institutional investors first dibs on shares like IPOs do. There is a drawback, mind you: no investment bank around means there’s no one to keep Wise’s share price from getting too volatile in the early days.
The bigger picture: Get excited.
Wise isn’t the only company getting investors hot under the collar this week: OnlyFans – which provided the bare skin everyone needed to get through lockdown – said it’s looking to raise money from private investors at a $1 billion valuation for the first time. The startup handled more than $2 billion in sales last year, with $400 million in revenue and a profit to boot. The new funding round isn’t just about keeping its regulars happy, either: OnlyFans is looking to erect a more mainstream media platform and – presumably – fall asleep straight after.
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China just announced it’s selling off a load of its industrial metals, as the rally in commodity prices continues to get the poor little guy down.
What does this mean?
Between widespread supply issues and a strong global economic recovery, commodity prices have been pushed to their highest levels in almost a decade. And China – by far the biggest consumer of raw materials in the world – has been trying to put an end to the rally, which risks both driving up global inflation and making China’s growth ambitions more expensive.
So now the government’s announced it’ll start selling major industrial metals – copper, aluminum, zinc – from the state’s own stockpiles. The hope is that the extra supply will reverse the commodities rally – particularly the more than 60% surge in the price of copper, which is essential to everything from transportation to infrastructure.
Why should I care?
For markets: The US crosses its fingers.
Whether China’s plan works depends on how much metal the country releases into the market. But if it does, it might cement the US Federal Reserve’s view that the spike in inflation is just a blip. That’s especially true after its chairman pointed to the recent plunge in lumber’s price as proof that commodity prices – and by extension inflation – will come down eventually. And since that means the central bank will be in no hurry to bump up its interest rates, that’s good news for investors everywhere.
The bigger picture: Root for the underdog.
Metal prices might soon drop off, but oil’s price rise is showing no sign of slowing down. It recently hit multi-year highs of above $70 a barrel, and now – thanks to underinvestment in supply and a recovery-driven surge in demand – the world’s biggest commodity trading firms are expecting that to reach $100.
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