Finance

US futures take time out after breakout rally


US stock futures took a breather on Friday, as investors weighed what could follow the record-breaking rally stoked by AI chipmaker Nvidia’s (NVDA) blowout earnings.

Futures on the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) danced around the flatline, having closed at all-time highs on Thursday. Contracts on the Nasdaq 100 (^NDX) were also muted after the tech-heavy index added 3% to score its own record.

Stocks are consolidating after the worldwide breakout, which saw about $277 billion added to Nvidia’s market value for the biggest single-day gain in Wall Street history. The meteoric rise in the chipmaker’s shares continued in Friday’s premarket, up about 2% and on track to top a $2 trillion valuation.

As the AI frenzy begins to abate, the chances of a US interest-rate cut are coming back into view for the market. A parade of Federal Reserve officials underlined that cuts are coming, but not soon — though they differed on just when the shift might start.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

A solid fourth-quarter earnings season is winding down, with more than one-third of reports so far beating estimates. An upbeat earnings forecast from Block (SQ) was followed by a jump in the fintech’s shares, while Carvana (SQ) stock popped after the used-car seller reported its first annual profit.

Live1 update

  • Old tech + new tech = Reddit’s IPO

    Some fun facts from Reddit’s IPO filing last night are below. I did the reading so you didn’t have to – you’re welcome! I am told by sources familiar with the matter that this listing is likely to go down toward the latter part of March.

    All in, I am genuinely fascinated by how Reddit is received by investors during the roadshow and then in public markets. For starters, here is an old tech business model (relies on ad revenue) that is trying to cash in on a new business model (licensing content to train AI platforms – see Google news). But while the old tech business model is trying to wade into the newer areas, it continues to lose a lot of money.

    This is a market that seems to reward only money-making tech companies – see Nvidia (NVDA), among others.

    So will investors overlook the losses and ad sales reliance and view Reddit as a future bet on exploding AI usage? I am curious on what you think, drop me a line on X @BrianSozzi.

    We are about to find out the market’s views.

    In the meantime, here’s what we do know:

    • AI kingmaker Sam Altman is Reddit’s 4th largest shareholder.

    • Tencent is Reddit’s 2nd largest shareholder.

    • Including $93.7 million in options rewards and $98.3 million in stock awards, CEO Steve Huffman’s total 2023 compensation stood at $193.2 million.

    • Key call out: “Our Chief Executive Officer, Steven Huffman, holds 662,447 PRSUs for shares of our Class B common stock that are issuable upon achievement of a vesting condition that will be deemed satisfied based on our attaining a $5.0 billion market capitalization valuation following this offering.”

    • Co-Founder Alexis Ohanian not mentioned in the S-1 (resigned from board in 2020).

    • GameStop (GME) and AMC (AMC) meme stock trading saga a few years back mentioned in the company’s risk factor section.

    • Has lost about $178 million on an adjusted EBITDA basis the past two years combined.





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