Today in the Market (9/19/2023)

Good Evening! On Tuesday, stocks had a major intra-day rebound, with the majority of early losses being recuperated later in the day. This corresponded with the commencement of the Fed’s most recent policy meeting. 

However, even though the three indexes rebounded from early-day losses, they all still finished in the red with the Dow Jones down 0.31%, the S&P 500 falling by 0.22%, and the Nasdaq Composite sliding by 0.23%.

DOUBLING INVESTMENTS

The Walt Disney Company (DIS) has announced plans to increase its investment in theme parks, cruises, and experiences by two times during the next decade. This decision is driven by a significant rise in income generated by its foreign theme parks.

So what does Disney want to do with the money? Disney announced in a submission to the SEC its intention to increase its capital allocation in theme parks and cruise lines, with a projected investment of $60 billion over the course of the next ten years. The capital investment will be used to expand the company’s presence, enhance its appeal to potential customers, and optimize commercial activities inside its resorts, among other objectives. The corporation has announced its possession of more land for prospective expansion throughout Europe, Asia, and Australia.

What is backing this new strategy? According to a comprehensive revenue breakdown provided by VisibleAlpha, the last quarter saw a remarkable 94.4% year-over-year growth in revenue from overseas theme parks. This growth far surpassed the comparatively modest 4.2% rise seen in revenue from U.S. theme parks. As of the present year, Disney’s foreign theme parks have recorded a total of 1.3 billion visitors. In addition, there has been a significant increase of about 70% in guest spending per individual over the course of the last five years.

THE START OF IPOs AGAIN?

Today, Instacart (CART), the grocery delivery app, has completed its IPO and is now public on the Nasdaq stock exchange. Shares of the corporation were valued at $30 each (peaked at $41.35), resulting in a total market capitalization of $10 billion.

Why is it important? The success or failure of Instacart will serve as an indicator for other firms in determining whether to pursue initial public offerings, taking into consideration the level of interest from Wall Street investors. A strong showing by Instacart may potentially lead to a resurgence in IPOs after a period of relative inactivity over the last 18 months.

However, times are changing! During the era from 2020 to 2021, highlighted by the availability of inexpensive venture capital funding and strong market demand for IPOs in the technology sector, the majority of tech businesses that underwent IPOs were mostly growth-oriented unicorns that had not yet achieved profitability. Instacart, however, has consistently generated profits over the last five quarters, making them a stand out from others.

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