What we’re reading (2/18)
“The Unicorn Boom Is Over, And Startups Are Getting Desperate” (Bloomberg). “A reckoning that has been looming for years is becoming painfully tangible. In 2021 more than 354 companies received billion-dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs, says Ilya Strebulaev, a professor at Stanford Graduate School of Business. Four others have gone public through SPACs, and another 10 have been acquired, several for less than $1 billion…There are a record 1,200 venture-backed unicorns that have yet to go public or get acquired, according to CB Insights, a researcher that tracks the venture capital industry. Startups that raised large sums of money are beginning to take desperate measures. Startups in later stages are in a particularly difficult position, because they generally need more money to operate—and the investors who’d write checks at billion-dollar-plus valuations have gotten more selective. For some, accepting unfavorable fundraising terms or selling at a steep discount are the only ways to avoid collapsing completely, leaving behind nothing but a unicorpse.”
“Who’s Paying For The US Tariffs? A Longer-Term Perspective” (Mary Amiti, et al.). “Using another year of data including significant escalations in the trade war, we find that the costs of the US tariffs continue to be almost entirely borne by US firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains. We find heterogeneity in the responses of some sectors, such as steel, where tariffs have caused foreign exporters to drop their prices substantially, enabling them to export relatively more than in sectors where tariff pass-through was complete.”
“At The ‘Wall Street Of Eggs,’ Demand Is Surging” (Wall Street Journal). “The nation’s biggest egg marketplace doesn’t own hens, farms or processing plants. From an office building in New Hampshire, roughly a dozen people facilitate the trading of billions of eggs a year, a task that shapes what Americans pay per dozen at the supermarket or for omelets at diners. The Egg Clearinghouse, or ECI, is little known outside the industry: It operates an online marketplace that allows participants to place bids on eggs listed for sale and see the results of trades. Only ECI members—farmers and egg buyers—are allowed to trade. Lately, there are a lot more buyers than sellers using the ‘Wall Street of Eggs’ with bird flu roiling the poultry market. And that is after last year marked the company’s busiest, trading over 2.6 billion shell eggs and 39 million pounds of egg product valued at more than $600 million. ECI represents a sliver of the broader egg market—less than 5%—but plays a crucial role in providing eggs for those in need or having trouble getting them, and how they are priced.”
“KFC Moves U.S. Headquarters From Kentucky To Texas” (CNBC). “KFC is leaving Kentucky. The fried chicken chain’s U.S. headquarters will move from Louisville, Kentucky, to Plano, Texas, owner Yum Brands said Tuesday. About 100 KFC U.S. employees will be required to relocate over the next six months.”
“Homebuilder Confidence Falls To Lowest Level In Five Months Amid Tariff Concerns, High Mortgage Rates” (Yahoo! Finance). “Homebuilders are feeling less optimistic about the housing market as they navigate concerns over tariffs, elevated mortgage rates, and high housing costs. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index was 42 in February, a five-point drop from January and the lowest level in five months. Economists were expecting a reading of 46, per Bloomberg data.”
