Closing summary: Reddit hopes to raise $500m in stock market float
Reddit will give bankers and investors a sense of whether demand for new stock market issues has picked up, after an extended slowdown.
The US social media company has been slower to shoot for profits than some other rivals, but it is still aiming for a tasty big tech valuation at more than $6bn, according to a filing on Monday.
The hoped-for valuation would value Reddit at $6.4bn at the top end – although that is lower than the $10bn valuation it achieved at its last fundraising in 2021.
In other business news today:
Bitcoin hit a new record above $72,000 for the first time.
Heathrow airport saw further growth last month with its busiest-ever February, as passenger numbers surpassed pre-Covid levels.
People from ethnic minority backgrounds now lead 12 of the UK’s top 100 listed companies, according to a wide ranging review into diversity in business, up from the seven recorded last year.
Messaging app Telegram has 900m users and is making “hundreds of millions of dollars” in revenues, according to its secretive founder.
UK culture secretary Lucy Frazer has received reports submitted by competition and media regulators ahead of deciding whether a more detailed regulatory probe is needed into a planned £600mn takeover of one of the Daily Telegraph owner by a UAE-backed consortium.
You can continue to follow the Guardian’s live coverage from around the world:
In the UK, Tice says he will be ‘surprised’ if Reform UK does not get more Tory MPs joining
In the US, Katie Britt’s State of the Union story about child sex abuse criticized by victim
In our coverage of the Russia-Ukraine war, Jens Stoltenberg says Sweden joining Nato shows Putin’s war strategy has failed
In our coverage of the Middle East crisis, the European Commission is ‘hopeful’ first boat from Cyprus carrying aid to Gaza will set sail soon
Thank you for reading today, and please join us tomorrow for more of the same. JJ
Europe is unprepared for war with Russia or the risk that Donald Trump could withdraw the US from Nato and needs to ramp up spending on defence equipment, the boss of Airbus has said.
Guillaume Faury, the chief executive of Europe’s biggest aerospace and defence company, said it was a “defining moment” for the continent’s defence industry, after Russia’s full-scale invasion of Ukraine in 2022 brought war to western Europe’s borders.
“We are coming from peacetime,” Faury told the Guardian. “I don’t think Europe has yet the level of preparedness that you would need for a conflict between Europe and Russia. Let’s call a spade a spade. And it seems like Russia is ramping up its defence capabilities.
You can read the interview here:
Lookahead: US and UK central banks wait for data on inflation pressures
Stock markets have fallen back across the world on Monday, but investors will be more focused on important data to come in the next few days.
In the US traders’ eyes will be on inflation figures, due on Tuesday. Economists expect price rises to remain at 3.1%, according to a poll.
Any surprise either way has the potential to prompt a scramble by investors to readjust. The Federal Reserve is due to announce its latest monetary policy decision next wee. Nobody expects any movement, but investors are nervously awaiting signals for when the Fed will consider cutting interest rates – once inflation falls durably.
Reuters reports:
An unexpected uptick in consumer and producer price pressures in January has raised some fears that inflation could see another bout of strength. Traders will be watching Tuesday’s data for confirmation that inflation is staying sticky, or for proof that January’s data was an anomaly due to seasonal factors.
In the UK the Office for National Statistics will publish labour market statistics on Tuesday. Unemployment is expected to stay steady at 3.8%, according to Reuters polling.
Imogen Bachra, head of non-dollar rates strategy at NatWest bank, said:
Given that wage growth is one of the MPC’s key indicators in determining the underlying persistence of inflation (and that there still exist question marks over many other parts of the labour market data set), this week’s wage growth will be important in determining the BoE’s reaction function over the coming months.
She said the data will not “add fuel to the early rate cut fire” because wage growth will stay about steady at an annual rate of 5.6%. However, that will not be enough to give the Bank of England the green light to slash rates at its next meeting on 21 March.
That will be followed on Wednesday by UK GDP data for January. The economists’ consensus is for a 0.2% rebound. That would provide some small relief to prime minister Rishi Sunak, after December’s data showed that the UK entered recession at the end of 2023.
If a rebound is confirmed (and watch out for revisions), that would probably eliminate any chance of an “early” interest rate cut, according to Matthew Ryan, head of market strategy at financial services firm Ebury. He said:
As things stand now, markets are not pricing in a full chance of a cut until August, a relatively hawkish stance that is providing solid support for sterling.
Wall Street’s main stock indices have followed their European counterparts lower on Monday morning.
The S&P 500 is down 0.5%, the tech-focused Nasdaq is down 0.4%, and the Dow Jones industrial average has dropped 0.4% as well in the first hour of trading.
One of the largest military contractors in the US paid commissions to a Saudi company later alleged to have been a conduit for bribes for the kingdom’s royal family.
You can read the latest installment in the Guardian’s investigation of a Saudi defence deal here:
Messaging app Telegram has 900m users and is making “hundreds of millions of dollars” in revenues, according to its secretive founder.
Russian-born founder Pavel Durov is based in Dubai. He has not given an interview since 2017, the Financial Times said:
Durov, who fully owns Telegram, said the company had “been offered $30bn-plus valuations” from potential investors including “global late-stage tech funds”, but has ruled out selling the platform while it explores a future initial public offering.
The interview has some interesting details about Durov’s relationship with his mother country: he says he fled Russia in 2014 after secret services asked for details on Ukrainian users of VKontakte, a Facebook-equivalent social network that made Durov perhaps Russia’s most prominent tech founders. Russian president Vladimir Putin launched a covert invasion of eastern Ukraine in 2014, before a full-scale assault in February 2022. Telegram has also been used prominently during the war on Ukraine.
Durov has already been a notable advocate of freedom of speech, and has resisted calls for increased moderation of content on Telegram channels, which can be used to broadcast to thousands of people. He said:
Unless they cross red lines, I don’t think that we should be policing people in the way they express themselves. I believe in the competition of ideas. I believe that any idea should be challenged … Otherwise, we can quickly degrade into authoritarianism.
FTSE 100 gains more ethnic minority bosses
People from ethnic minority backgrounds now lead 12 of the UK’s top 100 listed companies, according to a wide ranging review into diversity in business, up from the seven recorded last year.
The latest figures from the Parker Review also show that 96 of the top 100 companies had at least one ethnic minority board member as of 31 December 2023, but only 56 firms had more than one.
Diploma, Frasers Group, Howden Joinery and Intermediate Capital Group were the companies without any representation.
The Parker Review was launched in 2017 and carries out a voluntary annual census on ethnic minority makeup of boards of the FTSE 350 companies, and the 50 largest private companies.
On its launch it set the target for every board in the FTSE 250 to have at least one board member from an ethnic minority background by next year, while all FTSE 100 companies were tasked with hitting the goal by 2021.
Of the 222 FTSE 250 companies that responded to the survey, 175 (79%) had some ethnic diversity on their board, which was an increase from the 149 that met the target last year.
The review chair David Tyler described the figures as showing “good progress in driving up diversity” but urged those in the FTSE 250 to do all they could to increase numbers over the coming 12 months.
For the first time, the review also looked into representation in senior management teams, which showed that 13% of all FTSE 100 managers being from an ethnic minority background, and 12% of FTSE 250 firms.
The committee team did find that only 36 of the 50 private companies that it had invited to respond, had provided figures, and called for more responses in future years.
Of those that did respond, 22 (61%) had at least one board member from an ethnic minority background. The review has set a target that all private companies have at least one ethnic minority board member by 2027.
A quick check-in on bitcoin … shows it has hit a new record high.
The new tidemark is $72,259, according to Refinitiv. The cryptocurrency is up by 5.3% today (although that is a relatively meagre move for an asset that has been known for extreme volatility as speculators pile in and move out).
From mid-January though, with a few exceptions, it has been a one-way movement in the bitcoin price, from below $39,000 to above $72,000.
And here is an updated five-year chart. It shows what might well come to be known as the FTX dip – when the collapse of one of the biggest exchanges caused chaos in the market.
It also represents one of the fastest stories of multi-billion-dollar hubris followed by nemesis in financial market history: the fall of Sam Bankman-Fried. The former crypto entrepreneur is now fighting against a 100-year prison sentence for perpetrating one of the biggest frauds of all time.
Heathrow enjoys record February with busiest year expected
Heathrow airport saw further growth last month with its busiest-ever February, as passenger numbers surpassed pre-Covid levels.
The London hub averaged 200,000 passengers per day through the month, with the leap year bringing the total to 5.8m passengers – although it had hit the monthly record before the extra day.
Numbers were up 10% from last year, while the half-term holiday was its strongest to date, with more than 2m passengers travelling through, boosted by the winter sun and ski market.
The airport has reported record traffic in three of the past four months and is expecting 2024 to become the busiest on record.
Heathrow chief executive Thomas Woldbye is expected to unveil further plans to maximise capacity at the London hub in the coming months, including a decision on whether to push forward plans for a third runway.
UK culture secretary receives reports on planned Telegraph takeover
UK culture secretary Lucy Frazer has received reports submitted by competition and media regulators ahead of deciding whether a more detailed regulatory probe is needed into a planned £600mn takeover of one of the Daily Telegraph owner by a UAE-backed consortium.
Reports on the proposed takeover for the Daily Telegraph and Spectator magazine were submitted to Fraser by 9am on Monday by Ofcom, the media regulator and the Competition and Markets Authority (CMA), which examines monopoly issues. The CMA confirmed in a statement on Monday that it had delivered its report to Fraser on jurisdictional and competition matters.
The proposed deal by RedBird IMI has been fiercely opposed by many Tory MPs and peers who have raised concerns about press freedom. Redbird IMI is a partnership between a fund backed by sheikh Mansour bin Zayed Al Nahyan, the UAE’s vice-president, and the US investment firm RedBird Capital Partners.
Redbird IMI is majority owned by International Media Investments (IMI) backed by sheikh Mansour. Mansour is best known in the UK as being the ultimate owner of Manchester City football club. US investor Redbird is run by Jeff Zucker, a former CNN president.
IMI has teamed up with Redbird for the transaction which aims to take over the titles in exchange for repaying £1.15bn of debts owed to Lloyds Banking Group by its current owners, the billionaire Barclay family.
Grounds for ministers to refer a media takeover to a detailed investigation by regulators include the need for accurate presentation of news, free expression of opinion and – specifically regarding newspapers – a sufficient plurality of views and persons with control of ownership.
Updated
Reddit seeks $6bn valuation in New York stock float
Social network Reddit is hoping for a valuation of as much as $6.4bn when it floats shares on the New York stock exchange.
Reddit said it will sell 22m shares valued at between $31 and $34 each, in a filing published on Monday.
The social network is one of the most popular forums for online culture, with “subreddits” on a huge array of topics. However, it is still lossmaking – it lost $90m in 2023.
The listing will not be Reddit’s first run-in with financial markets. One subreddit, r/wallstreetbets, was behind a huge surge in market volatility in early 2021 when retail investors banded together to ruin hedge funds shorting various companies, including retailer GameStop and cinema chain AMC Entertainment.
It will be intriguing to see if Reddit itself becomes a target of those same retail investors. The company is certainly aware of the risks: it said r/wallstreetbets could cause “exteme volatility:
Reddit, in their IPO, lists wallstreetbets as a risk factor in their registration statement pic.twitter.com/Fr0bph0MpH
— unusual_whales (@unusual_whales) March 10, 2024
Advance Magazine Publishers is the company’s largest shareholder, with a 30.1% stake, while the Chinese multinational Tencent has 11%.
The biggest European stock markets are all in negative territory (with the smaller exception of Switzerland).
The FTSE 100 in London is down by 0.4%, with mining companies the biggest losers.
UK to allow creation of cryptocurrency-backed investments – for pros only
The UK’s financial regulator has said it will allow the creation of cryptocurrency debt instruments on financial exchanges – but only for professional investors.
The Financial Conduct Authority (FCA) said on Monday that it “will not object to requests from recognised investment exchanges to create a UK listed market segment for cryptoasset-backed exchange-traded notes (ETN)”.
The London Stock Exchange today outlined the process for admitting a crypto ETN. It said any new products would need to be “physically backed, i.e., non-leveraged; (b) has a market price or other value measure of the underlying that is reliable and publicly available; and (c) has bitcoin or ethereum underlying cryptoassets.”
The limit to professional investors only is there because the FCA believes that cryptocurrency products “are ill-suited for retail consumers due to the harm they pose”. Those harms are mostly in the form of steep losses for people who piled into crypto – a renewed risk with bitcoin back at a record high. The FCA said:
The FCA continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money.
But even if it is not exactly a ringing endorsement from the FCA, it does add to the sense that the long-awaited “institutionalisation” of cryptocurrency – the increasing interest from big banks and investors – is gaining some momentum.
There is something of a health trend in the UK inflation basket update.
Air fryers use less oil (and less energy) to cook, while spray oil for cooking can have lower calories. The further addition of gluten-free bread and rice cakes (thanks to its “growing popularity as part of a healthier lifestyle”) suggests more people are watching what they eat.
Another removal from the UK inflation basket: draught stout. That is because of its apparent similarity to draught bitter. However, before the Office for National Statistics starts a beer connoisseur turf war, we should note that the similarity is limited to price movements.
Bakeware is out for a similar reason: roasting tin prices move in a similar way to frying pans.
Updated
Vinyl and air fryers replace hand sanitiser and bakeware in UK inflation basket
The UK “shopping basket” used to calculate inflation has had its annual update. Out: pandemic-era hand sanitiser. In: air fryers, and a stunning return for the vinyl record.
The Office for National Statistics (ONS) tries to make the basket as representative as possible of the typical shopper’s habits to try to get the most accurate gauge of inflationary pressure. That means that the basket ends up being a good way of tracking the changing tastes of British consumers.
Additions: air fryers, vinyl music, gluten free bread, and edible sunflower seeds.
Removals: hand hygiene gel, hot rotisserie cooked chicken, and bakeware.
It is not just vinyl that represents a comeback for physical media despite digital dominance: a card game has been added to the basket as well.
And a hint at a future inclusion related to the rise of the electric car:
We also considered adding electric car charging at public sites to the basket but decided against for this year. We will continue to monitor it with a view to introducing it in future.
You can read the full report from the Guardian’s Phillip Inman here:
Side note: this intro sounds like a bid for the next office karaoke:
Not since Simply Red’s album Stars topped the album charts in 1992 have vinyl records been included in the basket of goods used to calculate annual inflation, but a surge in sales over recent years has brought them back as a marker of UK shop prices.
The European Commission’s use of Microsoft email and office software broke its own privacy rules, an EU privacy watchdog has ruled.
Microsoft’s software transferred personal data outside the EU, breaching privacy rules, according to the European Data Protection Supervisor.
The investigation started in 2021, amid concerns that the flow of personal data to other countries when people use big tech services with servers abroad. The watchdog has ordered the European Commission, the EU’s executive arm, to stop all flows of data to countries that do not meet EU privacy standards by 9 December.
It sounds like that will be a pretty significant job: the infringements “concern all processing operations carried out by the commission, or on its behalf, when using Microsoft 365, and impact a large number of individuals.”
Big news in the markets today for any train model enthusiasts out there, as Hornby confirms it has bought Corgi Model Club.
The deal will see Hornby acquire the Corgi subscription service from investment vehicle Blue 14, which is owned by entrepreneur Jim Lewcock.
CMC was established in 2021 as a monthly subscription model and has grown to have more than 6,000 members, and revenues of more than £2m. It supplies re-issued diecast models that were produced from the famous Corgi factory in Swansea during the 1960s.
The deal will see Hornby pay £400,000 for existing stock, and an additional £200,000 for the company, with the CMC management team transferring over. Lewcock has also agreed performance-related earnout based on profitability over the next three years.
The biggest UK stock market drop this morning is from Vanquis Bank: it is down 38% after a profit warning.
Vanquis Bank was formerly known as Provident Financial, but it dropped the 140-year-old name in January last year as it moved away from the doorstep lending that made it into a UK household name.
You can see something of the decline that the former “Provi” has been through in recent years. The steep 38% decline this morning barely registers compared with the tale of woe that is the lender’s share price since 2016:
Vanquis now focuses on credit cards, but it said that 2024 will be worse than expected, in a statement to the stock market:
The group expects to return to modest lending growth from the start of the second quarter. However, income is expected to be materially lower than market consensus expectations for 2024.
Currys shares drop 11% after Elliott Advisors walks away
The share price of Currys has dropped by 11% after the end of an approach by private equity investor Elliott.
Currys was valued at £728m on Friday, so the Monday morning move has wiped about £80m from the company’s notional value.
There will be no bid battle to drive a juicy takeover premium for shareholders in the FTSE 250 company – for now at least.
Chinese online retailer JD.com has also expressed interest. It has another week to make a firm offer or to walk away.
European stock markets are in the red at the open this morning.
They are following the lead of Asian markets, which have slumped. Japan’s Nikkei benchmark index dropped by 2.2% after computer chip stocks fell, after US rivals dropped on Friday.
Here are the opening European stock market snaps from Reuters:
EUROPE’S STOXX 600 DOWN 0.4%
BRITAIN’S FTSE 100 DOWN 0.4%
FRANCE’S CAC 40 DOWN 0.5%, SPAIN’S IBEX DOWN 0.3%
EURO STOXX INDEX DOWN 0.6%; EURO ZONE BLUE CHIPS DOWN 0.7%
GERMANY’S DAX DOWN 0.6%
Updated
Bitcoin at new record high
Good morning, and welcome to our live coverage of business, economics and financial markets.
Bitcoin went through a deep “crypto winter” after hitting its previous heights, but after a remarkable rally it is now hitting new heights above $71,000.
The cryptocurrency on Monday morning UK time hit a record of $71,209, adding further to a rally from less than $16,000 in late 2022.
The price of bitcoin had surged to a record of $68,550 in November 2021 amid euphoria from retail investors – many of whom had received money to help them through the coronavirus pandemic lockdowns. Historically low interest rates were also thought by many economists to have helped drive the price higher.
The crypto winter meant that many of the same investors who had piled in to the cryptocurrency were burned. However, institutional investors have shown increasing interest in the biggest cryptocurrency by market value after the US regulator approved new bitcoin exchange-traded funds (ETFs).
Elliott drops Currys takeover approach
In UK corporate news, mid-sized electronics retailer Currys appears to have fended off interest from US private equity investors Elliott Advisors.
Currys on Monday reported that Elliott had declined to make a formal offer after its approaches were rejected by the retailer’s board.
International private equity investors have targeted UK companies, which are undervalued compared to their peers on many metrics.
In a statement to the stock market, Elliott said:
Elliott Advisors (UK) Limited, acting on behalf of the funds it advises confirms that, following multiple attempts to engage with Currys’ Board, all of which were rejected, it is not in an informed position to make an improved offer for Currys on the basis of the public information available to it. Elliott therefore confirms it does not intend to make an offer for Currys.
Under the UK’s takeover rules, Elliott will be unable to make a new bid for Currys for at least six months (unless it gains the approval of the Currys board or there is a change in circumstances).
The agenda
9am GMT: Deadline for UK regulator to submit reports on proposed sale of Telegraph Media Group.
9:30am GMT: UK update to consumer price index basket
Updated
