What You Need To Know for Feb 20

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Welcome back!

Stocks have hit new all time highs! Tariffs have had a limited impact on the broader market for now, although currently futures are down slightly. Despite the shortened trading week, we have a decent amount of news for this edition, so let’s get into it.

Earnings Corner 📜 

Trending Down 📉 

Carvana (CVNA) reported earnings that beat estimates. The used car dealer sold 416K units in 2024, up 33% y/y. As in previous announcements, mgmt. released a broad 2025 outlook, projecting growth in units sold as well as adj. EBITDA. The stock was down 10% after hours

Wingstop (WING) reported mixed results, missing on revenue but beating earnings estimates. The restaurant chain saw comps up 10% y/y and opened 349 new restaurants in 2024. However, the market was concerned about rising chicken wing prices’ impact on profitability. The stock was down 13.4%

Bumble (BMBL) fell after projecting Q1 revenue below estimates. This comes less than a year into an attempted turnaround of the company that involved rehiring the dating app’s founder as CEO. The stock was down 30.3%

Cinemark (CNK) reported mixed results, beating on revenue but missing earnings estimates. Strong showings from Wicked and Moana 2 helped drive 27% y/y top line growth. The stock was down 13.6%

Etsy (ETSY) reported mixed results, missing on revenue but beating earnings estimates. The retailer cited weak discretionary spending  and is facing heightened competition from Chinese e-commerce companies like Temu, Shein, and TikTok Shop. The stock was down 10.1%

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Today’s Headlines 🍿 

• Tariffs keep coming: President Trump announced that lumber, autos, semiconductors, and pharmaceutical imports can expect to face tariffs “in the neighborhood of 25%” in the coming months

• Fed minutes reveal that officials are on hold until inflation improves, noting inflation worries around potential tariffs and lower immigration. Treasuries rose though upon reveal that the Fed discussed a potential quantitative tightening pause

• Private equity is getting pushback on trying to remove J Crew, Chewy, and Serta blockers. Recent deals, including Tecta America, have seen leveraged lenders push back on Sponsors trying to loosen docs

• Palantir shares fell 10% on Wednesday after the Pentagon was directed to reduce military spending 8% annually over the next five years

• More Federal Layoffs: 6,700 IRS workers are expected to be laid off beginning today. The IRS currently has around 100,000 workers.

  • Additionally, the Federal Housing Administration is set to lay off at least 40% of the staff following an investigation by DOGE. The FHA is one of the largest mortgage providers globally, having issued more than 40mm home loans since 1934. HUD plans to discharge 50% of its workforce

• Grok is on the rise: Elon Musk released a new model with 10x the compute of its previous version that he described as “maximally truth-seeking” if not always “politically correct”

• X’s rebound: The social media network is in talks to raise financing at a $44B valuation, the same price Musk took the company private for in 2022. Fidelity had marked its stake down 70% back in December

• Mira Murati, the former CTO of OpenAI, has announced her newly founded startup Thinking Machines Lab will focus on human and AI collaboration 

• Microsoft announced Majorana 1, its first quantum computing chip yesterday

• Home builder confidence hit new lows. The index fell 5 points month to month to 42, driven by tariff and housing cost fears

• Too cold to build. Building permits rose just 0.1% in January, as construction stalled due to snowstorms and freezing temperatures. Higher input costs from tariffs and elevated mortgage rates will likely keep building stagnant

• Trump wants to get rid of congestion pricing, the controversial law that has thus far raised infrastructure funding and reduced traffic

• Eric Adams is facing calls to resign. New York’s mayor has been embroiled in controversy over alleged bribery and fraud. The Justice Department requested prosecutors drop the charges after Adams began cooperating with the White House on immigration

• Citi’s Jane Fraser pay has been boosted to $34.5mm. The new paycheck is up 33% YoY, matching a trend across the street at major investment banks

• Real life Roy Brothers. Howard Lutnick named his 20-something year-old sons Brandon and Kyle chairman and executive vice chairman, respectively, of Cantor Fitzgerald

• Nike is partnering with Kim Kardashian's Skims shapewear brand, teaming up to launch a new brand that will "disrupt the global fitness and activewear industry,"

• The U.S. and Russia are beginning to negotiate a deal in the Ukraine vs Russia conflict. European leaders are concerned that they have not been included in the talks and some U.S. leaders are alarmed about President Trump’s message to Ukraine

• High-fashion combo in the works. Prada is working with Citi to evaluate buying Versace, the Italian fashion brand currently owned by Capri Holdings. Prada has outperformed struggling luxury peers recently

• HP will be acquiring the IP and team of Humane. Humane is known for creating a wearable AI pin, which it will stop selling post-acquisition. HP is getting 300+ patents from the $116mm purchase

• Brookfield is looking to invest $1B in Spring Education, a private school operator. Reflecting PE-wide interest in the industry, the asset manager purchased a Dubai-based private school operator last year

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M&A Transactions💭 

Global Blue (NYS: GB), offers a seamless shopping and payment journey, has reached a definitive agreement to be acquired for $2.5B by Shift4 Payments (NYS: FOUR). EV/EBITDA was 11.97x and EV/Revenue was 4.96x. Deutsche Bank, J.P. Morgan, Oppenheimer & Company, and PJT Partners advised on the sale.

Suvinil, manufacturer of architectural paints and a subsidiary of BASF (ETR: BAS), has reached a definitive agreement to be acquired for $1.115B by The Sherwin-Williams (NYS: SHW). EV/Revenue was 2.19x.

Shinko Electric Industries (TKS: 6967), an integrated manufacturer of semiconductor packages, has entered into a definitive agreement to be acquired for $5.19B by Dai Nippon Printing (TKS: 7912), Mitsui Chemicals (TKS: 4183), and JIC Capital. As a result of the transaction JIC Capital will hold an 80% stake, Dai Nippon Printing will hold a 15% stake, and Mitsui Chemicals will hold a 5% stake in the company. EV/EBITDA was 14.89x and EV/Revenue was 3.68x.

Wheeler fleet Solutions, distributor of truck parts and trailer equipment, has entered into a definitive agreement to be acquired for $230.0M by One Equity Partners. EV/Revenue was 6.57x. Jefferies advised on the sale.

Prime100, producer of pet food products, has reached a definitive agreement to be acquired for $500.0M by Colgate-Palmolive (NYS: CL). EV/EBITDA was 20.0x and EV/Revenue was 5.0x. Houlihan Lokey advised on the sale.

Humane, developer of hardware and software products, reached a definitive agreement to be acquired for $116.0M by HP (NYS: HPQ).

Herb Chambers Companies, operator of the automobile dealership, has reached a definitive agreement to be acquired for $1.34B by Asbury Automotive Group (NYS: ABG). EV/Revenue was 0.46x. Stephens advised on the sale.

Grover Gaming, developer of gaming software, has reached a definitive agreement to be acquired for $1.05B by LNW Gaming (NAS: LNW). EV/EBITDA was 9.46x. Goldman Sachs advised on the sale.

David Evans & Associates, provider of consulting engineering services, has reached a definitive agreement to be acquired for $300.0M by AtkinsRealis (TSE: ATRL). EV/Revenue was 1.56x. AEC Advisors advised on the sale.

MMG Singapore Resources has reached a definitive agreement to acquire The Brazil Nickel Business of Anglo American (LONN: AAL) for $500.0M.

Auswide Bank, engages in providing banking, finance products, and services to retail customers, was acquired for $473.15M by MyState (ASX: MYS).

Private Placement Transactions💭 

She, provider of career coaching services, raised $113.48M of Series C venture funding led by Marui Group and Moon Creative.

Ori, developer of an AI cloud platform, raised $140.0M of venture funding led by Wa’ed Ventures and other undisclosed investors.

Dream, provider of cybersecurity platform, raised $100.0M of Series B venture funding led by Bain Capital at a pre-money valuation of $1.0B.

Saronic, manufacturer of unmanned surface vehicles, raised $600.0M of Series C venture funding led by Elad Gil at a pre-money valuation of $3.4B.

OmniSun Information Materials, developer of high-precision photomask substrate materials, raised $101.95M of Series B venture funding led by China Reform Holdings Corporation.

Verkada, developer of a cloud-based platform, raised $200.0M of Series E venture funding led by General Catalyst at a pre-money valuation of $4.3B.

Odds of the Day 🍒 

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Noteworthy Chart 🧭

Meme Cleanser 😆 

Finance Merch Referrals ☕️ 

Until next time!

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