The Increasingly Crowded Unicorn Club
Unicorns, a moniker applied to private startups valued at over $1 billion or more, are supposed to be mythical in nature.
At best, there are supposed to be so few of them that venture capital firms would be absolutely elated to have a stake in any unicorn out there. (Or even their Canadian narwhal equivalents)
However, the truth is that unicorns are simply not rare or mythical anymore. According to the real-time list that CB Insights hosts, the number is now at 145 unicorns globally. In other words, the once exclusive Unicorn Club is becoming increasingly crowded.
That said, the odd member of the club does find the door.
Square, a prominent member of the club led by Twitter co-founder Jack Dorsey since mid-2011, finally IPO’d just a month ago with mixed results. It rose money from the public market at $9/share, which was a significant discount on the last private capital it raised at $15.46/share. Today it is trading closer to $12, which shows there is still optimism towards these kinds of technology companies.
Box’s IPO in January 2015 also sent mixed messages. It was privately valued at $2.4 billion, but then IPO’d at $1.7 billion. It soared on the first days of trading to $2.7 billion but then fell back down to a value below its IPO as lockups on insider traders expired during the summer.
Is the appetite for unicorns still frothy, or is it starting to sour?
We certainly agree that many of these companies have a great opportunity ahead of them. Many are growing at breakneck speed, and others are starting to find ways to monetize their offerings. However, is there really room for hundreds of them?
Today, the Australian software company Atlassian IPOs on the Nasdaq with a reported valuation of $4.4 billion. At time of publishing, it is up 33% on the day, and we will be continuing to watch the stock closely.
How Different Generations Think About Investing
Each generation was shaped by unique circumstances, and these differences translate directly to the investing world as well.
How Different Generations Think About Investing
View the full-size version of the infographic by clicking here
Every generation thinks about investing a little differently.
This is partially due to the fact that each cohort finds itself on a distinct leg of life’s journey. While boomers focus on retirement, Gen Zers are thinking about education and careers. As a result, it’s not surprising to find that investment objectives can differ by age group.
However, there are other major reasons that contribute to each unique generational view. For example, what major world events shaped the mindset of each generation? Also, what role did culture play, and how do things like economic cycles factor in?
Finding Generational Discrepancies
Today’s infographic comes to us from Raconteur, and it showcases some of the most significant differences in how generations think about investing.
Let’s dive into some of the most interesting data:
1. Investment Outlook
The majority of millennials (66%) are confident about investment opportunities in the next 12 months. This drops down to 49% when boomers are asked the same question.
How did different generations of investors react to recent bouts of volatility in the market?
- 82% of millennials made changes to their portfolios
- 69% of Gen X made changes
- 47% of boomers made changes
- 32% of the Silent Generation made changes
3. Knowledge and Ability
In terms of investment knowledge, 42% of millennials considered themselves to be experts in the field. On the same question, only 23% of boomers could say the same.
4. Financial Goals
Back when they were 27 years old, 45% of Gen Xers said their primary goal was to buy a home. Compare this to just 23% of millennials that consider a home to be their primary investment objective today.
5. Managing Investments
The majority of millennials (66%) saw the ability to manage all aspects of personal finance, including investments, in the same app as being important. Only 35% of boomers agreed.
Similarly, 67% of millennials saw recommendations made by artificial intelligence as being a basic part of any investment platform. Both Gen Xers and Baby Boomers were more hesitant, with 30% seeing computer-based recommendations as being integral.
6. Impact Investing
Millennials are twice as interested in ESG (environmental, social, and governance) investing, compared to their boomer counterparts. In fact, the majority of millennials (66%) choose funds according to ESG considerations.
Reasons for Not Investing
While generations may have varying investment philosophies, they seem a little more in sync when it comes to having reasons not to invest.
|Recognize future outlook would be better if they start investing||72%||73%||57%|
|Want to try out investing with a low money commitment||35%||31%||25%|
|Afraid of losing everything||42%||29%||28%|
|Too worried about current financial situation to think about future||49%||46%||32%|
|Find information about investing difficult to understand||63%||59%||55%|
|Don't have enough money to start investing||55%||59%||56%|
There are some similarities in the data here – for example, non-investors of all generations seem to have an equally tough time learning about investing, and similar proportions do not believe they have the funds to start investing.
On the flipside, it seems that millennials are more worried about their financial future, while simultaneously seeing a risk of “losing everything” stemming from investing.
A Visual History of the Largest Companies by Market Cap (1999-Today)
See how the world’s largest companies have changed over time, and how this helps tell a broader story about what the market is thinking.
A Visual History of the Largest Companies by Market Cap
The macro narrative that underlies the market is constantly under revision.
While this is partially a function of shifts in investor sentiment, it’s also driven by game-changing events as well as much more structural market forces.
For example, how does the macro narrative change after a commodity price crash? What about when the unprecedented scale of technology is truly understood by the market?
An Evolving Narrative
In this week’s chart, we look at how the big picture narrative has changed over time by using a very simple approach.
We have visualized the market capitalizations of the 10 largest public companies in the world over five-year intervals from 1999 until today, and it gives us a series of snapshots of what the market was “thinking” during these specific periods.
Not only is it evident as certain industries rise to prominence, but there are also some interesting individual stories to follow. We can see iconic companies – such as Apple – ascend into the public consciousness, while others fall off the radar completely.
|Year||Description||Top Company||Who Dominates Top 10?|
|1999||Dotcom Bubble||Microsoft ($583B)||Five tech companies in the mix|
|2004||Post-Bubble||GE ($319B)||Diverse mix of companies by industry|
|2009||Financial Crisis||PetroChina ($367B)||Six non-U.S. companies make list|
|2014||$100 Oil||Apple ($560B)||Last year for oil companies, tech starts ascending|
|2019||Big Tech Era||Microsoft ($1,050B)||Seven companies are tech|
The composition of the top 10 changes in each of the snapshots above, and this simple approach helps capture the market narrative for each timeframe.
During the Dotcom Bubble, you can see that half of the list was dominated by tech companies. This was short-lived, and the years 2004, 2009, and 2014 have much more diverse lists.
You can also see the impact of the financial crisis on U.S. company valuations. In 2009, there is an equal distribution of Chinese and American companies. Royal Dutch Shell (UK/Netherlands) and Petrobras (Brazil) help round out the top 10.
Finally, over the last five years, you can see the impact of lower oil prices and the growing scale of tech. Back in 2014, Exxon Mobil was the second largest company in the world by a solid margin, but today it’s been displaced by companies like Facebook, Amazon, Tencent, and Alibaba.
The Big Tech Era
Here is the current top 10 list of the world’s largest companies by market cap:
|#1||🇺🇸 Microsoft||Tech||$1,050 billion|
|#2||🇺🇸 Amazon||Tech||$943 billion|
|#3||🇺🇸 Apple||Tech||$920 billion|
|#4||🇺🇸 Alphabet||Tech||$778 billion|
|#6||🇺🇸 Berkshire Hathaway||Diversified||$507 billion|
|#7||🇨🇳 Alibaba||Tech||$435 billion|
|#8||🇨🇳 Tencent||Tech||$431 billion|
|#9||🇺🇸 Visa||Financial||$379 billion|
|#10||🇺🇸 Johnson & Johnson||Consumer Goods||$376 billion|
In total, the five biggest tech giants brought in a combined $801.5 billion in revenue last year, and $139 billion in net income.
The Staying Power of Microsoft
With a valuation today of just over $1 trillion, Microsoft is again the world’s largest company by market capitalization.
In this way, the above lists come full circle, since Microsoft was also the biggest company in 1999.
While the software giant experienced short periods where it did drop out of favor, Microsoft was the only company to make the list in our five snapshots above.
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