Visualizing the Rise of the ICO
If you ask any investor about Initial Public Offerings (IPOs), you’re not likely to get an extreme range of opinions.
That’s because IPOs have been around for centuries, they’re heavily regulated, and they usually are reserved for companies with impressive traction as they transition to the public market through a storied exchange like the NYSE or Nasdaq.
During times of extreme market froth, like the Dotcom bubble, a newly public company can be the subject of intense amounts of speculation. However, in relative terms, most IPOs are fairly benign.
Companies going public simply have a very abbreviated track record, which makes them difficult to value by the market.
Introducing the ICO
Today’s infographic comes to us from Coinlist, and it showcases the long-lost cousin of the IPO: the initial coin offering (ICO).
At the most basic level, an ICO is a crowdfunded offering of a newly issued cryptocurrency that can be used as a source of capital for startup companies. Investors buy these coins or tokens with legal tender or through the exchange of other cryptocurrencies such as Bitcoin or Ethereum.
And ICOs have taken off – see the incredible video on the explosion in ICOs for yourself.
ICO vs. IPO
Here are some major differences between ICOs and IPOs.
For a newly-listed public company, the market has limited information to assess – but usually the company has some known traction: sales, revenue, growth, etc. New listings can still be risky, but most still have some intrinsic value, even if that is just an asset at book value.
ICOs, on the other hand, are usually used to raise capital for a new idea or technology. Ethereum, which ICO’d in 2015, is a blockchain-based technology that focuses on enabling smart contracts and decentralized apps. While it wasn’t “proven” at the time of its ICO, Ethereum is now a wild success.
The only problem: not all new technologies or ideas are proven, and some will certainly crash and burn. Further, some will even be scams. Thus, the level of potential risk with ICOs cannot be understated.
Newly-listed companies are highly regulated, for better or worse.
ICOs are not regulated, though the SEC has stated that it will treat ICOs as security offerings in some situations. Meanwhile, other countries like South Korea and China have banned ICOs altogether, at least temporarily.
While early-stage venture capital and IPOs are traditionally much more difficult for the average person to get exposure to, anyone can buy into an ICO.
In this sense, the ICO offers something similar to crowdfunding: the ability for projects to raise money from a strong community of regular people. This community-based approach can also enable non-profit ventures to succeed.
A Full List of Pros/Cons
For a much more in-depth list of the pros and cons of ICOs, this article by Outlier Ventures provides some fantastic insights.
Which Companies Make Up the “Magnificent Seven” Stocks?
FAANG is dead… meet the ‘Magnificent Seven’ stocks that now make up over 25% of the S&P 500.
Which Companies Make Up the “Magnificent Seven” Stocks?
In 2013 CNBC analyst Jim Cramer popularized “FANG,” comprised of Facebook (now Meta), Amazon, Netflix, and Google (now Alphabet), as a shorthand for the best performing technology stocks on the market. Apple, added in 2017, made it FAANG.
However, over the last year a new moniker given by Bank of America analyst Michael Hartnett highlights the most valuable and popularly-owned companies on the American stock market: the “Magnificent Seven” stocks.
We visualize the Magnificent Seven’s market capitalization and 5-year stock performance as of November 2023 using data from Google Finance and CompaniesMarketCap.
The Magnificent Seven Stocks by Market Cap and 5-Year Return
The Magnificent Seven stocks are megacap companies focused and capitalizing on tech growth trends including AI, cloud computing, and cutting-edge hardware and software.
Four of the five FAANG stocks retain their place amongst the Magnificent Seven, with newcomers Nvidia, Tesla, and Microsoft joining the group. Following a poor 2022 performance and having more difficulty capitalizing on tech trends, Netflix is the sole FAANG company not included.
Here’s a look at the companies ranked by their market capitalization on November 6, 2023, alongside their 5-year stock performance:
|Rank||Company||Market Cap||5 Year Performance|
The Magnificent Seven make up more than one-quarter of the S&P 500 and more than half of the Nasdaq 100.
Meanwhile, five of the seven are part of the rare trillion dollar club, with Nvidia being the most recent entry.
A common theme among the Magnificent Seven is their ability to collect vast amounts of customer data, create cutting-edge hardware and software, as well as harness the power of AI.
However, if Netflix gets back on track—recently announcing its new ad-supported membership tier has 15 million subscribers—we could soon see a “Magnificent Eight.”
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