Protocol Index

Overheard

• "The public deserves a clear accounting of Robinhood's relationships with large financial firms and the extent to which those relationships may be undermining its obligations to its customers." —Sen. Elizabeth Warren wants answers from Robinhood .
• "There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time. Doing so would greatly mitigate the risk that such processing poses." —After T+2 settlement ruined Vlad Tenev's weekend , the Robinhood CEO wants real-time settlement .
• "We've not moved forward in 20 years." —China market expert Fraser Howie said systemic underpricing in Chinese IPOs showed how regulation was outdated.

The Big Story

Tech is a flat circle

Given that this is our last edition, I thought we could take a look back at some of the biggest trends we've discussed over the past year — and how they're going to factor into 2021.

The pandemic was surprisingly kind to tech. While some (myself included) initially thought the economic crash would be a disaster for the industry , we were happily proved wrong. The shift to remote work, combined with government stimulus and ultra-low interest rates, kept tech revenues and stock prices buoyant throughout the year.

• If anything, the market is now more reliant on tech stocks than ever. All the old worries about whether that creates systemic risk aren't going away: They're more salient than ever.
• As vaccines roll out and we go back to some kind of normal, investors might cool on the idea of all-digital everything. For stocks priced with little room for error, that could cause problems. Take Unity, which tanked last night after its forecast disappointed investors.

Tech companies have been borrowing billions throughout the pandemic, taking advantage of those crazy-low interest rates. And that trend isn't going away.

• Just this week, Apple sold $14 billion worth of bonds and Grab raised $2 billion in loan financing, while Alibaba received $38 billion in demand for $5 billion of bonds, despite its increased scrutiny from regulators.
• As Brown Advisory's head of fixed income Tom Graff told me last year, tech companies are basically saying "let's get while the getting's good." For now, at least, the getting's still good.

The IPO world is still red hot. After a rush to list in the second half of last year, seemingly driven by fears that markets would take a turn for the worse, the rush just … never stopped, and the stay-private orthodoxy continues to crumble.

• Kuaishou, which listed today, is a perfect example of market exuberance: Not only did it raise more in its IPO than any tech company since Uber, it closed its first day up 160%. And a whole bunch of other companies are set to follow in its footsteps in the coming weeks.

And you can bet Kuaishou will add fuel to the anti-IPO fire. It seems that people hate first-day pops now more than ever, and they're exploring all sorts of alternatives as a result.

• There are direct listings, obviously, which might only become more popular now that companies can raise capital through them.
• And there are hybrid auction approaches, carried out to great success by Unity , and less-great success by Airbnb and DoorDash .

But 2020's biggest IPO innovation was SPACs. The technique once reserved for unattractive companies quickly became a way for high-growth tech companies to list, thanks in part to looser regulatory requirements that let companies tout growth projections.

• What remains to be seen is whether SPACs end up causing problems for investors. Hindenburg Research certainly thinks they might: Having already upturned early SPAC adopter Nikola , it's now got its sights set on Chamath Palihapitiya and Clover Health.

All of those trends, though, were dwarfed by one: the U.S.-China trade war. 2020 accelerated the fundamental realignment of the two superpowers, with consequences that could shape just about every aspect of global trade, economics and markets for generations.

• In these early days of the Biden administration, it looks like the next four years will be pretty similar to the last four. This week, commerce secretary nominee Gina Raimondo said she sees " no reason " why Huawei and SMIC should be taken off the entity list.

In fact, "pretty similar" seems like a good way to describe just about everything. Though we've all gone through a hell of a lot in the last year, we're standing on a fairly familiar precipice. Markets are buoyant, trade wars are simmering and VCs are mad about IPOs. Maybe Alphonse Karr had it right all along.

READ NOW

One thing we have realized is that COVID-19 has accelerated three transformational trends that already existed before the pandemic, but are now dramatically reshaping healthcare: the concept of a networked healthcare system, the increasing adoption of telehealth, and the idea of virtual care and guidance. At the same time, we have seen consumers becoming much more engaged in their personal health and that of their families.

Read more

Up to Speed

• Monday: UiPath raised $750 million at a $35 billion valuation, ahead of a planned IPO. Fellow enterprise startup Databricks raised $1 billion at a $28 billion valuation. Also Monday: Sony Music bought AWAL for $430 million; Rapid7 bought Alcide for $50 million; and Atos ditched plans to buy DXC.
• Tuesday: Jeff Bezos resigned as Amazon CEO, as the company reported record revenue — but cloud revenue missed expectations. Also Tuesday: Alphabet earnings beat estimates; Alibaba earnings beat estimates; EA forecasts missed estimates; Uber bought Drizly for $1.1 billion; Apple was reported to be investing $3.6 billion in Kia; Astra said it would go public via a SPAC at a $2.1 billion valuation; and the U.K. proposed " buy now, pay later " regulation.
• Wednesday: Ant was reported to have reached a deal with regulators on its restructuring, which would see it become a financial holding company. Even its non-financial units would be owned by that company. Also Wednesday: Lenovo earnings beat expectations; PayPal earnings beat expectations; eBay earnings beat expectations; Qualcomm revenue missed expectations; Spotify earnings missed expectations; Sony raised its profit forecast; Box bought SignRequest for $55 million; Tealium raised $96 million at a $1.2 billion valuation; ON24 shares soared on debut; Carta was valued at $6.9 billion on CartaX; and Payoneer said it would go public via a SPAC at a $3.3 billion valuation.
• Thursday: Infineon raised its revenue outlook, bucking the negative sentiment shared by Qualcomm earlier in the week amid car chip shortages. Also Thursday: Snap forecasts missed expectations; Pinterest earnings beat expectations; Activision earnings beat expectations; Nokia gave a pessimistic outlook; Auto1 shares soared on debut; and 23andMe said it would go public via Richard Branson's SPAC at a $3.5 billion valuation.

Coming Up

• Earnings season continues. SoftBank and Take-Two report Monday, followed by Twitter , Cisco and Lyft on Tuesday; Uber on Wednesday; and Cloudflare on Thursday.