Alternative Investing Report - August 30, 2024

_{*as of market close August 29}

High-end luxury brands have been branching out into real estate, both residential and commercial. On the residential side, a number of luxury automakers such as Porsche, Mercedes-Benz and Aston Martin have been partnering with developers to create branded condo buildings in places like Miami. On the commercial side, luxury brands like Louis Vuitton and Prada have been buying retail spaces and buildings in New York and Paris.

➨ TAKEAWAY: In some cases, it’s not clear what the companies are bringing to the table other than a name, as residents often don’t get any additional perks for living in a branded building. But, for developers, and the brands themselves, the combination has been a winner so far, as consumers seem to be embracing the air of luxury that surrounds the properties. Don’t be surprised to see some of the major office-to-residential conversions in cities like New York adopt similar playbooks.

The Swedish fintech startup Klarna has cut its workforce from 5,000 to 3,800 in the past year, and aims to get to 2,000 through further use of AI in marketing and customer service. Despite the reduction in numbers, the company showed an operating profit, grew revenue by 27% and grew its per-employee revenue by 73%. It also took steps to quash some boardroom disputes about future voting rights as it gets fit for public markets. Klarna had been eyeing a 2024 IPO, but is now looking ahead to 2025.

➨ TAKEAWAY: There has been a lot of debate about when AI will take away jobs from humans, and this is one data point showing that it might already be happening. If Klarna is truly able to leverage AI for productivity this significantly, it could spur a larger scale trend other companies would emulate. Klarna has been valued as high as $46 billion in 2021, before falling precipitously in 2022 to a $6.7 billion valuation, and recent reports indicate it is targeting a $20 billion valuation for its future IPO.

🏡 Mortgage rates fall, again: The average rate for a 30-year fixed mortgage fell to 6.35%, the lowest it has been since April 2023, which should provide a boost in housing market activity.

⚾ Walmart adding collectibles: In an effort to compete with Amazon and eBay, the retail giant is expanding its marketplace to allow third-parties to sell pre-owned collectibles such as trading cards, sports memorabilia, comic books and watches.

🚀 SpaceX grounded: The much-anticipated launch of the Polaris Dawn mission has been delayed again, as the FAA grounded SpaceX’s Falcon 9 rockets after one failed.

🏡 College graduate migration: New York City remained the #1 market attracting new college grads, with Los Angeles, San Francisco, Boston and Chicago rounding out the top 5, which could boost office demand in those cities going forward.

🚀 More secondaries action: Another VC firm is jumping into the secondaries game, as NEA raised $468 million for its Secondary Opportunity Fund.

🪙 Crypto hacking rises: Total losses due to crypto hacks topped $1.2 billion so far in 2024, a 15% jump from the same period in 2023, as security remains a top priority for mainstream adoption.

🎨 Boy Scouts’ art auction: A collection including 65 Norman Rockwell paintings owned by the Boy Scouts of America is being auctioned at Heritage in November as part of a settlement to pay survivors of sexual abuse.

Monday: ⚾ Babe Ruth jersey, 🏡 Home sales reports
Tuesday: 🚨 Telegram founder arrested, 🪙 Crypto tax evasion
Wednesday: 🏡 Housing price growth, 🏈 NFL & private equity
Thursday: 🚀 VC secondaries, 🪙 Crypto millionaires

Have a great weekend!