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Vested Shorts: Instagram vs. TikTok, OpenAI faces competition, China’s trade surge, and Reddit’s $6.5B IPO plan

by Parth Parikh
March 9, 2024
3 min read
Vested Shorts: Instagram vs. TikTok, OpenAI faces competition, China’s trade surge, and Reddit’s $6.5B IPO plan

In today’s edition

  • Instagram is winning
  • China’s trade resurgence
  • Pi matches GPT-4
  • Reddit’s IPO countdown

Market Snapshot

This week, the US stock market retreated from its peak levels, with declines in the semiconductor industry casting a shadow over encouraging job growth data from the US Nonfarm Payrolls report. The addition of 275,000 jobs in February highlighted a strong labour market, yet the downturn in the tech sector, particularly among semiconductor companies, dampened the market mood. As a result, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed the week lower, posting declines of 0.3%, 0.9%, and 1.2%, respectively.

Stock market closing data for the week from March 4th to 8th, 2024

News Summaries

Instagram has surged ahead of TikTok in global app downloads, recording a 20% increase to 768 million in 2023, eclipsing TikTok’s modest 4% growth to 733 million. This shift underscores Instagram’s effective adaptation and integration of short-form video features akin to TikTok’s, specifically through Reels, which was introduced in 2020, targeting a younger demographic. Despite TikTok’s higher user engagement, with users spending an average of 95 minutes daily compared to Instagram’s 62 minutes, Instagram’s broader functionalities and effective monetization avenues for influencers are key factors in its rising popularity. Furthermore, Instagram benefits from Meta’s investment in artificial intelligence to enhance content recommendations, improving user experience and content relevance.

China experienced a surge in foreign trade in the initial months of 2024, with exports climbing 7.1% and imports increasing by 3.5%, outpacing forecasts and marking a recovery from the previous year’s decline. Despite a challenging 2023 marked by a 5% decline in trade, China’s recent performance signals potential economic recovery, aligning with the government’s ambitious 5% GDP growth target for 2024. Notably, trade with the Association of Southeast Asian Nations (ASEAN) led the way with a 4.8% increase, while trade with the EU dropped by 4.1%. Russia, now China’s fifth-largest single-country trading partner, saw a 9.3% jump in bilateral trade, reaching $37 billion. Additionally, trade with India and Brazil soared. This resurgence in trade, especially in electronics and resources like steel and iron ore, underscores China’s pivotal role in the global supply chain and its strategic trade realignments amidst geopolitical dynamics.

Inflection AI’s chatbot, Pi, now rivals OpenAI’s GPT-4 in performance, utilizing a new version 2.5 model that achieves parity on key metrics with just 40% of the computational resources. This underlines the efficiency and potential cost-effectiveness of Pi, which boasts 1 million daily and 6 million monthly active users compared to OpenAI’s 100 million weekly active users. Inflection focuses on a personal and engaging user experience and plans to monetize Pi through a subscription model, emphasizing its capability in complex tasks like math and coding. CEO Mustafa Suleyman’s vision includes innovative pricing strategies, reflecting a commitment to aligning costs with tangible outcomes. This positioning highlights Inflection’s ambition to carve out a significant niche in the crowded AI market, emphasizing resource efficiency and user-centric features.

Reddit is gearing up for its highly anticipated initial public offering (IPO) on the New York Stock Exchange, aiming to set a precedent for tech IPOs in 2024. The social media giant plans to price its shares between $31 and $34, targeting a valuation up to $6.5 billion, notably lower than its $10 billion valuation in 2021. This move comes amid a sluggish US IPO market, where companies face pressure to offer shares at a discount. Reddit seeks to attract an anchor investor to bolster its offering, with Fidelity and Tencent among its major shareholders. Despite its history of losses, including a $91 million loss in 2023, Reddit’s $800 million sales last year, primarily from advertising, and potential revenue from licensing user data for AI training, notably a $60 million deal with Google, position it as an intriguing prospect for investors.

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