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In today’s edition,
- India’s listings upswing
- Edtech at crossroads
- Meta’s AR leap
- EVs overtake ICE vehicles
- MicroStrategy’s big bet
Market Snapshot
This week saw strong gains across major U.S. stock indexes. The Nasdaq Composite surged by 2.77%, closing at 19,722.03, buoyed by robust performances in the technology sector. Meanwhile, the Dow Jones Industrial Average climbed 1.65% to finish the week at 42,992.21. The S&P 500 also posted a healthy increase of 2.21%, closing at 5,970.84.
Investor optimism helped drive these gains despite rising Treasury yields, with the 10-year yield surpassing 4.6%. Technology stocks, particularly Tesla and Nvidia, played a significant role in lifting the Nasdaq, while broader market strength supported the Dow and S&P 500. Additionally, expectations of a “Santa Claus rally”—a historical trend where markets rise in the final days of the year—are contributing to positive sentiment as traders look ahead to 2025.
Looking forward, analysts anticipate continued market strength into the new year, although concerns about tariffs, productivity, and monetary policy remain. Overall, the week ended on a high note, reflecting resilience and optimism in the face of economic uncertainties.
Stock market closing data for the week of Dec 23rd to Dec 27th, 2024
News Summaries
India has emerged as Asia’s top market for new listings in 2024, placing it just behind the US overall, with the National Stock Exchange surpassing Nasdaq and Hong Kong in listing values. This momentum stems from robust domestic investment and a wave of spin-offs, such as Hyundai’s local unit. Meanwhile, China’s pipeline slowed sharply, dropping from $48 billion in deals in 2023 to $7.5 billion this year, as strict regulations and a cooling economy weighed on issuances. Hong Kong took in more than $10 billion, up from $6 billion, bolstered by several big secondary offerings. Although foreign investors pulled around $13.5 billion out of Indian stocks over October and November, many bankers expect India’s active listings scene to continue through the first half of 2025, even as other major markets gear up for a potential comeback.
Edtech companies saw investment shrink from $17.3 billion in 2021 to $3 billion in 2024, the lowest in a decade, while funding for generative AI jumped to $51.4 billion this year, up from $16.5 billion in 2021. Many online learning providers that thrived during school closures are now losing subscribers to free AI tools that give quick answers. Chegg’s share price, for example, fell 84 percent this year after a drop in users, and Coursera’s and Udemy’s stocks fell by more than 40 percent. Duolingo, however, gained 60 percent this year through fresh features partly powered by AI. As competition grows, some edtech firms are trying to offer AI-driven solutions, such as tools to detect AI-generated content. Others warn that edtech businesses still face high development costs and complexities around bias and security, which, along with mixed results, have tempered investor interest.
Meta is quickly adding displays to its $300 Ray-Ban smart glasses, aiming for a late 2025 launch. This is part of a bigger plan to create lightweight AR devices that could replace smartphones. The current Ray-Bans, which have cameras, microphones, and speakers, sold more in the first few months after their 2023 launch than previous models did in two years. Meanwhile, Reality Labs, the team behind this project, lost $13 billion in the first three quarters of 2024 but made about $1 billion in revenue. This shows Mark Zuckerberg’s strong focus on augmented reality. Meta is also speeding up work on its Orion AR glasses, which will feature 3D content. However, experts say high costs and supply chain issues could delay the launch. Despite these challenges, Meta’s new glasses are part of a growing market. This market saw a 73% increase in shipments in 2024, showing a growing interest in AR technologies.
China is set to sell over 12 million electric cars in 2025, up from 5.9 million in 2022. This will surpass sales of internal combustion cars, expected to drop below 11 million. Analysts say this shift, ahead of government targets by a decade, highlights China’s strong EV supply chains and cost benefits. These factors lower consumer prices. Meanwhile, foreign automakers’ share in China has dropped to 37%, down from 64% in 2020. Local carmakers are now facing tough competition and a price war. Experts warn that uncertainty in economic policy and the end of some EV subsidies by 2026 could cause short-term issues. However, the trend is clear: China’s growing EV demand is changing the global auto market.
From the World of Crypto
MicroStrategy has raised about $20 billion this year and used most of it to buy bitcoin. Even though the overall market has had ups and downs, the company’s share price has soared more than 400 percent in 2024. As a result, it climbed into the Nasdaq 100 index and now sports a market value of roughly $80 billion. Yet, it holds about $41 billion worth of bitcoin — meaning its stock trades at a notable premium to its actual crypto holdings.
One reason for this surge is MicroStrategy’s frequent use of convertible bonds. These bonds pay minimal or no interest and give investors an option to convert into shares if the stock price rises.
For many bond fund managers, that setup is attractive: they get a chance to benefit from equity-like gains while still maintaining some downside protection if the stock price tumbles. MicroStrategy, on the other hand, secures more cash to buy even more bitcoin.
Another factor is the activity around leveraged exchange traded funds (ETFs) that track MicroStrategy’s stock. These funds rebalance every day to maintain their targeted leverage. When the share price goes up, the funds buy even more shares to keep the leverage constant. That helps drive the price upward. But if shares fall, the selling could become magnified as well.
Critics point to a few warnings.
They note that insiders have sold about $570mn worth of shares this year, questioning whether the company truly believes bitcoin is still undervalued. Others worry about the premium placed on MicroStrategy shares, saying it could fade if bitcoin takes a big hit or if investors simply cool on the stock.
Still, supporters argue the company’s creative financing and repeated share offerings show it’s committed to building a “treasury” based on bitcoin’s future potential. Ultimately, it’s a high-stakes gamble on a highly volatile asset — a bet that could keep fueling big profits, or swiftly reverse if market sentiment changes.
