Alternative Investing Report - October 3, 2024

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The AI chipmaker and Nvidia competitor Cerebras filed for a NASDAQ IPO that could reportedly raise between $600 million and $1 billion. The company saw an increase of revenue from $8.7 million in H1 2023 to $136.4 million in H1 2024, but the majority of that came from a single customer. Its net loss was still $66.6 million in that time period, and it could be a long way from profitability.

➨ TAKEAWAY: This is the first big venture-backed AI company to go public, and it will test the market’s appetite for a money-losing company that is all potential. A positive reception could open the floodgates in 2025 for more companies to go public - which would be a positive development, as the past three years has seen fewer IPOs than any other years in the past three decades.

High-quality farmland is still selling for record prices per acre in some areas, but the overall market for land has slowed, partially due to declining crop profitability. In Kansas, for example, land values have been growing at an unsustainably high 18-20% per year, but the forecast for 2024 is at 8%, which is still a solid return. However, Iowa saw farmland values drop for the first time in five years.

➨ TAKEAWAY: The question is whether the slowdown will turn into a flat market, which in turn could lead to prices declining nationwide. A recent survey of rural bankers showed that most believe that farmland values will fall or stay flat in the next year, while only 8% see prices increasing. The main metrics to keep an eye on are crop prices and profitability - if those don’t increase, it will have a negative impact on land values.

🏡 Millennials moving: People between the ages of 26-35 with an annual income of $200,000 or more have been moving to Florida, Texas, Colorado, North Carolina and Washington, while leaving California, Illinois, Massachusetts, New York and Pennsylvania.

🪙 Ripple ETF: Bitwise filed for an XRP token exchange-traded fund, but it is unclear what its chances for approval are. This comes after Grayscale debuted an XRP trust in September, which could be the first step in launching their own ETF.

💵 Private credit growth: The total AUM of the private credit market in North America tripled between 2010 and 2023 and is expected to double again by the end of 2029.

📊 Volatility trading: As the upcoming election leads to uncertainty in the markets, some traders are making complex derivative trades that benefit from increased market volatility, regardless of whether it goes up or down.

⚾ Grading activity down: September saw the fewest cards graded in a month and saw a year-over-year decline for the first time in 2024, with much of the decline coming from Trading Card Games cards, such as Pokémon and Magic: The Gathering.

🚀 Even playing field: After a couple of years of the market being more VC-friendly than startup-friendly, the market is becoming more balanced as the supply of investor cash is catching up to the startup demand for capital.

AI was a dominant topic at Climate Week NYC, as electricity demand is rising after being flat for nearly two decades, and the energy consumption by data centers is part of the reason why. By 2030, data centers are projected to double their electricity usage to satiate demand from AI’s rapid growth. For example, a study found that web searches with generative AI use 10 times as much energy as a standard web search. Some argue that the growing AI industry is going to lead to more demand for clean energy and better power infrastructure, but if AI becomes associated with outsized power usage and climate change, it could harm its reputation among the public.