Three Things (12/9)

TikTok faces U.S. deadline

Tech tension … A federal appeals court has upheld a law requiring ByteDance, TikTok’s China-based parent company, to divest the app or face a U.S. ban by January 19. Citing national security concerns, judges supported the law’s intent to block potential data access and content manipulation by the Chinese government. TikTok plans to appeal to the Supreme Court, asserting the law violates First Amendment rights.

TikTok’s explosive growth has redefined social media habits, especially with features like TikTok Shop. Launched in September 2023, TikTok Shop lets users buy items directly through the app, often marketed by influencers in live streams. This innovative approach combines entertainment with e-commerce—QVC on steroids—mimicking Instagram’s (META) shopping feature but amplifying sales via personalized algorithms and viral video culture. During Black Friday, TikTok Shop reportedly surpassed competitors like Shein and Temu (PDD) in U.S. spending, reflecting its impact on online shopping behavior.

While TikTok faces regulatory hurdles, ByteDance remains focused on its AI strategy. The company has aggressively recruited top AI engineers from Chinese rivals, becoming the largest buyer of Nvidia (NVDA) chips in Asia. ByteDance’s AI investments extend globally, powering projects like the Doubao chatbot in China and the Cici AI platform abroad. These advancements could solidify ByteDance’s influence in tech, even as TikTok’s future in the U.S. remains uncertain.

Mood shapes market

Vibe shift … The latest University of Michigan Consumer Sentiment Survey paints a polarized picture of economic optimism in the wake of Donald Trump’s election. Overall sentiment climbed to 74 in December, up from 71.8 in November. However, a deeper dive reveals sharp divisions across party lines. Republican optimism skyrocketed to 81.6, its highest since November 2020, while Democrat sentiment plummeted to 70.9, its lowest since September 2020.

The survey highlights Republicans’ belief that Trump’s presidency will curb inflation and boost the economy. Meanwhile, Democrats voice concerns that proposed policies, such as tariff hikes, could reignite inflation. Notably, future inflation expectations among all groups rose to 2.9%, the highest in six months, signaling apprehension about price stability.

Interestingly, consumers report improved buying conditions for big-ticket items, driven by expectations of future price hikes. “This rise in durables was primarily due to a perception that purchasing now would avoid future increases,” explained Joanne Hsu, director of the Michigan survey.

This divergence aligns with the broader concept of a “vibecession,” coined by economist Kyla Scanlon. Unlike traditional recessions defined by GDP contractions, a vibecession reflects how collective mood influences economic behaviors. When optimism reigns, spending surges; when worry dominates, growth slows—even without hard data backing either trend. 

As the Federal Reserve eyes inflation expectations closely, the question remains: Can optimism alone steer the economy, or will reality catch up?

Private equity evolves

Before the bell … Private company employees and early investors are no longer waiting for an IPO to cash out. In a growing trend, startups are using tender offers—prearranged trades that allow employees to sell shares to investors—to provide liquidity. This year alone, private companies have sold over $6 billion in stock via tender offers, nearly double last year’s total.

Big names like SpaceX and Stripe are leading the charge, regularly offering employees the chance to sell stock, sometimes through direct facilitation and other times through platforms like EquityZen and Nasdaq Private Market. These deals not only let workers cash in but also allow companies to remain private longer, avoiding the costs and scrutiny of public markets. The number of private “unicorns” valued at over $1 billion has soared to 1,250 from just 47 a decade ago, according to data from CB Insights.

Image via Moonfare

Investment access is expanding too. Platforms like EquityZen serve accredited investors, but funds like ARK’s Venture Fund and Cashmere Fund are opening doors for the public. ARK, for example, pools capital to invest in private firms, letting everyday investors access pre-IPO opportunities. Similarly, Cashmere Fund offers a public vehicle for private equity. Proposed legislation could further democratize private markets, allowing any investor to qualify through a financial knowledge exam. 

Back in the public markets, PwC predicts that IPOs may rebound in 2025, driven by a strong pipeline of companies, rate cuts, and favorable market conditions.

One more thing: Apollo Global Management (APO) and Workday (WDAY) have joined the S&P 500, replacing Qorvo (QRVO) and Amentum Holdings (AMTM), with changes effective Dec. 23. Apollo’s market value surged to $100 billion, driven by strong earnings and asset growth, while Workday’s shares soared 9% on projections of sustained growth.

Disclosures:

As of writing, SpaceX is a 12.4% holding in the ARK Venture Fund. NVDA and META are holdings in Titan's Flagship strategy. ARK Venture fund, Apollo Diversified Credit fund, and Apollo Diversified Real Estate fund are all offered on Titan.

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