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JP Morgan has just published a hard-hitting investment note, drawing parables between the dot-com bubble of the early 2000s and the unbridled enthusiasm that has become a hallmark of the current market. Against this backdrop, Britannica Group’s impending public market debut makes perfect sense. After all, who wouldn’t want to enjoy a lofty valuation in a market where almost everything floats?
Britannica Group Files a Draft Share Registration Statement With the SEC
The education-technology company Britannica Group, which happens to be the publisher of the Merriam-Webster dictionary and the famous Encyclopedia Britannica, has now announced that it has confidentially filed a “draft registration statement on Form S-1” with the SEC. This is typically a preliminary step on the long road to an IPO. The company has yet to announce the number of shares that it seeks to offer publicly and the corresponding offer price.
Bloomberg had reported back in September 2022 that Britannica Group was actively seeking a 2023 IPO at a valuation of around $1 billion. While the market’s oft-arising turmoil throughout 2023 likely played an important role in deterring Britannica Group from pursuing a public listing of its shares, the current year presents a much more sanguine landscape, with the Federal Reserve almost guaranteed to start cutting the benchmark interest rate, easing financial conditions (FCI) in the process.
The market is so frothy that an encyclopedia company is going public
Next up, yellow pages? pic.twitter.com/hKOAFoZ15D
— Julian Klymochko (@JulianKlymochko) January 30, 2024
Britannica Group’s public listing hammers home the elevated frothiness that has encapsulated almost the entirety of the market, echoing the peak mania phase of the dot-com bubble.
Are We in a Dot-Com Bubble Redux?
🔸 Current S&P 500 rally is ‘far more similar’ to dotcom bubble than people think: JPMorgan
JPMorgan quant strategists, led by Khuram Chaudhry, have identified a plethora of similarities between the current rally in US stocks and the dot-com bubble, despite common dismissals of…
— *Walter Bloomberg (@DeItaone) January 30, 2024
In what constitutes prescient timing, JP Morgan has just published an interesting investment note, concluding that the ongoing S&P 500 rally is “far more similar” to the dot-com bubble than what people normally think.
JPMORGAN: Today’s market parallels “to the Dotcom Bubble era are often dismissed, .. [but] they are far more similar than one may think! ..this time may not be so different ..” $SPX pic.twitter.com/13YKGsho6z
— Carl Quintanilla (@carlquintanilla) January 30, 2024
To support his claims, JP Morgan’s Chaudhry notes that the top 10 stocks in the MSCI USA index, which includes the “Magnificent 7” grouping of mega-cap stocks, carry a 29.3 percent weight, just shy of the 33.2 percent peak-weight back in June 2000 – the apex of the dot-com bubble.
At a time when the echoes of the dot-com bubble are again resonating across the halls of finance, Britannica Group has chosen to go public at a likely nosebleed valuation. Will the stock become a hallmark of the market’s excesses, or will the encyclopedia company again abandon its public flotation plans as the market’s reckoning arrives suddenly? Let us know your thoughts in the comments section below.