Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>Mainland investors continue their record southbound purchases during 2024 and into 2025. </li>
<li>
<a href="https://www.smartkarma.com/entities/gds-holdings-ltd" target="_blank" data-smartkarma-citation="entities:32157:1" rel="noopener">GDS Holdings (9698 HK)</a> , <a href="https://www.smartkarma.com/entities/gds-holdings-adr" target="_blank" data-smartkarma-citation="entities:23649:1" rel="noopener">GDS Holdings (ADR) (GDS US)</a> had a break out from its triangle formation in its continuation pattern.  The company may list its China REIT assets.
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> had a symmetrical pattern breakdown after the announcement that the US pentagon had placed the company on its blacklist.  The company began a large share buyback.
</li>
</ul>


Mainland investors continue their record southbound purchases during 2024 and into 2025. 

GDS Holdings (9698 HK) , GDS Holdings (ADR) (GDS US) had a break out from its triangle formation in its continuation pattern.  The company may list its China REIT assets.


Tencent (700 HK) had a symmetrical pattern breakdown after the announcement that the US pentagon had placed the company on its blacklist.  The company began a large share buyback.



Technically Speaking, Breakouts and Breakdowns: HONG KONG (January 6)

Private Markets, Angel and Secondary Investing, Sacra

Sacra

Private Markets, Angel and Secondary Investing

Bringing transparency to private markets so investors, founders, and employees can build on conviction. Sacra delivers deeply researched insights on the private companies shaping tomorrow's markets. By surfacing the data, context, and operator perspective that are missing from private markets today, we help secondary buyers and sellers price equity accurately and unlock liquidity for the people building these businesses.

Private Capital Markets

<ul><li>Discord hit $600M in annualized recurring revenue (ARR) at the end of 2023, up 35% year-over-year.</li><li>Generative AI was just emerging as Discord’s next big tailwind, with Midjourney projecting $200M in annual recurring revenue (ARR) from their AI art generation tool built into a Discord server.</li><li>This week, Discord announced that they’re moving away from their vision of building the chat app for every community, and leaning into the product-market fit they have for interactive, co-creative experiences.</li></ul>

Discord hit $600M in annualized recurring revenue (ARR) at the end of 2023, up 35% year-over-year.Generative AI was just emerging as Discord’s next big tailwind, with Midjourney projecting $200M in annual recurring revenue (ARR) from their AI art generation tool built into a Discord server.This week, Discord announced that they’re moving away from their vision of building the chat app for every community, and leaning into the product-market fit they have for interactive, co-creative experiences.

<ul><li>Now, revenue growth at Epic Games is re-accelerating.</li><li>Between December 2018 and October 2023, Fortnite’s monthly active users (MAUs) declined from 80M to roughly 35M before jumping to an all-time high of 100M in November 2023 after the re-release of Fortnite’s original "OG" map.</li><li>Thanks to Fortnite’s turnaround, Sacra estimates that Epic Games is on track to grow revenue by 30% to $5.7B in 2024.</li></ul>

Now, revenue growth at Epic Games is re-accelerating.Between December 2018 and October 2023, Fortnite’s monthly active users (MAUs) declined from 80M to roughly 35M before jumping to an all-time high of 100M in November 2023 after the re-release of Fortnite’s original "OG" map.Thanks to Fortnite’s turnaround, Sacra estimates that Epic Games is on track to grow revenue by 30% to $5.7B in 2024.

<ul><li>Fortnite has made Epic Games $27B of high-margin revenue off in-app purchases, but growth has now gone negative with falling engagement and Apple cutting Fortnite out of its walled garden.</li><li>Epic Games generated $5.6B of revenue in 2018, with $5B of that from Fortnite, but Sacra estimates that revenue fell to $5.2B in 2022 as Fortnite declined in users and conversion for a 6x revenue multiple on their $31.5B valuation.</li><li>To escape the hit-driven dynamics of gaming, Epic Games is now turning Fortnite into the centerpiece of a Roblox-like metaverse, with expanded tools for creators to build Fortnite worlds that are cross-compatible with other experiences within the Epic Games catalog.</li></ul>

Fortnite has made Epic Games $27B of high-margin revenue off in-app purchases, but growth has now gone negative with falling engagement and Apple cutting Fortnite out of its walled garden.Epic Games generated $5.6B of revenue in 2018, with $5B of that from Fortnite, but Sacra estimates that revenue fell to $5.2B in 2022 as Fortnite declined in users and conversion for a 6x revenue multiple on their $31.5B valuation.To escape the hit-driven dynamics of gaming, Epic Games is now turning Fortnite into the centerpiece of a Roblox-like metaverse, with expanded tools for creators to build Fortnite worlds that are cross-compatible with other experiences within the Epic Games catalog.

Epic Games: The $4B/year Metaverse Company

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> raised around US$4.9bn via selling some of its stake in <a href="https://www.smartkarma.com/entities/arm-holdings-inc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">ARM Holdings (ARM US)</a>' US IPO.</li>
<li>ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.</li>
<li>In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.</li>
</ul>



Softbank Group (9984 JP) raised around US$4.9bn via selling some of its stake in ARM Holdings (ARM US)' US IPO.
ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.


ARM Holdings IPO Trading - Sold Hope, Now for Some Reality

United States

Epic Games, Inc. develops video games. The Company designs, produces, and retails high-end action games for consoles, personal computers, and mobile devices. Epic Games serves clients worldwide.

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Epic Games (748448Z US)

Technically Speaking, Breakouts and Breakdowns: HONG KONG (January 6)

Mainland investors purchased a record amount of HK shares during 2024. GDS Holding announced that it may list its China assets in a REIT. Tencent...

David Mudd

Discord At $600M/year

TL;DR: Sacra estimates that Discord hit $600M in annualized recurring revenue (ARR) at the end of 2023, up 35% year-over-year. After attempting to...

Sacra

Fortnite At 120M MAUs

When we wrote about Epic Games in November, we estimated their 2023 revenue at $4.2B, down 19% from $5.2B in 2022, because of declining engagement...

Sacra

Epic Games: The $4B/year Metaverse Company

TL;DR: Fortnite has made Epic Games $27B of high-margin revenue off in-app purchases, but growth has now gone negative with falling engagement and...

Sacra

ARM Holdings IPO Trading - Sold Hope, Now for Some Reality

Softbank Group (9984 JP) raised around US$4.9bn via selling some of its stake in ARM Holdings (ARM US)' US IPO. In this note, we talk about the...

Sumeet Singh

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