What to do if your company stock options are underwater

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In a competitive job market, equity compensation such as stock options — the chance to buy stock in the company that employs you at a specific price — can be an incentive to sign on and stick around.

It can also be nerve-wracking when these assets underperform. 

“Part of the deal when you have stock options is they can go underwater, and we’re seeing a lot of that now with clients,” said certified financial planner Kristin McKenna, managing director at Darrow Wealth Management in Boston.

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While 2021 was a record-breaking year for initial public offerings, when private companies first sell stock to outside investors, many returns have been disappointing.

After a volatile month, the Renaissance IPO ETF, tracking an index of the largest recently listed U.S. IPOs, had dropped more than 25%, as of Jan. 28.

Of course, IPOs also have the potential for lucrative returns. But if you exercised stock options and prices are down, you may be wondering what to do next. Here’s what to consider, according to financial experts.

Pivot your exercise strategy

One of the first steps is to review the grant date to see when your remaining stock options expire, said Chelsea Ransom-Cooper, a New York-based CFP and managing partner at Zenith Wealth Partners.

“A lot of people don’t know that they have 10 years from grant,” she said. “So they feel as though they have to exercise during their vesting window.”

However, taking more time during volatile periods may be reassuring, Ransom-Cooper said.

For example, rather than buying a certain number of shares each year, you may pivot, depending on price targets and potential growth, she said.

“The challenge is not a lot of people stay at a company for 10 years,” Ransom-Cooper said.

If you’re not planning to stay long-term, you may have only 90 days after leaving to exercise remaining stock options, she said. But it may become a bargaining chip since you’ll compare future equity offers to what you’re leaving behind. 

How to handle underwater company stock

If you’re worried about volatility after exercising stock options, you may consider a so-called collar, which is designed to cap losses and gains, said McKenna at Darrow Wealth Management, with the cost hinging on the length of protection.

A collar involves two contracts: buying a put option, which allows you to sell if the stock drops to a specific price, and selling a call option, which permits the owner to buy the stock once it rises to a predetermined price, both during set time periods. The income from the call may help to offset the cost of the put.

The best advice I can give people is don’t prespend the proceeds.

Kristin McKenna

managing director at Darrow Wealth Management

You may buy and sell options through a brokerage, but these assets can be complicated and it may be best to work with an advisor, McKenna said.

However, if you’re in a lockup period, typically 90 days to 180 days after your company IPO, the contract may limit what you can do with the stock, including selling or hedging strategies, she said.

“The best advice I can give people is don’t prespend the proceeds,” McKenna said, explaining how much prices can change from exercise to IPO and beyond.

And if you’re ready to dump underwater stocks, you may consider selling to take advantage of tax-loss harvesting, which may allow you to offset other gains from the year, Ransom-Cooper said.

Tesla climbs more than 10% on Monday after Credit Suisse upgrade

A Tesla mobile service vehicle outside a dealership in Vallejo, California, U.S., on Tuesday, Oct. 19, 2021.

David Paul Morris | Bloomberg | Getty Images

Shares in electric vehicle maker Tesla climbed more than 10% closing at $936.72 on Monday after Credit Suisse upgraded the stock to “outperform” and the broader market rebounded.

Tesla had previously declined almost 20% in January amid a sell-off that dragged the Nasdaq down.

Shares were especially under pressure after CEO Elon Musk said on the company’s most recent earnings call that Tesla would not deliver any new model vehicles to customers in 2022, including the Cyberbtruck, an experimental pickup.

Instead, Musk informed shareholders that Tesla plans to focus on scaling production at its old and new factories, and to dedicate resources to developing a humanoid robot and driverless vehicle tech. Musk has been promising to make driverless vehicles a reality since 2016, and has yet to deliver a “robotaxi” safe for hands free use by drivers.

Credit Suisse saw a buying opportunity, and has a price target of $1,025 on shares of Tesla now.

Analyst Dan Levy wrote in a note out on Monday, “Tesla has surprised to the upside on margins, in large part driven by cost reductions; we believe the strong margins are sustainable.” And he said, “We believe legacy OEMs are taking clear steps to transitioning to an EV world, yet we expect Tesla to maintain a lead for the foreseeable future.”

The note also said, “Up until now Tesla margins have largely been a function of auto hardware sales, with some modest benefits of software…specifically FSD (Full Self-Drive features). However, as Tesla releases more FSD features and unlocks more deferred revenue (which likely flows through at 100% contribution margin), Tesla should see incremental margin benefit.”

This weekend, Musk said on Twitter, “Tesla will support FSD licensing by other manufacturers,” but did not say when or whether any automakers had expressed interest.

Other electric vehicle makers also rebounded with Rivian closing 15% higher, and Lucid up more than 8% on Monday. Legacy automakers with significant plans for battery electric vehicle production also closed higher on Monday — Ford was up more than 3% to close at $20.30 and GM closed at $52.73 up nearly 5% for the day.

According to analysis by the International Energy Agency, there were about 6.7 million battery electric vehicles (BEVs) already on the roads around the world by the end of 2020, including 1.1 million in the US that year.

President Biden said last August that he wants half of all vehicles sold in the US to be electric by 2030, including hybrids and battery electric vehicles.

Investors should vote more aggressively on boardroom diversity in 2022

JohnnyGreig | E+ | Getty Images

Embracing diversity is good for business.

More diverse companies, both at board level and throughout the workforce, can outperform on financial metrics such as return on equity and higher earnings per share. They can also generate higher returns compared to their indices, according to GS Sustain 2020. Moreover, embracing diversity is key to ensuring that boards and management teams have a broad range of skill sets, opinions and ideas.

While companies have made progress in bringing diverse voices to the boardroom, there is still a long way to go. Society is diverse, and companies need to reflect this. For example, in the U.S. racial or ethnic minorities make up 42% of the population but hold just 21% of S&P 500 board seats. Globally, women represent half the population and over $40 trillion in global consumer spending, yet in 2020 they held only 21% of corporate board seats.

As an active asset manager, we believe investors should be active stewards of the companies in which they invest. We believe that proactive engagement and thoughtful proxy voting at our investee companies is important, and we seek to encourage companies to make positive changes in ways that serve the interests of shareholders as well as their wider stakeholders. In our view, shareholders should advocate for greater diversity in the boardroom and should cast their votes accordingly.

At Goldman Sachs Asset Management, we have steadfastly pursued this aim by engaging with companies and evolving our proxy voting policies. In the 2021 proxy voting season, we voted against the full board in the U.S. and the nominating committee outside the U.S. at companies with no women on the board. We voted against 808 companies globally on these grounds last year.

For the 2022 season, we are raising the bar even higher. We will expect all companies to have at least two women on the board, unless the board has fewer than 10 members, or where local requirements or formal targets are already higher than this minimum.

We also plan to use our votes to recognize and promote diversity outside of gender. We plan to expect companies in the S&P 500 and the U.K.’s FTSE 100 to have at least one director from an underrepresented ethnic minority group. For U.S. companies outside the S&P 500, we will continue to expect boards to have at least one woman and at least one other diverse director, who could be a woman, a member of an underrepresented ethnic minority group or a member of the LGBTQ+ community.

Boardroom diversity is imperative, but we also believe other shareholders should join us in seeking to enhance diversity beyond the boardroom to management and the wider workforce. For instance, as shareholders we can encourage companies to set ambitious diversity goals and hold them accountable for meeting these ambitions. Sometimes it might be appropriate to tie these targets to executive compensation.

Operationally, companies can be encouraged to recruit diverse candidates for open positions, adjust workforce policies such as equal pay and anti-discrimination measures, and make key appointments like chief diversity officers or equivalents. All this needs to be supported by strong “tone from the top” to ensure that the organization’s values align with their diversity, equity, and inclusion goals.

It is often said that what gets measured gets done, and so we need clear reporting from companies on the state of their workforces. As of 2020, only 6% of companies in the United States disclosed their full EEO-1 report, a breakdown of gender, race and ethnicity data. As an industry, we should proactively engage with companies and encourage them to disclose more information on their workforce and board demographics. This data is critical to allow us to hold companies to account for the statements they have made, the strategies they have implemented and their progress to date. Forms of diversity beyond gender and ethnicity should also be incorporated into corporate diversity strategies and data, including but not limited to religion and sexual orientation.

Diversity matters, in the boardroom and in the workforce. We intend to continue to encourage companies to improve their diversity, and we think others should continue to do so, too. In our view, shareholders should continue to challenge companies on their boardroom diversity and be unafraid to vote against companies where necessary. It’s an approach that we will continue to deploy and expand during voting season in 2022.

Julian Salisbury is co-head of Goldman Sachs Asset Management. Katie Koch is chief investment officer for public markets equity at Goldman Sachs Asset Management.

Joe Manchin campaign gets big donations from corporations, executives

Senator Joe Manchin, a Democrat from West Virginia and chairman of the Senate Energy and Natural Resources Committee, speaks during a hearing on Capitol Hill in Washington, D.C.

Al Drago | Bloomberg | Getty Images

Sen. Joe Manchin’s reelection campaign raised nearly $300,000 from corporate political action committees and executives days after the conservative Democrat said he would oppose President Joe Biden’s $1.75 trillion social and climate spending package, according to a CNBC analysis of Federal Election Commission filings.

Some of the executives who donated to his campaign also previously contributed to Republican leaders’ political operations, including former President Donald Trump’s.

Manchin is up for reelection in 2024. His campaign raised just more than $1.5 million in the fourth quarter, ending the period with over $6 million on hand. Manchin’s campaign has never raised that much money over the October-December quarter, according to a campaign finance expert.

More than $280,000 from corporate PACs and influential donors came after Manchin announced on Fox News on Dec. 19 that he would not back Biden’s major spending bill, which is known as Build Back Better.

Manchin, who represents West Virginia, has a pivotal vote in the Senate, which is split 50-50 between the two parties. That has made him and his political operation a magnet for lobbying from business leaders and special interest groups.

Following his announcement last month that he would not vote in favor of Biden’s Build Back Better plan, records show that his campaign received contributions from companies such as Facebook (now known as Meta), CVS Health, Lowe’s, Anthem, Cigna, Boston Scientific, Cheniere Energy and Emergent BioSolutions. Those donations ranged from $1,500 to $5,000.

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Manchin’s campaign also received individual contributions from leading executives after he effectively blocked Build Back Better, including $5,800 from Republican megadonor and Home Depot co-founder Ken Langone. The billionaire also separately gave to Manchin’s PAC, which is called Country Roads. Langone had previously supported Trump when he ran in 2016 and endorsed many of the former president’s economic policies.

Real estate magnate Richard LeFrak, who has mainly given to Trump’s and Republican candidates’ committees, donated $5,800 to Manchin’s reelection campaign after he opposed the Build Back Better Act. LeFrak’s sons, Harrison and James, who have given big money to Democrats and Republicans, combined to contribute over $10,000 to Manchin’s campaign.

David Fischer, a Trump donor who also served as the then-president’s former ambassador to Morocco, gave $5,800 to Manchin on Dec. 20. Other donors who have financed GOP campaigns and gave to Manchin’s reelection effort late last year include real estate titan John Cushman III, veteran lobbyist Catherine Finley, health-care executive Robert Patricelli and Joel Myers, CEO of AccuWeather.

A month before his contributions to Manchin’s operations, Langone praised the senator live on CNBC. Langone also said he intended to host a massive fundraising event for the conservative Democrat.

“I don’t see leadership any place in this country. Thank God for Joe Manchin,” Langone said at the time. “I’m going to have one of the biggest fundraisers I’ve ever had for him. He’s special. He’s precious. He’s a great American,” he added.

Representatives for Manchin did not return emails seeking comment.

Wage growth may be slowing from ‘breakneck’ pace

A Now Hiring sign hangs in front of a Winn-Dixie grocery store on Dec. 3, 2021 in Miami.

Joe Raedle | Getty Images

The rapid pace of pay increases that characterized the labor market for much of last year may be starting to slow down.

Wage growth among private-sector jobs slowed to 1.2% in the fourth quarter of 2021 from 1.4% in the third quarter, according to U.S. Department of Labor data issued Friday.

That pace is still fast; it translates to a roughly 5% annual raise for workers, well above the pre-pandemic trend around 3%, according to Nick Bunker, economic research director for North America at the Indeed Hiring Lab.

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The deceleration suggests businesses are having any easier time finding workers — and therefore may not feel the need to bid up wages as rapidly to attract talent in 2022.

“The Q4 data hints at a slowdown,” Bunker said. “In combination with other data, it suggests the breakneck speed of wage growth we saw in summer and early fall may not be the pace we see moving forward.”

“Slowing down from 120 miles per hour to 90 miles per hour is slowing down,” he added. “But you’re still hitting 90, which is pretty quick.”

A further slowdown could be unwelcome news for workers. Inflation has been running at its fastest pace in decades, eroding the large raises workers have gotten.

If wage growth continues to decelerate while the cost of living doesn’t, the trend may eat into their paychecks even more. However, if inflation moderates in 2022 and wage growth plateaus at current levels, workers may ultimately experience a net raise, Bunker said.

Hiring getting easier?

Demand for workers surged last year as the U.S. economy emerged from its pandemic hibernation.

Job openings soared to record levels as business’ craving for workers outstripped the ready supply of labor. Millions of Americans have stayed on the sidelines, largely due to ongoing pandemic health fears, care responsibilities at home and early retirements among older workers, according to economists. Other factors like elevated household savings and employee burnout also likely played a role, they said.

Employees also began quitting in record numbers — a trend that came to be known as the “Great Resignation” — as Americans re-evaluated their work lives and many were confident they could find better, higher-paying jobs elsewhere.

The recent Labor Department wage data suggests those hiring challenges have somewhat eased.

“Relatively, it’s not as hard to hire as it was, say, back in September or August for some sectors,” Bunker said.

Wages have jumped most for low-paying, in-person jobs among sectors like leisure and hospitality (hotels, restaurants, bars), and those like brick-and-mortar retail stores that also had pronounced pandemic-related shutdowns, Bunker said.

Atlanta DA Fani Willis asks FBI for security help after Trump calls for protest

Fulton County Georgia District Attorney Fani Willis photographed in her office on Jan. 4, 2022.

Ben Gray | AP

Atlanta’s top prosecutor asked the FBI to conduct a security assessment and provide protection for a courthouse and government center a day after former President Donald Trump called on supporters to hold “the biggest protests we’ve ever had” in places where he is being investigated.

Fulton County District Attorney Fani Willis, who is investigating Trump for possible criminal interference in Georgia’s 2020 presidential election contest, said in a letter to the FBI that “security concerns were escalated this weekend by the rhetoric of former President Trump.” The reality TV star-turned-politician spoke at a rally Saturday in Conroe, Texas.

“We must work together to keep the public safe and ensure that we do not have a tragedy in Atlanta similar to what happened at the United States Capitol on January 6, 2021,” Willis wrote in her letter Sunday to the special agent in charge of the FBI’s Atlanta field office.

On Jan. 6 that year, a mob of Trump supporters invaded the Capitol and disrupted a joint session of Congress that was in the process of confirming that President Joe Biden had won the 2020 election, despite Trump’s false claims to the contrary.

Willis in her letter cited the fact that Trump said that if he runs for president in 2024 and is elected he may pardon rioters for Jan. 6 crimes “because they are being treated so unfairly.”

Former U.S. President Donald Trump speaks during a rally in Conroe, Texas, U.S., January 29, 2022.

Go Nakamura | Reuters

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Willis cited the special grand jury and its scheduled May 2 start date in her letter to the FBI saying, “I have an obligation to ensure that those who work and visit the Fulton County Courthouse, the adjoining Fulton County Government Center and surrounding areas are safe.”

She noted that those buildings are close to the Georgia State Capitol, Atlanta City Hall, and a federal district and circuit appeals court, as well as Georgia State University.

In addition to asking for an immediate risk assessment of the county courthouse and government center, Willis asked the FBI to “provide protective resources to include intelligence and federal agents.”

She wrote that Trump at his rally made multiple references to her probe and others.

At that rally, Trump said, “If these radical, vicious, racist prosecutors do anything wrong or illegal, I hope we are going to have the biggest protests we have ever had in Washington, D.C., in New York, in Atlanta and elsewhere because our country and our elections are corrupt.”

The Manhattan District Attorney and the New York state Attorney General’s offices are conducting parallel investigations into Trump’s business practices.

The FBI did not immediately comment on Willis’ request.

Rep. Liz Cheney, the Wyoming Republican who is vice chair of the select House committee investigating events surrounding the Jan. 6 riot, in a tweet early Monday blasted Trump for his rhetoric on Saturday.

“Trump uses language he knows caused the Jan 6 violence; suggests he’d pardon the Jan 6 defendants, some of whom have been charged with seditious conspiracy; threatens prosecutors; and admits he was attempting to overturn the election,” Cheney said. “He’d do it all again if given the chance.”

Earlier this month, a Texas man was arrested by federal authorities for allegedly posting a threat to kill a Georgia election official and other officials just days after Trump’s call to Georgia’s secretary of state

UK investigation into Downing Street Covid lockdown parties finds ‘failures of leadership’

Prime Minister Boris Johnson leaves 10 Downing Street to make a statement at Parliament on January 31, 2022 in London, England.

Dan Kitwood | Getty Images News | Getty Images

LONDON — The interim findings of an investigation into Covid-19 lockdown-breaking parties at Prime Minister Boris Johnson’s office and residence have sharply criticized the culture in Downing Street.

The 12-page interim report, published in a redacted form on the government’s website on Monday, makes clear that lockdown parties “should not have been allowed to take place,” while others “should not have been allowed to develop as they did.”

In a series of damning conclusions, senior civil servant Sue Gray’s partial findings said there were “failures of leadership and judgment by different parts of No 10 and the Cabinet Office at different times” and some of the behavior was “difficult to justify.”

It also found that the excessive consumption of alcohol was “not appropriate in a professional workplace at any time” and some staff had wanted to raise concerns about behaviors they witnessed but felt unable to do so.

“At least some of the gatherings in question represent a serious failure to observe not just the high standards expected of those working at the heart of Government but also of the standards expected of the entire British population at the time,” the report said.

Gray said it had not been possible to provide a meaningful report after the Metropolitan Police had controversially asked her to make “minimal reference” to parties they are also investigating.

The Met’s move provoked a backlash from British lawmakers who accused the police of attempting to affect the political process and to “whitewash” the report.

After multiple reports of various gatherings and alleged parties in government buildings, the latest disclosure in recent weeks was that an event was held during lockdown to celebrate Johnson’s birthday on June 19, 2020.

Johnson has so far resisted calls to resign from across the political spectrum, despite public anger over the long and growing list of alleged lockdown breaches.

In response to Gray’s interim report, Johnson told lawmakers gathered in the House of Commons that he was sorry for the way the matter had been handled and accepted it was time to review codes of conduct.

“Firstly, I want to say sorry,” Johnson said Monday afternoon. “I’m sorry for the things we simply didn’t get right and also sorry for the way that this matter has been handled.”

Johnson conceded it wasn’t enough to say sorry and said he will create an Office of the Prime Minister, with a permanent secretary.

“I get it and I will fix it,” Johnson said, prompting a chorus of jeers from opposition lawmakers.

Opposition Labour leader Keir Starmer said that “by routinely breaking the rules he set, the prime minister took us all for fools.”

“He gleefully treats what should be a mark of shame as a welcome shield,” Starmer added, noting that Gray’s report shows there are 12 cases that have reached the threshold for a criminal investigation.

The prime minister is expected to address all Conservative Party lawmakers in a meeting later this evening.

What happens next?

Many lawmakers who had remained loyal to Johnson, his closest colleagues among them, had repeatedly said that they would “await the findings” of Sue Gray’s report before casting judgment on their leader.

The oft-repeated phrase trotted out by Conservative politicians has allowed the prime minister to buy some time to lobby lawmakers for support in a bid to stave off a vote of no confidence — which is triggered if 54 Tory MPs send letters of no confidence to the chairman of the 1922 Committee, an influential group of backbench lawmakers which oversees leadership challenges.

It’s unknown how many letters have been sent to the 1922’s Chairman Graham Brady as the letters are kept secret, although a number of politicians have publicly declared they no longer have faith in Johnson’s leadership.

It will now be closely watched if the requisite 54 letters are declared by Brady in the wake of the publication of Gray’s findings. If enough letters of no confidence are received then a confidence vote would be triggered.

If a majority of Tory MPs voted to support Johnson in the vote, no new vote can be called for another 12 months, according to the current rules, although the 1922 Committee is reportedly considering whether to change that rule to allow for two votes per year.

If Johnson lost the vote, he would be forced to step down and a Conservative leadership contest would begin. In that eventuality, Johnson, as an ousted leader, would not be allowed to stand.

Of course, another alternative would be for Johnson to resign of his own accord but he shows no signs of intending to do so.

Some lawmakers might prefer to wait and see how the Conservative Party fares in May local elections, which will allow them to gauge public anger over “partygate.” Opinion polls have already shown that trust and approval in Johnson and his government has fallen, however.

Party over?

Johnson’s leadership has been under immense pressure after weeks of media reports (going back before Christmas) of multiple parties and gatherings attended by government staff, including Johnson at times.

One gathering, in particular, has snared Johnson as it was held in May 2020 at the height of the first lockdown, when the general public was only allowed to meet one other person from outside of their household, in an outdoor setting.

Johnson admitted to Parliament earlier in January that he attended the party — billed as a “bring your own booze” gathering in Downing Street’s garden to which around 100 people were reportedly invited.

But he told lawmakers that he had only attended the party for 25 minutes in order to “thank groups of staff” for their hard work and that he “believed implicitly that this was a work event,” a comment lampooned by opposition politicians.

The opposition Labour Party has been scathing about Johnson’s leadership and his comments on his attendance at the May 2020 party, calling on the prime minister to resign.

When Johnson offered his “heartfelt apologies” to the nation about attending the event, Labour leader Starmer said Johnson’s explanation for his attendance was “so ridiculous that it’s actually offensive to the British public” as he called on Johnson “to do the decent thing and resign.”

Joe Rogan apologizes to Spotify and musicians

Joe Rogan

Vivian Zink | SYFY | NBCUniversal

Podcaster Joe Rogan has apologized to Spotify, while also addressing the controversy around his podcast. Musicians Neil Young and Joni Mitchell recently boycotted the service for continuing to host “The Joe Rogan Experience, which has been accused by medical professionals of spreading Covid misinformation. Both musicians have since pulled their music libraries from Spotify.

“I want to thank Spotify for being so supportive during this time and I’m very sorry that this is happening to them and that they’re taking so much heat from it,” Rogan said Sunday. He also apologized to Young and Mitchell.

In a nearly 10-minute long video posted on Instagram, Rogan said he is open to changes to the show such as booking more mainstream experts after having controversial ones and doing more research on certain topics. Rogan praised Spotify for its latest decision to add content advisories to any material mentioning Covid-19, and direct its users to public health sites for more information. He also thanked the platform for its support.

Shares of Spotify were up more than 10% in early trading Monday.

“I’m not trying to promote misinformation, I’m not trying to be controversial,” Rogan added. “I’ve never tried to do anything with this podcast other than to just talk to people.”

“I do all the scheduling myself, and I don’t always get it right,” he added.

Rogan has been in hot water with accusations from medical professionals that he has repeatedly spread conspiracy theories about Covid-19. Spotify has also been under fire for hosting the episodes. It bought the exclusive streaming rights to “The Joe Rogan Experience” in a deal reportedly worth more than $100 million.

Earlier this month, 270 medical professionals wrote an open letter to the streaming giant asking it to take action against Rogan’s podcast, accusing the company of broadcasting misinformation.

Rogan has repeatedly used its platform, with millions of listeners, to discuss the Covid-19 pandemic and vaccinations, once saying that young adults don’t need to get a shot.

“If you’re a healthy person, and you’re exercising all the time, and you’re young, and you’re eating well…like, I don’t think you need to worry about this,” he said in an April episode of his podcast. But, he added that he is “not a doctor” or a “respected source of information.”

Dr. Anthony Fauci, the nation’s leading infectious disease expert, called out Rogan in April and said young people “absolutely” need to get vaccinated.

Rogan on Sunday also defended his decision to book Dr. Robert Malone, an infectious disease specialist who has become well-known among anti-vaccine Americans and was banned from Twitter for spreading Covid misinformation. Rogan in the past has also promoted the use of ivermectin to treat Covid-19, despite warnings that there’s no proof it can be effective at treating the virus.

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Crypto exchange FTX valued at $32 billion amid bitcoin price plunge

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, at the Bitcoin 2021 conference in Miami, Florida, on June 5, 2021.

Eva Marie Uzcategui | Bloomberg | Getty Images

Cryptocurrency exchange FTX saw its valuation swell to $32 billion in a new funding round announced Monday, highlighting continued appetite for the sector even as investors grow wary about a sharp pullback in crypto prices.

The Bahamas-based company said Monday that it raised $400 million in a Series C financing round — its third fundraise in the last nine months.

FTX, which offers derivatives products as well as spot trading, is one of the world’s largest digital currency exchanges. Once an obscure name, the firm has become a key player in the nascent market, rivaling the likes of Coinbase and Binance.

The company doesn’t offer trading in the United States. That function is provided by FTX U.S., its sister exchange. Last week, FTX U.S. announced a $400 million investment valuing the firm at $8 billion.

FTX said all investors in the U.S. affiliate, which included Singaporean state investor Temasek, SoftBank’s Vision Fund 2 and Tiger Global, jumped aboard for its own fundraise.

Having now raised a combined $2 billion in venture funding to date, FTX has built up a war chest at a time when digital currency prices have sunk considerably. Bitcoin is down 46% from its November record of almost $69,000, while other cryptocurrencies have slumped even further.

That’s led to fears the market may be on the cusp of a more severe downturn known as “crypto winter.” The last such occurrence happened in late 2017 and early 2018, when bitcoin tanked as much as 80% from its then-record high. Bear markets are typically bad news for crypto exchanges as it means volumes tend to dry up.

“I think we’re not entering a long term crypto winter,” Sam Bankman-Fried, FTX’s CEO and co-founder, told CNBC in an interview.

“There have been changes in expectations of interest rates, and that’s been moving crypto markets. But it’s been moving markets more generally as well.”

Indeed, stocks have taken a battering in recent weeks, with the Nasdaq down 11% year-to-date as investors reevaluate tech stocks amid concerns over higher interest rates from the Federal Reserve. Coinbase, FTX’s publicly-listed rival, has seen its shares slide 46% since debuting on the Nasdaq last April.

Asked whether his company could seek an initial public offering, Bankman-Fried said “it’s something we’ve been talking about.”

“I’m not sure whether we will. I could see it happening, I could see it not happening. We don’t feel like we have any particular need to do it.”

However, he said the firm will “try and be prepared, in case it’s something that we do end up wanting to do.” Such preparations would include audited accounts and a review of possible listing options, he added.

While the crypto market has seen seismic growth over the past couple of years, regulators have become increasingly wary about digital assets, concerned about their use in scams and other illicit activity.

A large focus for FTX, Bankman-Fried said, is acquiring licenses in several countries. Its U.S. arm is now authorized to sell derivatives products such as futures and options, which allow investors to speculate on movements in the price of an asset. Bankman-Fried said FTX’s international business will be licensed across “the bulk of the Western world” by the end of this year.

The company plans to use the fresh funds to continue developing new products. FTX last year launched a marketplace for trading non-fungible tokens — the crypto world’s answer to collectible items — and is now starting to license its software to other businesses in the realms of fintech and gaming, Bankman-Fried said.

FTX said its user base grew 60% since October 2021, when it last raised money at a $25 billion valuation, while daily trading volumes rose 40% to an average of $14 billion. The company recently established a $2 billion venture fund to invest in crypto start-ups.

Who is Sam Bankman-Fried?

FTX was founded almost three years ago by Bankman-Fried and fellow co-founder Gary Wang.

While Bankman-Fried may have started his career as a trader at the Wall Street firm Jane Street, the crypto boss is not your typical finance executive. He lives on a vegan diet, wears t-shirts and shorts, and is based in a sunny island country.

He does, however, share one similarity with traditional financial types: long working hours. Bankman-Fried previously said he functions on as little as four hours of sleep a night. He says he sleeps “a bit more” now, but “not a ton.”

FTX’s latest investment places it among the most valuable private crypto start-ups globally.  At just 29, Bankman-Fried is one of the richest people in crypto, having amassed a net worth of over $22 billion, according to Forbes. With his shares now worth more, that figure is likely to be even higher.

Bankman-Fried built an early fortune trading bitcoin at his quantitative trading firm Alameda Research. He used arbitrage, a trading strategy where investors look to profit from a divergence in prices for the same asset across different exchanges.

China names blockchain trial zones after crackdown on cryptocurrencies

Wangwukong | Stone | Getty Images

China has designated some cities and entities to trial blockchain applications, underscoring the importance Beijing is attaching to this particular technology.

In 2019, President Xi Jinping called on China to “seize the opportunities” presented by blockchain, giving his personal backing to the technology.

The Chinese capital Beijing and mega city Shanghai as well as Guangzhou in the south are all part of the pilot projects. Local government departments, universities, banks, hospitals, car companies and power firms are among the 164 entities chosen by China to carry out trial blockchain applications.

Blockchain originally referred to the technology that underpinned the cryptocurrency bitcoin. It is a public, tamper-proof and immutable ledger of activity. It is also “decentralized” meaning it is not run or owned by a single entity.

But the definition of blockchain has widened as many different industries look to use the technology for a variety of applications. Other names like “distributed ledger technology” or DLT are now often used and bear differences to the original bitcoin blockchain. Still, the idea of a single authentic record of activity is attractive.

China’s cyberspace regulator along with other regulators issued a notice on Sunday in which it called on provincial-level regulators to “give full play to the role of blockchain” in areas such as data sharing, optimizing business processes and reduce operating costs.

All the pilot units should “give priority to adopting blockchain software and hardware technologies,” the notice said.

China’s blockchain push comes after it renewed a crackdown on cryptocurrency trading and mining last year. Beijing has long-viewed bitcoin and other digital coins as a threat to financial stability.

Meanwhile, the People’s Bank of China is pushing ahead with the rollout of a digital version of the country’s yuan. However, it is not a decentralized cryptocurrency like bitcoin. It will be controlled and issued by the Chinese central bank.