The Magnificent Seven are undoubtedly the global investor favorites of the past few years. But there will come a time when new companies will mount a similarly phenomenal rally. These seven companies could have the potential to do just that.
• Analysis highlights seven private market champions
• Performance of the “Private Mag Seven” is better than that of NVIDIA & Co.
• Some of the “Private Mag Seven” companies are probably planning an IPO
NVIDIA, Apple, Microsoft, Tesla, Meta Platforms, Alphabet and Amazon – these seven Big Tech companies are on everyone’s lips in investor circles and have been referred to as the “Magnificent Seven” for some time. No wonder – the impressive rally in securities, which has been going on since autumn 2022, brought its shareholders magnificent price gains. In particular, the shares of the chip giant and AI top dog NVIDIA treated those investors who got involved in the booming company early enough with a capital multiplication.
Recently, warning voices have also been increasing, according to which Mag 7 securities are slowly running out of room for improvement: Valuations have now risen sharply, especially since the current growth rates cannot, as expected, be continued into the future at will. Large institutional investors have reduced their NVIDIA positions for these reasons. For this reason, it might be worth taking a look at new stock market star candidates. The trading platform Forge Global identified seven promising companies from the USA in its recently published study “Private Magnificent Seven”. Although their shares will not yet be publicly traded, they are showing considerable momentum on the private capital market.
The “Private Magnificent Seven”: New forces on the private market
With the release of their “Private Magnificent Seven,” Forge Global highlighted an exclusive group of companies that dominate the private market. The list specifically includes SpaceX, OpenAI, Scale AI, Databricks, Fanatics, Stripe and Rippling – all highly capitalized companies that have stood out in recent years for their innovations and rapid growth rates. These companies have a combined estimated market value of $473 billion. In its report, Forge Global emphasizes the companies’ recent impressive development: “The private ‘Magnificent Seven’ have outperformed their public counterparts by 16.9 percent in the last twelve months.” The outstanding performance of these companies not only reflects their individual strength, but also illustrates the increasing importance of the private market as an important capital market for investors.
These are the business areas of the seven booming private companies
The companies listed have particularly distinguished themselves through technological innovations in recent years. SpaceX, led by Elon Musk, is revolutionizing the space industry with cost-effective space transportation solutions. The company’s popularity among venture capital investors is immense: SpaceX raised billions in recent financing rounds.
OpenAI, known for developing the ChatGPT language model, has gained global attention through the increased use of artificial intelligence in various fields. The company OpenAI, in which Microsoft has a billion-dollar stake, is reportedly on track to attract billions from investors like Apple and NVIDIA to fund the next generation of AI models.
Databricks has secured a place at the forefront of AI infrastructure with its Mosaic AI Gateway, which manages traffic for large AI models such as Meta Llama and OpenAI GPT. Scale AI, on the other hand, is a leader in providing data and infrastructure services essential to machine learning and artificial intelligence. Fanatics has established itself as a comprehensive digital platform for sporting goods, trading cards, sports betting and iGaming, while Stripe is revolutionizing the financial technology industry with innovative payment and settlement services. Rippling enables companies to manage HR matters and related tasks such as payroll and employee management through a Software-as-a-Service (SaaS) platform.
“Private Mag Seven” goes public?
Although some companies on the list, including Fanatics, Stripe and Rippling, have sparked speculation about possible IPOs, it appears that private markets continue to offer attractive financing options. With access to large amounts of private capital, these companies can continue their expansion without being subject to the constraints of public markets, such as balance sheet disclosure requirements. However, small investors who usually do not have access to the private asset markets could be happy about the IPOs. According to the analysis, an IPO of these seven companies could be followed by a long-term upward trend.
Long-term benefits of the private market
The above-average performance of the “Private Magnificent Seven” illustrates the increasing dynamics on the private market. Over the past 12 months, these companies have seen their prices rise 55.3 percent, significantly higher than the 38.4 percent gain of their publicly traded counterparts. “There is increasing evidence that privately funded companies see an advantage in remaining independent of the fluctuations and demands of the public market,” explains Forge Global. This trend could indicate that the private market will play an even larger role in global capital raising in the long term.
While access to such investments remains limited for retail investors due to accreditation requirements, these firms continue to offer significant opportunities for institutional investors seeking alternatives to traditional equity markets. With its strong growth, its innovative strength and the potential to revolutionize entire industries, the “Private Magnificent Seven” remains an important indicator for the future of the global technology market, concludes the Forge Global study.
Editorial team finanzen.net
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