CEO at Post 9 on IPO Market's Big Thursday, Banks' Stress Test Rally, Micron Beats 6/29/23

SPEAKER_1 (0:00)

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David Faber (0:30)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:35)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Mike Santoli at the New York Stock Exchange. Cramer has the morning off. Got some news flow on this Thursday. Big revisions higher to Q1 GDP. Micron's moving some chips.

Banks passed the stress test and a important day for IPOs. Our roadmap begins with the return of the IPO. With three new listings set to debut here at the NYSE. We're going to be joined by the CEOs of two of them.

David Faber (0:59)

Plus shares of Micron are rallying in the pre-market. The chip maker delivered a bullish forecast, signaled an end to its supply glut, but does warn the full impact of a China chip ban. Well, that remains unknown.

Disney got a downgrade over KeyBank due to quote, meaningful uncertainty around that media giant. We'll talk a bit about that. NBA rights, ESPN, you know, what else, Carl?

Carl Quintanilla (1:21)

Let's begin the big Thursday for the IPO market. The thrift shop operator Savers Value Village, Kodiak Gas Services, Fidelis Insurance, all going public here at the big board. The three IPOs combined failed to hit the 1 billion mark, with Savers being the only one to exceed its projected price range.

As we said, don't miss our interviews with the CEOs of Savers and Kodiak coming after the opening bell. I guess some discussion this morning, Mike, about how the pricing hasn't been a bouilliant.

Mike Santoli (1:46)

Yeah, buyer's pretty discerning about it, not necessarily feeling as if they have to be too aggressive on the bid side. It's some ways textbook the way the IPO market reopens after being dormant for a long time, six or eight months after a market low, you got some stability in interest rates.

The deals that were kind of stacked up, get out and test the market. In these cases too, you have private equity owners or larger companies or sovereign wealth fund owners that just want to monetize these assets, so the sellers wanna have a deal done. And so, it's not necessarily the case where everyone is assuming you can flip them for a huge gain. So I think it's healthy on balance. We'll see how they trade.

And the fact that we're talking about three shows that the machinery is cranking forward, but slowly enough to where you're not losing yourself and all the tickers that are being thrown at you. So it seems again, a pretty rational environment. I think would also say the history of deals that get done in the early part of a reopened IPO cycle often do benefit the buyers more than the seller. So you get rationally valued deals. I mean, if you wanted to look at extreme examples, Visa coming public, that was actually more of a distress sale and await by the banks. Even Google, I mean, it was not a traditional IPO, but it happened at the early edge of when things were reopening after the tech crash.

David Faber (3:11)

But those were enormous deals. I mean, Visa was the biggest IPO of all time.

Mike Santoli (3:16)

Absolutely. And therefore the sellers needed to have it happen.

And so in retrospect, it was a really good entry point. I'm not suggesting this is what's going on right now. What I'm saying is it's a little more of a balanced market as opposed to if you want stock shares on this deal, you have to pay up and it goes to the benefit of the issuer, not the buyer.

David Faber (3:37)

There's a look at Visa, of course, which we do remark on in terms of its market cap, although it hasn't done much in a little bit, interestingly. It's sort of hung in there now for, sorry about that.

Mike Santoli (3:46)

Yeah, it got pretty expensive and has been chopping sideways for quite some time.

Carl Quintanilla (3:50)

There's also the notion, Tom Sosnoff on Squawk this morning sort of raised the idea that SPACs, in his view, at least, set the market back five years.

Mike Santoli (4:00)

Yeah, I don't know if that's the case in terms of-

Carl Quintanilla (4:01)

Introduced an element of toxicity to the whole thing.