In a look back, consultancy PWC issued a report that shows just how unusual 2021 was for Israel exits. Its 2022 exits review (link, in Hebrew) showed acquisitions and IPOs by local tech companies topped $16.9 billion in 2022 from 72 deals.
While that was down Y/Y, the firm’s analysts view 2021 as an anomaly, with exits reaping $82.5 billion from 171. PWC advised trend watchers to look at 2022 with a quarterly lens, observing that that is how it expects 2023’s exit procession to look.
Meanwhile, in a global look ahead, two of Loup Ventures’ predictions for the new year have implications for the Israel tech scene.
The firm expects private equity will be more active in taking tech companies private in 2023. That would be an interesting development in the startup nation — only one or two mega deals need to happen here in Israel to shake the market.
The second of Minneapolis-based Loup’s predictions seems obvious but chock full of more impact locally, that “a wave of unicorns will go bankrupt.”
Led by Gene Munster, Loup’s team notes that “even the biggest unicorns are under pressure” citing the drop in Instacart’s valuation from $39 billion a year ago to a reported $10 billion today.
“In the middle of 2022, there were about 750 unicorns with about 500 of those minted in 2021. We believe that we'll exit 2022 with around 200 unicorns and less than 125 by the end of 2023,” reads the firm’s predictions newsletter. (It’s free, why aren’t you reading it?)
Localize those figures to Israel with its 90 or so unicorns — a number that was down 40% by year-end 2022 — and the pressure is likely to be even more pronounced.
Meanwhile…
Taking the last few days to weed through books to schlep for resale at Halper’s on Allenby, we took a moment to leaf through a couple of them that have moved with us over the years, but aren’t likely to be read again.
One seemed particularly apropos to our interest in startups: Sartre’s “No Exit”.
Beyond the obvious ironic title, the final line of the play has a resonance here in the startup nation: “Let’s get on with it.”
Why the resonance?
We recall sitting at the Tel Aviv Hilton a few years back listening to a former IDF commander-turned-entrepreneur-turned-listed company CEO talk about the decision to go with an IPO.
His response: “ehhhhhhhhh, so I said, ‘nu, kadima’”. As simple as that.
The year that was…
Ark Israel Innovative Technology ETF (BATS:IZRL) down 39.8%
BlueStar Israel Technology ETF (NYSEARCA:ITEQ) down 30.7%
Ishares MSCI Israel ETF (NYSEARCA:EIS) down 29%
VanEck Israel ETF (NYSEARCA:ISRA) down 27.4%
ILS down 13.3% against USD
Stock Bloggers Weigh In
OPKO Health (NASDAQ:OPK, TLV:OPK) got a strong sell rating from Seeking Alpha contributor Harold Goldmeier, who cited “its own failing financial health and collapsing price.”
Perion Network (NASDAQ:PERI, TLV:PERI) showed up on the radar of blogger Michele Pagliaro, who likes the company’s double-digit growth prospects in the global digital ad market. He sees the Tel Aviv company’s FCF as enabling key acquisitions in the near term.
On The Motley Fool, top-ranked Bram Berkowitz (TipRanks #1,606 out of 20,615 financial bloggers) highlighted the PERI stake held by Ark Israel Innovative Technology ETF (BATS:IZRL). Fund manager Cathie Wood owns more than 91,000 of the shares, which are up more than 108% since purchase, he wrote.
Zim Integrated Shipping (NYSE:ZIM) is recommended at current price levels by Oakoff Investments, writing on Seeking Alpha. In its Dec. 30 technical analysis, the admitted to have been “wrong in many ways in my thinking about ZIM. Lately, I have been advocating active position management, not buy and hold.”
Blogger JR Research a day earlier on SA advised that the shipping firm’s stock is one “for the brave buyers.” “investors need to decide which camp they are in, mild-to-moderate or severe recession camp, before deciding whether to add more ZIM.”
But it was top-ranked Stone Fox Capital (TipRanks #400 out of 16,622 financial bloggers) that talked bluntly about the tough year ahead for Zim as it still faces falling shipping rates as 2022 ends. “The stock faces a likely quick transition to losses next year and the real possibility management decides to not pay the true-up dividend for 2022.”