What you Need to Know for March 5th

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Despite the initial selloff following the U.S. and Israeli war on Iran, stocks moved higher yesterday on reports Iran reached out to the CIA to end the war. The war remains extremely fluid though as strikes were ongoing last night. Meanwhile, Bitcoin is back to being a “safe haven” asset - rallying near $73,000 at the time of writing.

Notably too, Anthropic is reportedly resuming AI deal negotiations with the Pentagon, a stark reversal vs. all the drama this past week.

We’ve had a nice rebound in software this week too. Clearly, terminal value questions remain, but we were a bit oversold. We did a Part II writeup on Software you can access here that focuses on bifurcation in the space and which software companies are most impacted vs. least impacted by AI.

Let’s get into it.

Earnings Corner 💸 

• $AVGO ( ▲ 1.18% ) Top and bottom line beat with revenue coming in at $19.31B vs. $19.18B and EPS at $2.05, driven by surging AI semiconductor demand as hyperscalers ramp custom accelerators and networking chips for large-scale model training. AI revenue more than doubled to $8.4B, supported by strong demand tied to Google TPUs and other cloud AI infrastructure. Guidance topped expectations, and CEO Hock Tan expects AI chip revenue well above $100B next year.

• $CRWD ( ▲ 4.15% ) Top and bottom line beat as as subscription growth and platform expansion drove ARR higher, with total ARR reaching $5.25B and net new ARR of $331M beating expectations. Strong adoption of the Falcon Flex licensing model and increased demand for AI-driven security tools supported cross selling and higher module adoption, lifting revenue and margins. Guidance came in slightly above expectations as management pointed to strong pipeline and continued platform momentum.

• $OKTA ( ▼ 1.08% ) Top and bottom line beat as revenue rose 11% y/y driven by continued enterprise demand for identity security and growing need to secure AI agents and workloads. Subscription backlog remained strong with RPO up 15% y/y, signaling solid bookings momentum. Guidance disappointed with revenue and EPS below expectations amid macro uncertainty and slower enterprise IT spending.

• $TGT ( ▼ 0.6% ) Revenue slightly missed while EPS beat at $2.44 vs. $2.16. Sales and traffic remained weak with in store sales down 2.5% as discretionary demand and store traffic declined. Profitability benefited from cost controls and growth in higher margin businesses like advertising, memberships, and same day delivery. Management outlined a turnaround strategy focused on “busy families,” shifting away from being an “everything store” while full-year EPS guidance topped expectations.

• $NCLH ( ▼ 0.75% ) Revenue missed at $2.24B vs. $2.34B while EPS came in roughly in line. Results were dragged by execution missteps, including a poorly coordinated Caribbean capacity expansion that increased supply before marketing, pricing, and infrastructure were fully aligned, weighing on yields. Guidance disappointed with EPS ($2.38) and EBITDA ($2.95B) both below expectations, as operational issues and pricing pressure continues.

• $ROST ( ▲ 8.04% ) Beat on revenue (+12% y/y) and EPS of $2.00 vs. $1.88, driven by strong holiday traffic and a 9% comp increase, with higher customer transactions across key categories like apparel and footwear. Results benefitted from value focused consumers switching to off price retailers. Guidance topped expectations as mgmt pointed to continued momentum.

• $BBY ( ▲ 2.18% ) Revenue missed while EPS beat at $2.61 vs. $2.47. Sales fell slightly, down 1% y/y with comps down 0.8% as consumers delayed larger electronic purchases like appliances and home theaters. Profitability improved as cost cuts and growth in higher-margin businesses like advertising and the third-party marketplace helped offset demand. Guidance came in just below expectations, signaling continued weak electronics demand.

• $BBWI ( ▲ 2.59% ) Beat on revenue ($2.72B vs. $2.61B) and EPS ($2.05 vs. $1.77), though sales fell 2.3% y/y as Body Care remained weak. Results were supported by holiday promotions and stronger home fragrance and soap sales. The company launched a curated assortment on Amazon as part of a broader turnaround strategy, while guidance came in light with sales expected to decline 2.5%–4.5%.

On The Move 📈 📉

• Coinbase $COIN ( ▲ 14.57% ) and MicroStrategy $MSTR ( ▲ 10.37% ) shares climbed as Bitcoin rebounded and Trump signaled support for the industry.

• AST SpaceMobile $ASTS ( ▲ 13.17% ) surged after announcing a direct-to-cell partnership with Orange in Europe.

• AppLovin $APP ( ▲ 10.01% ) stock rallied after delivering a strong Q4 earnings beat and earning multiple price target hikes.

• Moderna $MRNA ( ▲ 15.99% ) rose after finally settling a litigation related to the delivery technology behind its covid shot.

• Trade Desk $TTD ( ▲ 0.68% ) is rising after hours following a report that OpenAI may sell ads on the platform, plus their CEO acquired $148mm in shares.

IPO Roundup 📍 

• Whoop plans to grow headcount by up to 7% this year, adding 600+ roles to its ~800-person team as it positions for a potential IPO within the next two years.

• MiniMed is targeting a raise of $784mm in its IPO that’s pricing today, valuing the company at just under $8B as it separates from health giant Medtronic.

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Today’s Headlines 📖🍿 

• Jobs rebound: ADP showed US private payrolls increased by 63,000 in February vs. 50,000 estimated, the strongest gain since July. This was driven by education and health services, signaling gradual labor market stabilization, with wage growth holding steady at 4.5% for job stayers.

• Morgan Stanley job cuts: The bank is laying off 2,500 employees, roughly 3% of their workforce. The cuts include IBD and wealth management, both banking and back-office positions, and are tied to shifting business and location priorities.

• South Korean stocks plunge, but are now recovering: The Kospi fell 12%, its worst one-day drop on record, after a 7.2% slide the previous session. However, this looks short lived as at the time of writing, the Kospi is up 12%.

• Iran latest: The US has torpedoed 20 Iranian ships, with Hegseth saying “we have only just begun the fight” as Iran continues to launch missiles across the Middle East. The Senate voted to reject the war powers resolution, which would have halted any further attacks until congressional approval was given.

  • Additionally, traffic through the Strait of Hormuz has effectively closed, forcing some countries to shut in production and sending oil prices up. In response, Trump said that the US will provide naval escorts and insurance guarantees to ensure safe passage for oil tankers.

• Apollo warns of private credit shakeout: Apollo CEO Marc Rowan said rising defaults, especially in software, will trigger a prolonged correction in the $1.8T private credit market. Apollo shares have fallen ~30% YTD amid investor concerns.

• Blue Owl shorts hit record highs: Short interest climbed to a record high of 14.65% of free float as shares remain down nearly one-third YTD. Borrow demand is up 46% MoM, and financing costs have climbed above 200 bps, reflecting mounting private credit and AI-related software exposure concerns.

• Blackstone raises BCRED withdrawal cap: Blackstone allowed a record 7.9% of shares worth ~$3.8B to be redeemed from its $82B flagship private credit fund, exceeding the typical 5% quarterly limit.

  • Blackstone MDs chip in: 25 Senior managing directors invested $150mm in personal capital to help fund redemptions, covering part of the withdrawal request and signaling alignment with investors.

• Ares views the 15% private credit default rate as “absolutely wrong” and calls the commentary from UBS “actually irresponsible” while Marathon has pushed back, opting to stay away from software lending and focus on hard assets instead.

• Stonepeak eyes Cleco Power: Stonepeak and Bernhard Capital are in advanced talks to acquire Cleco Power from Macquarie in a deal valuing the Louisiana utility company at $5B+ enterprise value.

• Banks back Select Medical Buyout: JPMorgan and Wells Fargo committed ~$1B in debt to support the $3.9B MBO of healthcare company Select Medical.

• Champions is getting $1B in debt financing at S+450, with Blackstone levering the company up to 6.5x.

• Apple launches $599 MacBook Neo, marking Apple’s cheapest Mac ever and a direct push against Chromebooks and entry-level Windows.

• Judge orders Trump to begin refunding importers for the $130B it collected from the invalidated global tariffs as over 2,000 companies have filed lawsuits.

  • This comes as President Trump’s global 15% tariffs are set to go into effect this week.

• Tech companies agree to cover rising electricity costs, with seven industry leaders pledging to pay for the cost of power for their data centers.

M&A Transactions💭 

Valokuitunen, provider of fiber-to-home network connection, has entered into a definitive agreement to be acquired for EUR 200.0M by Telia Finland and Brookfield Infrastructure Partners. The transaction values the company at EUR 333.33M.

SPX Flow, manufacturer of industrial processing equipment, was acquired for $4.775B by ITT (NYS: ITT). EV/Revenue was 3.67x. Citigroup and Jefferies advised on the sale.

Saxo Bank, operator of a fully licensed European bank, was acquired for EUR 1.12B by J. Safra Sarasin Holding. The transaction values the company at EUR 1.6B. Goldman Sachs advised on the sale.

Saxdor Yachts, manufacturer of premium boats, was acquired for EUR 150.0M by Malibu Boats (NAS: MBUU). The company shareholders may earn up to EUR 72.0M in additional consideration upon achievement of certain operating and financial growth targets. D.A. Davidson Companies advised on the sale.

Proficy, developer of artificial intelligence-based software and a division of GE Vernova, was acquired for $600.0M by TPG. Evercore and Morgan Stanley advised on the sale.

Peanuts Worldwide, publishers of comic strips intended to display brief humor, was acquired for CAD 630.0M by Sony Music Entertainment. Goldman Sachs advised on the sale.

Middlefield Banc, a bank holding company, was acquired for $299.0M by Farmers National Bank (NAS: FMNB). EV/Net Income was 15.39x and EV/Revenue was 3.84x. Raymond James advised on the sale.

The Azora Capital / Palladium Hotel Group Joint Venture was acquired by Palladium Hotel Group for EUR 300.0M. The transaction values the company at EUR 400.0M.

Forge Global Holdings, a financial service platform, was acquired for $572.913M by The Charles Schwab (NYS: SCHW). EV/Revenue was 6.17x. Financial Technology Partners advised on the sale.

European Residential REIT (TSE: ERE.UN), an unincorporated, open-ended real estate investment trust, has reached a definitive agreement to be acquired for CAD 235.87M by Canadian Apartment Properties Real Estate Investment Trust (TSE: CAR.UN). EV/EBITDA was 2.09x and EV/Revenue was 4.48x. BMO Capital Markets and Haywood Securities advised on the sale.

Care.com, developer of an online platform designed to connect families with caregivers, has entered into a definitive agreement to be acquired for $320.0M by Pacific Avenue Capital Partners. J.P. Morgan advised on the sale.

Centurium Capital Partners, backing Luckin Coffee, has agreed to acquire Blue Bottle Coffee for $400.0M.

Barrenjoey Capital Partners Group, provider of financial consulting services, has entered into a definitive agreement to be acquired for AUD 903.85M by Magellan Financial Group. EV/Net Income was 16.2x and EV/Revenue was 3.35x.

AES (NYS: AES), a global power company, has entered into a definitive agreement to be acquired for $41.55B by EQT, Global Infrastructure Partners, Qatar Investment Authority, and California Public Employees’ Retirement System. EV/EBITDA was 15.86x and EV/Revenue was 3.4x. J.P. Morgan and Wells Fargo advised on the sale.

Worldwide Express, provider of logistics services, has entered into a definitive agreement to be acquired for $500.0M by Auctane. EV/Revenue was 0.1x. J.P. Morgan, Morgan Stanley, Goldman Sachs, and UBS advised on the sale.

Valiant Artificial Lift Solutions, operator of oilfield services, was acquired for $200.0M by Flowco Holdings (NYS: FLOC). PPHB Energy Investment Banking advised on the sale.

RAPT Therapeutics, a clinical-stage immunology-based biopharmaceutical company, was acquired for $2.2B by GSK (LON: GSK). J.P. Morgan advised on the sale.

Ookla, provider of broadband testing services, has reached a definitive agreement to be acquired for $1.2B by Accenture (NYS: ACN). Citigroup and Evercore Group advised on the sale.

MW Components, manufacturer of precision components, has entered into a definitive agreement to be acquired for GBP 950.0M by Rosebank Industries. EV/EBITDA was 13.58x and EV/Revenue was 2.58x. Robert W. Baird & Co. and Investec advised on the sale.

DRC Heat Transfer, manufacturer of automotive machine parts, has reached a definitive agreement to be acquired for GBP 164.0M by Smiths Group (LON: SMIN). EV/Revenue was 2.32x.

CPM Holdings, manufacturer of engineered process equipment, has entered into a definitive agreement to be acquired for $2.1B by Rosebank Industries. Evercore Group, Robert W. Baird & Co., and Goldman Sachs advised on the sale.

Covelya Group, manufacturer of advanced underwater technology, has reached a definitive agreement to be acquired by Kraken Robotics (TSX: PNG) for $615.0M. EV/Revenue was 7.78x. Piper Sandler advised on the sale.

Aludec, manufacturer of exterior and interior decorative parts, was acquired for EUR 200.0M by CIE Automotive (MAD: CIE). 

CJ Feed&Care, producer of animal feed, was acquired by De Heus Voeders for KRW 1.0T.

Private Placement Transactions💭 

Noetix, manufacturer of humanoid robotics solutions, raised CNY 1.0B of Series B venture funding led by Chendao Capital.

KargoBot, developer and provider of self-driving truck service, raised $100.0M of Series B venture funding led by Horizon Robotics (HKG: 09660) and Gaorang Ventures.

Gropyus, operator of a vertically integrated construction company, raised EUR 100.0M of venture funding from undisclosed investors.

GalBot, developer and manufacturer of humanoid robotics, raised CNY 2.5B of Series D venture funding from SAIC Motor, CITIC Construction, and Sinopec.

Rent2Cash, developer of rental management platform, raised EUR 100.0M of venture funding from undisclosed investors.

Grow Therapy, developer of mental healthcare platform, raised $150.0M of venture funding led by TCV and Goldman Sachs Asset Management at a pre-money valuation of $2.85B.

Flink, operator of grocery platform, raised EUR 100.0M of venture funding led by Prosus.

Ayar Labs, developer of optical interconnect technology, raised $500.0M of Series E venture funding led by Neuberger Berman at a pre-money valuation of $3.25B.

PLD Space, developer of an international space services platform, raised EUR 180.0M of Series E venture funding led by Mitsubishi Electric.

Oxa Autonomy, developer of AI based autonomous vehicle journey platform, raised $103.0M of Series D venture funding from bp ventures, nVentures, and IP Group.

Odds of the Day 🍒 

Polymarket traders are pricing in a 39% chance of the Iranian regime falling

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