What you Need to Know for May 20th

Welcome back!

Markets were hit yesterday by high rates & persistently high oil. Despite all the AI excitement, we’re starting to see some impact from the US Iran conflict nearing its 3rd month. Let’s get right into it.

Here’s a look at the remaining earnings for this week.

• Wednesday: NVIDIA, Analog Devices, Lowe’s, TJX, Intuit, Target, Hasbro, e.l.f. Beauty, VF Corp

• Thursday: Walmart, Deere & Company, Ross Stores, Workday, Zoom, Deckers Outdoor, Webull, Take-Two Interactive, NetEase

• Friday: BJ's Wholesale, Booz Allen

Here’s a look at economic data this week (estimates are in quotations).

• Wednesday: Minutes of Fed's May FOMC meeting

• Thursday: Initial jobless claims (210,000), Housing starts (1.40M), Building permits (1.38M), Philadelphia Fed manufacturing survey (18.0), S&P flash U.S. services PMI (51.5), S&P flash U.S. manufacturing PMI (53.8)

• Friday: Consumer sentiment final (48.2), U.S. leading economic indicators (-0.2%)

Earnings Corner 💸 

• Home Depot $HD ( ▲ 0.88% ) revenue beat expectations at $41.8B vs. $41.5B, and EPS beat at $3.43. Revenue rose nearly 5% as resilient DIY spending, smaller home improvement projects, and continued growth from professional contractors supported demand despite a weak housing market and higher fuel costs. Sales also benefited from stronger spring demand and recent acquisitions that expanded Home Depot’s roofing and HVAC contractor businesses. This expansion helped total revenue beat estimates, even as comparable sales slightly missed expectations due to consumers continuing to delay larger renovation projects. The company reaffirmed full-year guidance despite ongoing housing and macro uncertainty.

• Cava $CAVA ( ▼ 2.22% ) top- and bottom-line beats occurred with revenue at $434M, driven by strong customer traffic, continued same-store sales growth, and rapid new restaurant expansion. Same-store sales rose 9.7% as value-focused pricing, digital ordering growth, and menu innovation helped drive higher traffic and engagement. Margins improved from sales leverage and a favorable mix, leading the company to raise guidance despite noting broader macro and geopolitical uncertainty around energy costs and consumer spending.

On The Move 📈 📉

• Warby Parker $WRBY ( ▼ 10.96% ) dropped to $25 after the market reacted negatively to the Google AI glasses partnership. This follows Co-CEO Dave Gilboa cutting his direct stake by over 71% earlier this month.

• Chewy $CHWY ( ▼ 9.11% ) slid to $20 after management flagged “stretched” pet owners at the JPMorgan TMT conference, signaling slowing demand. California’s AG also unsealed antitrust evidence naming Chewy in an alleged price fixing case.

• Agilysys $AGYS ( ▲ 12.45% ) rallied to $80 as AI fear faded for the hospitality software maker, with the CEO calling AI a tool to “meet and exceed” industry innovation demands. Q4 revenue and EPS topped estimates at $82.95M and $0.63.

• Astera Labs $ALAB ( ▲ 13.3% ) surged at the JPMorgan TMT conference after management flagged a multi-billion dollar optical networking opportunity. ALAB is up 36% YTD on the Nvidia NVLink Fusion partnership behind it.

• CleanSpark $CLSK ( ▲ 9.3% ) pumped to $14 as Wall Street looked through a Q2 EBITDA miss and focused on the companies pivot to AI data center infrastructure. Maxim and Macquarie both raised PTs to $22 as KBW also lifted its target to $16.

IPO Roundup 📍 

• YMTC, a Chinese state-backed 3D NAND maker, files for domestic IPO review. The company is valued at $22B and holds 11% of the global market share despite US trade restrictions.

• Lincoln International, a Chicago based middle market investment banking advisory firm is set to begin trading on May 20. The company priced its IPO in the upper half of the $18-$20 range, raising around $400M at a $1.94B valuation. Goldman Sachs and Morgan Stanley led the offering.

• SpaceX has chosen Goldman Sachs for the leading role on its IPO, with Morgan Stanley also as a lead bank and Bank of America, Citi, and JPMorgan in supporting roles. SpaceX is expected to file as soon as Wednesday, with shares set to begin trading June 12.

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Today’s Headlines 📖🍿 

• U.S. / Iran Peace Negotiations Stalled as Tehran Issues Defiant Proposal: Oil prices and market volatility indicators remained sensitive following a counter-proposal from Iran. The terms demand the removal of all U.S. forces from the region, the unfreezing of assets, and reparations—conditions similar to those previously dismissed by Washington, complicating hopes for a swift reopening of the Strait of Hormuz.

• U.S. Long Bond Yields Climb to Highest Closings Since 2007, Triggering Algorithmic Sell Signals Across Equities: Fixed-income markets experienced severe repricing as the 30-year U.S. Treasury yield touched 5.138% and the benchmark 10-year yield held near 4.61%. The sudden shift reflects deepening institutional anxiety that the Federal Reserve may be forced to keep interest rates elevated longer.

• Global Institutional Cash Levels Fall Below 4%: A Bank of America global fund manager survey revealed institutional cash allocations dropped sharply from 4.3% to 3.9% over the last four weeks.

• Digital Assets Suffer Sudden Liquidity Drain With Spot Bitcoin ETFs Recording Near-Half-Billion Outflows: U.S. spot Bitcoin exchange-traded funds registered $448 million in net capital outflows within a multi-day window.

• Crude Oil Benchmarks Keep Footing Firmly Above $100 Line Amid Stalled Diplomatic Impasse and Shipping Bottlenecks: Brent crude futures traded above $111 per barrel and West Texas Intermediate topped $103 on Tuesday, driven by the ongoing restrictions in the Strait of Hormuz.

• Drone Strikes Target Vital Energy Infrastructure in the United Arab Emirates and Saudi Arabia, Accelerating Global Inventory Drain: Fresh regional disruptions, including a reported drone strike targeting a UAE nuclear site and intercepted drone attacks over Saudi territory, have escalated supply concerns across European and Asian markets. Analysts warn that with nearly 20% of global petroleum transit compromised, international oil inventories are depleting at one of the fastest clips outside of historical emergency declarations.

• Ryanair CEO Predicts Airline Bankruptcies Across Europe: Michael O’Leary named Wizz Air and Air Baltic as failure candidates if the Strait of Hormuz remains restricted through November. He also ruled out any acquisitions, saying “there is nothing in Europe you’d want to buy,” but stated Ryanair would buy aircraft from any collapsed carriers.

• Google and Blackstone Launch a $25B AI Cloud Venture: Blackstone is taking majority ownership with $5B in equity, levered to $25B, in a new TPU-powered neocloud targeting 500MW of capacity by 2027. This directly challenges Nvidia-backed rival CoreWeave as hyperscalers race to monetize proprietary chip infrastructure.

• Musk Loses Lawsuit Against OpenAI: A federal jury in Oakland rejected Musk’s claims that OpenAI betrayed its nonprofit mission by becoming a for-profit business, finding he waited too long to sue. The decision clears a major obstacle as OpenAI prepares for a potential IPO; however, Musk has vowed to appeal.

• Blue Owl Co-Founder Ostrover Sells Commanders Stake as Blue Owl Shares Halve: The Josh Harris led group bought back Ostrover’s remaining position at a $9B valuation, up from $6B at purchase. While Blue Owl faces mounting pressures, Ostrover’s liquidation began in 2025.

• LIV Golf Prepares a Potential Chapter 11 After PIF Pulls Funding: The Saudi-backed league has burned an estimated $5B of PIF capital over four years and is preparing for a potential US bankruptcy filing at the season’s end in August if fundraising fails. The company has retained Gibson Dunn and Ducera Partners to pursue new investors.

• Roblox Announces First Ever Share Buyback: The board authorized up to $3B in share repurchases, with up to $1B planned over the next 12 months to partially offset dilution from employee equity grants. CFO Naveen Chopra said the move reflects confidence in the company’s long-term opportunity and the strength of its balance sheet and free cash flow.

• Standard Chartered to Eliminate 7,800 Corporate and Operational Roles in Aggressive Shift to AI: The Asia- and Africa-focused lender announced a major workforce reduction by 2028, systematically replacing lower-value back-office positions with automated artificial intelligence systems to lower its structural cost-to-income ratio.

• Fragile US-China Agreements Provide Cautious Market Relief Following Beijing Summit: Bilateral talks between President Trump and President Xi concluded with China committing to purchase at least $17 billion in U.S. agricultural products and establish non-sensitive trade boards, injecting temporary stability into global supply chains amidst broader geopolitical uncertainty.

• SpaceX Plans to Acquire Cursor 30 Days After its IPO: The $60B deal would close in July, following SpaceX’s expected June 12 debut at a $2T+ valuation with up to $75B in proceeds. If the acquisition falls through, SpaceX would owe Cursor a $10B cash breakup fee.

• HSBC Shelves $4B Private Credit Push Amid Retail Redemption Wave. The bank has quietly backed away from its aggressive mid-market lending expansion plans as rising borrower default rates and AI-related software sector concentration trigger an uptick in retail investor withdrawals across alternative asset managers.

• Zombie Status Looms as Astorg Struggles to Raise Flagship Buyout Fund. The fundraising crunch is intensifying for mid-tier European sponsors; LPs are refusing to roll over capital as Big Four PE sentiment hits a multi-year low over gridlocked exit activity and missing distributions.

• UK Moves to Scrap Post-2008 Financial Crisis Bank Rules. In a bid to boost London’s flagging competitiveness against Wall Street, British regulators are planning a sweeping rollback of core liquidity and capital requirements, matching a broader global shift toward financial deregulation.

• Feds Target Valuation Creep as BlackRock Fund Faces Manhattan DA Probe. The SEC and federal prosecutors are expanding their shadow over non-bank lending, launching a formal investigation into the valuation practices of BlackRock’s TCP Capital fund after a string of abrupt portfolio write-downs exposed how opaque marks are hiding real default rates from retail investors.

• The $863B Logjam: LPs Threaten Revolts Over Seven-Year Aging Buyouts. Pressure is boiling over for mega-cap sponsors as buyout funds aged seven years or older hit a staggering $863B in net asset value. Cash-starved allocators are drawing hard lines on new fund commitments until managers deliver actual distributions (DPI) over paper gains (IRR).

M&A Transactions💭 

Owen Mumford, manufacturer of medical devices, was acquired for GBP 150.0M by Embecta (NAS: EMBC).

Mindsprint, provider of digital transformation services, was acquired for $386.0M by Wipro (BOM: 507685). EV/Revenue was 2.84x. Avendus Capital advised on the sale.

Meridian Transportes Maritimos, operator of a maritime transport and nautical services company, was acquired for $444.49M by Adani Ports and Special Economic Zone (BOM: 532921).

Manx Telecom, provider of telecommunications and internet services, was acquired for GBP 500.0M by CVC DIF and JT Group.

The Solar Manufacturing Assets of Boviet Solar USA was acquired by INOX Clean Energy for $750.0M.  

MPC Kinetic, provider of construction and maintenance services, has reached a definitive agreement to be acquired for AUD 400.0M by GenusPlus Group (ASX: GNP). EV/EBITDA was 53.76x and EV/Revenue was 0.84x.

Sachem Capital (ASE: SACH), a real estate investment trust, has reached a definitive agreement to be acquired for $1.5B by Industrial Realty Group. EV/Net Income was 816.99x and EV/Revenue was 69.99x. Piper Sandler and Scout Risius Ross advised on the sale.

LiveRamp Holdings (NYS: RAMP), a technology company, has reached a definitive agreement to be acquired for $2.462B by Publicis Groupe (PAR: PUB). EV/EBITDA was 22.08x and EV/Revenue was 3.03x. Evercore Group advised on the sale.

Bharti Axa Life Insurance, provider of life insurance services, has reached a definitive agreement to be acquired for INR 35.0B by Prudential (LON: PRU).

Soleno Therapeutics, a biopharmaceutical company, was acquired for $2.95B by Neurocrine Biosciences (NAS: NBIX). EV/EBITDA was 33.38x and EV/Revenue was 10.36x. Centerview Partners and Guggenheim Partners advised on the sale.

Omnisys, developer of battle resource optimization systems, has reached a definitive agreement to be acquired for $200.0M by Ondas (NAS: ONDS).

NURNBERG Beteiligungs (ETR: NBG6), operates in financial services domain, was acquired for EUR 1.4B by Vienna Insurance Group (WBO: VIG). EV/EBITDA was 6.41x and EV/Revenue was 0.3x. ParkView Partners and Metzler advised on the sale.

Moore Nanotechnology Systems, manufacturer of ultra-precision machining systems, reached a definitive agreement to be acquired for $150.0M by Shibaura Machine Company. Houlihan Lokey advised on the sale.

Forsta, developer of feedback and analytics software, was acquired for $6.75B by Qualtrics. Barclays and Moelis & Company advised on the sale.

Dominion Energy (NYS: D), an integrated energy company, has reached a definitive agreement to be acquired for $118.54B by NextEra Energy (NYS: NEE). EV/EBITDA was 13.9x and EV/Revenue was 6.79x. J.P. Morgan and Goldman Sachs advised on the sale.

Dawon C&S, provider of information technology infrastructure, was acquired for KRW 11.4B by Entels (KRX: 069410).

Empower Semiconductor, manufacturer of semiconductors, has reached a definitive agreement to be acquired for $1.5B by Analog Devices (NAS: ADI). EV/EBITDA was 20.0x and EV/Revenue was 5.0x.

Linergy Power, manufacturer of lithium-ion battery systems, has reached a definitive agreement to be acquired for $241.1M by TDK (TKS: 6762).

Information Services (TSE: ISC), provider of registry and information management services, has reached a definitive agreement to be acquired for $1.2B by Plenary Americas. EV/EBITDA was 20.58x and EV/Revenue was 6.37x.

TwoDots, operator of a financial technology company, was acquired for $740.0M by an undisclosed investor.

Empower Semiconductor, manufacturer of semiconductors, has reached a definitive agreement to be acquired for $1.5B by Analog Devices (NAS: ADI).

Dominion Aesthetic Technologies, developer of laser medical devices, was acquired for $200.0M by BellaMia Technologies.

Private Placement Transactions💭 

Tomorrow.io, developer of a local weather forecasting platform, raised $220.0M of Series F venture funding led by Stonecourt Capital and HarbourVest Partners.

MiRus, developer of implantable medical devices, raised $1.5B of venture funding from Boston Scientific at a pre-money valuation of $2.91B.

Decart, developer of an AI infrastructure platform, raised $300.0M of venture funding led by Radical Ventures at a pre-money valuation of $3.7B.

Radar, developer of a real-time inventory management technology, raised $170.0M of Series B venture funding led by Nimble Partners and Gideon Strategic Partners at a pre-money valuation of $830.0M.

Nourish, developer of a telehealth platform, raised $100.0M of Series C venture funding led by Menlo Ventures at a pre-money valuation of $1.65B.

Fragile, provider of fragile building products, raised $100.0M of venture funding from undisclosed investors.

Armada, developer of an edge computing platform, raised $230.0M of Series B venture funding led by 8090 Industries, Overmatch Ventures, and BlackRock at a pre-money valuation of $1.77B. EV/EBITDA was 20.0x and EV/Revenue was 5.0x.

Odds of the Day 🍒 

Polymarket traders are pricing in a 24.9% chance of a Gavin Newsom being the Democratic Presidential Nominee for 2028.

Noteworthy Chart 🧭

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