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Deepwater’s 2024 Predictions
Apple, Google , Meta , Tesla

Over the last seven years, we’ve made a habit of offering a few predictions for the year ahead. Here’s what we’re anticipating for 2024:

  1. IWO will outperform the S&P500. The iShares Russell 2000 Growth ETF (IWO) will outperform the SPDR S&P 500 EFT Trust (SPY). Performance from the sub-$20B tech companies will outperform the large cap companies.
  2. Large cap technology platform will be acquisitive in 2024. Companies spent the last two years rationalizing spend and consolidating the number of vendors that they work with. We’ve seen the larger platform companies, like CRWD, PANW, and DDOG outperform in 2023, as their customers turned to them for more and more products in their portfolio. We think these companies will be acquisitive in the coming year as they continue to add point solutions to their platforms.
  3. Doug Clinton’s Intelligent Alpha AI powered investment strategies outperform their major market benchmarks.
  4. Apple will bring generative AI to Siri. Apple’s Ajax foundation model will power a generative AI version of Siri (likely announced at WWDC), adding more personalization and natural conversation to Siri.
  5. Apple will not announce any additional devices in the Vision product line. It has been reported Apple is already working on a cheaper ($1,500), less advanced version of the soon to be released Vision Pro headset. We believe Vision Pro needs time to gain traction with developers in the market before a lesser model is released. We expect Apple will sell between 400k-500k Vision Pro’s in 2024.
  6. Apple will acquire Peloton. Apple will look to bolster their workout segment in 2024 by adding fitness equipment to compliment the Watch and fitness tracking software. Peloton has a loyal subscriber base of about 3 million users that will add about $1.7B to Apple’s subscription revenue, additionally this fits well into Apple’s continued investment in health and wellness.
  7. The Tesla Robotaxi will not be announced. In 2024, I believe its in Tesla’s best interest to stay quiet on the Robotaxi. The new vehicle’s selling “feature” is its price and Tesla showcasing the upcoming vehicle would likely have a cooling effect on current low-priced Model 3 sales, a risk not worth taking in a year where EV sales will continue to muted. On top of that, the car will likely be produced in Giga Mexico which we believe won’t be operational until 2027.
  8. Tesla will maintain US EV market share. While most investors expect Tesla to lose share in 2024 given they have almost 60% US market share today, we believe the company will maintain share as traditional car makers are slowing their investments in EVs.
  9. While EVs growth will slow in 2024, it will rebound in 2025. We expect EV deliveries in the US to grow by about 25% in 2024, down from over 40% in 2023. We expect growth to reaccelerate in 2025 as consumer optimism around the category improves along with affordability.
  10. The IPO market returns to 2019 levels. This year saw 153 IPOs, down from 181 the year prior. We think the number of IPOs will climb above 200 in 2024, being closer to 2019 levels.
  11. The anticipation of GTA VI makes TTWO the best performing US gaming stock in 2024. In December, Rockstar Games released the trailer for GTA VI, citing a 2025 release date. Given company commentary, it seems likely the game will be released in the first quarter of calendar 2025. As the release date approaches, we think shares of TTWO will outperform its US-peers EA and RBLX.
  12. Reddit will be acquired for their data. A company with a LLM will buy Reddit to train its model from.
  13. AI will negatively impact the 2024 Presidential Election. Intentionally misleading content will be released to interfere with the election (e.g., deepfakes)

A look back at our 2023 predictions:

We went 8.5 for 10 on our 2023 predictions.

  1. We believe that FAANG will outperform the S&P in 2023. Got it. While it’s almost passé to talk about the FAANG now, a year ago it was still relevant. Overall the FAANG is up 88% in 2023 while the S&P is up 24%. FAANG disbanded and the newly formed Magnificent 7 which is up is up 115% YTD.  The Mag 7 carried the S&P 500, outperforming it by 5x. The Mag 7 went on a historic run powered by AI, Meta and Tesla.
  2. Apple will show its MR headset in late 2023. Got it. Apple announced Vision Pro during their June WWDC. It will be released in February or March of 2024 and comes with a $3,500 price tag.
  3. Tesla will wait until 2024 to announce Model 2. Missed. The market has now come to an agreement and is now calling Model 2, Robotaxi. Our revised prediction is we will see the product previewed in 2025.
  4. F-150 Lightning will outsell Cybertruck in 2023. Got it. Ford delivered about 25k F-150 Lightnings compared to less than 100 Cybertrucks.
  5. Global EV sales will be a disappointment in 2023 given a slowdown in the broader new car market. Got it. High interest rates put a significant damper on EV sales this year. Tesla’s delivery growth went from 40% in 2022 to what will likely be 37% in 2023. It wasn’t only Tesla that saw the deceleration, 4 of the top 6 automakers announced plans to slow their EV production in 2024 given demand for EV’s in 2023 slowed.
  6. Private equity will be active in taking tech companies private in 2023. Got it. Private equity take-private deals hit a 16-year high. There were over 100 public equity teak-private deals in 2023, that compares to 79 in 2022, 81 in 2021, 71 in 2020, and 69 in 2019. We counted 8 tech deals above $2B, including Toshiba ($13.6B), Qualtrics ($13B), Worldpay ($12.7B), Amplexor Life Sciences ($8B), CVent ($4.6B), EngageSmart ($4.6B), Virgin Pulse ($3B), and Duck Creek Technologies ($2.6B). While there were more deals, the average value of each deal on a revenue multiple was about 35% less in 2023 over 2022.
  7. A wave of unicorns will go bankrupt. Got it. We saw promising names like WeWork (peaked at $50B), Bird (peaked at $2.5B), Olive AI (peaked at $4B), Convoy (peaked at $3.8B), and Plastiq (peaked at $5B).
  8. A thought on the Macro. Got it. We were correct that the market missed the year end interest rate outlook, although the market was close, with rates ending at 5.5% compared to expectations for it to end at 5.25%. As for the market indexes, we were correct that NASDAQ would rebound. The NASDAQ was up 44%, the S&P was up 24%, Russell 2000 was up 16%, and the Dow Jones was up 13%.
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