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The Nasdaq MarketSite in the Times Square neighborhood of New York, on Tuesday, May 31, 2022.

Michael Nagle | Bloomberg | Getty Images

Tech stocks rebounded from a disastrous 2022 and lifted the Nasdaq to one of its strongest years in the past two decades.

After last year’s 33% plunge, the tech-heavy Nasdaq finished 2023 up 43%, its best year since 2020, which was narrowly higher. The gain was also just shy of the index’s performance in 2009. Those are the only two years with bigger gains dating back to 2003, when stocks were coming out of the dot-com crash.

The Nasdaq is now just 6.5% below its record high it reached in November 2021.

Across the industry, the big story this year was a return to risk, driven by the Federal Reserve halting its interest rate hikes and a more stable outlook on inflation. Companies also benefited from the cost-cutting measures they put in place starting late last year to focus on efficiency and bolstering profit margins.

“Once you have a Fed that’s backing off, no mas, in terms of rate hikes, you can get back to the business of pricing companies properly — how much money do they make, what kind of multiple do you put on it,” Kevin Simpson, founder of Capital Wealth Planning, told CNBC’s “Halftime Report” on Tuesday. “It can continue into 2024.”

The Santa Claus rally can continue into 2024, says Capital Wealth's Kevin Simpson

While the tech industry got a big boost from the macro environment and the prospect of lower borrowing costs, the emergence of generative artificial intelligence drove excitement in the sector and pushed companies to invest in what’s viewed as the next big thing.

Nvidia was the big winner in the AI rush. The chipmaker’s stock price soared 239% in 2023, as large cloud vendors and heavily funded startups snapped up the company’s graphics processing units (GPUs), which are needed to train and run advanced AI models. In the first three quarters of 2023, Nvidia generated $17.5 billion in net income, up more than sixfold from the prior year. Revenue in the latest quarter tripled.

Jensen Huang, Nvidia’s CEO, said in March that AI’s “iPhone moment” has begun.

“Startups are racing to build disruptive products and business models, while incumbents are looking to respond,” Huang said at Nvidia’s developers conference. “Generative AI has triggered a sense of urgency in enterprises worldwide to develop AI strategies.”

‘Relatively early stages’

Consumers got to know about generative AI thanks to OpenAI’s ChatGPT, which the Microsoft-backed company released in late 2022. The chatbot allowed users to type in a few words of text and start a conversation that could produce sophisticated responses in an instant.

Developers started using generative AI to create tools for booking travel, creating marketing materials, enhancing customer service and even coding software. Microsoft, Google, Meta and Amazon touted their hefty investments in generative AI as they embedded the tech across product suites.

Amazon CEO Andy Jassy said on his company’s earnings call in October that generative AI will likely produce tens of billions of dollars in revenue for Amazon Web Services in the next few years, adding that Amazon is using the models to forecast inventory, establish transportation routes for drivers, help third-party sellers create product pages and help advertisers generate images.

“We have been surprised at the pace of growth in generative AI,” Jassy said. “Our generative AI business is growing very, very quickly. Almost by any measure it’s a pretty significant business for us already. And yet I would also say that companies are still in the relatively early stages.”

Amazon shares climbed 81% in 2023, their best year since 2015.

Microsoft investors enjoyed a rally this year unlike anything they’d seen since 2009, with shares of the software company climbing 58%.

In addition to its investment in OpenAI, Microsoft integrated the technology into products like Bing, Office and Windows. Copilot became the brand for its broad generative AI service, and CEO Satya Nadella described Microsoft last month as “the Copilot company.”

“Microsoft’s partnership with OpenAI and subsequent product innovation through 2023 has resulted in a market dynamic shift,” Michael Turrin, a Wells Fargo analyst who recommends buying the stock, wrote in a Dec. 20 note to clients. “Many now view MSFT as the outright leader in the early AI wars (even ahead of market share leader AWS).”

Meanwhile, Microsoft has been cranking out profits at a historic rate. In its latest earnings report, Microsoft said its gross margin exceeded 71% for the first time since 2013, when Steve Ballmer ran the company. Microsoft has found ways to more efficiently run its data centers and has lowered reliance on hardware, resulting in higher margins for the segment containing Windows, Xbox and search.

Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Altman delivered the keynote address at the first ever Open AI DevDay conference. 

Justin Sullivan | Getty Images

After Nvidia, the biggest stock pop among mega-cap tech companies was in shares of Meta, which jumped almost 200%. Nvidia and Meta were by far the two top performers in the S&P 500.

Meta’s rally was sparked in February, when CEO Mark Zuckerberg, who founded the company in 2004, said 2023 would be the company’s “year of efficiency” after the stock plummeted 64% in 2022 due largely to three straight quarters of declining revenue.

The company cut more than 20,000 jobs, proving to Wall Street it was serious about streamlining its expenses. Then growth returned as Facebook picked up market share in digital advertising. For the third quarter, Meta recorded expansion of 23%, its sharpest increase in two years. 

Where are the IPOs?

Like Meta, Uber wasn’t around during the dot-com crash. The ride-hailing company was founded in 2009, during the depths of the financial crisis, and became a tech darling in the ensuing years, when investors favored innovation and growth over profit.

Uber went public in 2019, but for a long time battled the notion that it could never be profitable because so much of its revenue went to paying drivers. But the economic model finally began to work late last year, for both its rideshare and food delivery businesses.

That all allowed Uber to achieve a major investor milestone earlier this month, when the stock was added to the S&P 500. Members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total, according to S&P’s rules. Uber reported net income of $221 million on $9.29 billion in revenue for its third quarter, and in the past four quarters altogether, it generated more than $1 billion in profit.

Uber shares climbed to a record this week and jumped 149% for the year. The stock, which is listed on the New York Stock Exchange, finished the year as the sixth-biggest gainer in the S&P 500.

Despite the tech rally in 2023, there was a dearth of new opportunities for public investors during the year. After a dismal 2022 for tech IPOs, very few names came to market in 2023. The three most notable IPOs — Instacart, Arm and Klaviyo — all took place during a one-week stretch in September.

For most late-stage companies in the IPO pipeline, more work needs to be done. The public market remains unwelcoming for cash-burning companies that have yet to show they can be sustainably profitable, which is a problem for the many startups that raised mountains of cash during the zero-interest days of 2020 and 2021.

Even for profitable software and internet companies, multiples have contracted, meaning the valuation startups achieved in the private market will require many of them to take a haircut when going public.

Byron Lichtenstein, a managing director at venture firm Insight Partners, called 2023 “the great reset.” He said the companies best positioned for IPOs are unlikely to debut until the back half of 2024 at the earliest. In the meantime, they’ll be making necessary preparations, such as hiring independent board members and spending on IT and accounting to make sure they’re ready.

“You have this dynamic of where expectations were in ’21 and the prices that were paid then,” Lichtenstein said in an interview. “We’re still dealing with a little bit of that hangover.”

—CNBC’s Jonathan Vanian contributed to this report

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From ‘Cockroach Award’ to the Big Board: Hinge Health’s unlikely path to IPO

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From 'Cockroach Award' to the Big Board: Hinge Health's unlikely path to IPO

Hinge Health co-founders Gabriel Mecklenburg (left) and Daniel Perez (right).

Courtesy of Hinge Health

At digital physical therapy startup Hinge Health, CEO Daniel Perez used to recognize hard-working employees with the “Cockroach Award,” a distinction that brought with it a “cockroach squad” t-shirt and a cash payout.

References to the insect were abundant at the company’s old headquarters in London, where a picture of a cockroach was prominently displayed on the wall. For much of Hinge’s 10-year history, the cockroach was the unofficial mascot. Staffers named it Flossy after the viral dance move “the floss.”

Perez relishes the symbolism. In his determination to build a company that will push through adversity, he’s encouraged employees to think of themselves like cockroaches, due to the creature’s grimy resilience and noted ability to survive harsh conditions.

“It was the identity of every individual in the company,” said Joshua Sturm, a vice president at Hinge from 2019 to 2024 and now chief revenue officer at cancer prevention startup Color Health. “We are all in this together, and no matter what happens, we are going to survive together.”

Perez and his 1,400-person workforce now face the ultimate test of their mettle. Hinge, which moved from London to San Francisco in 2017, is trying to go public at a time of such extreme economic uncertainty and market volatility that several companies, including online lender Klarna and ticket marketplace StubHub, have delayed their long-awaited IPOs.

Hinge filed its prospectus on March 10, announcing plans to trade on the New York Stock Exchange under the ticker symbol “HNGE.” Three weeks later, President Donald Trump announced a sweeping tariff policy that plunged U.S. markets into turmoil after tariff concerns had already pushed the Nasdaq to its worst quarter since 2022.

But Hinge. led by its 39-year old co-founder and CEO, appears determined to power through the chaos. Hinge declined to comment or make Perez available for an interview. 

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Going public was already going to be a risky endeavor for Hinge. The IPO market has been mostly dormant since late 2021, when soaring inflation and rising interest rates pushed investors out of risky assets. Within digital health, it’s been almost completely dead.

Health-tech companies have struggled to adapt to a more muted growth environment following the Covid pandemic, and many once promising business models haven’t panned out as planned.

The starkest example is virtual health company Teladoc, which has a market cap of just over $1 billion less than five years after buying digital health provider Livongo in a deal that valued the combined companies at $37 billion. Teladoc’s BetterHelp mental health unit has been a particularly troublesome business as paying users dropped off in the years following the pandemic.

Over time, Hinge’s Cockroach Award transitioned from a monthly prize to a quarterly distinction. The company phased it out entirely about a year ago in preparation for its next public-facing chapter, but the survive-at-all-costs mentality persists, according to current employees. Now, staffers are recognized with the “Movers Awards,” a nod to the company’s focus on movement.

“We have many decades of work ahead,” Perez wrote in a letter to investors in March. “We hope you join us on this journey.”

CNBC spoke to 13 current and former Hinge employees, investors, and people close to Perez for this story, some of whom asked not to be named in order to provide candid commentary.

‘I gave him terrible advice’

Hinge uses software to help patients treat acute musculoskeletal injuries, chronic pain and carry out post-surgery rehabilitation remotely. Large employers like Target and Morgan Stanley cover the costs so their employees can access Hinge’s app-based virtual physical therapy, as well as its wearable electrical nerve stimulation device called Enso. 

The company says its technology can help users manage pain, cut down health-care costs and reduce the need for surgery and opioids. Revenue increased 33% to $390.4 million last year, while its net loss narrowed to $11.9 million from $108.1 million a year earlier, according to the prospectus.

Hinge’s roster of clients expanded by 36% last year to 2,256, and the number of individual members jumped 44% to over 532,300, the filing said.

Hinge has raised more than $1 billion from investors including Tiger Global Management and Coatue Management, and it boasted a $6.2 billion valuation as of October 2021, the last time the company raised outside funding. The biggest institutional shareholders are venture firms Insight Partners and Atomico, which own 19% and 15% of the stock, respectively, according to the filing.

Daniel Perez, CEO of Hinge Health

Courtesy: Hinge Health

Perez and Gabriel Mecklenburg, Hinge’s executive chairman, started the company in 2014. The pair met while they were both pursuing PhDs in the U.K. — Perez at the University of Oxford and Mecklenburg at Imperial College London. They were distracted students, according to Perez’s twin brother, David. 

By the time they launched Hinge, Perez and Mecklenburg had already co-founded two other ventures together. One was the Oxbridge Biotech Roundtable, an organization that connected academics and industry experts. The other was Marblar, which worked to commercialize academic intellectual property.

Perez took a leave of absence from Oxford while working on Marblar and never returned. His brother wasn’t a fan of the decision initially.

“I gave him terrible advice,” said David Perez, a graduate of Yale Law School and partner at Perkins Coie in Seattle. “I was like, ‘I think you’re an idiot, I think you should focus on your PhD. Only an idiot would not finish a PhD at Oxford.'” 

The twins have two older siblings. Their mother immigrated from Cuba in 1968, followed 12 years later by their father. Their parents met in Miami, got married after just three dates, and are still together after more than 40 years. 

The family moved from Miami to Salt Lake City, Utah, in 1990. Perez’s mother was a substitute teacher and his father worked at restaurants as a dishwasher and busboy. David Perez said their father “worked around the clock” and used to call out orders in his sleep. 

“It wasn’t a lot of money, I think combined they made about $19,000 a year,” David Perez said. “But they stitched it together and raised four kids.” 

The twin boys were competitive, particularly when it came to academics and playing basketball in the driveway. David said his brother got “great grades” and always had an inclination toward science and medicine, graduating from high school at age 16 and then starting college at Westminster University, a small liberal arts school in Utah.

“I swear,” David Perez said, “there were times where the only punishment that my mom could issue that would have the sting was restricting our ability to do homework.”

Hit by a car

Perez was a student in the Honors College at Westminster, and he graduated with a degree in biology. Richard Badenhausen, dean of the Honors College, described Perez as an independent thinker and an ambitious student, especially for his age. 

“He didn’t care too much what people thought about him, which is a strength in my book,” Badenhausen said in an interview. 

When Perez was 13, he was hit by a car. He broke an arm and a leg, and had to be airlifted to a nearby hospital. After three surgeries and 12 months of rehab, he had a newfound interest in orthopedics and physical therapy. 

Mecklenburg had a serious injury of his own, tearing his anterior cruciate ligament (ACL) during a judo match, which also required a year of rehab, according to Hinge’s website.

One day in October 2014, the pair put their heads together and outlined the tools they wished were available while undergoing physical therapy. Musculoskeletal conditions affect as many as 1.7 billion people worldwide, according to Hinge’s prospectus, so there was no shortage of opportunities.

They had the early concept of Hinge within hours and a prototype ready by December of that year.

In Hinge’s early days, Perez and Mecklenburg would meet every Saturday morning to talk shop. Now, as they’ve aged and started families, they meet on Wednesday nights, according to colleagues. Perez welcomed his first child with his wife late last year. 

“Seeing the growth over the last six, seven, eight years has just been unbelievable,” said Jon Reynolds, a tech founder who contributed to Hinge’s seed funding round. “That comes down to the quality of Dan and Gabriel as leaders. They complement each other really well, and they’ve obviously got that mutual respect.”

Perez is a hands-on CEO who expects a lot from his staff. 

He’s direct, detail-oriented, opinionated, competitive and can be intense, according to current and former employees. But he’s committed to the mission and the wellbeing of his employees, they said.

“He’s one of those rare founder CEOs who I think can go all the way,” said Paul Kruszewski, a former Hinge employee who joined the company after it acquired his Canadian computer vision startup, Wrnch, in 2021. 

Hinge Health’s Enso product.

Courtesy: Hinge Health

Employees say Perez is a voracious reader, often finishing two to four books a month. That includes books about business and leadership, an important source of information given that Hinge was his first real job. He’s a fan of “The Innovator’s Prescription,” by Clayton Christensen and others, “Crossing the Chasm,” by Geoffrey Moore and “The Long Fix,” by Dr. Vivian Lee.

He also likes his staffers to read. Executives will often prepare to discuss chapters from a book in their meetings. 

“I’d come home and there’d be a package from Dan, and it’s a book,” said Sturm, who led partnerships and new market development at Hinge. “That was just the norm.”

Sturm, who has worked in the health-care and benefits space for around 30 years, said Hinge was very deliberate with hiring, so there wasn’t a lot of turnover among senior executives. He said Hinge’s recruitment process was the hardest he’s ever experienced. 

Another “Dan-ism,” as Sturm called it, is Hinge’s philosophy around writing. Perez has employees write memos, typically up to six pages long, instead of preparing slide decks or other materials ahead of meetings. Perez was inspired by a similar practice at Amazon, according to current and former employees, and sees it as a way to force employees to think through what they want to say instead of hiding behind bullet points.

Hinge’s memo culture can be an adjustment, particularly for new employees. Sturm said he thought the practice was “insane” at first, but ultimately came to appreciate it and said it improved his pitches.

“When you sort of sit back, you go, ‘You know actually, he wasn’t wrong,'” Sturm said. 

Hinge has come a long way since venture firm Atomico led the $8 million Series A investment in 2017. The London-based firm said in a blog post at the time that it was “extremely impressed by Daniel and Gabriel, and their determination to tackle a big problem in society.”

Carolina Brochado led the round, though she left Atomico a year later and now works at investment firm EQT Group. She said that getting Hinge to the brink of an IPO was a “one in a million chance,” but noted that the company has managed to build a sizable business in digital health despite having so many odds stacked against it.

“Lots of learnings along the way, of course, like a big tech correction in the middle,” Brochado said in an interview. “But it really is one of those rare examples of just an enormous market that was under penetrated.”

For David Perez, whose firm now serves as Hinge’s outside counsel, watching the startup grow has been “fascinating,” he said.

“I’m a partner at a major law firm,” he said, “and I am only the second most successful twin. But I think I’m okay with that.”

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Hims & Hers brings former Amazon executive into C-suite

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Hims & Hers brings former Amazon executive into C-suite

Bringing nearly 20 years of global experience at Amazon, Nader Kabbani is joining the executive leadership team to help the company further innovate on the delivery of affordable, seamless personalized care in the U.S. and globally.

Courtesy: Hims & Hers

Hims & Hers Health on Monday announced Nader Kabbani, a former Amazon executive who helped establish many of its health-care offerings, will join the telehealth company as its chief operations officer.

Kabbani spent nearly 20 years at Amazon, where he oversaw the launch of Amazon Pharmacy, the company’s acquisition of PillPack and its global Covid-19 Vaccination Task Force. He also helped stand up Amazon Kindle, Amazon Logistics, Amazon Music and Prime Video services.

Hims & Hers offers a range of direct-to-consumer treatments for conditions like erectile dysfunction and hair loss. The company, which saw revenue increase by 69% last year, said Kabbani will help the company continue to grow and scale.

“Nader’s experience scaling operations at the highest level makes him uniquely qualified to help us build the future of healthcare,” Hims and Hers CEO Andrew Dudum said in a statement.

In addition to his experience at Amazon, Kabbani also held executive leadership roles at the supply chain logistics company Flexport and the warehouse automation company Symbotic.

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Hims & Hers shares over six months.

Hims & Hers shares had a volatile start to the year, notching several double digit moves over the last few months. Investors have been paying close attention to the company’s weight loss offering, which was thrown into question after the U.S. Food and Drug Administration announced changes to the medication supply environment earlier this year.

Shares of the company closed up 23% on April 29, for instance, after Novo Nordisk said it would offer its weight loss drug Wegovy through telehealth providers like Hims & Hers.

The stock was down more than 1% on Monday but was up more than 70% year to date.

Hims & Hers is slated to report earnings after market close.

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Trump set to raise millions from crypto and memecoin this month

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Trump set to raise millions from crypto and memecoin this month

Jonathan Raa | Nurphoto | Getty Images

President Donald Trump has two crypto-focused dinners on the calendar this month — one aimed at deep-pocketed political donors, the other at memecoin millionaires. Both are poised to help him rake in millions.

The first event, a $1.5 million-per-plate fundraiser set for Monday, is among the priciest political fundraisers in recent memory. The second, on May 22, offers access to Trump’s inner circle not for cash — but for holders of the $TRUMP token.

Hosted by MAGA Inc., the “Crypto & AI Innovators Dinner” on May 5 features special guest David Sacks — who has been helping to rewrite the country’s crypto and artificial intelligence rules.

The committee receiving the funds, MAGA Inc. is a super PAC that supports Trump, but the president is constitutionally barred from running for a third term. It’s unclear how the PAC plans to spend the millions of dollars it is raising this spring at a series of dinners.

The crypto community has cheered Sacks’ growing influence in Washington, crediting him and other Trump-aligned appointees with a sweeping policy shift that’s already delivered a spate of regulatory wins across multiple federal agencies — in what many industry executives are describing as a 180 pivot from President Joe Biden.

The second gala dinner will be held at Trump National, the president’s private club in the Washington, D.C., area, later this month. The guest list will be decided by a blockchain-based contest run by the creators of the $TRUMP memetoken. Instead of cash, entry is based on how many tokens a user holds, with the top 220 promised dinner with Trump himself. The contest runs through May 12.

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The gala, which is black tie optional, offers a “VIP White House Tour” and special reception to the memecoin’s 25-biggest holders. The website hosts an active leaderboard displaying the usernames of the coin’s top buyers.

Accountable.US, a center-left watchdog group that investigates corporate and political influence, described the leaderboard contest as “the most nakedly corrupt self-enrichment scheme in U.S. presidential history,” warning it opens the door for wealthy donors — including potentially foreign actors — to buy access to the president, while personally enriching the Trump family.

Because crypto wallets are pseudonymous, unless a holder has publicly disclosed their wallet address, it is difficult to independently confirm the identities of the top token holders currently leading the contest.

In January, for example, crypto entrepreneur Justin Sun upped his token stake in another Trump-related crypto project. The Tron blockchain founder disclosed that he holds $75 million worth of World Liberty Financial’s token. A court filing the following month showed that Sun and the SEC were exploring a resolution to the regulator’s civil fraud case against the crypto entrepreneur.

The fine print of the $TRUMP contest does not guarantee access to the president.

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According to the site’s terms and conditions, Trump may not be able to attend and the event can be canceled “for any reason.” In that case, they’ll get a Trump NFT instead.

Still, the contest has supercharged demand for the coin — and lined the pockets of its creators. The $TRUMP token surged more than 50% after the gala was announced, boosting the paper value of wallets controlled by insiders and early backers.

Roughly 80% of the $TRUMP token supply is controlled by the Trump Organization and affiliates, according to the project’s website.

Since its launch in January, trading activity has generated more than $324 million in trading fees for insiders, Chainalysis found. These fees are generated through the token’s built-in mechanism that routes a percentage of each trade to wallets controlled by the project — wallets that, according to the website, are linked to the coin’s creators.

Insiders have agreed, however, to delay cashing out their share of tokens for at least another 90 days, according to the project’s public disclosures.

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