🎙️ Endless Patience

The best-performing sector in 2024? It ain’t tech.

Utilities takes the cake so far. In March, it was the worst sector in 2024. At least for now, it’s the top performer.

On Thursday, almost every major group in the S&P 500 gained, with the benchmark hitting its 39th record in 2024. Tech rose sharply. Bitcoin was up. Gold kept rising, too, as traders bet that more rate cuts would boost the precious metal’s appeal.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• The clean jet fuel tech winning over Wall Street

• Messi drives a wealth boom in U.S. soccer

This, and more, in just 5 minutes to read.

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In The News

✈️ The Clean Jet Fuel Technology Winning Over Wall Street

A startup doing something you probably haven’t heard before, “industrial photosynthesis,” has raised $645 million. In layperson’s terms, it’s making cleaner jet fuel, and investors are paying close attention.

Twelve, a carbon transformation company, has raised $400 million in project equity led by TPG Rise Climate, $200 million in Series C financing, and $45 million in credit facilities.

The investment, which values Twelve at over $1 billion, is one of the largest investments in clean jet fuel ever. Key investors include TPG, Alaska Airlines, Capricorn Investment Group, Pulse Fund, and Fifth Wall.

How it works: Twelve’s E-jet fuel uses carbon transformation technology, which converts carbon dioxide, water, and renewable energy into sustainable aviation fuel. The Wall Street Journal reports that the process can achieve up to 90% lower lifecycle emissions than conventional fossil fuels.

• The first plane, in Washington state, will make roughly 50,000 gallons annually when it starts operating next year. “Production of the new fuel won’t make a dent in the 100 billion gallon a year jet-fuel market for at least another decade,” the WSJ reports, “but capacity is growing across the industry.
  

• One of Twelve’s investors said, “This actually has a shot at eventually replacing fossil fuels.”

Origin: Twelve was founded in 2015 at Stanford's business school. Its name comes from the earth's most abundant form of carbon, the isotope carbon-12. 

• Twelve’s tech also makes hydrocarbon products for anything from plastics to laundry detergent, which has intrigued Procter & Gamble and Mercedes-Benz, among other companies.

Why it matters:

The development is part of a larger trend of investment in eFuels and synthetic fuels to address emissions in the aviation industry, which has contributed around 4% to the Earth’s changing climate by most estimates.

Moving quickly: The rise in sustainable aviation fuel is significant on several levels, notably because it represents a major step toward decarbonizing the aviation industry, one of the hardest sectors to abate. 

The large investment also indicates growing confidence in eFuel technologies as a viable long-term solution for sustainable aviation. And that major investors and airlines are involved suggests a shift in the industry toward more sustainable practices, which are expected to be much more cost-effective over time. 

• “We’re trying to move as quickly as we can to bring supply to the market,” Twelve’s CEO said.

Read more

More Headlines

📈 Gold keeps soaring, up 27% in 2024 and setting more new all-time highs

👟 Nike veteran Elliott Hill to replace Donahoe as CEO; shares jump

📉 China's venture capital collapse

💡 The most important interest rate

💰 Britain’s ultra-wealthy threaten to exit en masse ahead of proposed tax changes

✈️ Boeing strike has already cost the company and its workers over $572 million

⚽ Messi Fuels a Wealth Boom in U.S. Soccer

The Messi effect rages on. Since the global soccer superstar joined Major League Soccer’s Inter Miami last year, MLS team values have surged $3.2 billion.

The Argentine star, 37, has driven unprecedented growth to his team and the league. Inter Miami became the most popular American sports team on social media. Revenue has grown nearly four-fold to $200 million. Fans have broken attendance records, and Messi’s Miami jersey is the world’s bestseller. 

Messi effect, year 2: Messi, the first soccer player to rank as Americans’ favorite athlete, is making soccer in the U.S. cool. The “Messi effect” could help Inter Miami’s team value rise to $2 billion by 2025, a three-fold jump from 2022. Ticket prices explode wherever he plays — in Miami or on the road. Amid the frenzy, Inter Miami is building a new $425 million stadium. 

But the MLS is also grappling with how to move on from Messi once he retires. (Messi’s contract expires at the end of next season.) 

How can the league sustain its growth and popularity? Companies face a similar question when a superstar CEO is guiding a resurgence but is nearing the end of their career. For starters, the league hopes to parlay the World Cup — coming to North America in 2026 — into lasting change.

Why it matters:

Despite the Messi effect, U.S. soccer’s popularity remains well behind that of American sports such as football, basketball, and baseball. 

The league is counting on Messi’s fame and other stars to follow him. After he retires, Messi will have a 10% stake in Inter Miami, or roughly $200 million. He earns $60 million through the team and another $70 million (or more) from endorsements, putting his total compensation at more than $130 million. Messi, who signed with Miami in July 2023, reportedly rejected an offer from Saudi Arabia worth $400 million annually. 

By the numbers: Messi might already be a billionaire. By late next year, he’ll have earned $1.6 billion throughout his career. He’s worth the price tag because he attracts so many eyeballs and revenue: Inter Miami will earn about $55 million this season on endorsements alone, and game-day ticket sales, food, and apparel are the team’s largest revenue stream. 

• About 4% of the club’s annual revenue comes from broadcast rights, including proceeds from MLS’ 10-year, $2.5 billion deal with AppleTV+. 

Endless patience: Few people truly know how profitable MLS teams are—they don’t disclose their income statements. However, the league states that its clubs are worth $20 billion combined, a seven-fold increase in the past decade. 

The league now has 30 teams, up from 10 in 2004. Egyptian billionaire investor Mohamed Mansour paid about $500 million to make San Diego FC a new expansion team next year. 

• “Could US soccer become really profitable?” a University of Michigan sports management professor specializing in the business of soccer told Bloomberg. “One of the hallmarks of billionaires is that they have endless patience.”

Read more

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Quick Poll

On Wednesday, we asked: How has your use of ETFs changed over the past few years?

— About half of investors have been investing more in ETFs over the past few years, while only one-fifth are investing less in ETFs. The other third of respondents said there has been no change to their use of ETFs in recent years.

— One ETF fan said: “Low fees, intraday trading, and tax loss harvesting...what's not to like?” Another: “Once I found out about ETFs, I moved all my mutual funds to ETFs. Managers can’t outperform the market.”

— One investor has long been invested in index funds, with no plan to change that strategy anytime soon. “I've had Vanguard index funds for 5 or 6 years at least. I'm holding, paying off my house.”

See you next time!

That's it for today on We Study Markets!

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