In a rapidly-changing world of finance – increasingly led by artificial intelligence, algorithms and big data, Israeli startup ARX aims to advise publicly traded companies or mid to late-stage companies on IPO strategy and robust aftermarket support.
Founded by former IDF Unit 8200 members Yehuda Leibler and Rotem Gantz, as well as Nimrod Okon, who served in an elite forces unit in the IDF, ARX uses big data insights to advise companies that are in the process of offering their IPO to public markets or are looking to protect their existing position in capital markets.
ARX uses AI to track patterns in the market that could be an opportunity – or threat – to a public company, such as short sellers or disinformation campaigns, which ARX says are on the rise.
“By scanning and analyzing non-trivial data, we’re able to provide deep insights that ultimately create strategic growth and public credit for our clients,” Leibler declared.
GLOBAL INFLATION currently high: Traders work the floor of the New York Stock Exchange. (credit: REUTERS/BRENDAN MCDERMID)How does ARX protect publicly-traded companies?
Fueled by a rise in internet speculation and rumors, stocks have become subject to stark price movements based solely on sentiment driven by disinformation, rather than any financial fundamentals or company news.
In 2021, video games company Gamestop and movie theater company AMC were the first prominent examples of this irregular market activity after the stock prices soared to unrealistic prices following internet speculation. Prices can also fall to unreasonable levels based on this disinformation, as evidenced by a rise in losses.
“Research shows that the damage caused by fake news and disinformation attacks had reached about $78B by 2019, with half of that coming from attacks relating to the capital markets. And since 2019, those numbers have only gone up,” explained Okon. “We’re talking about massive damage, for which there hasn’t yet been a response. We have the ability to look at these threats through the lens of cyber professionals.”
The ARX founders attribute a rise in speculation following a stock market surge in 2021 to the rise in losses caused by disinformation, as short sellers – investors who bet on a fall in stock price – and speculators alike rush to potential market opportunities.
“You take a startup in the fields of cyber, fintech or biotech, and within one day they are transformed from sitting in coworking space in Ramat Gan to a public company with a prospectus, bankers, and gangs of short sellers,” Gantz says. “Our data shows quite clearly that Israeli companies, in particular, experience difficulties after go-public events.
So how can ARX and its solutions guide companies as they deal with obstacles related to being a publicly-traded company? Gantz says 21st-century companies must embrace big data and other technological revolutions in order to remain competitive.
“Whether stock exchanges, regulators, and bankers like it or not, trading is becoming increasingly digital, and less centralized. As with the Industrial Revolution, the Internet Revolution, and the Data Revolution, so too will the stock market change and become more technologically complex,” said Gantz.
