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Discount retailer B&M European Value Retail has performed outstandingly in the past year as evidenced in today’s preliminary results. Profits are up 108% from £252 million in financial year 2020 to £525 million in the past 12 months. It has warned that, thanks to its own success, like-for-like sales this coming year will probably be lower.
B&M seems to have bucked two trends in the past year. The first is the fallout of the coronavirus crisis which has impacted heavily on physical stores. Although B&M was able to remain open throughout, restrictions on customers and extra safety measures won’t have helped. As many retailers demonstrate, overcoming this headwind alone is tough.
But the other major trend it is bucking is the secular decline of high street retail. In a world where Amazon and the internet increasingly dominates, B&M has found a niche as a bargain-hunters palace. Customers flock to the retailer for its supplies of affordable ‘dupes’ of furniture and other products that can sometimes cost over four times more in other retailers. Today’s numbers suggest this is a winning formula.
With 43 new store openings in the last year, and the addition of over 7,000 new employees, the firm seems set to become a major presence in the UK physical retail space. Beyond the UK though it is also expanding in other markets such as France, where they will hope to replicate some of the success witnessed in Britain.
Zoom’s first quarter earnings beat all expectations, with bumper 191% sales growth, an impressive showing for a firm that was not well-known just over a year ago. But its good performance belies difficulties ahead that are already reflecting in the share price.
Zoom’s shares are down 3% so far this year vs nearly 12% growth of its wider index the S&P 500. While this is a symptom of the wider tech reversal as value stocks turn, it is also indicative of uncertainty from investors as to the firm’s future success.
Zoom was not a household name just over a year ago – its spectacular arrival in the homes of millions was largely thanks to the mass shift to home working caused by the pandemic, and the ease of use of its software. That shift is now showing signs of reversal as vaccines lead people back to the office.
The firm has recently announced ‘Zoom Rooms’ – in-office conferencing hardware – in an attempt to bridge the gap to workplaces. But the sheer scale of Zoom’s success has been that it was able to be used by large numbers of customers on any device they needed. A physical hardware offering is a very different proposal, one that may face stiffer competition.
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Wizz Air’s results make for grim reading. It has suffered some €482m losses in the past year, and passenger loads are down 75%. The firm is still not highly optimistic of a bounce back in demand in 2022 and expects to continue lossmaking.
While it says it has the ability to adapt its capacity quickly, today’s results suggest it doesn’t expect demand to pick up to anywhere near normal levels in 2022. Despite this, its share price has jumped in early trading, as investors digest its resilient cash position. Management says it sees no need to take measures to sustain liquidity, which marks it apart from some debt-laden competitors. With substantial cash holdings it would seem prepared to hold on for now.
Air travel generally is still a long way off from normal, but the firm’s position as a Europe-only carrier helps its cause. While vaccine progress worldwide is still slow, in Europe it is gathering pace, and this is reflected in a positive outlook for 2023.
“That being said, its future success is contingent on vaccine efficacy being sustained in the long-term, to keep air travel open for good. Whether or not the vaccines can help European air travel open up more quickly than Wizz Air’s downbeat expectations suggest, remains to be seen.
Brent crude oil prices rose over US$70/bbl for the first time since 2019, as OPEC Plus agreed at its meeting today to continue its gradual ramp up of supply as it seeks to meet rebounding global demand.
Oil prices are being boosted by the return of global economic growth, with inventories now normalising back to long-term average levels. OPEC Plus’ continued supply restraint is also another key factor. Meanwhile, a weaker dollar is providing further impetus, whilst demand is also being boosted by investors increasingly looking for a hedge to rising inflation.
Although solid gains have already been made so far, we are positive about commodity prices. It is the best performing asset class after cryptoassets this year (the Bloomberg commodity index is up +21% YTD while Bitcoin is up +26%), and within commodities, we think oil prices are well supported. With spot prices well-above consensus US$64-5/bbl for this year and next, we see further upside to analysts’ earnings estimates for the energy sector, which is already the best performer this year.
Of course, significant oil price upside may be capped by OPEC Plus’ continued c7% excess production and the outlook for potentially increased Iranian exports and US shale supply. However, the story is far from done as the global economy continues to recover from the pandemic.
Nvidia has been one of the standout winners of lockdown, with demand for its processors and graphics cards soaring throughout 2020 and into this year, and it has beaten estimates on both revenue and earnings in the first quarter.
Of particular note alongside its core business is its move into the cryptoasset world – the group said it made sales of $155m to cryptoasset miners, and that its new dedicated cryptoasset mining chip could help tackle the supply shortage in this sector.
“The shares were muted in after-hours trading, and that’s no wonder given its dramatic share price gains over the last year. It has outpaced most other stocks of a similar size, trebling its share price from the March 2020 low point, and the expected graphics card shortfall caused by a lack of semiconductors will impact the business this year.
“That said, demand for its products – which are vital components of an increasing amount of technology – is only likely to grow, it is completing a mega merger with ARM, and its shares are still below consensus price targets, so there are a lot of potential positives.”
The UK has always been known as a nation of pet lovers, but that kicked up a notch or two during lockdown.
The number of pets in the UK surged an estimated 8% in the past year, which has led to a boom in sales at Pets at Home, the nation’s largest pet care provider.
Pets at Home believe that enlarged market could be worth £600m in revenue – or 50% of current levels – over the medium term.
Those figures are not beyond the realms of fantasy. These new owners will need vet services, toys, grooming equipment and food for the lifespan of their pets, leaving Pets at Home with years of repeat business if it grasps the opportunity.
Germany’s improving GfK June consumer climate indicator underlines the growth recovery outlook in Europe’s largest economy, and helps support the recent strong DAX performance.
The consumer indicator improved modestly to -7.0, versus -8.6 last month and a recent February low of -15.5, helped by the rapid acceleration in the vaccination program. Over 40% of the population have now received at least one vaccination dose, near double the proportion a month ago. With private consumption 50% of GDP, we expect the consumer to increasingly lead the country’s recovery from its ‘double dip’ COVID recession. GDP fell 1.8% QoQ in Q1, and we see a +1.5% consumer-led rebound in Q2.
The DAX index is up 12.6% this year, outperforming the 10% rise of global equities. We see further economic recovery progress driving more global investor interest and equity market outperformance.
The mood music surrounding Royal Mail has totally changed in the past 6-12 months.
A year ago, the postal service was fighting off the unions over pay and working conditions as well as trying to cope with the terminal decline of letter deliveries.
“But now, following a deal with the unions and soaring revenues on the back of increased parcel deliveries during the pandemic, things are looking very different.
In fact, analysts are climbing over themselves to slap ‘buy’ ratings on Royal Mail, which looks likely to rejoin the FTSE 100 when the quarterly reshuffle takes places next week.
While the outlook for Royal Mail is looking much more positive than it was, we would also urge investors not to get too carried away. Yes, parcel volumes have increased significantly, which has led to bumper profits, but that may mean that there is less potential future upside.
Marks & Spencer has had plenty of false dawns over the years, so you can forgive shareholders for rolling their eyes when the board using language such as ‘forging a reshaped M&S’.
Turnaround expert after turnaround expert has tried to revive its failing clothing business, but the reality is, food became central to the retailer’s offering years ago. Its full-year results confirm that, with Marks posting another strong year for food, helped by its promising tie-up with online grocer Ocado, and its clothing and home division (C&H) once again disappointing.
Admittedly, it is harsh to judge a firm based on their performance during a global pandemic and when many of its stores were closed, but the reality is that Marks’ C&H division had been declining in popularity years before coronavirus came along.
That said, there has been a strong uptick in online C&H sales in the past year, but one wonders whether Marks will double down on food if this latest attempt to resuscitate its C&H business goes the same way as the others.
Kingfisher has been one of the relatively few businesses to have thrived during the pandemic, as lockdown led to a surge in home improvement projects.
But have we reached peak DIY? Kingfisher thinks we might have, predicting sales growth to roll back in the second half of the year.
Regardless though, Kingfisher is in a relatively strong position compared to many retailers and has made good progress on its online offering, which should hold it in good stead.
While a dip in sales is almost inevitable now the economy has reopened, Kingfisher’s medium-to-long term goal must be to find ways of maintaining sales and keep consumers coming back.
The US Federal Reserve is due to release minutes from its April meeting at 2pm ET today. The market will focus keenly on any clues to the timing of a reduction (‘tapering’) in bond buying, and an ultimate increase in interest rates moving higher.
Pressure has already been building, with both reported inflation and market expectations soaring above the Fed’s average 2% inflation target, and boosting broader market volatility. Last week’s jump in inflation to 4.2% will only have added to that pressure.
Nonetheless, we expect the Fed to remain consistent in viewing the current inflation spike as transitory, whilst waiting for signs of a stronger labor market before considering tapering. Anything different is likely to add to current market volatility.
A tapering announcement is coming by the end of this year, but we don’t think the economy – or the Fed – is quite there yet.”
We expect the first revision of Europe’s’ Q1 GDP ‘double-dip’ recession to be positive, easing to -0.6% QoQ, and setting up for a strong Q2 recovery.
We are also looking ahead to the Friday purchasing managers index data for further evidence of Europe’s building recovery, as regional vaccination rates have surged and economies are re-opening.
We expect this to drive renewed interest in European assets, relative to the rest of the world, and helped by their cheaper valuations and more cyclical equity markets.
The world’s second largest economy reported decelerating but strong growth in April, helped by the rebounding global economy as it laps the virus crisis lows. Industrial production rose 9.8% year on year, whilst fixed asset investment (YTD) rose 19.9%. However, there were signs that the domestic consumer recovery has further to catch up, with Chinese retail sales growing short of expectations at 17.7% year on year.
That being said, this is a strong foundation, with the Chinese economy expected to grow 8.5% this year – leading the global rebound. This swell will continue to support commodity prices, due to China’s status as the world’s largest raw materials importer; as well as aiding the recovery of the European economy, as the continent’s largest trade partner.
Many large European companies will benefit, with big expected winners including miners BHP (62% of 2020 revenues from China) and Rio Tinto (58%), tech names Infineon (34%), Reply (20%), ASML (17%), and luxury stocks Swatch (44%), Tod’s (31%), Richemont (23%), and BMW (18%).
In order to turn a profit in the thin-margin budget end of the airline industry you need vast numbers of passengers.
Clearly, that’s been impossible for nearly 14 months now, due to various governments’ Covid travel restrictions, which have taken a toll on Ryanair’s balance sheet.
Its debt levels have soared 28% to €5.4bn in the year to 31 March due to an 81% fall in both revenue and passenger numbers.
The problem for Ryanair – and indeed all carriers – is that they need to drastically increase passenger numbers in order to pay back the debts they have piled on during the past 14 months.
“The budget airline expects passenger numbers to be in the range of 50-80% of pre-Covid levels in the coming year. If you’re a half-glass-full person, you’ll see these forecasts as a sign that the industry is in recovery mode.
“However, if you’re more pessimistic, you might see it as a sign that it’ll be the middle of the decade before the damage caused by the pandemic has been erased from balance sheets.”
Disney announced its Q2 earnings today of USD$0.79 per share on revenue of USD$15.61 billion, compared to analyst expectations of USD$0.28 per share on revenue of USD$15.87 billion.
Disney has experienced a robust past six months. Not only from its successful Disney+ streaming platform which continues to bite at the tail of rival Netflix, but also the recent news that it re-opened its adventure theme parks in April 2021.
The Disney+ streaming platform has grown its subscriber base to 103 million paid subscribers, lower than the 109 million expected this quarter. Disney anticipates the platform to reach between 230 million and 260 million global subscribers by the end of the fiscal year 2024.
These numbers are, in part, attributed to the easing of restrictions worldwide, meaning that the streaming side of Disney’s business has begun to slow down as demand decreases. In terms of outlook, the company is expected to aggressively continue to build Disney+’s new original content flow in order to somewhat sustain this growth.
Four of Disney’s adventure theme parks in California, Florida, Shanghai and Hong Kong are now open again. Despite this, the company’s park revenue decreased to USD$3.2 billion, compared to the previous quarter of USD$3.58 billion.
These numbers are, of course, heavily reliant on the rate of vaccinations across the US. So far, President Joe Biden has been successful at maintaining the country’s vaccine roll-out, which will only play favourably for Disney moving forward in 2021, despite weaker-than-expected earnings this quarter.
Airbnb announced its Q1 earnings today of USD$-1.95 per share on revenue of USD$886.9 billion, compared to analyst expectations of USD$-1.15 per share on revenue of USD$714 million.
Despite international travel restrictions still in place across the globe, Airbnb has demonstrated resilience in its booking numbers, with domestic travel and long term stays responsible for driving revenue in Q1. Airbnb reported 64.4 million nights and experiences booked, illustrating an increase of 39 per cent from Q4.
As the economic upcycle preserves, we can anticipate Airbnb to be a benefactor of the travel industry’s resurgence, especially with the unique and quirky nature of the stays available on the platform.
With significant customer brand recognition, Airbnb currently dominates the holiday rental market, despite leering competition from Booking.com and TripAdvisor. The company’s rentals are currently available in over 100,000 cities across the world, so it’s expected that Airbnb will continue to be the go-to provider for travel throughout 2021 and 2022.
Airbnb’s first quarter results are very much a mixed bag. On the one hand, it smashed expectations for revenue and booking, but on the other, losses were more than three times higher than consensus.
Of course, these are not normal conditions, and it’s perhaps unfair to point to larger-than-expected losses after 14 grueling months of strict travel restrictions.
But looking forward, we expect both Airbnb’s revenue and bookings to increase and losses to shrink as countries loosen their rules around letting in foreign tourists.
However, as I have said before, we are months – if not years – away from seeing the travel and tourism sector back to the way we know it. That means shareholders should probably temper their expectations from these firms.
“Bitcoin, ethereum and other cryptoassets are entering correction territory now, having dropped more than 20% from peak in most cases.
The sell-off is being driven by a number of factors; valuations were at or near all-time highs earlier this month, so there will naturally be some profit-taking, while we are also seeing a general sell-off among risk assets – such as technology stocks – as economies start to unlock post the pandemic and investors fret over potential rate rises and higher inflation.
However, for many cryptoassets such as bitcoin and ethereum, the long-term story has not changed. This emerging asset class continues to revolutionise many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for cryptoassets remain as solid as ever.
Indeed, we would expect to see buyers return to bitcoin, ethereum and peers in the next few weeks to take advantage of lower prices. Importantly, we continue to see higher lows, as well as higher highs, for cryptoassets as more investors enter this asset class, and we do not expect that trend to change.
Burberry’s recovery from coronavirus is accelerating and the firm is now moving on from merely mitigating the impact of the pandemic.
Sales are soaring and are just 5% lower in the fourth quarter than they were in the same period of 2019 – the year before Covid – with China, Korea and the US driving growth.
Its decision to reintroduce its dividend is the board’s way of saying that the worst of pandemic is behind it and that growth is now the main item on the agenda.
However, with revenue down 11% year-on-year and operating profit down 9% compared to last go, there is still some way to go before its recovery is complete.
Investors will also want to keep one eye on what is happening in China, where the luxury fashion brand is experiencing a boycott by consumers over its decision to ban using cotton produced in Xinjiang over human rights concerns.
China is such a key market for Burberry that the firm cannot afford the situation to get out of control.
The much anticipated US April inflation figures came significantly higher than forecast across the board. This will boost expectations for an earlier-than-expected tightening of Fed monetary policy, higher long-term bond yields, and accelerate the investor rotation away from the high-flying tech sector and towards cyclicals and value. We are also likely to see higher market uncertainty and volatility, especially after the double-digit equity gains already seen this year.
We see the UK and Europe as well-placed to weather any increase in market volatility. The regional economic recovery is becoming increasingly clear – the earnings rebound is now leading the US, whilst equity valuations remain significantly cheaper. Indices also have a greater weight towards the cyclical and value sectors – such as financials, commodities, and industrials – that will benefit from a reflationary environment of both higher growth and inflation.
Palantir Technologies announced its Q1 earnings today of USD$0.04 per share on revenue of USD$341 million, compared to analyst expectations of USD$0.04 per share on revenue of USD$332.31 million.
Palantir Technologies has felt the full impact of the broad decline in tech stocks, especially as inflation fears rise and bond yields slowly creep higher this year. The company’s stock traded as high as USD$39 a share in January 2021, and has since lost around 48 per cent trading at USD$20.21.
Palantir Technologies works simultaneously with government agencies, with 56 per cent of its revenue in 2020 coming from government contracts. In this report, US government revenue grew 83 per cent year-over-year. If the company continues to renew and gain new contacts in this industry, such as its contract with the UK Royal Navy, it will be in a solid position to increase its profits and growth rates, moving forward.
There was an air of disappointment across the board when Palantir Technologies reported lower-than-expected full-year revenue guidance for 2021 in its Q4 report. This report illustrates no change on that outlook, with the company still projecting growth of 30 per cent a year from 2021 through till 2025.
Online gaming platform Roblox announced its Q1 earnings today of USD$-0.46 per share on revenue of USD$387 million, compared to analyst expectations of USD$-0.21 per share on revenue of USD$490 million.
This is Roblox’s first earnings report as a public limited company, which depicts huge active users and booking growth year-over-year. The company’s share price dropped around 8 per cent since its listing in March 2021, and is now trading up around 4 per cent out of hours.
The gaming industry gains tremendous traction from its users filming and posting on YouTube, as is evident with Roblox, which has experienced a significant amount of organic growth, receiving more than 100 million views on videos alone.
In 2020, Roblox’s daily active users nearly doubled to 32.6 million, and this figure has reached 42.1 million for this quarter alone. This number of active users demonstrates a remarkable opportunity for Roblox to generate a significant amount of advertising revenue via its ability to allow companies to advertise in the game itself.
Another crucial opportunity for Roblox moving forward will be converting users from its free gaming experience to the paid additional content available on the platform. The company’s revenue is generated from ‘Robux’, a virtual currency users can purchase in-game. We can see in this report that bookings increased by 161 per cent year-over-year to USD$652.3 million.
Consumers flocked to gaming platforms like Roblox during the pandemic as a form of entertainment. As lockdowns restrictions begin to ease globally, investors will be keen to see whether Roblox can build on the momentum of 2020 and continue to grow its number of active users. This Q1 report certainly shows no signs of slowing down as the company continues to grow.
Moderna announced its Q1 earnings of USD$2.84 per share on revenue of USD$1.94 billion, compared to analyst expectations of USD$2.47 per share on revenue of USD$2.06 billion.
Moderna’s share price this year has already jumped 45 per cent, as vaccine sales boom. Its full-year guidance for vaccine sales has been raised to USD$19.2 billion, after sales of USD$1.2 billion this quarter.
The company plans to deliver 300 million doses to the US by July 2021, and if the roll outs are successful, vaccine orders could continue for many years. The European Commission is set to also be lining up a colossal 1.8 billion order, on top of this.
2021 is expected to be a pivotal year for Moderna, in terms of achieving future success. The company has been able to increase its cash flow enormously, now at USD$8.2 billion, up 57 per cent from Q4. This will allow Moderna to expand its research operations and manufacturing capabilities. Investments in these areas will be essential for Moderna to keep pace with rival Pfizer.
Square announced its Q1 earnings today of USD$0.41 per share on revenue of USD$5.06 billion, compared to analyst expectations of USD$0.16 per share on revenue of USD$3.33 billion.
Similar to its competitors, Square was truly a benefactor of the pandemic, as people turned to eCommerce platforms to meet and fulfil their shopping needs and desires. Square’s share price climbed more than 240 per cent during this period, as a direct result.
This surge of popularity has allowed Square to expand its offering, announcing in March 2021 that its industrial bank, Square Financial Services, has begun operations after completing the charter approval process. This move will enable Square to essentially become a one-stop-shop for businesses using their platform, and will provide huge growth potential if executed correctly.
We have continued to see significant traction from Square’s Cash App product. Not only has the company allowed users to deposit US stimulus cheques via the platform in March, but it has also granted them the ability to transact in crypto assets, which have soared in popularity over the past few months. Revenues illustrate growth of 266 per cent year-over-year, thanks in part to bitcoin, which produced USD$3.5 billion in revenue.
Square’s challenge moving into the future will be its ability to maintain this momentous growth, especially when trying to keep its competitors like PayPal at an arm’s length.
We can also anticipate short-term prospects to be bright for Square, mainly due to consumer spending being on a rise in the US. Square’s seller ecosystem also demonstrates strong growth, with generated gross profit of $468 million, up 32 per cent year-over-year, which is likely to continue throughout 2021.
“The third largest French bank in terms of market capitalisation, Societe Generale, has just published this morning, financial results in strong increase, notably due to the spectacular rebound of its market activities.
Indeed, the corporate and investment bank (CIB), saw its revenues soar in the first quarter by 60% to 2.5 billion euros, thanks in particular to the “equities” division, which achieved its best quarter since 2015, thanks to favourable market conditions. Fixed income and currency activities also posted a substantial rebound, up 51% compared to the fourth quarter of 2020.
These excellent results, which include CIB’s new positioning in structured products, confirm the banking group’s ability to capture value.
Like the major European banks, these good results were also driven by the rigorous cost control measures introduced three years ago.
Overall, turnover rose by 21% to 6.2 billion euros and a net profit was announced, whereas a loss had been published a year earlier. The only downside was that net banking income fell by 2.4% due to the continuing low interest rate environment and the health restrictions still in place.
On the stock market, the results were applauded this morning, as Societe Generale led the CAC40 with a 5% increase, bringing its performance since the beginning of the year to 43%. The banking group, which had been particularly neglected in 2020, has caught up with a large part of its European competitors!”
“Payments giant PayPal announced its Q1 earnings today of USD$1.22 per share on revenue of USD$6.03 billion, compared to analyst expectations of USD$1.02 per share on revenue of USD$5.9 billion.
PayPal has benefited more than most companies from lockdown, as a result of the seismic shift towards eCommerce payments during this period.
Despite many brick and mortar stores starting to re-open their doors to the public from the start of 2021, PayPal is still reigning supreme with over 400 million users, adding more than 14.5 million users this quarter, and expectations to reach 750 million by 2025. If the company achieves these projected numbers, it will be a powerhouse in the payments space.
PayPal’s year-over-year revenues increased by 30 per cent, thanks in part to the stimulus packages that are currently being distributed to US citizens via PayPal’s mobile app, Venmo.
Recently PayPal announced that it would be releasing a stablecoin, aligning with the platform’s existing ability to allow users to buy, sell, hold and checkout with cryptoassets via its accounts. As interest in cryptoassets from retail investors continues to climb, PayPal has positioned itself well to capitalise on this trend, moving forward.”
Uber announced its Q1 earnings today of USD$-0.06 per share on revenue of USD$2.9 billion, compared to analyst expectations of USD$-0.35 per share on revenue of USD$3.28 billion.
COVID-19 and the repercussions following, haven’t exactly been playing in Uber’s ride sharing business’ favour. Even after the imposed lockdown started to ease in late 2020, people were still hesitant to book an Uber to get to their preferred destination, due to fears of being stuck in small enclosed spaces with strangers.
In March 2021, the tides turned for Uber’s ride sharing offering, when the company announced record gross bookings for the month, as demand increased. However, it wasn’t all doom and gloom for Uber, as it was buoyed by solid delivery revenues from its booming UberEats offering, which in this report demonstrated an increase of 166 per cent year-over-year.
This report signifies Uber may still be some way off reaching its mobility revenues of pre-pandemic levels. Nevertheless, its delivery unit is flourishing and supporting the business in the short term, as investors look at Uber for long term growth in 2021.
With investors concerned by Uber’s recent shortage of drivers, the company has offered new incentives to drivers such as bonuses and pay guarantees, in order to sweeten the deal and solidify brand loyalty.
Without an adequate number of drivers on its ride sharing offering, Uber may struggle to increase its revenues, as well as meet the increased demand for its services, operating through 2021.
“Pharmaceutical company Pfizer announced its Q1 earnings today of USD$0.93 per share on revenue of USD$14.6 billion, compared to analyst expectations of USD$0.77 per share on revenue of USD$13.63 billion.
As the first company to report positive clinical data from its trials, as well as gain approval from the US, EU and UK before its competitors Moderna and AstraZeneca, Pfizer is definitely still in many retail investor’s good books. Overall sales numbers increased by 42 per cent YOY, demonstrating that the vaccine production is and will continue to help revenues.
Recent headlines announced 20 million new Pfizer vaccinations were ordered in Australia in April 2021. As a result, Pfizer has increasingly become a stock-of-choice for Australian investors looking to capitalise on its success, especially with a healthy 4 per cent dividend yield.
As the vaccine of choice for multiple governments around the globe, Pfizer is quickly establishing itself as a reliable provider, paving the way for future contracts and increasing revenues.”
Pfizer has now increased it’s full year earnings guidance from USD$61.4 billion to USD$72.5 billion. This comes as US President Joe Biden’s plans of vaccinating the whole country’s population by the end of July 2021, will continue to drive demand for the vaccine. If this goal is reached and the vaccine proves effective, Pfizer will be looking at substantial growth, especially in the short term.”
“2020 was a disaster for ITV but it is in now in full recovery mode.
“Despite the fact that people have spent much of the last year trapped inside watching more television, the pandemic decimated revenues, particularly in ITV’s production unit, ITV Studios.
“However, we’ve seen a swift and sharp recovery in ITV’s fortunes since the start of the year, with total revenue now higher than it was pre-crisis.
“We expect a strong summer for both viewing and advertising revenue, with the Euros kicking off next month and Love Island returning to screens this summer.
“It may be tempting fate, but it looks like ITV has put the worst of the crisis behind it and is returning to something resembling normality.
“While shareholders will welcome that, its pre-pandemic challenges still remain, namely how it keeps viewers’ attention in the face of stiff competition from streaming giants such as Netflix and Amazon.”
“Pfizer’s earnings release is one of the positive stories in the context of a weak session of global equity indexes. The company beat market expectations on both revenues and earnings but, clearly, the focus was on the additional steps in the distribution of the Covid-19 vaccine. With the plan to file for full U.S. approval of the vaccine by the end of this month, Pfizer is on the right track to separate itself from other competitors. The increase of vaccine sales estimates for 2021, from $15 billion to $26 billion, shows an unexpressed business potential for the company over the long term.
Ferrari released its Q1 2021 results at 2pm today.
“The Italian carmaker reported sales of €1.01 billion, up 8% on last year.
Ferrari’s quarterly net profit also rose to 205 million euros ($247.3 million) from 166 million euros a year earlier.
In the first quarter of the year, the Italian brand said it sold 2,771 vehicles, a very slight increase (1%) compared to the same time last year. Adjusted Ebitda was 376 million euros in the first quarter, beating the average analyst estimate of 368.3 million euros.
Ferrari’s current temporary CEO, John Elkann, said the first quarter of the year bodes well for the rest of 2021 and that the company expects to reach the top end of its outlook, including annual sales of around €4.3 billion and adjusted Ebitda of between €1.45 billion and €1.50 billion.
However, Ferrari is postponing its financial targets for 2022 by one year due to the effects of the pandemic, which is why investors did not welcome the Italian carmaker’s results.
On the stock market, Ferrari’s shares fell by more than 5%, extending this year’s decline.
The company will face several challenges in the coming months, such as finding its next CEO, or working on a new range of electric vehicles in order to catch up with some of its competitors like Tesla.”
Amazon has posted its fourth record quarter in a row, with both profits and sales beating analysts’ estimates, and it has also attracted over 200 million Prime members.
Both are staggering feats given the size of the business, and shares are poised to break to a new all-time high today when the US market opens, according to current indications. The move certainly looks justified given the company’s results overnight, and it appears to be a question of when, and not if, it becomes a $2trn company.
Even as founder and CEO Jeff Bezos prepares to hand over the reins to Andy Jassy, the guidance from Amazon remained solid, with its core business – as well as its giant cloud service arm AWS – all projected to continue to grow. With the grocery market its next big target, the sky is still the limit for this business.”
“Barclays has spooked investors this morning after sounding a note of caution on the outlook for the UK.
“Shares are down sharply over 5% after the bank said it was taking a “cautious” view of the recovery, and it failed to provide any clarity on future dividend payouts. Investors also appear to be fretting about a slump in some of its trading revenues, notably from its fixed income and commodities desks.
“The comments overshadowed strong numbers that showed profits had come in at £3.4bn, double the amount forecast by analysts.
“Like its peers earlier this week, the bank also saw bad loans all but disappear – coming in at just £55m versus £2.1bn a year ago – amid the ongoing support for the economy from the government.
“Given its shares have rallied significantly off lows, there will be an element of profit-taking today, but this is also a sign that investors are concerned about how much further some of these highly-cyclical names can rebound.”
Europe’s leading aerospace and defence company, Airbus Group, released its first quarter results this morning, and overall they came in above analysts’ expectations.
Even if the turnover decreased by 2%, to 10.5 billion euros, the net profit came out at 362 million euros, against a net loss of 481 million euros a year before!
Furthermore, the most closely watched indicator, operating profit (Ebit), which measures the group’s real profitability, rose by 147% compared to the first quarter of 2020, to 694 million euros.
These good results reflect an excellent contribution from the helicopter, defence and space businesses, which offset the reduced activity of the aerospace division, which accounts for more than three quarters of group sales.
Cost reductions and cash preservation also played an important role in today’s good results. The Franco-German group managed to generate a positive cash flow of 1 billion euros during the quarter, compared to a negative balance of 8 billion euros a year earlier!
On the stock market, the results are applauded this morning by operators, as Airbus is the leader of the CAC 40 with a rise of almost 3%. However, the share price, which is trading at €101.96 at the time of writing, is still far from its January 2020 high of €139.40, which was its all-time high at the time.
The French number one in health, Sanofi, has just published its results for the first quarter. The results were mixed, with net income up 5.1% to €2.02 billion, but sales fell by 4.3% to €8.43 billion, compared with analysts’ expectations of €8.66 billion.
On the positive side, the ratio most closely watched by investors, namely net earnings per share (EPS), rose by 5.2% to 1.61 euros. For 2021, Sanofi’s management still expects EPS to rise by between 5 and 10%. Secondly, sales of its flagship asthma drug, Dupixent, rose sharply by 45% in the quarter!
On the negative side, sales of the general medicine business fell by 7.3% at constant exchange rates to €3.67 billion, partly due to the widespread use of masks. This was partly due to the widespread use of masks, as the mandatory use of masks as a result of the pandemic has slowed the spread of winter viruses such as influenza, resulting in lower sales of cold and cough products.
In addition, as Sanofi has fallen far behind in the global race for the Covid-19 vaccine, the French group has just signed a deal with Moderna to help produce its own vaccine. That said, the French healthcare giant is still involved in the development of the vaccine along with UK-based GlaxoSmithKline for which it had to launch a new study due to insufficient preliminary results, the vaccine is still scheduled for the fourth quarter of 2021.
On the stock market this morning, Sanofi shares are up almost 2% despite these mixed results. The stock is currently trading at 12.8 times 2020 earnings, which is quite low for the sector.
“Google’s parent company, Alphabet, released its Q1 2021 results yesterday and far exceeded analysts’ expectations.
Driven by advertising and cloud revenues, Alphabet reported revenues of $55.3 billion, up from an estimated $51.61 billion, a 34% year-on-year increase.
If traffic acquisition costs are removed, revenue is now $45.6 billion, compared to the $42.48 billion expected by analysts.
The search engine giant also reported net income of $17.93 billion, or $26.29 per share in its fiscal first quarter, compared with net income of $6.84 billion, or $9.87 per share, in the first quarter of last year, again far exceeding FactSet’s estimate of $15.76 in EPS.
Google Cloud generated $4.02 billion in revenue and posted an operating loss of $974 million in the first quarter, compared to $3.99 billion in revenue expected by analysts, allowing the company to close the gap on its competitors (Amazon and Microsoft) in this sector.
After its first ever drop in revenue in the second quarter of 2020, Google’s advertising business has also recovered strongly.
Advertisers are slowly starting to reallocate their budgets to Google’s platforms, especially YouTube, which generated $6.01 billion in revenue in the first quarter of 2021, up 46% year-on-year.
Finally, Alphabet’s investments, which include Verily, Waymo and others, reported revenue of $198 million against an operating loss of $1.1 billion. This was again above analysts’ estimates of $1.21 billion in operating losses.
Despite several ongoing lawsuits for market monopoly, Google’s shares are up more than 30% since the beginning of the year (compared to 11.5% for the S&P) and after these good results the upward trend does not seem ready to stop, with Google’s shares gaining around 5% in pre-market trading.”
“Unsurprisingly, Netflix subscriptions have soared over the past year as bored households searched for something to do during the pandemic.
“As a result, in the last 12 months the number of new subscribers added was roughly a third higher than the long-term average, and all eyes will be on that subscriber growth once more tonight.
“Netflix’s current growth trajectory suggests it is on course to add less than 25 million new subscribers this year, roughly the same as it did in 2017.
“While that is a significant slowdown, it still represents exceptional growth, particularly when one considers it now has to compete even harder for people’s attention as restrictions are lifted in some parts of the world.
“The California-based firm is also experiencing stiff competition from the likes of Disney, Amazon and Apple, meaning it will need to keep producing the goods if it is to maintain its position at the top of the streaming tree.
“The good news for investors is that there is no suggestion it cannot do that, particularly when you consider that nine of the top 10 most Googled shows last year were Netflix creations.”
“Primark has long been Associated British Food’s cash-cow, so the fact it has lagged behind other parts of the ABF group over the past year, will have been strange for investors to see.
“The primary reason for that is the fact Primark does not have an online shop to sell its goods, meaning it couldn’t generate cash when its stores were closed during the various lockdowns over the past year.
“While competitors have ramped up their online offerings over the past 12 months, a lack of e-commerce functionality has cost Primark up to £3bn in sales and £1bn in profit.
“I’m sure there will be shareholders out there asking themselves why Primark’s management refuse to adapt to the digital era, when others have profited handsomely from it.
“I’m equally sure management will argue that creating an online store will force it to raise its famously low prices. But at some point, that becomes a price worth paying, if it stops you from being left behind.”
“While the FTSE 100 continues to be a laggard in international terms, the fact it has broken through the 7,000 mark for the first time since February last year can be read as a sign of cautious optimism among investors.
“The UK’s blue-chip index is now more than 40% higher than it was at the worst of last year’s sell-off, although growth has stagnated in the past week or so.
“With the vaccine roll-out fairly advanced and talk positive about the future state of the economy, investors are once again seeing opportunity rather than threat in UK shares.
“The FTSE 100 is often derided for its ‘old world’ constituents, but it is these miners, banks, oil companies and airlines that will power the recovery and investors are beginning to wake up to that.
“Add in the fact that UK shares are looking relatively cheap when compared with other developed markets, and the investment case becomes quite compelling.”
“Lockdown has led to a surge in home improvement projects with people using the extra time at home to fix those creaky gates or reinvigorate those outdated kitchens.
“As a result builders merchants such as Travis Perkins have thrived at a time when other retail firms have struggled, with tool and building material subsidiary Toolstation a particular highlight.
“Looking forward, while the group is on an upward trajectory now, it’s still uncertain how the group will perform now coronavirus rules have been relaxed in much of the country. Whether sales can continue to climb will be the big question on shareholders’ lips.
“However, on a positive note, the decision to list Wickes as a separate business will see the group become leaner and allow it to refocus on its strengths, which is providing services and materials to trade customers.”
Earnings season starts again in the US this week, with the banks kicking things off. We can expect to see strong growth from these sets of results, with consensus expectations for a 26 per cent increase YoY in US earnings, as the economy continues to recover at a steady pace.
It’s been a robust start to the year for financials with the XLF index which tracks the financial sector, gaining more than 20 per cent YTD. This increase has been attributed to a rise in bond yields and popularity for cyclical stocks amongst retail investors as sentiment shifts slightly away from tech.
We saw a surge in mergers and acquisitions activity, as well as a flurry of public listings at the end of 2020 through to the start of 2021, including cloud-based software company Salesforce buying communications software business Slack. Such M&A activity has clearly helped JP Morgan, Goldman Sachs and Wells Fargo with investment banking revenues soaring all across their respective earnings reports.
Equity markets have been a source of strength for banks throughout the crisis. Trading revenues have persistently improved, as we see record amounts of capital being pumped into the markets.
All banks were helped by a release in loan reserves, as the US banking industry is now expecting to have fewer loan losses than it did last year, when it set aside billions for defaults expected from the coronavirus pandemic.
This was a strong quarter for JP Morgan, posting better than expected earnings of USD$4.50 per share on revenue of USD$33.12 billion, compared to analysts estimates of USD$3.00 per share on revenue of USD$30.28 billion. First-quarter investment banking revenue surged 222 per cent, to USD$2.9 billion, exceeding the estimate of USD$2.65 billion. These results provide strong support that the financial sector is recovering and the bank is in a great position to take advantage of the economic upcycle.
Goldman Sachs reported earnings of USD$18.60 on revenues of USD$17.7 billion, compared to analysts estimates of USD$10.19 per share on revenues of USD$12.66 billion.
This latest report from Goldman represents a huge 498 per cent growth in the last year. Trading revenue was a particularly strong point for Goldman, with USD$3.69 billion in equities revenue, reflecting YoY growth of 68 per cent.
Wells Fargo reported earnings of USD$1.07 per share on revenues of USD$18.06 billion, compared to analysts estimates of USD$0.70 per share on revenue of USD$17.55 billion.
Corporate and investment banking revenue grew 7 per cent to USD$3.6 billion. Wells Fargo is providing an optimistic outlook on lending towards the end of the year. As inflation fears rise, so have bond yields. Higher bond yields benefit banks because they lend on the long end of the yield and borrow on the short end.
“Tesco is one of the few businesses to have remained open throughout the pandemic, yet its share price is way below pre-Covid levels.
“But while sales are up more than 7% and its market share has grown in the past year, the pandemic has made running a major supermarket a much more expensive affair.
“In fact, added home delivery, payroll and health and safety costs have wiped £892 million off profits in the UK alone in the past year.
“However, strip away these costs and you have a business that has relatively strong headline growth and a share price that is at its lowest level since November 2017.
“That may be enough to tempt some investors who believe that Tesco will reap the rewards of its Covid investments once social distancing guidance has been lifted.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Investors have shrugged off today’s US inflation figures, despite the fact prices are rising somewhat faster than anticipated, it was not the nasty surprise that many feared.
“When inflation outpaces expectations, we typically see rising bonds yields as investors fret over an earlier-than-expected increase in interest rates. However, the opposite has happened today and, at the same time, the S&P500 and the Nasdaq have spiked.
“That tells us that investors believe the Federal Reserve when it says it is willing to run the economy hot for the time being in a bid to secure the economy recovery, which should provide a tail wind for US stocks in the coming weeks, as well as support the recent rebound in tech stocks.
“We expect the market focus to now shift to the start of a crucial US earnings season tomorrow, led by the financials, where we are looking for over 25% earnings growth year-over-year.”
“Bitcoin has jumped to a new peak this morning above $62,000, as has ethereum, which is continuing its multi-month rally to reach $2,200 and we don’t expect the trend to stop here.
“The dynamics have changed quite dramatically this year. Demand is flooding the market from institutions just as large amounts of bitcoin and ethereum are increasingly being taken offline and holders are transferring them to their own wallets. There is only one outcome from that, and investors should expect higher highs and higher lows throughout the year.
“In the short-term, we may soon see some profit-taking from some investors – a common theme that occurs when bitcoin or its peers hit record peaks – but the long-term trend remains solid, with demand for alternative investments continuing.”
“JD Sports’ full-year results suggests it has breezed through the pandemic when much of the High Street has struggled.
“Strip out exceptional items and the sportswear giant posted near identical pre-tax profit figures in the year to 30 January as it did the year before, a remarkable performance given many of its stores have been closed over the past year.
“The strength of JD’s online presence helped it maintain and even grow revenue when many of its stores were open, helping it catch sales that would have otherwise been lost to rivals.
“The sportwear giant predicts profit in the range of £475-500m for this year, which seems plausible given the strength of its performance throughout the pandemic.
“But it will rest largely on whether sportswear will remain a priority for many people now that shops have reopened in many markets.”
“E-commerce firms have thrived throughout the pandemic and ASOS’s half-year results remain impressive.
“With three lockdowns in a year, there haven’t been a lot of excuses for fashionistas to buy new outfits, yet ASOS has still managed to deliver record results with sales and revenue both up by nearly a quarter.
“Despite major investment in its technology platform and £294 million spent on acquiring new brands, the fashion retailer has also gone from a £163.6m net debt position to a £92m, which is indicative of strong cash generation.
“Also, the decision recently to snap up the likes of Topshop, Topman and Miss Selfridge from Arcadia should strengthen and build its position as a leading fashion firm for trendy twentysomethings.
“ASOS has managed to capitalise during this pandemic and looks like it will come out the other side a much stronger business.”
“The popularity of cryptoassets has exploded among retail investors searching for good returns over the past five years.
“However, critics have argued that cryptoassets, including bitcoin, will never become a truly mainstream asset until institutional investors provide them with their stamp of legitimacy.
“This year we set out four barriers that were stopping institutional investors participating in cryptoassets in a wide ranging report, including regulatory uncertainty, immature market infrastructure, ongoing reputational and security risks, and market capitalisation.
“With the market cap of cryptoassets having just passed the $2 trillion barrier, we believe one of those barriers has now fallen.
“Far from being simply symbolic, passing the $2 trillion mark means that cryptoassets now have a combined market cap in excess of Microsoft’s and approaching that of Apple’s.
“Of course, there are still hurdles to clear before institutional investors participate in great numbers. But we believe it is now a matter of when, not if we will see this happen.”
“Another week, another record for ethereum. Maintaining the momentum built throughout the past three months, the world’s second largest cryptoasset now sits at a new all-time-high around $2,150 and looks poised to continue its steep ascent.
“Having traded below $150 less than a year ago, ethereum’s rise is nothing short of incredible and has been driven by announcements that seem only to confirm its future potential. This latest move follows Visa’s announcement that transactions can be settled using USD Coin (USDC), a stablecoin powered by the Ethereum blockchain. The move means that Visa has become the first major payments company to use stablecoins as a settlement currency, and ethereum’s investors are already benefiting.
“Meanwhile, large volumes of ETH are increasingly being locked into DeFi projects and the ETH 2.0 deposit contract. This reduces the supply in circulation while announcements like Visa’s increase demand, thereby pushing prices higher. Likewise, following the network’s London hard fork in July, billions of dollars of ETH are expected to be burnt – i.e. bought and then destroyed by the Ethereum blockchain – further reducing the overall supply and forcing prices higher still.
“All of these factors combine to suggest that the following quarter and the remainder of the year could be very healthy indeed for ETH.”
“Bricks and mortar retailers have had a torrid time over the past year and have been forced to adapt to some pretty extraordinary changes in retail spending habits.
“Some, like Next, have managed conditions better than others. Despite its stores being closed for a total of 20 weeks in the past year, the fashion and homewares retailer managed a relatively decent pre-tax profit of £342m – even if that was down 53% year-on-year.
“That is in part down to the rapid growth of online sales, which have started the year well and are up more than 60% compared to two years ago.
“However, it is also down to its strong margins and prudent fiscal management, which involved trimming costs and reducing its debt burden during the year.
“As a result, Next now forecasts a return to nearly pre-pandemic profit levels this year, which is something a lot of its rivals would probably struggle to say.
“If Next’s profit does recover as expected, we expect it to announce the return of its dividend in the not-too-distant future.”
In today’s Q4 earnings report global athletic apparel retailer Lululemon announced an earnings beat of USD$2.58 per share with revenue of USD$1.73, compared with analyst expectations of USD$2.49 per share and USD$1.66 billion in revenue.
Lululemon has been a benefactor of the pandemic, with consumers turning towards fitness apparel to support their plight to stay healthy throughout worldwide lockdowns. As a result, the stock reached record highs of USD$398 in September 2020.
Stocks such as Lululemon and other ‘stay at home’ stocks have felt the full force of vaccines being rolled out globally, meaning we have seen a rotation back into value stocks away from growth stocks. Year-to-date, Lululemon’s share price has fallen more than 11 per cent.
As restrictions begin to ease around the world, Lululemon’s brick and mortar presence has been renewed in China and Australia, with most stores reopening their doors to the public. While stores remained closed across the US amidst rising COVID-19 concerns, Lululemon managed to reduce operational costs and staff hours, contributing to a 23 per cent increase in sales year-over-year.
In its Q3 earnings, the company’s eCommerce revenue grew by 100 per cent year-over-year. In this latest report, eCommerce revenue was the stand out once again. Lululemon has changed its revenue streams that were heavily focused on store revenue 80/20. Now its eCommerce revenue makes up 52 per cent of overall revenues, demonstrating its ability to adapt to the digital shift.
Will Lululemon continue to strengthen its core in 2021? Or will the pandemic put it in an awkward position?
“The first quarter was another disappointing one for H&M, which was forced to close around 1,800 stores – or 36% of its total – due to coronavirus.
“While H&M’s online sales are growing, it only has an e-commerce presence in around 70% of the 74 markets it operates in, meaning it would have to grow these sales exponentially to compensate for the lost revenue from its 4,950-strong store network.
“More worrying, from an investor’s perspective, is that the Swedish retailer is currently the subject of a boycott in China over its decision to speak out over alleged human rights issues.
“H&M has more than 500 stores in China, its second biggest market, and so the backlash could have a damaging ripple effect on sales for the rest of the year and beyond unless the retailer finds a way to repair the situation.”
“Royal Mail has been a major beneficiary of the rise in home parcel deliveries during lockdown. “In the third quarter alone, it handled 496 million parcels – the busiest quarter in its history – with volumes up about a third compared to the first national lockdown.
“That has help offset some of the revenue lost from people sending fewer letters, which until recently used to be a better earner for Royal Mail than parcel deliveries.
“Overall, the group seems in position of relative strength at the moment, with full-year operating profit expected to be in the region of £700m.
“However, investors will want to see that the Royal Mail board has a plan for life after the pandemic, when parcel delivery volumes may revert back to normal.”
In today’s Q1 earnings report, American multinational computer software company Adobe announced a beat on earnings per share of USD$3.14 on revenue of USD$3.91 billion, compared with analyst expectations of USD$2.79 earnings per share and USD$3.77 billion in revenue.
Adobe’s share price has remained sluggish in the last six months with a 4 per cent drop. This comes after the company traded at record highs in September 2020 at USD$533 a share, after recovering particularly well from the market crash in March 2020 amidst the tech-fuelled market rally.
In its latest report, Adobe achieved revenue growth of 26 per cent year over year with record Q1 revenue. Cash flows remained strong at USD$1.77 billion, exhibiting a healthy balance sheet.
This earnings report demonstrates substantial growth potential for Adobe in 2021, with annual targets raised for the year to USD$15.45 billion up from USD$15.15 billion. With Adobe still trading around 13 per cent of its record highs, many investors are seeing this as an ideal opportunity to get a slice of the Adobe pie.
Core product offerings such as Photoshop have allowed Adobe to be irreplaceable within the industry, with little competition in the market. The company’s digital media segment makes up a large portion of its quarterly revenue, and continues to expand quarter over quarter, showing a 32 per cent increase in Q1.
In 2020, Adobe announced that its board of directors had approved up to USD$15 billion in share buybacks through FY2024. Not only will this create a demand for the stock over this time, as supply reduces, but it also often means that company’s executives believe Adobe’s share price is undervalued.
Adobe’s stock price may spook some thrifty retail investors with the high price, however, the company’s growth potential has others hooked.
Will Adobe continue to shine as the best-in-breed? Or slowly fade into the background?
“Bellway and other housebuilders are riding the crest of a wave at the moment, with demand for housing strong and expected to remain that way due to further Government intervention in the housing market.
“As a result, Bellway expects to sell around 10,000 homes for the full-year – 32% more than the year before – and following record first half sales of 5,656.
“Despite this, Bellway’s profit was down in the first half of its financial year, largely as a result of a £20.3m charge for remedial safety improvements on legacy apartments, bringing the total set aside to £131.6m since 2017.
“However, while demand for housing remains strong, it’s not all sunlit uplands for housebuilders.
“The Government’s stamp duty holiday and 5% mortgage scheme will stoke demand further, but long-term demand will depend on how the economy recovers and how household finances react when government support is withdrawn.”
“Tesla’s decision to both accept payment for its cars in bitcoin and hold that bitcoin on its balance sheet rather than convert it to dollars will likely build more momentum for the cryptoasset.
“Tesla and other companies are showing that crypto is here to stay, and its mainstream adoption is only going to increase. eToro itself bought bitcoin for its balance sheet over a decade ago when it was valued at just $5.
“In terms of market dynamics, as more companies hold bitcoin on their balance sheet, so the finite supply is depleted even more, and this is likely to cause a supply-side squeeze and boost prices over the longer-term.”
One year after the start of the health crisis, the most deadly in the last hundred years, a significant number of sectors have undergone profound changes. This is particularly true of the health sector, which as a whole has had to adapt to the changing face of Covid-19.
One year after the start of the pandemic, one clear winner stands out: the BioNTech/Pfizer tandem. Despite the delays of the beginning of the year, the German-American couple was the first to discover the vaccine and has already carried out a very large part of the injections in the United States. In a few days, Washington should receive 120 million additional doses, and Pfizer has just revised upwards its production objectives for 2021, between 2.3 and 2.4 billion doses!
BioNTech, which holds the marketing rights to the vaccine it has developed, wants to become independent. According to the Wall Street Journal, it has just finalised a deal with 13 companies, including Novartis, Merck and Sanofi, to increase production capacity.
On the other hand, its Anglo-Swedish competitor, AstraZeneca, has not aroused the same enthusiasm. After some clotting problems in some patients, the vaccine was withdrawn from the market in some European countries, including France, for several days. AstraZeneca’s Covid-19 vaccine is probably safe, but the way the company presented clinical data from a large trial raised some questions.
“Moderna, the second company to discover the vaccine, can claim to have developed the vaccine without the help of a big pharmaceutical company. That said, the quantity of vaccine produced has remained low compared to its competitors.
France is not in the same league, with Sanofi lagging far behind in the development of its vaccine with the help of GlaxoSmithKline. In contrast, a French biotech company called Valneva entered a Phase 1/2 clinical trial in December and expects to publish its first results. The biotech company expects to receive initial marketing authorisation for its vaccine in the second half of the year.
On the financial markets, healthcare companies have experienced varying trajectories over the past year. Investors have favoured small biotechs at the expense of large pharmaceutical companies. Over a sliding year, Moderna and Valneva have soared on the stock market, by 400% and 330% respectively. In contrast, Sanofi and AstraZeneca have been flat for a year and Pfizer has risen by “only” 17% despite its considerable lead over its competitors.”
“A year ago today global stock markets suffered a sharp and brutal sell-off as governments took the unprecedented move of shutting down their economies to stop the spread of coronavirus.
“Share prices have recovered strongly over the past year and the FTSE 100 is up more than 34% since the flash crash in March 2020. However, the UK’s blue-chip index has lagged behind other major indices such as the tech-heavy Nasdaq in the US or even Germany’s Dax.
“One of the main reasons for this is the FTSE is light on tech firms, which have thrived over the past year as the nation was confined to their homes.
“However, banks, energy companies and travel firms – all of which the FTSE 100 has an abundance of – will be vital to the UK’s economic recovery and so UK shares could well perform strongly over the coming years.”
“Europe’s rekindled love for DIY shows no sign of abating, with Kingfisher posting yet another strong set of results.
“It’s rare these days to see a company in such a strong position financially and it’s clear the B&Q owner has benefitted greatly from people being forced to stay home.
“Kingfisher is now a much stronger and leaner business than it was when the pandemic started: sales are growing strongly, profit has exploded and the group has managed to cut net debt by 45% in the past year, all while increasing its dividend by nearly 150%.
“That leaves it the envy of a lot of retailers, but the true challenge will be whether it can maintain such stellar performance once lockdown is lifted and DIY becomes less of a priority in people’s lives again.”
“Pubs are within touching distance of reopening, but the sector will be wearing the scars of coronavirus for a while yet.
“The stop-start nature of the hospitality sector over the past 12 months has made it pretty much impossible for firms to turn over profit.
“Wetherspoon, perhaps the industry’s strongest player, reported a £46.2m pre-tax loss and revenue tumbling 53.8% in the 26 weeks to 24 January.
“The pub chain’s results reveal that it has also battened down the hatches during the pandemic, drastically reducing investment in its estate and placing around 100 of its pubs on the market.
“Tim Martin, the chain’s chairman, will be pleased that pubs are reopening next month. But sales won’t fully recover until his pubs can operate again without restrictions.”
In today’s Q3 earnings report, athletic apparel giant Nike reported earnings per share of USD$0.90 cents on revenue of USD$10.36 billion, compared with analyst expectations of USD$11 billion in revenue and earnings per share of USD$0.75.
The share price has since dropped by around 2 per cent lower after hours trading to USD$143.
As a result of the global pandemic, Nike was forced to shut most of its brick and mortar stores around the world in 2020. The company initially struggled with supply distributions, however, it was able to survive with the income generated by its eCommerce and digital presence. Nevertheless, these supply chain issues have now come back to haunt Nike, with slower sales growth than anticipated, resulting from limited shipping container availability.
Demand in China is supporting Nike’s business, as the fitness industry continues to expand in this region. In its Q2 report, Nike announced a 24 per cent increase in sales in Greater China and this has excelled once again for Nike in Q3, reporting a 54 per cent increase.
Overall, these supply issues are expected to be temporary. As we begin to see rollouts of the COVID-19 vaccines, supply issues should return to a form of normality.
As such a strong name in the industry, Nike should be in a prime position to benefit from the boom in the fitness industry, but will it still have the edge over competition in 2021?
“With some of the largest banks in the world now moving to offer their clients bitcoin via a variety of products, we think this is lighting the touch paper for an explosion in interest in cryptoassets.
“Higher net worth individuals with advisers are one of the groups that is likely to have less exposure to cryptoassets thus far, with many of the traditional ways they invest – such as via funds – still in their relative infancy when it comes to bitcoin.
“As banks increasingly consider allocations to cryptoassets on behalf of clients, we expect a fresh wave of interest for bitcoin and its peers which could have a significant impact on demand.”
“Sportswear makers have demonstrated a fair amount of resilience, since the start of the pandemic, with sales outpacing the rest of the clothing industry, according to a report by Mckinsey.
“While Nike’s revenues contracted in the six months following the first wave of lockdowns, it has recovered strongly since.
“By refocusing on digital sales, it managed to add 70 million new subscribers worldwide to its loyalty programme and actually grow revenues in its second quarter.
“We see no reason to believe it can’t continue its revenue growth in Q3, albeit at perhaps a slightly slower pace. More generally, the sportswear and equipment sector could be one to watch, as we emerge from coronavirus and consumer spending habits return to normal.”
“Fevertree has proved itself nimble and able to adapt quickly to what have been very malignant conditions throughout the pandemic.
“Pubs and bars accounted for 45% of the premium tonic maker’s revenue before the pandemic, so their closure should in theory lead to a devastating effect on sales. Yet total revenue is down just 3%.
“Fevertree has offset a lot of its so-called ‘on-trade’ business by boosting supermarket sales as well as pushing deeper into the lucrative US market, where revenue has grown 23% in the past year.
“Yes, margins have been squeezed this past year and pre-tax profit is down nearly 29%, but the drinks maker has shown very impressive ingenuity throughout the Covid crisis and will likely be rewarded for it when the pandemic passes.”
In today’s Q4 earnings report, American cybersecurity technology CrowdStrike beat analyst revenue expectations of USD$250 million and earnings per share of USD$0.08, delivering an earnings of USD$264.9 million in revenue and earnings per share of USD$0.13.
The share price has since spiked out of hours, rising more than 7 per cent to USD$210.
Over the last year, CrowdStrike’s share price has skyrocketed by more than 500 per cent, as consumers and businesses realised their immediate needs for cybersecurity, driven by adoption of digital payment platforms, business management tools and ecommerce offerings.
Revenues from Q4 increased by 74 per cent year-over-year, and record cash flow figures from CrowdStrike’s balance sheet demonstrate the importance and value of security transformation as businesses continue to work remotely.
The company’s AI, expert-driven threat detection and endpoint protection platform is also increasing in popularity, which is evident from it’s growing customer base as it added a record 1,480 net subscription customers in Q4.
In the last few weeks, CrowdStrike has felt the full force of the stock rotation from Tech to Value, with its share price losing more than 17 per cent. Although we may see some ‘work from home’ stocks fall out of favour over the next year, cybersecurity will continue to accelerate at a rapid speed.
CrowdStrike is leading the charge, but will it be struck down by its competitors in 2021?
Yesterday, German automaker Volkswagen delivered its fiscal year 2020 report, announcing sales revenue of €222.9 billion. This demonstrates a year over year decline of 12 per cent, mainly attributed to falling volumes as a result of the global pandemic.
Over the past year, Volkswagen has positioned itself as a threat to Elon Musk’s Tesla in the battle for EV market domination, launching a high number of Volkswagen EV models such as the ID3. As the largest selling car manufacturer in Europe, Volkswagen has nearly tripled its deliveries of EV’s last year to over 212,000. In this recent report, Volkswagen has laid out ambitious plans to deliver 1 million EVs this current year, investing more than €46 billion in EV’s over the next 5 years.
In 2020, Volkswagen’s stock rose more than 121 per cent. This week, Volkswagen’s “Power Day” only added more fuel to the stock’s success, rising more than 7 per cent. During the event, Volkswagen unveiled its roadmap to longer-range EVs, cheaper batteries, and better charging. The event was a hit with investors as it provided a glimpse of what can be expected from the company moving forward.
Tesla will continue to dominate the EV sector over the short period, but will Volkswagen speed through as Tesla’s biggest rival?
Zalando, Europe’s No. 1 online retailer of ready-to-wear clothing, has just published excellent annual results, thanks to a business model that has adapted perfectly to the health crisis.
The group’s annual turnover rose by 23% to €7.9 billion and operating profit came to €420.8 million compared to €224.9 million in 2019!
These excellent figures are the result of a business model that has adapted perfectly to consumer needs in a context of travel restrictions. Indeed, overnight, the entire fashion sector had a strong need for digitalisation, yet Zalando already had a comparative advantage.
The German ready-to-wear website has built up a catalogue of fashion brands that is the largest in Europe and has developed deeper customer relationships over time.
In terms of forecasts, Zalando has ambitious new targets; the group says it expects to grow its business volume by between 27% and 32% in 2021, with an adjusted operating profit of between €350 and €425 million.
On the stock market, these announcements were well received as the share price rose by 4.8% at the opening this morning. After a drop in February in the wake of technology stocks, the share has been flat since 1 January (+0.15%)
Since the start of the pandemic, the video game industry has seen a huge boost from restrictions imposed on people’s movement. It is therefore not surprising to see established brands such as EA, Activision or Ubisoft, or console manufacturers such as Sony or Nintendo performing at record levels.
Last week (10 March), investors were able to start investing in a hot new company, Roblox.
Valued at around $42 billion, the share price rose 55% on the opening day and is currently at $77.
Founded by Dave Baszucki in 2004, Roblox is a gaming platform where children can learn to code, programming games for other users, as well as playing games created by others.
With over 150 million active users per month worldwide and millions of games now sold on the platform, the game is extremely popular with children around the world!
But does this success justify its valuation? Even though Roblox is one of the largest publicly traded video game companies in the world, the company is now worth more than industry giants such as Ubisoft, Take-Two and CD Projekt or even Electronic Arts which is valued at $38 billion.
However, even though it is more valued than these competitors, Roblox is currently making less revenue than EA, which is expecting to make between $5.8 and $6.1 billion this year, while Roblox is forecasting $1.4 to $1.5 billion!
So for now, investors seem convinced of Roblox’s business model of hosting and selling games produced by others. Time will tell if this model will catch on in the long term, but one thing is for sure, it will certainly be worth watching how Roblox develops over the next couple of years.
“Coronavirus obliterated demand for oil, particularly at the start of the pandemic, as fewer people took to the roads or the skies.
“The slump hit firms such as Wood Group, which relies on the oil industry for 35% of its revenues, hard. It’s full year results reflect that, with revenue down sharply and the group swinging to a pre-tax loss.
“However, the prospects for the oil industry look far rosier today than they did a year ago and many are predicting demand to peak once Covid-related restrictions are lifted globally.
“Wood’s non-oil divisions have shown some level of resilience throughout the pandemic, so if the oil price can stay around $50-60 dollars a barrel, we should see an improvement in performance for the wider group.”
Ethereum miners fight back against network changes
Ethereum miners are threatening to halt mining activities in protest over planned changes to the network which will see their fees reduced.
Under the proposed changes, planned to take place later this year, users will send a base transactional fee to the network, rather than to the miners directly. However, miners are angry about the overhaul, with major mining group Spark signaling its opposition on Twitter.
Whilst it’s not clear whether this threat to cease mining will come to fruition, the proposed changes have been welcomed by investors, with prices rocketing back above $1,700 in the hours following the announcement, and holding this level.
World’s first digital NFT based artwork sells for $69 million
MakersPlace and Christie’s have made history by selling Beeple’s 5,000-day art collection for over $60 million. One of the highest art auction sales ever, 353 people submitted bids for the collection, which consisted of 5,000 pieces of digital art produced by Beeple every single day for 14 years.
The sale comes after the Kings of Leon’s decision to release their latest album as an NFT. While this technology is still emerging, the trend is starting to take off, with the potential to revolutionise industries such as property and art, as well as countless others.
Bitcoin sets all time high above $61,000
The bitcoin price broke above $61,000 over the weekend, rebounding once again following the unveiling of the $1.9trn stimulus in the US.
Having pulled back below $50,000 briefly in the early part of the month, the price has picked up momentum once more, with last week’s stimulus announcement helping to power it into new territory on Saturday.
Having breached this key level, prices have retreated marginally overnight, currently trading around $57,500 this morning as investors review their positions following these latest gains.
Bitcoin outperforms all other USD assets in last decade
Bitcoin has outperformed all other dollar-denominated asset classes by a minimum of ten times over the last decade, new research has shown.
According to data from Compound Capital Advisors, Bitcoin has produced an annualised return of 230% on average — more than 10 times higher than the next best asset class.
In comparison gold has made just 1.5% per year since 2011, with five out of the past 11 years producing a loss for the asset, while the US bond market has delivered 3.3%. Cash has returned an annual amount of just 0.5% amid this era of record low rates.
What a difference a year makes for bitcoin
Last week marked the anniversary of Black Thursday, which saw bitcoin futures tumble more that 50% in a day, due to technical failure on the Bitcoin Mercantile Exchange (Bitmex).
Just 12 months on and bitcoin has gone from strength to strength since falling to a low of $3,800 that day – with prices rising over 1,400%.
The case for holding bitcoin has increased over the period, with institutional investors now holding the cryptoasset, as they look to alternatives to fiat currencies. With big corporations also lending their support, the future has never looked brighter for cryptoassets.
The Franco-Italian optics specialist, EssilorLuxottica, unveiled its results for the 2020 financial year this morning. It has been penalised by the health crisis like the whole sector with a net profit that has melted to 85 million euros against 1.08 billion in 2019.
The optical giant, which manufactures glasses for luxury brands such as Chanel, Prada and Versace, said it had recovered some of the revenue lost after the first wave of containment in the second half. The fourth quarter was strong as sales rose 1.7% to more than €4 billion, as a rebound in prescription business offset weak demand for sunglasses from customers who stayed home during the pandemic.
The 2020 financial year was also marked by the twists and turns surrounding the acquisition of Dutch optical distributor GrandVision.
The group, the result of a merger between France’s Essilor and Italy’s Luxottica, can boast of having recently brought in the French sovereign wealth fund Bpifrance as a major shareholder, which could act as a mediator in the management.
In 2021, EssilorLuxottica intends to achieve “a performance comparable to pre-pandemic levels”, and will distribute at its next general meeting the final dividend for the 2020 financial year of 1.08 euro per share. The group had already distributed an interim dividend of €1.15 per share at the end of December.
On the stock market, the results were received with little enthusiasm, with the share price down 0.5% at the opening. The performance since the beginning of the year is 9.5%, but the valuation of the Franco-Italian group seems high at 64 times earnings.
“The ECB ready to step up but the Eurozone has other problems Following the recent weakening of the EUR versus the major pairs and the very modest rise of government bonds yields in the eurozone, Christine Lagarde had limited pressure in stepping into this ECB meeting. Given the actual slack in the workforce, it is reasonable to consider any inflationary pressure as a transitory phenomenon. As expected, the ECB macroeconomic projections showed how limited the visibility on the path of the economic recovery is within the region. Apart from Lagarde’s press conference, the most worrisome issue for the Eurozone now is the tangible delay in the vaccination rollout in comparison to the US and this is definitely going to impact the economic recovery over the coming months, as the most recent macroeconomic data showed. In line with the past, the Eurozone is showing its fragility as a single political body and, in this respect, the ECB has no room for intervention.”
Eurazéo, Europe’s leading investment company, with Assets under Management (AUM) up 16% in 2020 to €21.8 billion, has just published its annual results.
As expected, Eurazéo reported an annual net loss of €160 million, compared to a net profit of €99 million in 2019. The accounts include impairments of €264 million, attributable on the one hand to the €171 million impairment of WorldStrides, the US student travel specialist in bankruptcy proceedings, and on the other hand to the downturn in Europcar, which caused it to lose €31 million in market value.
This being said, NAV (Net Asset Value), which is a key performance indicator reflecting the valuation of assets, is at its highest level ever at 85.4 euros per share, up 21% compared to 30 June 2020. This is mainly due to capital gains on disposals and performance fees in the second half of the year.
The holding wishes to turn the page on the health crisis with a very difficult first half (380 million euros in losses), the group will reorient its investments and holdings towards tech and health in a context of digitalisation of the economy. Eurazéo has also left the car rental company Europcar to its creditors and has strengthened its position in high-growth companies such as Doctolib and ManoMano.
Eurazéo also plans to increase its fundraising in 2021 and 2022, and will propose a dividend of €1.5 per share for the 2020 financial year.
On the stock market, the results were very well received by the financial community, as after three hours of trading, Eurazéo’s share price rose by 8% on the Paris stock exchange, bringing the company’s performance in 2021 to 19%, well above its benchmark index, the SBF 120.”
“A year ago the bitcoin marketplace was ravaged by the failure of the Bitcoin Mercantile Exchange, or Bitmex, which forced the price of bitcoin futures to tumble some 50% in one day.
“On this day, Bitmex, which was the primary futures market for bitcoin at the time, came under a DDoS attack, halting its services as the price of bitcoin fell.
“Its auto-liquidation function, designed to offset losses on the platform, failed to operate properly, leading to a wave of sell orders which drove prices down at breakneck speed.
“This was a defining moment for bitcoin; until then, Bitmex was the market leader for bitcoin futures, but in the wake of Black Thursday, others moved up to take its crown as its market share fell.
“Crucially though, this proved to be the best time to buy bitcoin. Its price has risen over 1,400% since falling to a low of $3,800 that day, having never returned anywhere near that level since.
“How did we get here? Quite simply, the real-world case for holding bitcoin has become more apparent to more people and financial institutions.
“With fiat currencies like the US dollar being weighed down under a growing mountain of debt, and years of policy intervention from central banks increasing correlations between other asset classes, investors want diversification away from traditional investments.
“Bitcoin, ethereum and other cryptoassets have given them this opportunity and the journey is far from over. With blockchain developments, such as the explosion in non-fungible tokens (NFTs), taking hold, and the desire for diversification of wealth as strong as ever, the drivers of crypto demand are now becoming increasingly entrenched.
“On occasion prices will get ahead of themselves and prompt some short-term profit taki
“The pandemic continues to be excruciatingly painful for Rolls-Royce, despite efforts to overhaul its finances, including cutting thousands of jobs.
“The engineering giant earns a significant portion of its revenue based on the number of hours its engines fly. So the fact most of the industry has been operating at minimal capacity for a year now has had a hugely negative impact on its finances.
“In the past year, the engine-maker has seen its revenue slump by £3.6bn, pre-tax losses treble and it has piled on the debt.
“There are hopes that short-term flights will increase in number in the coming months, which would provide relief for Rolls-Royce, but long-haul flight demand will take considerably longer to recover – as will its own recovery.”
“The announcement from the White House is very significant for risk assets in general, and cryptoassets specifically.
“The $1.9trn stimulus package is already boosting bitcoin and peers, and with the floodgates now open in terms of new liquidity for the market, we expect fresh record highs to be set for the major cryptoassets in short order.
“Momentum was already building in the major cryptoassets, and we expect many stimulus checks will mimic previous patterns and be invested into the markets, with bitcoin and others like ethereum benefiting directly.”
“The Kings of Leon achieved sales of $2m of their first ever album in an NFT – or non-fungible token – format, which gives fans of the band the chance to get exclusive content and lays the groundwork for other artists to follow suit.
“However, as well as being a new development for the music industry, it also bodes well for cryptoassets.
“NFTs sit on platforms including the Ethereum network, and as we are only at the tip of the iceberg in terms of the widespread adoption and use of NFTs, we expect this will provide yet more impetus for Ethereum and its peers.
“Critics often argue about what is the real-world case for some cryptoassets, but here we see just how easily they can enter huge markets, like the multi-billion dollar music industry, and become mainstream. This is just the beginning of this NFT explosion. Digital artwork NFT Cyberpunks recently changed hands for huge sums, as the art world begins its own adoption of them, and blockchain networks like Ethereum, which enable them, are going to reap the rewards.”
“Last week, Square, the fintech created by former Twitter founder Jack Dorsey, announced it was acquiring a $297 million majority stake in Jay-Z’s music streaming app, Tidal. As a reminder, the company had been bought by the rapper in 2015 for $56 million. Jay-Z has thus made a nice financial deal and is now joining the board of directors. But was Square right to acquire Tidal? What can we expect now that Square is in control?
Like Spotify or Apple Music, Tidal has sought to differentiate itself from the start in two important ways:
– Better sound quality
– Better revenue distribution for artists
Unfortunately, with only 3 million registered users in 2016, Tidal faces many competitors with a much larger market share.
As a result, Tidal’s main competitors currently hold 10 times more subscribers. For example, in the last quarter of 2020, Spotify had 155 million paying subscribers and 345 million active users. Apple Music reported 72 million paying subscribers at the end of 2020, a far cry from Tidal, which has not reported this figure since 2016.
But despite a much smaller market share than its competitors, Jay Z’s application still has certain advantages.
First of all, Square will be able to count on the prestigious shareholders of Tidal, which includes well-known artists such as: Nicki Minaj, Kanye West, Madonna, and the duo Daft Punk!
Secondly, Square’s technical skills should allow them to implement several innovations to help musicians find new ways to support their work and make better decisions!
Finally, it is important to understand that Square does not expect Tidal’s financial results to have a significant impact on Square’s consolidated revenue or gross margin in 2021.
The Tidal streaming application is expected to operate independently, exactly as is the case with other group projects such as Cash APP.
The parties therefore expect to close the transaction in the second quarter of 2021, with completion of the transaction subject to regulatory approvals.”
“With people having been cooped up in their homes for the best part of the year, conditions have been perfect for delivery food services such as Just East Takeaway.
“In 2020, the firm increased revenue 54%, active customers by 23% and the number of restaurants listed on its app by 42% in what was a hugely impressive year of growth.
“But that growth has come at a price and Just Eat has had to spend big on marketing and delivery drivers to stay ahead of the deep-pocketed Uber Eats and Deliveroo.
“Courier costs alone have skyrocketed 917% in the past year, while marketing spend is up 158% since 2019, meaning it is once again loss-making.
“That said, it is definitely a statement of intent and shows that it is more than willing to throw money and resource to pull ahead of its rivals.”
“Coronavirus put an end to TV production for months and caused advertising spend to dry up, which explains why ITV’s 2020 financials look like a disaster.
“However, there are definitely signs of recovery from fourth quarter of 2020 onwards.
“Advertising revenues are forecast to grow up to 7% in the first four months of the year, production is at 90% of capacity again and ITV achieved its third highest share of voice in a decade last year.
“The broadcaster is also planning to strip out £100m of costs by 2022, meaning it will be a less flabby business coming out of the pandemic that it was going in.
“However, the pre-pandemic threats have not disappeared, and ITV is still up against the like of Netflix and Amazon as well as domestic rivals such as the BBC for viewers’ attention.
“While Britbox UK subscriptions are ahead of target, at 500,000 the service is way behind some of its rivals. Shareholders will want to see continued progress in this area.”
“Ethereum prices rocketed back above $1,700 over the weekend, hitting a multi-week high after a major upgrade to the network was announced, and this move is far from over.
“The Ethereum Improvement Proposal 1559 will be implemented as part of the planned London hard fork coming this July for the network, and will see a major shift in the way users transact.
“Currently, users pay a gas fee to a miner for a transaction to be included in a block, which make up a substantial part of miners’ overall income.
“However, under the new proposals – which have gathered support from users and application creators – gas fees will be sent to the network instead in a new fee structure called a “basefee”. Miners will only be given an optional tip by users, with the basefee set by an algorithm and thus easier for users to understand and check if they are paying a fair fee or not.
“The market is already welcoming the moves. Ethereum and bitcoin prices have both rebounded over the weekend amid the news, and the latest expectations of further government stimulus; but there is more to come. We expect ethereum to break new ground above $2,000 this year, with the hard fork and the fee changes all helping to cement its position as the number two cryptoasset, stoking further demand.”
“Pearson has been slow to adapt to the shift to online learning but there are signs its ‘digital first’ strategy is bearing fruit.
“The market for digital education tools is worth trillions of dollars a year, and it seems that Pearson is beginning to take its share of it.
“While revenue and profits tumbled last year, digital learning sales soared 18% due to increased demand for virtual learning throughout the pandemic. “
However, the fact that Pearson remains one of the UK’s most shorted stocks suggests that many investors doubt its ability to prosper in an increasingly digital education sector.
“They may be right, but there is no denying that the publisher has made progress in the past two years.”
Vivendi published yesterday its results for the year 2020 and cast a doubt about a possible acquisition of a stake in M6. Vivendi’s revenue amounts to 16.09 billion euros, up +1.2%.
While some of the group’s businesses, mainly Havas Group and Vivendi Village, were impacted by the consequences of the health crisis, others showed good resilience. Among them:
– Universal Music, which reported 7.4 billion euros in revenues, up around 5%, and includes four artists in Spotify’s Top Five (Drake, J Balvin, Juice WRLD and The Weeknd), the number one song of the year (Blinding Lights by The Weeknd) and two of the top three albums (After Hours by The Weeknd and Hollywood’s Bleeding by Post Malone),
– The Canal + group, which has 21.8 million subscribers, 8.7 million of whom are in mainland France, and generates revenues of around €5.5 billion,
– Or its publishing house Editis which reached €725 million, up 5.6% compared to 2019 and which has seen a strong rebound in its activities since June 2020 in France.
Thanks to this, EBITA (adjusted operating profit) stands at €1.6 billion, up 6.6% compared with 2019.
Vivendi has been able to show resilience and has had to adapt to continue serving and entertaining its customers in the best possible way, while reducing its costs to preserve its margins. The company also has significant financing capacity. As of December 31, 2020, the Group’s confirmed credit lines were available up to €3.3 billion, which could be used by the company to buy out Bertelsmann’s stake in M6.
2.35 billion share buyback programme and the strategy implemented by Vivendi to deal with the health crisis. The share has almost doubled in one year.
For 2021, the plan to distribute 60% of Universal Music’s capital to Vivendi shareholders, the possible repurchase of M6 and the evolution of the company’s CSR programme should be the main elements impacting the share price in the coming months.
The Syndicat des Éditeurs de Logiciels de Loisirs (SELL) today presented the new edition of the Essentiel du Jeu Vidéo (Video Game Essentials), which provides a comprehensive review of the French market.
Unsurprisingly, it reveals that the year 2020 has been an exceptional year for the video game industry.
In France, this industry generated a turnover of 5.3 billion euros, an increase of 11.3%. More than half of this turnover (51%) was generated by console gamers, 27% by mobile gamers and finally 22% by PC gamers.
With a turnover of 1426 billion euros in France, up 16% compared to last year, mobile games are therefore starting to take on an increasingly important role.
According to data from Apple Store and Google Play, 43% of downloads (all applications combined) are games, representing 67% of consumer spending!
The containment measures put in place by countries around the world have thus greatly benefited the growth of this industry, which now has 36.46 million players. And, contrary to popular belief, the average age of French players who play regularly is 39 years old and 47% are women!
As people can no longer really see each other, the majority of people have turned to video games, which have made it possible to entertain, bring together and federate millions of players throughout the world despite the unprecedented health context.
The launch of new generation consoles, the development of mobile games and the arrival of new successful games such as Animal Crossing on Switch or Among US have strongly contributed to the craze around this sector.
In addition to commercial successes, the year 2020 also marked a profound change in the way the video game industry is viewed.
Often criticised, video games are now seen as a positive and interactive medium offering many opportunities beyond their primary function of entertainment.
And this trend is expected to continue this year. The recent announcements by Nintendo on the release of its new Pokémon games, the announcement of the takeover of Fall Guys by Epic Games, the release of a new Star Wars game announced by Ubisoft and the highly anticipated IPO of Roblox will be new news to be closely followed in 2021!
“In a world where dividends have been under significant pressure, especially in the UK, the London Stock Exchange Group’s 7% dividend increase announced this morning is eye-catching to say the least. Its “confident outlook” also bodes well for future progress.
“Revenues are up and the completion of the Refinitiv buyout is a positive step for the listings business, as it can focus on providing quality data services to clients.
“The results also noted BlackRock picking the FTSE Russell for the first climate risk-adjusted Government Bond ETF – a good PR victory for the firm in a competitive growing marketplace. And it is winning other business too. Deliveroo recently announced it will list in London, which is a another high point.
“In the background, the Government is keen to make the UK stock market home to more tech businesses and LSEG will be at the middle of this overhaul. The UK Government post-Brexit wants to portray its markets as open and innovative, as any major listing player will receive the lion’s share of incoming offerings.”
In today’s Q4 earnings report, Snowflake, which publicly listed in September 2020, reported a loss of 70 cents a share on $190 million revenues, compared to Wall Street analyst expectations of a loss of 18 cents per share on revenue of $178.5 million.
The stock has already reacted out of hours, declining more than 4 per cent.
On its first day of trading, the stock traded above $250, from its original price of $100-110. Backed by Berkshire Hathaway, Snowflake was the largest software IPO ever, raising more than $3.4 billion in funding.
In its Q3 report, Snowflake announced a loss of -$1.01 per share, much worse than the expectation of -$0.25 per share. This now means that its first two reports as a publicly listed company have broadly missed analyst expectations.
Sales were expected to increase in Snowflake’s latest report, especially as its chief financial officer stated last quarter that the company would continue to grow its sales department. Sales did improve last quarter, but overall performance was dragged down by spend on sales and marketing.
Two major areas of focus in the company’s Q4 report were Snowflake’s Dollar Based Net Revenue retention rate, as well as the addition of its new customer base. These key metrics have continued to increase for Snowflake, adding another 19 Fortune 500 companies and enjoying a higher retention rate than Q3 of 168 per cent.
Snowflake’s guidance for FY22 shows revenues are likely to slow down and gross profit will increase, with product revenue pegged at $1 billion.
As revenues are unlikely to continue growing at the same rate, Snowflake is currently trading at an eye-watering valuation. With the amount Snowflake is spending on sales and marketing, investors would be expecting year-on-year growth to increase, but guidance suggests it will be 40 per cent lower than FY21.
So, will Snowflake continue to grow after its Q4 report? Or will it simply melt away?
“Taylor Wimpey’s full-year financials aren’t pretty, but they must be taken in context during what was a completely unprecedented year.
“The housing market and building sites were effectively closed for the second quarter, which has had a serious effect on completions and sales.
“However, the property market has recovered strongly since then, boosted in no small part by the Government’s decision to scrap stamp duty on properties worth less than £500,000.
“Taylor Wimpey’s performance has mirrored that of the wider market, picking up in the second half of the year to the extent that it once again feels able to pay a dividend.
“Rishi Sunak’s Budget plans to increase the supply of mortgages to those with small deposits will provide fresh impetus to the market and will probably result in further house price inflation “While we don’t know the full details of the scheme yet, anything that makes buying a home more attractive will ultimately line the pockets of developers.”
In today’s Q4 earnings report, Nio smashed through analyst revenue expectations of $742 million, to instead turn out $1.02 billion in revenues.
Figures from January and February 2021 sales were particularly positive for Nio, showing 352 per cent and 689 per cent increases in sales year-over-year.
However, share price has already fallen by 6 per cent out of hours, as investors were disappointed with Nio reporting a larger than anticipated loss of $0.14 per share.
Gross margins increased to 17.2 per cent up from 12.9 per cent, which means that higher vehicle deliveries will be key to ensuring that the company can turn a notable profit in the future.
The earnings report depicts a positive cash flow for Nio, which climbed to $6.5 billion up from $3.3 billion in Q3.
Production increases are key for Nio, as this will move towards further deliveries. Its strong balance sheet will certainly help this key metric in 2021.
Moving forward, Nio’s 2021’s growth will likely depend on government policies in China, as well as its planned expansion into Europe through the year.
Will Nio continue to nip at Tesla’s heels in 2021? Or will it run out of energy?
Zoom – the leader in modern enterprise video communications – once again delivered an earnings beat with $1.22 per share on revenues of $888.25 million, compared to analyst expectations of profits of 78 cents per share on revenues of $810 million.
Zoom’s share price has already reacted out of hours, climbing more than 10 per cent.
Zoom has been a huge successor of the global pandemic, gaining recognition for helping individuals, groups and workplaces to stay connected. As a result, this earnings report has signed off with a fiscal year adjusted profit of $995 million.
Cash flow also doesn’t seem to be an issue for Zoom, with the company reporting a 994 per cent year-over-year increase in operating cash flow. Zoom will be focused on increasing security measures over the next quarter, as this seems to be its biggest downfall at present.
Zoom’s guidance for the fiscal Q1 2021, demonstrates that the company is still expected to see its huge growth continue. Revenue outlook has been pegged at around $900 million, above Wall Street expectations and proving that Zoom still may have significant room to flourish and grow.
However, with the pandemic starting to ease in many western countries and a return to offices in sight for many this year, what will be in Zoom’s product roadmap to keep fueling demand beyond lockdown?
“Zoom Video Communications has emerged from obscurity to become the poster child of the stay-at-home economy since the start of the pandemic. With large swathes of the workforce forced to work from home, the firm’s revenues have rocketed, tripling over the past year.
“However, there are questions over whether Zoom can sustain such strong growth. Governments all around the world are eyeing the end of the pandemic and will soon be encouraging their populations to go back to the office.
“While we believe homeworking is here to stay, it is also likely that many workers will prefer to return to the workplace a couple of days a week, at least. Therefore, it’s likely that Zoom’s days of runaway revenue growth are numbered.”
“The past 12 months has been perhaps the most difficult and testing period in the history of aviation.
“British Airways parent IAG’s results are a testament to that, with revenue plunging, passenger numbers a fraction of what they were and debt spiraling.
“With the pace of vaccinations picking up in many countries, there is talk of a tentative reopening of the skies for those who have had a Covid-19 jab – a long overdue piece of good news for the industry.
“However, even if flights return by summer, as is hoped, IAG and the wider airline industry will be wearing the scars of this pandemic for years to come.”
Engie has just published a record net loss for 2020 of 1.5 billion euros against a profit of 1 billion a year earlier. This poor result is due to a depreciation of 2.9 billion euros of two nuclear power plants in Belgium, the group estimating that the extension of their lifespan would not go beyond 20 years.
In addition, current operating income (ROC) was down 21% to 4.5 billion euros due to the impact of the health crisis.
The gas and electricity supplier, however, highlighted the progress made in the simplification of the group with the sale of 29.9% of Suez for 3.4 billion euros, which marks a new strategic direction and an increase in Client Solutions, GTT and ENGIE EPS activities.
In terms of forecasts, Engie is confident and aims for an overall financial performance in 2021 which should significantly improve, with recurring net income of between 2.3 billion and 2.5 billion euros and an operating profit of between 5.2 billion at 5.6 billion euros specified Engie.
Engie has decided to increase its tariffs by 5.7% on March 1 compared to the scale in force since February 1, 2021, because the prices on the wholesale gas markets have been supported this winter by strong global demand t due to the cold snap on the Asian and European continent.
Regarding the dividend, the group of “utilities” will propose a dividend of 0.53 euros per share, against 0.80 for the previous year.
On the stock market, the results led to a 2% drop in the stock, posting a two-month low. The performance has been stable since the start of the year at -0.60%!
On 26 February, Airbnb will release its first earnings report since going public, wrapping up a whirlwind year for the company and the travel industry as a whole. In December, Airbnb’s shares were originally priced at $USD68, but then quickly accelerated to $USD144 on its first day of trading. The stock has continued to gain momentum this year, gaining around 43 per cent at $USD200 per share.
Airbnb has positioned itself well – and arguably better than its competitors – since the start of the pandemic, pivoting its offerings by making significant changes to its cancellation policies and user experience.
As the globe continues to be vaccinated and restrictions start to ease as a result, Airbnb is likely to receive an injection of interest from travellers over the next few months, looking to occupy and rent residences.
Analysts expectations are $USD750 million in Q4 revenue, and earnings per share of $USD-8.41 due to the fees associated with its IPO.
Salesforce is deemed to be one of the many winners of the global pandemic. As a company that has thrived since businesses transitioned to a remote working model, Salesforce has continued to grow its revenues throughout 2020. Its share price has gained around 6 per cent YTD and trading at $USD235 a share.
A major focus of this earnings report for investors will be Salesforce’s acquisition and integration of Slack. The acquisition was not only costly at $USD27.7 billion, but it may also affect short term profits for Salesforce.
Ongoing growth in the cloud sector is also anticipated to resonate in the company’s earnings. With Salesforce’s development in AI, the company has landed some impressive partnership agreements with the likes of Alphabet and Amazon.
Analyst expectations are $USD5.68 billion in revenue, and earnings per share of $USD0.75.
As one of the leading companies manufacturing the COVID-19 vaccine, it’s expected that Moderna’s earnings report will reflect its success as it rolls out.
In January 2021, Moderna supplied 18 million doses of its vaccine to the US government. The company is adapting its current vaccine to target separate strains of the virus, as well as options for children and pregnant women. This is likely to provide optimism in future guidance from Moderna.
With lingering competition from rivals Pfizer and AstraZeneca, who have both received approval in Australia and the United Kingdom for its respective vaccines, Moderna’s global distribution is still low. Moreover, Moderna’s spend on research and regulatory requirements is also expected to have increased operating costs for the company in the quarter.
Analyst expectations are $USD318 million in revenue and earnings per share of $USD-0.22, compared to just $14.1 million in revenue and $USD-0.31 in 2019.
Global pizza restaurant chain Dominos announces its Q4 earnings report on Friday morning, and it’s expected to be a scorcher.
After feeding and meeting customer demand through the global pandemic, Dominos has adapted many aspects of its business to reflect the ‘new normal’. From its mobile app, to its delivery policies; Dominos has simplified and streamlined the order process for its customers.
A big focus for investors will be Dominos dividend payments, which increased in its Q4 2019 report. Many investors will be hoping that a strong 2020 performance will lead to a higher dividend payment.
However, one cause for concern for investors is the company’s high level of debt, which is only increasing each year as a result of penetration in new global markets. Sustaining customer numbers at its current levels will also be a crucial focus for Dominos, in order to retain its growth throughout 2021.
Analyst expectations are $USD1.38billion in revenue and earnings per share of $USD3.79.
“In terms of financial performance, at times Aston Martin resembles more a spluttering lawnmower engine than a highly-tuned sports car.
“It’s perhaps a little unfair to level too much criticism at firms in the middle of a global pandemic that has closed large swathes of the economy, but Aston’s problems long predate coronavirus.
“It has been consistently loss-making ever since its hotly-anticipated IPO in October 2018 and its shares are now trading some 80% lower than when it made its debut as a public company.
“Fashion magnate Lawrence Stroll, Aston’s executive chairman, says he has a plan to revive the firm – and there are signs of progress in these results, particularly with the firm predicting a big boost to wholesale sales in the coming year.
“But after such a lengthy period of bleak underperformance, shareholders will want to see the firm kick through the gears fairly swiftly when the economy returns to normal.”
“NVIDIA has consistently beat analysts’ expectations throughout coronavirus and, though growth has slowed a little, it is expected to continue to perform strongly into the next quarter.
“Shareholders will be disappointed that the deal for British chip maker Arm looks dead in the water, but NVIDIA already has a very strong position in this market.
“While its share price has rolled back in the past few days, NVIDIA has offered outstanding growth for investors, with its share price up more than 185% since the market sell-off last March.
“Tech stocks have wobbled over the past few days, so it may pay for investors to be cautious before adding to their portfolios at present, but the long-term prospects for NVIDIA looks positive. And the diversity of its income streams mean it should be more resilient than some of its peers, even if market conditions deteriorate.”
“Bitcoin has rebounded from yesterday’s sell-off, with both retail and institutional investors using the falls in prices to add to their positions.
“Jark Dorsey’s Square was one particularly notable backer. The payments company stated it had invested $170m more in bitcoin. With yet more endorsements from leading figures in the world of finance and technology, the direction of travel longer-term is clear – bitcoin and its peers are here to stay and are getting more integrated in our lives. This bodes well for future prices.
“Bouts of volatility impact all asset classes but investors must focus on the long-term. It’s likely we’ll see similar events in the future for bitcoin and other cryptoassets like ethereum, which also saw its price rebound sharply overnight. The key for investors is to focus on their financial goals rather than overreact to short-term moves in markets.”
“Coronavirus has made us all much more aware of good hygiene practices, such as disinfecting work surfaces and washing our hands regularly.
“As a result, the pandemic has been very kind to firms such as Reckitt Benckiser, which makes disinfectants such as Lysol, Finish dishwasher tablets and Dettol antiseptic.
“However, shareholders have a right to question whether or not Reckitt’s strong recent sales growth has been artificially boosted by Covid-19. Remember, this is a firm that reported lackluster revenue growth and a £2.1bn pre-tax loss a year ago.
“Laxman Narasimhan, Reckitt’s chief executive, believes the firm has turned a corner. But I suppose we will only know for sure once coronavirus is a distant memory and we can see how it has affected consumers’ long-term buying behaviour.”
French payment group Worldline released its results today and exceeded analysts’ expectations.
While 2020 was marked by the bankruptcy of Wirecard, its main French competitor, Worldline, took the opportunity to acquire Ingenico and achieve 2.748 billion euros in revenue in 2020, a decrease of 4.6% compared to the previous year.
The company was notably impacted by measures related to Covid-19 and their effects on European economies, mainly during the second and, to a lesser extent, the fourth quarter of the year!
The group’s operating margin before depreciation and amortization (OMDA) reached 700 million euros, or 25.5% of sales, an increase of +60 basis points compared to 2019.
This solid performance compared to the 2020 objective of reaching approximately the same percentage as in 2019, reflects the transformation and synergy plans underway at Worldline, as well as the important measures taken to adapt the cost base in order to mitigate the impact of Covid-19 on the profitability of the company while continuing to invest in strategic projects to fuel future growth.
Worldline’s net income share stood at 164 million euros, down by 147 million euros compared to the 2019 net income and the net income normalized portion stood at 361 million euros (+61 million euros compared to the previous year), or 13.1% of turnover.
Finally, Worldline achieved 295 million euros in cash flow in 2020, including 54 million euros in acquisition costs of the Ingenico transaction. Excluding these costs, the group’s free cash flow increased by + 21.3% compared to 2019!
The year 2021 should allow the French group to continue its development. Whether through a gradual improvement in the health crisis or through the integration of Ingenico and Gopay into its offer, the French payment group is targeting a rebound in its activity in 2021.
Fnac Darty’s results were unveiled yesterday after the market closed, and they came out rather convincing.
Despite a very unfavorable start to the year when the group had to deal with a supply crisis for its products due to manufacturing disruptions in China, Fnac Darty managed to publish a turnover in 2020, up 1.9% to 7.49 billion euros.
This was made possible by an excellent 4th quarter (+ 9.6%), where online sales and click & collect were available for all products, which limited the impact of the closure of certain stores during the second confinement in November.
Over the year, the leader in the distribution of cultural products and household appliances gained more than five million new active web customers, and online sales increased by 55%, thanks in particular to the power of the omnichannel. The group has also significantly accelerated its sales on mobile, the weight of which represents more than 64% of traffic on its sites, up from last year.
Due to financial charges and additional tax charges, net income fell 16% to 96 million euros.
In addition, Fnac Darty unveiled a new strategic plan for 2025, called Everyday, which aims to increase the share of digital in the group’s turnover to 30%.
The levers of the Everyday plan will aim to generate free operating cash flow of 500 million euros over the period 2021-2023 and at least 240 million per year from 2025. This excess cash will make it possible to “finance operations external growth ”and regularly deliver a dividend to its shareholders, according to the group’s press release.
On the stock market, operators appreciated the results as the title rose 8% at the opening, which once again tipped the performance into the green since the start of the year (+ 3.5%). Over a rolling year, the stock is up 20%!
Over the course of his testimony, Jerome Powell reiterated the idea that the recent rise of inflation is a temporary phenomenon, trying to reassure investors after the steep rise of the US Treasury yields over the last few months.
However, there are some concerns. Firstly, the 10 years US Treasury yield is now trading around 1.4%, while the dividend yield on the S&P 500 is at multi-year lows of around 1.5%. When these two yields are too close, investors tend to change something in their portfolios.
Secondly, the recent rally on WTI could dampen the economic recovery, which is globally still very fragile.
Finally, the recent underperformance of the tech industry is a natural drag for equities, due to their weight on the indexes. The recent rally of cyclical sectors (energy, basic materials and financials) cannot compensate for the weakness of tech companies: that is why having a well-diversified portfolio is now, more than ever, a must for retail investors.
“Today’s correction for cryptoassets is part of a wider sell-off in markets globally, being driven by profit-taking. Investors are closing positions, which will have generated significant gains for many of them.
“However, as positions are being closed and prices fall, eToro data shows even more new investors are coming on stream for the first time and buying bitcoin, with 26% more opened positions than closed ones in the last seven days (to Monday).
“The sell-off will attract more investors longer-term. However, in the short-term some we will see some volatility, as we are today. We still see great potential for bitcoin and peers as we move through the year.”
“HSBC had been signaling that it would restart its dividend payments for a while, so perhaps this has come as no surprise for shareholders.
“However, while HSBC outperformed analysts’ expectations slightly for 2020, I think there will be shareholders out there this morning alarmed by how radically its performance has deteriorated.
“Admittedly, coronavirus and perpetually low rates mean that conditions are terrible for banks at the moment, but HSBC’s decline over the past two years has been severe. “Since 2018, revenue has fallen 6%, but pre-tax profit has plunged an enormous 55% and basic earnings per share – a key measure of profitability – is down nearly 70%.
“So while shareholders will welcome HSBC’s decision to resume dividends, many would probably prefer to see the bank return to growth.”
On the 24th of February, Jack Dorsey’s mobile payments company Square will report its Q4 earnings, with analysts expecting quarterly revenue of $USD3.1 billion and earnings per share of $0.01.
In its previous Q3 earnings, Square announced a blowout report, with earnings per share more than doubling expectations, and revenues increased by over 1,000 per cent.
The company has already enjoyed a strong start to 2021, jumping more than 25 per cent and trading last week at record highs of $USD281. Square has continued to disrupt the payments and banking sector with developments from its Cash App, which allows users to transfer funds and cryptoassets to one another using a mobile phone. The current euphoria around cryptoassets will undoubtedly show an increase in user activity.
One of the key factors from this earnings report will be the performance of bitcoin. In October 2020, Square purchased $USD50 million worth of bitcoin for its balance sheet. Bitcoin has increased by 340 per cent since this time, which will only support Square’s bottom line.
However, continued product development expenses are expected to weigh heavily on Square’s profitability. In Q3, product development expenses increased by 35 per cent from the year-ago period and analysts are pricing in and increasing this again for Q4.
Furthermore, Square continues to face fierce competition from Paypal who is currently growing at its fastest rate since 2017, thanks to strong new additions such as accepting cryptoassets and its recent ‘buy now, pay later’ offering.
Will Square continue to dominate the payments space? Only time will tell.
“Danone, one of the world’s leading agro-food groups, published its results for 2020 this morning. Turnover was down 1.4%, weighed down by the 15% decline in its “Waters” division and current net income fell 13% to 2.19 billion euros.
These figures, in decline but in line with expectations, have eclipsed the dissensions that reign between shareholders and the management of the group. In fact, last week, the American management company Artisan Partners, which owns 3% of Danone, announced that it wanted a strategic reorientation and separated the functions of chairman and managing director, demanding the departure of current CEO Emmanuel Faber. The latter said this morning that he would make “no comment on the governance of the group today”.
In its change of strategy, Artisan Partners wants Danone to sell 30% of the “Waters” and “Dairy products” divisions. According to the US shareholder, medical nutrition and infant nutrition are two separate businesses.
Danone for its part specified that an investor day would be held on March 25 to unveil “its medium-term acceleration plans” as part of its reorganisation plan.
On the stock market, investors still trust Danone, which rose 5% this morning at the opening. Since the start of the year, the title has outperformed its great rival world number 1 Neslté, who is down -5%.”
“Bitcoin reaching a $1trillion market cap is momentous for the industry. Despite being criticised only this week as a bubble waiting to burst and an “economic sideshow”, it has yet again proved its detractors wrong and broken another record. Of course, it can be volatile, but achieving such a large market cap is not to be sniffed at. Today’s milestone demonstrates bitcoin’s growing power as it looks to disrupt the traditional financial landscape.
“It must be said that last week saw a real turning point for the cryptoasset – with the likes of Tesla, Mastercard and BNY Mellon lending their support – and that confidence is continuing to buoy the market. For investors, it’s an exciting time, especially for long-term speculators who will have seen a 60% surge just this month.
“There are warning signs that there may be a market correction on the horizon, but in the meantime, there seems to be no stopping bitcoin’s upwards trajectory.”
“Investors will be heartened to see that Barclays and now NatWest have decided to restart payments to shareholders, and we believe it’s very likely both HSBC and Lloyds will follow suit when they report next week.
“Dividends aside, NatWest’s balance sheet is showing obvious signs of strain from coronavirus, having dished out 258,000 mortgage repayment holidays to customers last year.
“Margins have been squeezed to uncomfortably low levels and, like Barclays, NatWest has set aside billions in extra capital to cover a potential spike in bad loans as a result of the pandemic.
“The return of bank dividends is welcome, but it should not be taken as a sign of health in the wider banking sector. Banks are facing some serious headwinds and it could be some time before these ease.”
“Two of the main French telecom companies, Bouygues and Orange, published their quarterly results this morning.
With the announcement of these results, Bouygues also took the opportunity to announce that the functions of CEO and Chairman will now be separated.
While Martin Bouygues had been the group’s CEO for over 30 years, he will now be replaced by Olivier Roussat, who previously held the positions of Deputy CEO and Chairman of the Board of Directors of Bouygues Telecom and Colas!
Regarding the annual results, the two companies were also impacted by the health crisis. First of all, Bouygues achieved a net profit of 696 million euros, down more than 40% in 2020! Turnover fell 9% to 34.7 billion euros, while its current operating income fell to 1.22 billion euros against 1.67 billion a year earlier.
The group operating in the construction industry, the media (TF1) and telecoms now expects a more significant recovery in its activity in 2021 and a turnover and results “much higher than those of 2020, without however reaching the level of 2019 “.
Orange, for its part, did not surprise either, and the company’s 2020 results are approaching the targets the company revised last July.
The company has also announced the launch of TowerCo, a structure dedicated to its mobile infrastructure.
This decision therefore follows a difficult year for the operator, which was notably impacted by the health crisis and competition on the European market.
Organic cash flow from telecoms activities therefore amounts to 2.5 billion euros for Orange and exceeds largely the objectives announced for 2020!
Orange Group sales amounted to € 42.3 billion in 2020, up + 0.3% year-on-year on a comparable basis. As of December 31, 2020, the company had 11.06 million customers across the Group, up 2.7% year-on-year and mobile services had 214.1 million accesses, up + 3.3 % over one year, including 77.4 million packages!
The two companies also announced the distribution of a dividend for the fiscal year 2020. For its part, Bouygues has announced that it will distribute its annual dividend at 1.7 euros, while Orange will propose a 2020 dividend of 0.70 euros per share, i.e. more than € 0.20 than was expected following the favourable decision of the Council of State on the subject of an old tax dispute.
And while the situation is unlikely to return to normal right away, both companies have nevertheless forecast better results in 2021.”
“For every positive in Barclays’ full-year results, investors will be able to find something that makes their hair stand on end.
“Starting with the positives, it is an incredibly welcome sight to see that Barclays has resumed its dividend payment, which is in itself a sign that it is confident in its outlook.
“Secondly, the strong performance of the bank’s corporate and investment arm meant that it was able to remain profitable throughout the pandemic, something that few firms are able to say.
“However, there are some worrying signs in Barclays’ retail arm, which has been battered by lower margins and the fact that people have been taking on less credit and paying down debts during coronavirus.
“The deteriorating economic situation also forced Barclays to increase the amount of cash it sets aside for bad lending by more than 150% to £4.8bn, which could be a canary in the coalmine for something serious coming down the line.
“If the economy falters again then bad debts could become a problem not just for Barclays but the UK banking sector as a whole.”
The health crisis had a very negative impact on the results of the luxury group Kering, its revenues and net profit being down by 17.5% and 6.9% respectively in 2020.
There are many explanations, first of all, the group was severely penalized by the closures of stores around the world in the first half of the year. In addition, its main driver of growth, the Gucci brand, which represents 60% of the group’s turnover, saw its sales fall by 21% in 2020 to 7.44 billion euros. Yves Saint Laurent sales, for their part, fell 13.8%.
However, the good news came from its third flagship brand, Bottega Veneta, whose activity grew by 5% due to the rebound in sales in the Asia-Pacific zone in the second half of the year. This increase is mainly due to the strong growth in sales to distributors, which increased by half over one year in 2020.
The management is not however alarmist on the future of the conglomerate with the fifteen luxury brands, the dynamics in China as well as in the United States remain “encouraging”, even if the situation is more difficult in Europe where many health restrictions remain in place.
Kering’s board of directors will distribute a dividend of 8 euros for fiscal year 2020, stable compared to 2019.
In contrast to the stock market, investors did not appreciate this morning’s publication, the stock was sanctioned with a fall of -7% at the opening. It largely underperforms its sector with a drop of -11.5% since the start of the year when its great rival LVMH has grown by + 5.6%.
Shopify has reaped the benefits of the online shopping revolution, resulting from people being stuck at home during the global pandemic. The global eCommerce platform allows anyone to set up an online store and sell their products.
The company’s share price has risen more than 180 per cent in the last year, with sales soaring as retailers and merchants convert their traditional bricks and mortar presence into eCommerce stores.
On Wednesday before the US market opens, Shopify will announce its Q4 earnings report with analysts anticipating revenues of over $906 million, up 79 per cent from Q3 and earnings per share of $1.21. Shopify has crushed expectations on its previous four earnings reports. Wall Street analysts have set the bar high for the company’s upcoming report.
Earlier this month, Shopify announced its ‘Shop Pay’ service will integrate with Facebook and Instagram. The service allows users to checkout 60 per cent faster than usual via a mobile device. The ‘Shop Pay’ service and other merchant tools – like buy now pay later options for some sellers – are set to provide a huge revenue boost for Shopify.
However, there are some doubts about Shopify’s reliance on its relationship with Facebook. If the social networking giant continues to come under fire for its data usage, its advert targeting could be restricted. This could adversely affect small businesses that will be using Shopify’s products, which in turn could impact the payment company’s revenues because its model is based on the number of transactions processed.
With a significant share price jump in the last year, Shopify is trading at all-time highs of $1,445. It’s price to earnings ratio of 927 is one of the highest in the US market right now. The high valuation of Shopify’s shares may put off potential investors, therefore dampening sentiment for the short term.
Once lockdown restrictions are lifted globally and physical brick and mortar stores reopen, investors will want some reassurance over Shopify’s growth potential. Shopify may have had a stellar 2020, but will they be able to retain sales and sustain growth over the long-term?
While coronavirus has squeezed margins, British American Tobacco put in a relatively resilient showing last year.
“From a returns perspective, shareholders will be concerned that BAT predicts a 3% decline in the tobacco market next year, but it is switching customers over to non-combustibles at an impressive rate. Last year it switched over 3.5 million, a giant leap towards its aim of 50 million by 2050.
“Despite the pandemic, it was able to achieve double-digit profit growth, chip away at its sizeable debt and increase its dividend – no mean feat given the current environment.”
“Bitcoin’s incredible rise this year shows no sign of abating. This latest landmark shows how it now has to be considered a mainstream investment asset.
“The fact that major multi-national corporations, from BNY Mellon to Mastercard, are queuing up to lend support to bitcoin demonstrates the clout it now holds. Its buying power is only going to become greater as more big names jump on board.
“Ultimately, bitcoin is disrupting the status quo, and capitalising on the waning power of the dollar. As retail investors look to hedge against inflation, and institutions look for avenues to help drive growth, there’s no reason why $70,000 can’t soon be the new normal. Although, realistically, the cryptoasset could aim higher based on its impressive 2021 performance thus far.”
“BHP had an incredibly strong second half to 2020 and is symptomatic of a sector in the ascendency.
“Miners such as BHP have been boosted by incredible demand from China for iron ore, the key component in making steel, which has sent the price of the commodity soaring by more than 85% in the past year.
“That has caused BHP’s profits to jump and allowed it to pay out a record dividend at a time when investors are crying out for good income-paying stocks.
“For a long time, miners have gone unloved by many investors. However, we believe that will change as developed economies emerge from their coronavirus-induced economic hibernation and direct capital towards infrastructure projects and growth creation.”
Palantir Technologies, a company that has been particularly popular amongst many eToro retail investors globally since its IPO in September 2020, has seen its share price climb more than 200 per cent in the last four months.
Analysts have high expectations for the American software company’s upcoming earnings report, which is released tonight before markets open in the US. Palantir Technologies provided revenue guidance at $300 million for Q4 from its Q3 earnings, and analysts expect around $302 million in revenue.
Since the start of December 2020, Palantir Technologies has continued to accelerate its strong customer acquisition, signing a number of deals including the US FDA, this will add up to in excess of $200 million in revenue.
Palantir Technologies’ recent Demo Day in January 2021 was a roaring success, impressing analysts and industry experts across the board. The day provided an insight into the platform, what it can offer to large businesses, as well as its longevity. Shortly after, Palantir Technologies also announced its partnership with IBM to deliver AI to businesses.
A strong earnings report from Palantir Technologies will provide a bullish sentiment for investors moving forward, especially as the company continues to mature in the market. However, that being said, the company has only released one earnings report as a publicly listed company, therefore providing little insight into what to expect from its Q4 earnings.
The share price of Palantir Technologies has soared after the recent string of revenue announcements, which could mean that if the company beats analysts expectations we may potentially see little to no price action. Palantir Technologies has had a strong start as a publicly listed company, but can it maintain this momentum?
The gambling operator, la Française des Jeux (FDJ), listed on the stock market in November 2019, recorded a 6% increase in its net profit in 2020 to 214 million euros, despite a slight drop in its revenues to 1.92 billion.
This profit increase was made possible by several factors, first of all its Loto and Euromillions draw games confirmed their popularity, with a growth in stakes of 6%, to 3.2 billion euros, which shows that despite the crisis, the French continued to play.
In addition, for the first time, Internet stakes for lottery games exceeded the billion euros mark, to 1.1 billion, up 60%. In addition, the charges related to its privatization in 2019 positively affected the balance sheet in 2020.
The group says it is “confident in its ability to combine medium-term growth and a high level of profitability”. The strategy, which consists of always being more “omnichannel” is bearing fruit, by focusing both on its tobacconist network, digital, but also services for individuals,
The Board of Directors has decided to increase its dividend quite significantly, from 0.45 euro to 0.90 euro per share, which corresponds to a distribution of 80% of net income, more to investors. The dividend yield is thus 2.4%
On the stock market, investors appreciated the results unveiled by the FDJ, because the stock took 8% at the time of the announcement and posted a record at 40.51 €, it then declined to finish up by 3.24 %. Since its IPO, FDJ shares have risen by 97%!
After its IPO on the Nasdaq last Thursday, Bumble’s shares have soared, trading at over $75 compared to its original price of $43. We have seen numerous large gains from IPOs recently, with share prices from companies such as Airbnb and DoorDash rising after public listings in December 2020. These brands are familiar among retail investors and we know there is an appetite for them amongst investors on eToro.
The global pandemic has allowed Bumble to increase its user base to 100 million in 2020 from 75 million in 2019. Bumble has the opportunity to continue growing as it expands the brand across the world. Revenues are increasing, with each user spending more in 2020 than they did in 2019. This will need to continue, if Bumble wishes to compete with Match Group and narrow the market share, which is currently 40 per cent to 19 per cent respectively.
Bumble has generated huge interest in 2020, with growth in social dating raising its profile globally. However, Bumble may find it tough to maintain the same growth it experienced last year, as the demand for social activities increases, after world-wide lockdown restrictions lift. Such activities may lead to less reliance on social apps over the next few years.
“The cryptoasset world is bursting into the realms of traditional finance at a staggering pace. Major payments provider Mastercard announced it will support digital assets directly via its own network, signaling yet another major milestone for the industry.
“Mastercard is the operator of the second-largest network of credit cards in the world, and for a business of that size to be making this decision shows the long-term trend for cryptoasset adoption.
“While we may see short-term upside in the price of bitcoin and other cryptoassets as a result of this, Mastercard’s announcement – coming so soon after Tesla’s own comments earlier this week – has real long-term implications for bitcoin and its peers.
“Bitcoin and its peers are, quite simply, going to be part of the mainstream financial universe sooner rather than later. I expect demand to surge and see bitcoin prices hitting at least $70,000 by the end of this year.”
“AstraZeneca has become one of the main drivers of growth in the pharmaceutical market in recent years and the pandemic hasn’t changed that.
“Strong product sales and a decent looking pipeline should see the drugs giant to double-digit revenue growth for the coming financial year as predic “However, perhaps to the disappointment of shareholders, there was precious little in Astra’s results about the thing they wanted to hear most about: its Covid-19 vaccine.
“Astra has pledged not to profit on the vaccine ‘during the pandemic’, meaning it will provide it on a cost basis as long as the pandemic lasts.
“The drugs giant has told investors they will have to wait until next quarter until it starts reporting sales figures for the vaccine and, even then, we may not see a major impact on revenue.”
The year 2020 was marked by the Covid 19 pandemic!
But while some industries such as tourism and aviation have experienced enormous difficulties, others such as teleworking and video games have greatly benefited from measures put in place by governments around the world.
Lockdown has played an important role in the development of video games in recent months.
With people cut off from social interactions, video games have allowed millions of players to meet each other virtually.
This trend has therefore benefited all video game publishers like Activision, which largely exceeded analysts’ expectations and announced 3.05 billion in revenues (up 24% compared to last year), in particular thanks to the success of the Call of Duty franchise which gathered 128 million monthly active users.
For its part, the Nintendo company also published record financial earnings last week, notably thanks to the success of Animal Crossing: NewHorizons, of which 19.41 million units were sold, far ahead of their second game, Mario Kart 8 Deluxe, of which 8 , 64 million units were sold.
The popularity of Animal Crossing also helped sales of the Nintendo Switch, which was also one of the best-selling game consoles this year with 17.74million units.
The shortage of new generation consoles, the lockdown and the success of the various Nintendo licenses have therefore been beneficial to the company this year, and this should continue in 2021.
Speaking of Switch, Ubisoft has also benefited from the success of this console and we are learning in the results published today that Ubisoft is the best third-party publisher in 2020 on this console, notably thanks to the game Just Dance 2020.
Several games have therefore contributed to the success of Ubisoft this year, and in particular the game Assassin’s Creed Valhall, which was the revenue record for franchise and enabled the company to exceed analysts’ expectations and achieve € 1 billion in net bookings, i.e. an increase of 120% compared to the same period last year, which represents far the best quarter in Ubisoft history.
Ubisoft has also announced a few days ago its collaboration with Lucasfilm Games to develop a new story-driven open-world video game set in the Star Wars galaxy, which appears to be a hotly anticipated item by analysts and could greatly benefit the company after the launch.
During their earning, video game companies have therefore all reaffirmed their ambition for the year 2021 and according to them, they fully intend to continue this momentum which could prove to be an interesting opportunity for investors.
Air Liquide, world leader in gases, technologies and services for industry and health, has just released solid results for 2020. The group, present in 78 countries, increased its net income (+ 4.4%) , maintained its turnover (-1.3%), and significantly increased its operating margin (+ 18.5%).
Sales in the “Gas & Services” division, or 96% of turnover, showed good resistance, as did “Global Markets & Technologies” which remained on a good trend.
Regarding geographic areas, the situations are contrasted with, in particular, good performance in Europe, driven by the “Healthcare” division, and robust performance in China, the countries of Eastern Europe and Latin America.
The energy transition is also becoming an important growth driver in the context of global recovery plans. The group’s investment opportunities are numerous, half of the projects being linked to the fight against climate change, and the use of hydrogen
The board of directors raised the dividend by 5 cents to € 2.75, ie a yield of 2%. On the stock market, the stock is one of the defensive stocks that are experiencing low volatility, the stock rose 1% in 2020, and this morning, when the results were announced, the performance was flat (-0.07%).
“Uber’s decision to diversify into food delivery in 2015 has made the firm much more resilient than it would have otherwise been during the pandemic. “Coronavirus has caused Uber’s ride-hailing revenues to fall off a cliff, but this has been offset to some extent by strong growth in its Uber Eats division. For example, in the third quarter food delivery revenue was up 125% year-on-year, compared with a 53% drop in so-called ‘mobility revenue’.
“The diversity of Uber’s business model has given investors comfort during the darkest days of the pandemic and helps explain why the firm’s shares are up an astonishing 302% since the great market sell-off in March. “We expect both Uber’s ride-hailing and wider group revenues to be subdued for much of this year, or at least until restrictions are lifted in the majority of its key markets. But we also expect more growth in the firm’s food delivery division, which has momentum on its side.
“Uber’s strong share price growth shows that investors see it as a good long-term prospect, regardless of the fact revenues are down quite heavily compared with pre-Covid. That tells us we can probably expect to see even greater investor interest once the worst of Covid has passed and it is able to kick up a gear.”
“Yesterday’s move by Tesla to invest in bitcoin and start accepting it as payment for its own products really moved the needle. Already there is talk of copycat moves from Apple and Google, linking it to their own payment systems.
“The shift to digital consumption is growing. We expect to see others follow in Tesla’s footsteps, with bitcoin payments increasingly making sense for businesses that conduct nearly all their sales online.
“The dramatic price move aside, this has far-reaching implications for companies. If corporates the size of Tesla, valued at nearly $1trn, believe bitcoin can be used in this way, and are willing to back its views with action, then others will undoubtedly start to consider it. Tesla has diversified its own business by investing in bitcoin on a grand scale. We believe other companies will also look to hold some bitcoin as both a diversifier, and as an insurance policy against the devaluation of other currencies.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “There aren’t many firms that are 20 years old and are still considered in growth mode, but Ocado is certainly one of those.
“The online supermarket is investing large sums of money to fuel its rapid ascent and to take advantage of the huge upswing in online grocery sales during the pandemic.
“That’s why its revenue is skyrocketing but, perhaps to the disappointment of some shareholders, it has made yet another loss.
“Remember, Ocado was founded at a time when ordering your groceries over the internet was very niche and so progress has been relatively slow and steady until the past few years.
“But the pandemic has turbocharged the shift to online and now ordering their weekly shop online has become a normal part of everyday life for a lot of people.
“If this trend endures after the pandemic has passed, Ocado could well deliver on its vast potential and become a rare British tech success story to rival the US.”
The number 1 French healthcare company, Sanofi, has just published its annual results this morning, they came out satisfactory. Net profit rose 4.2% to 7.35 billion euros, slightly above the consensus (7.28 billion).
These good results were made possible by the good sales performance of its asthma medication, Dupixent.
Regarding the global race for vaccines against Covid-19, Sanofi has been left behind by its American (Pfizer, Moderna) and British (AstraZeneca) counterparts. Recently, the results of an interim study on the vaccine developed with the English GlaxoSmithKline showed an insufficient immune response in the elderly.
Faced with the health emergency and production problems encountered by its competitors, Sanofi has entered into an agreement with BioNTech to help the German company accelerate the manufacture of the vaccine.
In terms of outlook, the pharmaceutical group still forecasts an operating margin rate of 30% by 2022 and over 32% in 2025. It is now around 27%
On the stock market, the Sanofi share has underperformed the CAC 40 for a year, –10% against -4% for the French index. The price nevertheless reacted positively this morning to the announcement of the results, up 3%.
Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, says: “It’s been a record-breaking week for Ethereum, and this new high today at nearly $1,700 shows just how solid the demand is for the cryptoasset.
“With more and more investors entering the market, the fundamentals supporting ethereum, and indeed bitcoin which is also back near record highs, are solid. We therefore expect ethereum to cross through the $2,000 mark in short order before reaching $2,500 by the end of the year.
“Ethereum is in such high demand because the asset is undergoing changes to make it even more decentralised, and even more secure, and this is attracting buyers from both the institutional and retail world. While it has been volatile so far in 2021, it is nonetheless seeing higher highs, as well as higher lows, and we expect it will continue to prove the doubters wrong.”
World leader in product lifecycle management software, Dassault Systèmes, has done better than weather the health crisis; the group has just published this morning a turnover up 11% to 4.45 billion euros, in 2020 and a net profit which remains solid at 491 million euros despite a decrease of 20%. Its operating margin remains impressive at 36% (+ 2.3%)
According to Pascal Daloz, Managing Director, Dassault’s results demonstrate “the extreme resilience of our economic model”, because the group has retained all of its employees, increased its research and development spending, and has not requested government aid.
The software leader has particularly benefited from the explosion of its revenues in the healthcare sector, which tripled to 797 million euros, mainly thanks to the subsidiary Medidata acquired in 2019.
Almost all of the vaccine producers (Pfizer / BioNTech, Moderna, AstraZeneca) have used solutions from Dassault Syst. to develop their different vaccines.
In total, Dassault Systèmes software is present in “more than 500 developments of vaccines or therapies linked to Covid 19 at the moment”, specified Pascal Daloz
In addition, the group has raised its forecasts of net earnings per share (EPS) from 4.10 to 4.15 euros, i.e. growth of between 8% and 10%.
On the stock market, the stock reached a new all-time high this morning on the announcement of its results, it is already up 8.4% since the start of the year!
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Once again, Unilever’s results are patchy, although the fact it managed to grow sales will be welcomed by shareholders.
“Aside from anything else, it shows demand for many of its products, such as its Domestos cleaning range and Dove soaps, has held up during the pandemic.
“That’s a very positive sign, of course, although a big chunk of those sales will have been positively influenced by lockdown, which we know resulted in bigger-than-normal spending on groceries, and home and personal essentials. Unilever’s job now will be to maintain that demand as we exit lockdown and coronavirus is defeated.
“It’s healthy cash flow situation demonstrates its resilience, but investors will probably be disappointed overall with this latest update, particularly that it has been unable to grow operating profit.
“However, these are exceptional times, of course, and therefore certain allowances should be given as firms try to tackle the ongoing crisis.”
“Depending on which way you look at it, Vodafone’s third quarter demonstrates resilience or is slightly disappointing.
“On the one hand, customer numbers grew across the board and the telecoms group delivered another quarter of record data traffic.
“However, on the other, it failed to turn those customers into additional revenue, which was down 4.7% year-on-year across the entire group.
“But investors should not base their decision to invest on one quarter’s earnings and instead focus on whether Vodafone looks a good long-term prospect.
“Looking further ahead, Vodafone has maintained its full-year earnings and cash-flow guidance, despite the dip in revenue, which is a positive.”
Created in 1994 by Henri Seydoux, the French company Parrot is today the European leader in the drone industry.
But with competition from Chinese companies like DJI and the massive arrival of other inexpensive Asian brands, the company has been going through tough times for the past few years.
After good performance, the company had exceeded 40 € in September 2015 and then fell back to less than 2 € per share!
It was at this point that the company decided to take a major strategic turn, now focusing on B2B sales primarily.
A movement that is starting to be rather well received by investors.
Thus, the company is recovering on the stock market and is up 117% over 1 year, with the share now rising above € 7.
Much hope therefore rests on the success of its new range of Anafi drones, very powerful drones designed for professionals such as first aid teams, firefighters or the military! By the way, this is one of the areas in which the Parrot company has already succeeded in convincing major allies.
After being selected by the US Defense Innovation Unit as one of the major suppliers of drones to the US Army in August, Parrot announced last month that it had been chosen by the Directorate General of Armaments to supply 300 ANAFI USA micro-drones for a period of 5 years to equip the three corps of the French army (Air, Sea and Earth), as part of its call for tenders launched last February.
These latest news seem to be a good sign for investors, states seem to have understood the importance of new technologies in surveillance and weaponry in the future.
We will now have to wait for the announcement of the results, which will take place on Friday, March 19, to know if this strategic move to focus on B2B customers, started by the company for 2 years now, begins to bear fruit on the company’s results!
As a reminder, in the third quarter of 2020, the company achieved revenues of only 14.3 million euros, down 20% compared to the previous year.
Ethereum has hit a new record high today as the fundamentals reassert themselves. It now finds itself in the spotlight after data showed withdrawals of ethereum from exchanges is once again accelerating.
“There are a few potential drivers for this dwindling supply. Firstly, investors may be continuing to lock away tokens into the deposit contract to receive staking rewards for Ethereum 2.0. Secondly, ethereum is increasingly being locked away in DeFi (Decentralised Finance) protocols, whilst investors are also moving ethereum to their own personal cold storage to hold for the long-term.
“Either way, it’s clear from the price that this diminishing supply is feeding through quickly to prices.
“With institutions expected to add further to their positions, we expect the price of ethereum to push higher from here.
“Nothing goes up in a straight line of course, and there will be further volatility, but this demand-led run higher looks more than sustainable.
“The past year has been bleak for oil and gas producers, one that has cost thousands of jobs and billions in profits.
“Coronavirus has caused demand for fossil fuels to fall off a cliff which, combined with perpetually low oil prices, has acted as a double body blow to the industry. This combination caused BP to swing from a $10bn net profit in 2019 to a huge $5.7bn loss in 2020.
“The problem for oil exploration firms is that demand for their product is unlikely to return for some time: many airlines are operating at less than a fifth of capacity and people are still driving less because of lockdown.
“Of course, demand will return eventually, but things look fairly grim for the industry until that happens. Long-term, BP’s shift to green energy will benefit it, but it won’t help its bottom line much this year.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Broadly speaking, H&M is in much better shape than many of its rivals in the retail sector.
“Considering at one point 80% of its 5,000 stores were closed and fashion spending dived last year as a result of lockdowns, the fact H&M is profitable and has limited the sales slide to 18% is a relatively good performance.
“The fast-fashion firm is also sitting on about £1.4bn of cash, an indicator of the strength of its balance sheet, which has been bolstered by cost-cutting earlier in the pandemic.
“H&M is looking remarkably resilient given the circumstances and has demonstrated it can ride out the new wave of lockdowns introduced across Europe.”
Apple is indeed the largest global company at all levels, it has just (re) demonstrated it yesterday during the publication of results for the 1st quarter of its staggered 2020-2021 fiscal year. It is the first time in the history of capitalism, a company reveals a quarterly turnover higher than 100 billion dollars, it reached 111.4 billion dollars during the period (+ 21%), this is 2.5 times higher than LVMH’s annual turnover!
Profit is also astronomical, $ 28.7 billion, up 29% from Q1 2019-2020.
The main explanation comes from iPhone sales, which jumped 17% over the period, bringing in 65 billion to Apple driven by China where 2 of the 3 best-selling smartphones are iPhones. The Californian firm had an exceptional quarter in almost every product category. including the iPad, whose sales climbed + 41% to $ 8.4 billion and various accessories such as the Apple Watch or AirPods wireless headphones (+ 30%, to $ 13 billion).
The period was also rich in novelties with the new iPad Air, the Apple Watch Series 6, the AirPods Max headset, Fitness + and the Apple One bundle.
But these devices and services have never been more valuable than in these days of widespread teleworking. Apple confirms today that it is profiting rather than suffering from this situation.
Finally, the stock has soared 82% on the stock market in 2020, and 2021 is starting on the hats of wheels with an increase of 7.06% and an all-time high of $ 145 on January 25.
Adam Vettese, analyst at multi-asset investment platform eToro, says: “2020 was exceptionally bleak for the airline industry and so far 2021 looks no different.
“The introduction of tough new travel restrictions means passenger numbers – already running at around a tenth of usual capacity – look set to remain low for some time.
“easyJet has traditionally had one of the stronger balance sheets, but it too has had to slash costs and take on new debt to get through this crisis.
“In fact, its cost base is now 59% lower than it was this time last year, with outgoings of roughly £40 million a week in a fully grounded scenario.
“Over the medium-to-long-term this radical cost-cutting could lead to bigger profits. However, easyJet must not impair its ability to ramp up activity again once coronavirus has passed and demand for air travel recovers.”
Tesla had its most successful year last year in the face of the most severe downturn in history.
“From being dismissed as a passing fad just a few years ago, Tesla became the world’s most valuable car maker last year, dwarfing the share price return of its traditional rivals.
“The reason its share price is up nearly 700% in the past year and why it was the second most popular stock on the eToro platform last year is quite simply because investors believe Tesla is the future.
“While other manufacturers are making electric cars, they don’t have anywhere near the technology that Tesla does and therefore Elon Musk’s firm has built up a position of dominance.
“We polled our investors at the end of last year and 78% of them said they would be investing in Tesla in 2021. If those findings are replicated, then it’s likely at least from a retail investor point of view, we could see Tesla’s shares continue on their upward trajectory.”
Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, says: “The world’s second largest cryptoasset, ethereum, has hit another all-time high.
2021 is shaping up to be a major year for crypto. Ethereum touched $1,467 – almost double its price on the 1st of January.
The reasons for the rise are many.
Firstly, the Ethereum platform is seeing increased usage as developers look to build decentralised applications (DApps) on the technology.
Secondly, investors are continuing to ‘stake’ ethereum tokens, meaning their tokens are locked away for a set period of time in the platform, helping to make the technology more decentralised and therefore more secure.
Thirdly, institutional investors are increasingly interested in crypto as an asset class, and ethereum is set to benefit from this new interest.
Ethereum’s current rise cold shoulders the sceptics, many of whom were quick to denounce crypto when bitcoin recently fell from its $40,000 high. With a whole range of logistical improvements to the Ethereum network in the works, increased institutional inflows, and more and more developers building on the platform, the future is bright for ethereum.
I believe that a price of $2,500 by the end of the year is very feasible. As with all crypto, however, there will be bumps along the way.”
Bitcoin, having already hit an all-time high of $41,000 earlier this month, is falling at a steady but noticeable rate but I don’t think investors should be worried.
This price movement is a perfectly natural correction, one which happens in all assets once the market has perceived them to be a little overbought. And although the price is dropping, sitting at just over $31,000 at the time of writing, the demand for bitcoin is not.
Appetite among institutional investors is still growing with the likes of investment trust Grayscale buying $600m of the cryptoasset in a single day this week and BlackRock, the world’s largest asset manager, announced two of its funds will trade in bitcoin derivatives in the future.
The continued fear of a weakening dollar continues to benefit the price of bitcoin as well, with investors looking to scarce assets to use as a hedge against rising inflation. The Biden administration will still use stimulus to prop up the US economy, and this stimulus has had a detrimental effect on the dollar, which fell 6.3% in 2020, with further declines expected in 2021.
In my view, the current price drop will be temporary as many investors will see the $28,000-$30,000 price range as a relatively cheap entry point for bitcoin.
A move to $28,000 could be on the cards, but I don’t believe it would last for long. The cat is out of the bag with bitcoin.
“Burberry’s sales may have fallen 9% in the third quarter, but there are signs a turnaround is underway.
“The luxury goods manufacturer struggled early on in the pandemic because of the slowdown in Asia.
“But strong recent economic growth in the region means it is also likely to be one of the British firms to bounce back from this crisis.
“How it and the demand for luxury clothing fares longer term will depend on how much damage this pandemic has caused to the global economy.
“But it’s bullish and investors are latching onto that this morning, with its shares already up more than 3%.”
“It’s probably fair to say that over the past decade, Kier Group has been one of the UK’s least loved stocks.
“Since peaking 13 years ago, the construction group’s shares have slumped more than 95% as it lurched from one crisis to the next and even lost its spot in the prestigious FTSE 250.
“However, the board have been trimming fat, both through asset sales and cost-cutting, over the past few years, which is showing signs of paying off.
“Kier slightly outperformed the board’s expectations in the first half of the year, a welcome surprise during a tough period for the construction industry.
“There is plenty left to go in Kier’s recovery, but for the first time in a while there seems to be some positive news for shareholders.”
“Lockdown has led to an intense streaming war between Netflix, Disney and Amazon but also new players such as Starz and Apple TV.
“That means it will be increasingly difficult to gain new subscribers, which has perhaps been the most powerful determinant of Netflix’s share price movements in the past few years.
“However, one advantage Netflix has over its rivals is the strength of back catalogue and its original programming. None of its competitors have strong enough rosters to bump Netflix off the top spot in the streaming world, although I’m sure Disney will have something to say about that.
“Unless that changes, Netflix will remain the service that all of the others want to beat. Although to keep the subscriber numbers ticking up, it needs to keep producing the goods when it comes to programming.”
“The US earnings season kicked off on the right foot for financials. Blackrock was the first and only asset manager: the company is sort of “investor’s sentiment” stock, with reference to general market appetite. Asset under management grew above analyst’s estimates, thanks to market performance and new assets inflows, showing how yield-oriented both retail and institutional investors are now. Both active and passive (ETF’s) products registered strong growth.
Among commercial banks (JP Morgan, Citigroup and Wells Fargo) JP Morgan was the clear winner, showing organic growth not only in terms of earnings but also from the revenues perspective, thanks to strong performances in its trading and investment banking business. From the earnings perspective, all banks beat analyst estimates, mainly because of better than expected credit reserves release. As expected, the new regulation on loan-loss provisions is bringing more volatility to banks earnings. During the first wave of the pandemic, banks had to put more cash aside for expected loan loss and now, in the anticipation of an economic recovery, they can release the reserves back to the income statement.
Overall, banks with a more resilient, diversified and flexible business model will be the winners in this pandemic driven recession.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “It’s a strange time for supermarkets such as Tesco. Sales have boomed during coronavirus but so too have costs.
“The problem for supermarkets is that making stores safe for customers, dealing with disruption in supply chains and losing productivity through staff illness – all from coronavirus – hit the bottom line hard.
“Tesco estimates that its costs could rise by more than £810m this year purely as a result of the pandemic. Much of that has been offset by exceptionally strong sales, but it disproves the myth that supermarkets have been coasting through this crisis.
“Let there be no doubt though, while the extra costs act as a drag, supermarkets are in a much stronger position that many other firms at the moment and Tesco’s Q3 sales figures are impressive, with the exception of its banking division.
“Now the UK is back in lockdown and non-essential shops are shut, investors should expect another round of bumper sales for UK supermarkets over the next quarter – accompanied with elevated costs, of course.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Coronavirus has resulted in perhaps the biggest shift towards online shopping since the dawn of the internet.
“The pandemic and the subsequent lockdowns have meant that for much of the past year shoppers could not pop to their local High Street to buy clothes and other accessories.
“Therefore, it is brands with strong online presences, such as ASOS, that have cleaned up. To report a 36% increase in sales during a pandemic that has brought many parts of the global economy to a grinding halt is nothing short of spectacular.
“However, what we don’t know is whether Covid-19 has permanently altered consumer behaviour and whether the customers ASOS has picked up during the pandemic will remain loyal once restrictions have been lifted.
“Personally, I think there will be some people who will prefer to shop on the High Street again once the pandemic has passed, but for me this shift towards online will be permanent. If that proves right, investors can expect a bright future from companies such as ASOS.”
“Despite yesterday’s short-term market correction, bitcoin remains in a healthy place, hovering around the $35,000 level.
“Many detractors were quick to believe the bitcoin bubble had popped, as the price seemed destined to fall below $30,000 but this failed to materialise. As a result, enthusiasts declared victory, arguing that $30,000 is a new bottom for the cryptoasset.
“In my view, it is too early to say. Although we remain in a price range we haven’t seen before, some of the rises and falls we’re seeing in this current crypto bull market were also present in the 2017 bull market.
“From a long-term perspective, the outlook for bitcoin remains positive. It is likely that the most bullish large scale investors have been using the recent price dip as an opportunity to add to their balance sheets at a (relatively) cheap price and retail investor sentiment continues to remain positive.”
“Marks & Spencer’s latest trading update is a disappointing one for investors, capping off a pretty miserable 2020 for the iconic retailer which reported its first-ever loss as a publicly listed firm.
“The 8.3% drop in sales in the third quarter coincided with the second lockdown in England, when High Street footfall slowed significantly. However, there was an encouraging rise in online clothing sales, which helped to partially offset slower activity in-store.
“M&S’s food division remains a bright spot, and its tie-up with Ocado continues to look like a shrewd piece of business, despite some having reservations about the deal when it was first signed.”
“Another day, another dollar record. Bitcoin has hit yet another all-time high of $37,700.
“Demand for alternative assets is surging and institutions around the globe are now looking at bitcoin as both a growth asset and as a way to hedge against the big fear of 2021: inflation.
“The financial largesse we have seen from central banks and governments has eroded the value of traditional assets such as cash and bonds. This shows no sign of abating, so the momentum behind bitcoin is unlikely to drop away any time soon.
“There will be volatility, which is natural after the gains we have seen, but the long-term trend is clear. Crypto is moving into the mainstream, and more and more investors are adding exposure. On 4 January 2021, eToro had 61% more unique bitcoin holders than on the same date in 2020 and 49% more unique Ethereum holders.
“I believe, with this positive momentum, bitcoin is well on track to hit my price target of $70,000-$90,000 by Christmas 2021.”
Adam Vettese, analyst at multi-asset investment platform eToro, says: “Greggs was on a roll before coronavirus, posting a record year in 2019 as sales soared.
“However, the pandemic has knocked the stuffing out of it and multiple lockdowns have left sales seriously underbaked compared with last year.
“That can be explained in part by its decision to close its bakeries during the first lockdown in March last year but also because deliveries make up such a small part of its business.
“We have seen during this crisis that firms with strong delivery capabilities have weathered this crisis better than others.
“Greggs delivery deal with Just Eat is in its early days but will no doubt help boost sales now that strict coronavirus measures have been introduced across the UK. However, it will be some time before Greggs can boast of record performance again.”
“The supermarket sector has proved to be almost bullet-proof throughout coronavirus, consistently clocking strong sales growth no matter what restrictions are introduced.
“That has been particularly true over Christmas and it seems weary households were determined to indulge over the festive period, despite the bar on family gatherings, to forget what was a pretty dreary 2020.
“As Morrison’s latest trading update shows, sales of Champagne, smoked salmon and mince pies rocketed as the supermarket chalked up 8% sales growth over Christmas, capping off a strong second half of the year for the supermarket.
“Now England is back in national lockdown for at least six weeks, I expect supermarket sales to continue to boom as households treat themselves in the absence of being able to do other things such as going to the pub or take part in leisure activities.
“But there is no guarantee that will translate into higher share prices. In fact, the share prices of each of the three major listed supermarkets – Morrisons, Tesco and Sainsbury’s – are all lower than they were a year ago.
“That’s because while sales are rising, the pandemic has chipped away at profits due to increased costs in supply chains and making stores safe for customers.”
“Bitcoin’s meteoric rise to $30,000 shows the huge amount of demand there is for the cryptoasset. The reasons for the current surge are multi-faceted.
“Firstly, there continues to be strong large scale investment in bitcoin from institutions.
“Secondly, payment providers such as PayPal and Square are allowing their large userbases to buy and sell in cryptoassets such as bitcoin.
“Thirdly, central banks continue to use economic stimulus to keep their economies afloat in the wake of the coronavirus pandemic and some are buying bitcoin as an inflation hedge. This trend has started to accelerate, with the US readying its next round of stimulus cheques.
“Analysts at various investment banks have recently pivoted to a more positive view of bitcoin, and this could have also contributed to the recent rise.
“The price, having hit a new all-time high of $34,800 on Sunday, subsequently dropped to the sub-$30,000. Since then however, retail investors have been buying up bitcoin and driving the price upwards again. I believe we are going to push back towards a new all-time high, but I wouldn’t completely rule out another price drop beforehand. If we do see a dump of bitcoin from larger investors, then we could see the price fall back to the $20,000-23,000 range.”
Prior to the coronavirus, JD Sports was absolutely flying, as its full-year results show.
However, the outbreak has of course meant that footfall is now much lower than it was before as shoppers try to avoid enclosed spaces over fears of contracting the virus.
It’ll be some time before shoppers come out again in the numbers we saw before the pandemic but luckily for JD, it has a strong online presence that has performed well these past few months.
Sales may be affected for a while yet, but JD is likely to come out of this economic crisis better than most.
Before February 2020, the Airbus development cycle was in perpetual expansion; increasing production, order books with a good decade of visibility, increasing delivery rates and above all major problems with its long-standing competitor, Boeing.
However for five months, it is a real cataclysm which strikes the Franco-German aircraft manufacturer, with the plunge of air traffic (-90% during confinement) and the fall of the aeronautical market, the activity of Airbus has collapsed by 40%, and its market capitalization dropped by 52 billion euros.
Despite the 15 billion euros of aid from the French government to the aeronautics sector (including 7 billion for Air France), Airbus announced last week a massive social plan of around 15,000 job cuts, of which 1/3 in France .
For its historic competitor, the American Boeing, the health crisis has accelerated a decline that had already started in March 2019, with the immobilization of the 737 MAX, following two accidents that killed 346 people in the space of five months! The interruption of production of the flagship plane of the time already cost him more than 18 billion dollars!
In addition, Boeing continues to burn cash because the American aircraft manufacturer suspended deliveries but maintained a large part of its production chain, which could represent $ 4 billion in cash in the second quarter.
In addition, one of its biggest customers, the Norwegian Air company has just canceled an order of 92 copies as well as five Dreamliner.
The good news comes from the Export-Import Bank, which takes over financing to Boeing customers and suppliers, and from the Federal Reserve (Fed), which continues to finance its debt.
On the stock market, both titles are in dire straits, Airbus is down -48% and Boeing -43% since the beginning of the year. Given the resurgence of cases of Covid-19 across the Atlantic and a resumption of air traffic which returns to normal not before 2023, the future seems more than uncertain for the two largest aircraft manufacturers in the world.
In June, the well-known ISM purchasing manager index for the US service sector improved significantly. The economy is picking up speed, but the coronavirus epidemic is not yet over, as the high number of new infections in the USA shows.
In June, the American ISM purchasing manager index for the service sector rose sharply to 57.1 points after 45.4 points in the previous month. This is the largest monthly increase since the index was launched in 1997. This not only easily exceeded the expectation of 50 points, the number of points clearly above the 50 point mark also signals growth again. New orders were particularly strong with more than 60 points. 14 of the 18 service sub-indices rose in June. “The easing measures that have been observed since May have a positive effect on the mood in the US economy,” summarizes Dennis Austinat, Germany director of the social trading platform eToro, the development of the important purchasing manager index. “However, investors are worried about a second Covid 19 Wave of infections that could weigh on the US economy again,” Austinat adds. Some US states have already introduced restrictions again.
Purchasing managers more and more optimistic
The mood brightening in the German economy continues. In June the purchasing manager index rose to its highest level in 4 months, however the current index level still signals a shrinking process.
In June, the purchasing manager indices calculated by the research company Markit for the industry and the service sector rose sharply. The mood in the economy has improved significantly after the first easing measures. The overall purchasing manager index rose by 13.5 points to 45.8, only an increase of 44.2 points was expected. The individual indices also jumped up significantly, reaching 44.6 points (industry) and 45.8 points (service). However, this means that all purchasing manager indices are still below the threshold of 50 points, which indicates an expansion of activities. “The latest leading indicators, which also include the Markit purchasing manager indices, show that decision-makers in companies are more optimistic about the economic situation than a few weeks ago,” explains Dennis Austinat, Germany director of the social trading platform eToro.
Taking advantage of containment, the video game industry is one of the few industries to have benefited from this health crisis. And it also benefited local players like Ubisoft.
After reaching a historic high of € 108 in July 2018, the year 2019 had been particularly complicated for Ubisoft, reaching in October 2019 a low of € 40.
But since its lows and after a failed takeover attempt by Vincent Bolloré and Vivendi, the French video game publisher is beginning to regain the interest of investors.
The company has since almost doubled since its lows.
Thanks to several Blockbusters like Assassin’s Creed, Far Cry or Watch Dogs and several innovations in the blockchain industry, the publisher has managed to recover and is up 25% since the start of the year.
In June, the video game company tested the sale of 55 Rabbids collectibles. This took the form of non-fungible tokens (NFT) on the Ethereum blockchain, and the money was donated directly to Unicef as donations. Each with its own properties, the 55 NFT Rabbit tokens are intended to be collected and exchanged in the same way as playing cards. With each new acquisition, the amount of the transaction is donated directly to UNICEF.
For two years now, the company has been deeply involved in blockchain projects. In November, Ubisoft partnered with an Eos sister blockchain (EOS) and became a block producer of the UOS blockchain. Last summer, the firm also launched an initiative to use Ethereum (ETH) and blockchain for in-game purchases. The company also joined the Blockchain Game Alliance network, which brings together video game companies involved in the sector .
In addition, with the launch of the remake of Trackmania, a racing game democratized by the streamer Zerator, and with the arrival of Hyper Space, a Battle Royal that wants to compete with Fortnite, the group could benefit even more from these latest innovations for outperform the CAC 40.
Despite some allegations of sexual harassment taken very seriously by the group, the novelties seem to take over among institutional investors. Thus Blackrock has held since June 24, 5.09% of the capital and 4.63% of the voting rights and JP Morgan meanwhile holds 10.80% of the capital and 9.82% of the voting rights of the publisher of video games.
The action is one of the biggest increases of the SBF 120 during these last two sessions despite a delay on the release of several AAA games and a sharp drop in non-IFRS operating profit which goes from 446 million for the year 2018 to 1,019 against 34.2 million for the year 2019-20. In addition, the current crisis also calls for caution. The transition to homework had short-term repercussions on production.
But with 117 million console and PC players on their games and having their own licenses including 11 games of 6 franchises have sold more than 10 million copies and with the arrival of new generation consoles, the French company now wants to focus on social interactions and should continue to perform well at the moment. The company has also succeeded in dividing its non-IFRS net debt by 3.
The coming months will therefore have to tell us more about the publisher’s ability to keep up with their launch schedule, especially during the Ubisoft Forward conference to be held on July 12!
It is too early to call the unemployment rate to have bottomed out but these job numbers are definitely a good reason for markets to consolidate this rebound from March lows. Despite the uptick in new Covid-19 cases and in hospitalization in the US, average death rates are declining and this is giving investors enough confidence to continue to stay invested in stocks. However, today’s data showed the 15th straight week in which initial claims remained above 1 million (1.43 million). A future claims number below that threshold could be the next turning point for investors in order to more firmly believe in speedy recovery.
Perhaps the eight most important words in Associated British Foods’ (ABF) latest trading update are: ‘Nearly all Primark stores are now trading again’.
The budget fashion brand is so important to ABF that it has become affectionately known as the group’s ‘golden goose’.
The problem was that without an online presence, Primark was the golden goose that stopped laying eggs, which is why the group-wide figures are down so much.
Strip out Primark, however, and ABF’s Grocery, Sugar and Ingredients divisions have actually done reasonably well.
But of course, the news shareholders really wanted was that Primark was nearly back to firing on all cylinders, even if it takes a while for its sales and profits to recover.
The Covid-19 pandemic has had beneficial effects for certain markets, and dramatic for others, the diamond market belongs to the second category.
Given that 90% of diamond sales are made in jewelry stores and other luxury boutiques, the closure of all these businesses during the confinement resulted in a dramatic drop in sales of precious stones.
In 2019, it is a market which represented 12 billion dollars, in 2020, diamond sales should hardly reach 8 billion, according to Moody’s. It is not until 2021 that sales are expected to resume, and perhaps reach the $ 10 billion level again.
In addition, the global supply chain is totally disrupted because India, where more than 80% of rough stones are cut and polished, has massively offloaded its stock of diamonds, due to the lack of appetite of consumers , and as a result the global supply has become overabundant.
Due to this glut, world leaders in diamond mining and production have seen prices fall by almost 5% and their margins have shrunk.
The world number, the Russian Alrosa, which produces a quarter of diamonds in the world, had to drop its production drastically to maintain its prices. But its sales have collapsed by 59% in Q1 2020.
The current number two in the world, the best known historically because being in the extraction of diamonds for more than 100 years, the South African of Beers bought by the British Anglo American since 2011, also knows great difficulties since the beginning of the ‘year. To cut prices and stem the plunge in sales, de Beers launched its brand of synthetic diamonds Lightbox, this market is growing by 20% and provides access to diamonds at much more affordable prices.
In the stock market, mid-size diamond extractors like the British Petra Diamonds are under high pressure, in London the title has fallen by 79% since the start of the year. However mining as Anglo American (Beers) or Rio Tinto, are doing relatively well since the first one down “only” 13% and the second is flat since 1st January 2020.
Sainsbury’s first quarter results show just how much of a competitive advantage supermarkets have had throughout lockdown, with a 10.7% increase in grocery sales and a doubling of digital sales in just one quarter almost unheard of in normal times.
While that has not all necessarily translated into profits, it’s clear the sector is riding the crest of a devastatingly unfortunate Covid-19 wave at the moment.
But this sort of sales growth will almost certainly tail off in the coming weeks as the economy begins to reopen and supermarkets once again have to compete with other sectors for the money in people’s pockets.
“The big question now is whether the supermarkets are ready for that and what they have been doing to prepare for such an event.
In May, retail sales from Germany rose sharply and significantly exceeded analysts’ expectations. The figures thus confirm the recent developments in the ifo business climate index and the GfK consumer climate index, which have also signaled an improvement.
German retail sales increased significantly in May and rose more than in the previous year and the previous month than analysts had expected. The year-on-year increase was 3.8 percent and compared to the previous month of April sales increased by 13.9 percent. Only an increase of 3.9 percent was expected, or a decrease of 3.5 percent in a monthly comparison. “This positive development signals that German retail and the economy as a whole are on a fast path to recovery,” says Dennis Austinat, Germany director of the social trading platform eToro. “The recovery could continue in the second half of 2020,” Austinat adds.
The luxury sector suffered the brunt of the Covid-19 crisis. The closing of stores around the world has halted activity, and the significant drop in sales has been accelerated by the collapse of tourism; tourism being the main lever of the luxury sector.
These arguments have just been taken up during the LVMH Board of Directors meeting that morning. Tourists and in particular Chinese tourists traditionally draw sales from the market, but this clientele, which has been nonexistent for the past three months, is largely responsible for the 17% decline in group sales in the 1 st quarter. Even though LVMH owns 70 brands, Louis Vuiton represents 37% of its turnover, and this was strongly impacted by the closure of stores in Asia but also around the world.
Its direct competitor Kering, which, however, is three times smaller than LVMH, is very dependent on its flagship brand Gucci, representing 60% of total turnover. Gucci suffered severely from the crisis with a 23% drop in sales in the 1 st quarter.
That said, the gradual deconfinement and the reopening of shops should benefit the sector, even if according to some experts, the market should not return to its record level of 2019 (281 billion euros) before 2022 or 2023.
The current crisis will force luxury players to be more creative to meet new demands while adapting to new constraints. LVMH appears to be the best equipped, with significant sector diversification (fashion & leather goods, wines & spirits, cosmetics or even fine jewelry).
The number one share price has dropped “only” by 5% since the start of the year, outperforming Kering, which has fallen by 17%.
From a substantial standpoint, this Fed’s decision has limited price impact on banks, as dividends were minimally preserved and buybacks were off the table anyway. However, it signals some uncertainty for the financial sector. In addition, there is constant political pressure on global listed corporations in order to limit or abandon buyback policies. We have to keep in mind that, since 2009, buybacks became a key source return for investors, even higher than dividends. Just on the S&P500, buybacks totaled 800 billion in 2018. The 2019 was a record year, with more than a trillion buybacks, while dividend remained around 500 billion. Should we see more regulation on this front, this could completely change the payoff structure on equity returns, which we know include dividends, stocks buyback and capital appreciation.
Tesco has achieved fantastic sales growth in the 30 weeks ending 30 May but that has come at a cost.
Ensuring customers can shop in a socially distant way and bolstering support for online so they can buy everything they need has been expensive for Tesco and the supermarket sector as a whole.
While business rates relief has clearly offset some of these additional costs, the reality is many supermarkets have not been cashing in during the coronavirus outbreak like the sales figures might suggest.
That said, if supermarkets can find ways to do this in a more cost efficient manner, then we could see profits soar.
The launch of the FC Barcelona token was a real success. In just 24 hours, the $ BAR Fan Tokens were sold in 106 different countries, collecting 1.3 million Euros in just 2 hours, including € 777K in less than two minutes.
A Fan token is a cryptocurrency built on top of the blockchain in order to allow sportfis clubs to better interact with their community. Often in partnership with Startup blockchain Chiliz, this type of token is issued directly on the Socios.com platform, an application created by Chiliz that allows sports fans to better interact with their favorite club.
In addition to the speculative side specific to cryptocurrencies, having a BAR token will therefore allow Barça supporters to vote in club-specific polls and to win possible rewards such as a meeting with the club’s players, VIP seats and many other gifts. Fans will also be able to resell their tokens at any time and / or send them directly to other wallets.
In just 6 months, the idea has already won over several football clubs and even the organization behind the UFC, one of the most renowned combat sports in the world. Whether it’s PSG, AS Rome, Juventus Turin or Athletico Madrid, all these clubs have decided to take the plunge and launch their own Fan Token.
But this is not the first time that the sports industry has demonstrated its interest in cryptocurrencies.
Indeed, other sports such as Baseball, NBA or F1 have favored the creation of non-fungible Tokens allowing fans to collect and play with cards specially designed for blockchain.
And this type of operation is far from new to the sports industry. In 2019, eToro had already become the largest sponsor of the English championship after sponsoring six Premier League clubs (Tottenham, Everton, Aston Villa, Southampton, Crystal Palace & Leicester), all paid directly in cryptocurrencies.
Indeed, other sports such as Baseball, NBA or F1 have favored the creation of non-fungible Tokens allowing fans to collect and play with cards specially designed for blockchain.
And this type of operation is far from new to the sports industry. In 2019, eToro had already become the largest sponsor of the English championship after sponsoring six Premier League clubs (Tottenham, Everton, Aston Villa, Southampton, Crystal Palace & Leicester), all paid directly in cryptocurrencies.
The international influence of the sport is an excellent opportunity for cryptocurrencies to acquire a population still unfamiliar with blockchain technology and the functioning of cryptocurrencies.
Allowing clubs to better interact with their fans and facilitating sponsorship contracts, the use of blockchain in the sports industry could therefore improve the transparency of this industry and be the trigger for mass adoption and a new uptrend for cryptocurrencies.
Royal Mail is currently in the position every shareholder dreads: without a CEO, performing dismally, at war with the unions and seemingly on the ropes.
A stark difference to when the postal service floated in 2013 and investors were climbing over themselves to buy shares. That is reflected in the share price, which is less than half of what it was when it made its stock market debut.
While Royal Mail has come out with an emergency plan to arrest the slide, including drastically reducing capital investment and slashing staffing costs by £130 million, it doesn’t really get to the root of the problem.
The uncomfortable truth is that Royal Mail’s abominable performance in recent years is largely because it has failed to adapt to a world where people send fewer letters and more parcels.
The cinemas reopened in France on Monday June 22 after more than three months of closure due to containment measures. The biggest producers of films in the world are American, they had to adapt to the closure of cinemas, and consequently a big artistic blur reigned on the calendar of blockbuster releases.
In the United States there is not, as in France, a National Cinema Center (CNC) which supervises the chronology of the media and grants the dates for the release of films. This is the result of a purely commercial showdown.
Universal Studios, a subsidiary of Comcast, was the first to pave the way, breaking the media timeline, which is usually three months exclusive for movie theater operators. The American giant has thus decided to cancel the theatrical release of his animated film The Trolls 2 to offer it directly on VOD (video on demand), at € 19.90, which was a huge success.
Paramount, a subsidiary of ViacomCBS, has also chosen to skip the cinema box, unlike Disney which, for its part, preferred to postpone the theatrical release of its future blockbusters Mulan and Black Widow.
TimeWarner, recently bought by At & T has also decided to postpone its two big films, Wonderwoman on August 12 and Tenet, the last Christopher Nolan, to July 17.
Regarding stock market prices, ViacomCBS (parent company of Paramount) suffered the strongest drop during the crisis with a drop of 71% between mid-February and mid-March, however, the rebound was spectacular, + 130% from the low point at $ 10.
For Comcast, At & T, and Walt Disney, the decline was less marked, ranging from 31 to 44%. Since the March 19 low point, a recovery has materialized, from 15% for AT&T to 45% for Walt Disney. Note that none of the 4 majors have returned to their pre-crisis rating levels.
Cinema majors are also facing the explosion of video-on-demand services which undoubtedly have a bright future ahead of them, while 46% of French people have a VOD subscription today. A craze that also pushes GAFAM to invest more and more in streaming like Amazon with Prime Video or Apple which recently announced new features for the operating system of Apple TV in order to play 4K content.
Investors are well aware of these upheavals in the sector. On eToro, Netflix is the 13th most invested action by French investors in April and May 2020. The latter also retain confidence in Disney, the 6th most invested action on the platform in France, which benefits from greater diversification of its activities, illustrated by the launch of Disney + which already has more than 50 million subscribers worldwide.
The coronavirus pandemic significantly impacted industrial service provider Bilfinger in the first quarter of 2020. Nevertheless, CEO Tom Blades is confident of coping with the crisis and sees promising growth potential, as he explained at today’s virtual general meeting.
Last year, Bilfinger had achieved its financial targets and organic sales growth of 6 percent. But this year the environment has become more difficult due to the Corona crisis. The opening quarter of 2020 was additionally burdened by the drop in oil prices. Bilfinger is therefore now anticipating a 20 percent decline in sales this year and an operating result below the previous year’s level, which should remain positive. In the long term, Blades continues to expect attractive growth increases: According to the company’s own 2020+ strategy, sales are to be increased to over 5 billion euros by 2024. In addition, the goal is to achieve a free cash flow of over 200 million euros by 2024. “With its corporate strategy, Bilfinger wants to present itself as a predictable, reliable and sustainable company,” says Dennis Austinat, Germany director of the social trading platform eToro. This also includes the sustainable expansion of industrial plants so that customers can achieve their ESG goals with regard to environmental, social and fair management criteria.
Various surveys have shown that one of the things the nation has done more of during lockdown is cooking. It’s no surprise then that companies such as Premier Foods have benefited massively from this trend.
The maker of Bisto gravy and Sharwood’s sauces revealed it has experienced a huge spike in demand for meal prep items such as cooking sauces, gravy and baking ingredients as we have had more time to experiment in the kitchen.
That has helped Premier report growing profits for a third year running while revenue is expected to come in 20% higher year-on-year in the third quarter, which is impressive in the current environment.
But Premier’s challenge now is working out how to capitalise on the nation’s newfound love affair with cooking and find ways to tempt people back into the kitchen once lockdown ends and everyone returns to their busy lives. If it can nail that, then there is no doubt it will continue on a similar trajectory to what it is now.
Demand for oil crashed during lockdown which in turn had a crippling effect on the price of oil and therefore revenues for those operating in the sector.
This is what has happened to Wood Group’s oil division, which has seen activity plummet in its upstream and midstream oil operations. However, the energy services group has been saved by the diversity of its services, with chemicals, renewables and downstream operations compensating to some degree.
But that probably won’t be enough to woo back investors at this moment in time, given how important the oil industry is to the firm. And it’s likely to be months or even years before we see oil demand reach pre-Covid-19 levels once more.
At today’s virtual general meeting, Deutsche Telekom cut the dividend despite record results. Rising debts due to the takeover of the US competitor Sprint weigh on the company. Nevertheless, the annual forecast was confirmed.
At today’s virtual annual general meeting of Deutsche Telekom, CEO Höttges confirmed the annual forecast. He currently sees only a limited impact of the pandemic on business results. Adjusted operating profit grew double-digit by 10.2 percent. “After the takeover of Sprint, Deutsche Telekom plans to further expand its business with the 5G mobile communications standard,” explains Dennis Austinat, Germany director of the social trading platform eToro. “In Germany, the group plans to expand coverage significantly this year and thus secure future opportunities,” Austinat continued. However, the 5G expansion and the takeover of Sprint have to be financed, which is why Deutsche Telekom reduced the dividend by 10 to 60 cents. At the current price level, this distribution makes a dividend yield of almost four percent.
The lottery and sports betting operator, La Française des jeux (FDJ) has just revealed, this afternoon during its General Assembly, the impacts of the health and containment crisis as well as the measures to deal with it.
During the two months of confinement, the decline in total bets was 60%, including 40% for the lottery (excluding Amigo) and 95% for sports betting, despite a 16% increase in digital player bets . This had a significant impact for the 4th World Lottery Group, a decline of 100 million euros monthly on revenue and € 50 million in EBITDA. Despite these negative elements, investors were reassured by the responsiveness and solidity of the group, which announced 800 million euros in available cash and a savings plan of 80 million euros to deal with the shortfall in turnover.
Only downside, the board of directors proposed a 30% reduction in the dividend for 2019 which was approved by a large majority of shareholders. It thus goes from 0.64 euro to 0.45 euro per share.
On the stock market, we can say that the success has been total since its introduction at € 19.90 in November 2019, the stock now quoting € 30.40, representing a performance of 52% over the period! Since the beginning of the year, the FDJ action is not far behind with an increase of 28%, the 5 th performance of the SBF 120, outperforming the CAC 40 which largely fell by -17%.
The group can see the future with serenity with the reopening of points of sale and the gradual resumption of major sports championships.
National Grid is in the enviable position of being relatively shielded from the coronavirus economic fallout.
While the outbreak has led to a £400 million increase in costs for the energy network operator – largely for IT and system cleaning and maintenance – it is bullish it will be largely unaffected long-term.
For investors, classic defensive stocks such as National Grid are very appealing at the moment. It may not be sexy, but it has shown the sort of resilience in recent months that other companies can only dream of.
Throw into the mix the fact it is also one of the few major companies to have maintained or grown its dividend and it becomes even more tempting for investors needing to produce an income from their investments.
International expansion for the MDAX value is also progressing, as as Dennis Austinat, Germany director of the social trading platform eToro explains: “Even if the takeover of the US food delivery service Grubhub was not successful, the market position in Asia was able to with the previous takeover be strengthened by Woowa. The company operates one of the largest local delivery services in South Korea and Vietnam ”. Asia is the world’s second strongest region for Delivery Hero, with around 30 percent of sales.
The health crisis has amplified two trends that already existed, namely the reduction in cash payment and, more importantly, the increase in contactless payment; the world champion being Sweden where cash payments account for only 2%!
Two major players have an interest in the end of cash, first of all the banks because of the costs of withdrawals from ATMs (ATMs) — 89 euro cents per withdrawal in France. Then the United States, for fiscal reasons, since cash payments can pass under its radar.
Thanks to the coronavirus epidemic, the limit for contactless payments has increased from € 30 to € 50, which has benefited credit card providers. The two main ones are Visa and Mastercard, which share 87% of the world market, 60% for the former and 27% for the latter.
Even if payment by card was favored during the crisis, the end of tourism and travel for two months has had negative consequences for the two market leaders who revised their sales downwards for 2020. However, at its General Meeting on June 16, Mastercard voted to distribute a quarterly dividend of 40 cents per share.
In addition to paperless payments, Visa and Mastercard are very interested in blockchain technologies and cryptocurrencies.
After first joining Facebook’s Libra project, the two companies decided to back off following complications with the American regulator. However, even if Visa and Mastercard have withdrawn from Facebook’s stablecoins project, the two companies are not completely closing the door on a return to this ambitious project, which is currently on stand-by.
In addition, the two giants of the bank card are developing many projects in parallel. For example, Visa has filed a patent for the creation of a stable digital currency on the Ethereum blockchain at the USPTO (United States Patent and Trademark Office), the equivalent of France’s INPI (National Intellectual Property Office); this type of project has the potential to reduce the volatility of cryptocurrencies.
For its part, Mastercard has joined ID2020, an initiative from Microsoft which advocates for the digital identification of the billion undocumented migrants and refugees worldwide. In addition to digging into the blockchain domain, and in order to catch up with Visa, Mastercard also recently launched in Europe, a new program called “Fintech Express” allowing Fintechs to move from the project stage to the product stage “in the space of a few days”, in particular thanks to a simplified regulatory procedure and obtaining a license approved directly by the payment giant.
These latest advances could bode well for the stock prices of the two payment service giants. Because, after an impressive journey for three years, + 180% for Visa and + 350% for MasterCard, the securities plunged respectively -37% and -42% between February and March during the stock market crash.
That said, since March 23, Visa has returned 43.8% and Mastercard 51.5% which outperforms their benchmark, the S&P 500; which increased 42.3% over the period.
Compared with many firms, Kingfisher has weathered the coronavirus outbreak and subsequent lockdown fairly well.
Yes, its balance sheet has taken a bit of a beating, but there is no doubt the owner of B&Q has been helped by the fact that DIY stores reopened early in many parts of Europe, boosting sales by nearly 22% in the second quarter.
Looking forward, the signs suggest Kingfisher could capitalise on the economic uncertainty brought on by Covid-19.
When times are tough, people tend to do odd jobs around the house themselves rather than call in workers, which of course benefits DIY firms.
Therefore, while Kingfisher’s re-entry into the FTSE 100 earlier this month may have been a surprise, conditions may help it maintain its position in London’s blue-chip index.
One of the leaders in digital transformation, Atos has a portfolio of global activities: infrastructure management, cloud, Big Data and cybersecurity.
The group has strong visibility in the long term, in fact more than half of its order books are multi-year between 3 and 7 years. At the same time, its Q1 results satisfied analysts, with Big Data and Cybersecurity pulling out with a 16% increase, which made up for the 0.5% loss in infrastructure management.
To deal with the crisis, the IT group launched the “Always Ready” offer, allowing customers to manage emergencies related to containment situations (generalized teleworking, strengthening cybersecurity).
In addition, Atos is very committed to the environment. For several years, the group has been trying to lower its own carbon footprint, by improving server cooling techniques or by lowering the energy consumption of supercomputers.
Finally, Atos will be one of the European companies to take part in the Franco-German project, Gaïa-X, whose objective is to build a cloud environment that will allow Europe to reduce its dependence on American giants like Microsoft or Amazon.
This will concern in particular the creation of common standards and strict data protection solutions in accordance with European rules.
Today, the Annual General Meeting was held behind closed doors, which made it possible to update certain objectives for 2020. Turnover is revised downwards from -4% to -7% against + 7% pre Covid-19 due to a loss of 450 million euros due to the termination of current projects. Free Cash Flow (FCF) will decrease by 100 million euros due to the contraction of the operating margin net of tax.
On the stock market, Atos’ prices lost almost 50% during the crisis. Since then, the rebound has been strong, with prices retracing 80% of the previous decline. The valuation is still attractive at 9.7 times the profit, which is quite low for the sector.
Due to the composition of the corporate bond portfolio, the Fed’s program could generate long lasting distortions on the US credit market but, short-term, is another step towards “monetising everything”. It also shows that last week correction was physiological and had little to do with a potential second outbreak of contagions. USA retail sales also came out way better than expected and this helped as well. Markets will continue to ask for relief and, no surprise, central banks and governments will step in on request. In order for this rally to continue, we need more visibility on the future economic outlook, which will bring more visibility on corporate earnings of cyclical stocks, in particular for basic materials, energy, transportation and consumer discretionary.
The Federal Reserve’s aggressive stimulus plans have certainly both aggravated and excited many cryptocurrency enthusiasts. This type of aggressive money-printing could help promote the narrative behind bitcoin and other cryptocurrencies. However, we have yet to see the crypto market react accordingly. This level of stimulus might provide a short-term solution to increasing unemployment and shrinking GDP growth, but it cannot be sustained.
Ashtead’s remarkable performance through the first three quarters of its financial year has helped it emerge from the past few months in decent shape.
Lockdown meant much lower demand for industrial equipment hire but while the fourth quarter figures look bleak, the full-year figures are ok, all things considered.
There will be investors who see a sea of minus figures for the fourth quarter and get spooked, but it must be remembered that the firm was on course for a record year before Covid-19 struck.
On top of that, its decision to increase its dividend is incredibly welcome when many others have slashed or scrapped theirs and reflects the strength of Ashtead’s balance sheet.
Retailers have been battered by Covid-19 but H&M’s quarterly results offer some hope to the sector.
While sales have been down year-on-year every week for the past 18 weeks – and are still down more than a third – the situation has improved dramatically in recent weeks as Europe has begun to emerge from lockdown.
That said, investors remain quite rightly reticent to back a sector that has been so badly affected by the coronavirus. The sad truth is that while there is some hope on the horizon, the road to recovery will be long and painful for many firms – and not all of them will be able to survive.
The Covid-19 pandemic has reshuffled the cards of CAC 40 companies, and some stocks have seen their stock market prices melt, particularly in the aeronautics, tourism and catering sectors.
The verdict finally fell yesterday after trading, it is the specialist in call centers, Teleperformance, who will replace within the CAC 40, Sodexo, leader in collective catering in France, on June 22.
This is explained by the fact that the Sodexo share price has declined by more than 41% since the start of the year. It was the fifth worst performance of the CAC 40, which lowered its market capitalization to 9 billion euros, 38th ranking just ahead of Accor and Renault.
The confinement had a devastating impact on the group’s activity, causing the closure of schools, businesses, and even the postponement of the Tokyo Olympics, in which Sodexo was to participate.
On the other hand for Teleperformance, it is the consecration, for this group of more than 330,000 employees, in organic growth above 5% for eight years. The group also reassured investors during the containment by pursuing certain critical activities such as the hotlines dedicated to Coronavirus that the governments had set up.
On the stock market, the title has experienced an impressive trajectory, losing “only” 3% since the beginning of the year, multiplying its price by 8 for ten years and regularly appearing among the best performances of the SBF 120.
The recent cryptoasset pullback coincides with a similar retraction in global equity markets. It appears the narrative in markets has somewhat changed from potential recovery and reopening of economies post-lockdown, to a potential second COVID-19 wave. Especially after several US states have reported a spike in coronavirus cases since reopening their local economies.
Optimism has dissipated and realism has set in, in both the cryptoasset market and global stock markets. If we begin to see widespread second spikes of Covid-19, then it would probably cause another sell off across all markets. If the price drops below the $8,500 level, investors should be worried.
With bitcoin there is always the possibility for a further drop, but it’s my view that we are seeing a new bottom begin to form. Fundamentals remain positive for the asset, especially given the recent Fed meeting and indication of continued economic stimulus and consistently close to zero interest rates.
eToro in The News
Business InsiderMay 29,2021
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