Inflation drives a wedge between consumer giants 29 Jul 2022 P&G’s gross margin – a sign of pricing power – fell faster in the last quarter than rivals Unilever and Nestlé. Rising input costs are a threat; a bigger one is cheaper substitute products. That favors posh ice cream over, say, toilet paper, which leaves P&G relatively exposed.
Capital Calls: Apple’s aging clout 28 Jul 2022 Concise views on global finance: The company barely eked out slow growth as it sold more iPhones and wrung more money from users by selling services. Investors are happy enough as the company churns out and returns plenty of cash.
Amazon’s brick-and-mortar vision is still blurry 28 Jul 2022 The $1.2 trln tech giant’s purchase of Whole Foods was meant to transform the grocery business. Instead, sales at physical stores have languished and without e-commerce profits, it’s hard to see how one benefits the other. Investors waiting for a revolution will keep waiting.
JetBlue buckles up for long, turbulent M&A flight 28 Jul 2022 After a near-four-month tussle, the U.S. budget airline clinched a $3.8 bln deal with rival Spirit. It stacks up if hoped-for extra profit results. The price is still high: If the merger fails – as it might – JetBlue may have to pay Spirit one-fifth of its market value.
U.S. growth is eroding from the bottom up 28 Jul 2022 The 0.9% fall in second-quarter GDP hints at but doesn’t confirm a recession. The generous spending of top earners is hiding the slowdown facing lower-income Americans. Diverging fortunes of companies like Walmart and Mercedes paint a more nuanced picture.
Belgian biotech is pricey cure for Big Pharma ills 28 Jul 2022 Rare-disease specialist Argenx reported surging sales of its main treatment. That increases its allure to drugmakers like Pfizer, whose revenue is threatened by expiring patents. But the $21 bln firm’s soaring shares since a recent U.S. drug approval make it anything but cheap.
Meta Platforms, like wine, gets better with age 27 Jul 2022 Sure, advertising is under threat, Facebook’s user growth is slowing, and Mark Zuckerberg’s metaverse risks becoming a kind of corporate midlife crisis. But maturity brings financial advantages, like profitability. Even if revenue falls, Meta’s valuation is on solid ground.
GM and Ford are now juggling three crises 27 Jul 2022 The U.S. automakers are starting to figure out Covid-driven shortages – that was the first pickle. But long-term risks to both pricing and lithium supplies will make it more difficult to efficiently grow EVs. Plus pent-up demand only covers for a weakening consumer for so long.
Powell can afford to lose macro popularity contest 27 Jul 2022 The Fed’s biggest rate hikes in 41 years could push the U.S. into a recession. But unlike some previous central bank chiefs, Powell’s ample political capital gives him cover to be single-minded in fighting inflation. Fear of a future downturn is unlikely to hold him back.
Google’s “victim of success” status is worth it 26 Jul 2022 The tech giant’s search business will hold up through a bad market, making $1.4 trln parent Alphabet more vulnerable to watchdogs’ antitrust case. The way it corners both data and ads is problematic. But Microsoft’s history – and Alphabet’s valuation – suggest it will be fine.
McDonald’s serves nuggets of inflationary insight 26 Jul 2022 Same-store sales rose nearly 10% in the second quarter. Rising menu prices have also yet to deter customers, suggesting the Golden Arches has still managed to hang on to recession-proof qualities. If customers keep trading down, however, that balance will be harder to strike.
Walmart’s pain will be problem shared widely 26 Jul 2022 The giant grocer lost about 10%, or $35 bln, of its market value after saying it would need to slash prices as customers rethink how to spend. The decline suggests more than just a fallow year. If the mighty retailer didn’t see this coming, there’s scant hope for smaller peers.
Moelis’ crypto foray is a bottom-ticking flier 25 Jul 2022 Investment banks often launch advisory initiatives at the top of hot markets. The boutique led by Ken Moelis is instead pushing into blockchain as the market is imploding. The business looks ripe for consolidation. If Moelis culls market share, it may have cracked a new model.
Tech investors may be overvaluing moats 25 Jul 2022 Meta and Netflix valuations have been pounded, but Microsoft and Apple are holding up, relatively speaking, partly because they are less vulnerable to competitors. The trouble is the latter two are now premium compared to historical prices, and their buffers aren’t unassailable.
Twitter and Snap could be M&A birds of a feather 22 Jul 2022 Both social networks are luring new users, but each is too small to go to the mat with Alphabet or Meta over advertisers, who will get more discerning as the economy slows. With both companies similarly valued, a merger has merit – if Twitter can tie up loose ends with Elon Musk.
Gary Gensler has set the SEC on a perilous path 22 Jul 2022 The chair of the U.S. securities regulator has swamped companies with proposals, cut public comment periods and circumvented processes. That makes him more productive than other watchdogs. But after Gensler, it will be easier for future SEC bosses to play fast and loose too.
Tesla investors bet on recovery and fantasy 20 Jul 2022 The electric-car leader’s 10% quarterly fall in sales reflects factory woes shared by other carmakers too. Yet with a market capitalization of $770 bln, Tesla is valued like none of its peers. The stock is buoyed by promises of a bigger revolution up boss Elon Musk’s sleeve.
Italy puts itself in a lonely, risky limbo 20 Jul 2022 Prime Minister Mario Draghi lost backing from key coalition parties in a confidence vote, likely prompting elections. The lack of a reform-minded government will hurt growth just as Italy faces a gas crisis. It also imperils its access to ECB bond buying and European Covid funds.
Netflix only partly dressed for ad auditions 19 Jul 2022 The $90 bln streaming service’s subscribers grew faster than expected, boosting revenue and sending shares up 7% after Tuesday’s close. But cash flow is still under pressure. As the ads business kicks in, Netflix can’t rely just on lazy users. Eyeballs on content matter more.
Twitter-Musk divorce court favors the kids 19 Jul 2022 A Delaware judge set a speedier October trial for the deal fight with Tesla’s boss. That leans towards Twitter’s wishes, but only because Musk was asking for the house, the dog, and his in-law’s silver. A quick resolution is in everyone’s interest, but mostly shareholders’.