Investors ignore China Covid spike at their peril 18 Nov 2022 Shares have rallied on signs President Xi Jinping is embracing pragmatism and easing up on crackdowns in real estate and tech. Shaking hands with U.S. President Joe Biden helped, too. However, Beijing might also be losing control of the virus. Policy relaxations may be moot.
Burberry revival rests on more leather power 17 Nov 2022 New CEO Jonathan Akeroyd wants to grow sales by 40% in coming years at the stagnating fashion house. Success hinges on star designer Daniel Lee’s ability to create alluring high-margin bags and shoes. But the move will take time and may hurt demand for items currently in store.
Feedback loops power Elon Musk’s SpaceX 16 Nov 2022 Even as tech valuations fall, including that of Tesla, the rocket maker’s may rise 20%, to $150 bln. Its growing Starlink service is more appealing than lunar expeditions. The bigger the satellite business gets, the worse the economics become for rivals such as Amazon.
Estée Lauder plus Tom Ford is tricky defensive act 16 Nov 2022 The beauty giant will buy the fashion house for $2.8 bln. It allows the $81 bln group to cling on to the designer’s fast-growing fragrances, which it licenses. But outsourcing the eyewear and clothes units risks being a distraction, especially if Ford himself leaves after a year.
Tencent’s investor giveaway buys welcome respite 16 Nov 2022 The Chinese web giant is handing a $20 bln stake in food delivery firm Meituan to shareholders. The second such move in a year comes on top of increased share buybacks. The focus on boosting returns goes a long way to make up for slowing growth in Tencent’s video-game business.
Musk needs a third of America to pay for Twitter 15 Nov 2022 As the social media firm’s new boss says, it's losing $4 mln a day - before accounting for big drops in ad revenue. Even with cutting costs, sky-high interest means Twitter has to grow into its debt, which could require as many as over 110 million people to pay for the platform.
Walmart turns inflation into a land grab 15 Nov 2022 The $375 bln retailer is attracting higher earners with its lower prices, gaining market share in the third quarter. That’s leading to revenue growth despite the uptick in prices. But the makers of the soaps and snacks that Walmart sells are seeing their pricing power slip away.
Zombie firms shuffle away from reckoning 14 Nov 2022 Carvana, Peloton and others assumed capital would always be plentiful. It’s not, and they continue to burn cash with business models that need work. Yet these larger firms, on average, have two years of money left. With cost cutting, many may survive, if not thrive.
Capital Calls: Roche’s risky big drug bets 14 Nov 2022 Concise views on global finance: Shares in the Swiss drugmaker fell 4% after a treatment for dementia produced disappointing results in a late-stage trial, reminding investors of the downsides of pursuing potential blockbusters.
Inflation has gig economy perk: more side hustlers 11 Nov 2022 Uber is seeing more drivers. Airbnb has had strong growth in hosts. As wallets are pinched, people are looking to pick up odd jobs. For those who profit off the shared economy, that should help their businesses. And at least for now, demand is holding up, too.
Fine art world gets a taste of the Walmart effect 10 Nov 2022 The record $1.5 bln paid for the Microsoft co-founder Paul Allen’s collection might not seem a classic recessionary trade. But when asset prices wobble, investors fly to the familiar. Cezanne and Klimt are to plutocrats what defensive consumer stocks are to gun-shy investors.
Adland veterans play tortoise to Big Tech’s hare 10 Nov 2022 Once deemed ex-growth, WPP and peers collectively grew revenue faster than Snap and Meta last quarter. New services like building apps and crunching client data helped. But if big adland clients like Nestlé keep spending while small businesses drop out, it may be no one-off.
U.S. cannabis movement can learn from Canada 9 Nov 2022 Maryland and Missouri voters look set to expand the country's legalized recreational weed usage. Up north, too much hype contributed to a costly glut. As the business keeps getting bigger in the United States, it would do well to learn from its neighbor's growing pains.
Carlyle plays an ever-tougher game of catch-up 8 Nov 2022 The buyout shop raised only $6 bln in the third quarter, a 72% drop from 2021. It’s also managing less money, about $370 bln, as peers accumulate more. And misgivings have spilled into public markets. Whoever replaces abruptly departed boss Kewsong Lee faces a long to-do list.
Capital Calls: Disney’s Netflix problem 8 Nov 2022 Concise views on global finance: The Magic Kingdom’s shares tanked on Tuesday after it reported widening losses in its streaming service division, but it can overcome the challenges.
IPhone plant woes are least of Apple’s problems 7 Nov 2022 The supplier of the $2.2 trillion tech giant’s devices, Foxconn, may lose up to 30% of production from a key facility following a Covid outbreak. That sounds bad, but it may only hit 1% of revenue. Waning demand and a slower transition to services affects Apple more.
Tesla success is less fleeting than AV upcharge 7 Nov 2022 Boss Elon Musk charges $15,000 a car for self-driving tech that doesn’t yet work. Ford wants to do that too, even as it ditches plans for robotaxis. Like power steering, fees for hands-free driving may disappear. Good chance Musk’s technology innovates before competitors.
Philip Morris and Rio’s poker faces need some work 7 Nov 2022 The $139 bln Marlboro maker and $95 bln miner have upped buyout offers to try and clinch strategically key deals. In both cases, hedge funds and minority investors called their bluff. The lesson is that bidders can’t play hardball if everybody knows they really need a deal.
Capital Calls: Starbucks waits stubbornly in China 4 Nov 2022 Concise views on global finance: The $100 billion coffee chain surprised investors with a solid quarter despite persistent sluggish results in the People’s Republic.
Slim-chance grocer lawsuit is real problem for M&A 4 Nov 2022 Washington attorneys won a temporary setback for grocer Albertsons on a $25 bln sale to Kroger. Arguments over a special dividend look stretched. Still, state meddling in deals is unusual. This opening salvo is one part of an expanding toolkit competition hawks will start to use.