vestact posted: " Market Scorecard US markets slipped yesterday, but the S&P500 finished the month of August up 2.9%, its largest monthly gain since April. This is the seventh consecutive month of advances for the benchmark index, its longest winning streak sin"
US markets slipped yesterday, but the S&P500 finished the month of August up 2.9%, its largest monthly gain since April. This is the seventh consecutive month of advances for the benchmark index, its longest winning streak since ten straight months in January 2018. The Nasdaq did even better, up 4% for August!
In company news, Zoom shares plunged by 16.7% after the videoconferencing company lowered its forecast for future earnings. To be fair, they continue to grow fast, with revenues surpassing $1 billion for the first time.
At the closing bell, the JSE All-share was up 0.54%, the S&P 500 dipped by 0.13%, and the Nasdaq was down a whisker, 0.04%.
Our 10c Worth
One Thing, From Paul
I was supposed to report to you on Nvidia's second-quarter results last month. Michael allocates each of us a list of companies to comment on each earnings season, and I dragged my heels, until now.
Sorry about that. For the record, Nvidia's results were very good (sales up 68% year-over-year) and the share price has kept moving higher.
Here are the highlights: (1) Revenue: $6.5 billion versus $6.3 billion expected. (2) Earnings per share: $1.04 versus $1.01 expected. (3) Data Centre sales: $2.4 billion versus $2.3 billion expected. (4) Gaming sales: $3.1 billion versus $2.9 billion expected.
One extra point to note please. Nvidia is still battling to close a transaction to buy UK-based chip designer ARM for $40 billion. The deal was announced in September 2020, but still hinges on approval by global regulators, and is still up in the air. We like the stock, regardless of whether that purchase goes ahead.
Just take a look at the 5-year share price chart below. What a winner!
Byron's Beats
All the news from Prosus lately has been about their complicated structure, or regulatory problems for Tencent in China. We often forget that they own a host of other quality assets. Keep in mind too that Prosus sold 6.5% of their Tencent stake in April, at a price around 26% higher than it trades today. That was well timed.
Yesterday, Prosus announced a whopping fintech investment of $4.7 billion to buy an Indian business called BillDesk. BillDesk is the largest network for digital payments in India. The business will be integrated into PayU, forming a payments operation that will process over $100 billion in payments with revenues of $750 million. It will be the 7th biggest payment company on the planet.
As you know, we really like the payments space, and India has over 700 million internet users, so this is a very large market to tap. Sounds good.
The more valuable the rest of the Prosus investment portfolio becomes, the less reliant they will be on Tencent. As we are seeing first hand, that will be a good thing.
Michael's Musings
Two months ago I had Covid, which gave me a chance to sample the different shopping home-delivery options. For my medications, I simply WhatsApped orders to a small local pharmacy and they arrived a few hours later. It was much easier than trying to set up delivery through Clicks or Dischem. I also tested Woolies Dash and Checkers Sixty60 (owned by Shoprite).
Woolies Dash is still in its testing phase, so getting a delivery time slot was tough. They also messed up my order and it took over two weeks, with many phone calls and tweets to resolve the problem. Still more work to do for Woolies.
The Checkers app is great. They rolled it out in 2019, before Covid hit, giving them a significant advantage over their competitors. Some friends now exclusively do purchases through Sixty60. Who has time to go to an actual store these days?
The Shoprite business plan has shifted from expanding into the rest of Africa, to competing in South Africa for higher-earning customers. They are retreating from more marginal regions and have opened high-end stores in South Africa. Checkers has also launched their own range of readymade meals, trying to poach customers from Woolies. Many of these meals are a hit, and very well priced.
As a consumer, it is great to see more companies competing for my spend. It has resulted in more convenience, better pricing and increased options.
The trendy shoe brand Allbirds has filed for an IPO on the Nasdaq under the ticker "BIRD". My favourite part of the pre-listing statement was the management saying the company has lost money since inception and expects to be unprofitable for the foreseeable future. Huh?
Allbirds makes shoes from products that are sustainably sourced. They recently announced a collection of activewear that will not contain any polyester, a material that is responsible for a lot of carbon emissions in the manufacturing process. Allbirds will instead create clothes from eucalyptus tree fibres and merino wool, two materials that already go into its iconic slip-on sneakers.
If you haven't been following the athleisure market closely, technical cashmere (the material discovered by Chip Wilson, the Lululemon and Kit&Ace founder) is all the rage. So I find it odd that the founders, Joseph Zwillinger and Timothy Brown decided to go with merino wool instead.
Allbirds made a loss of $14.5 million in 2019, which grew to $25.9 in 2020, and for the six months ending in June, the company has already burned through $21.1 million. Revenues came in at $219.3 million in 2020 of which 89% were digital sales. I'm curious to see the valuation post listing, considering that it's implied worth is already $1.7 billion.
Linkfest, Lap It Up
Can Nvidia grow by five times from here, to be bigger than Apple? Beth Kindig, an analyst and regular contributor to Forbes, thinks it can because of the massive potential from AI - Here's Why Nvidia Will Surpass Apple's Valuation In 5 Years.
Bungalow, an online marketplace for residential properties raised $75 million. The company has tripled its valuation to over $600 million. Not bad for an app that was first used for finding roommates - Deer Park Road leads Bungalow's latest round of funding.
Signing Off
Asian markets are up this morning. Japan and mainland China are leading the rebound as traders bet on a recovery after markets got hit hard by Beijing's regulatory clampdown. This is the fourth day in a row that the MSCI Asia-Pacific is higher. Maybe the worst is over for now?
The Rand is trading around R14.54 to the US Dollar. US futures are in the green in early trade. Green is good! Happy Spring Day.
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