Month: October 2022

The Vulcan Energy Resources Ltd (ASX: VUL) share price is up 0.69% amid the company posting its quarterly activities and cash flow reports for the September 2022 quarter this morning.

Shares of the ASX lithium stock are currently trading for $7.32 apiece. Earlier, they hit a high of $7.38 and a low of $7.18.

Let’s go over the highlights of these reports from the lithium developer.

What did Vulcan Energy Report?

• Net cash used in operating activities: €5.13 million ($7.97 million)
• Net cash used in investing activities: €12.52 million ($19.45 million)
• Cash and cash equivalents down 9.81% from the previous quarter to €158.20 million ($245.79 million)
• Estimated quarters of funding available: 15

One of Vulcan’s highlights for the September quarter was the beginning of on-site works at its sorption demo plant in Landau, Germany. This site will be important for training its staff in a pre-commercial setting.

Another achievement was producing “the highest grade lithium hydroxide samples that [Vulcan] has yielded to date”. These were produced through its phase 1 definitive feasibility study that should be completed by the end of Q1 FY23.

Meanwhile, work also commenced at its Insheim and Landau-Süd licence areas to create an integrated lithium and geothermal energy project in the future.

What else happened in the September quarter?

A binding agreement was made with Enel Green Power for exploring geothermal lithium in Italy.

The company’s first sustainability report was released covering the financial year of 2022. The report focused on climate-related financial disclosures (TCFD) and Vulcan’s approach to sustainability practices.

Vulcan appointed a new deputy CEO, Cris Moreno, who has worked on lithium hydroxide and battery cathode plants in Europe.

What did management say?

Vulcan’s managing director and CEO Francis Wedin said:

With winter approaching, and as Germany and Europe grapple with an energy crisis, Vulcan is making a positive impact by generating baseload, renewable power from our Insheim geothermal renewable energy plant. We are focused on delivering a significant contribution to renewable energy supply in Europe, by developing multiple large-scale renewable heat and power projects across the Upper Rhine Valley Brine Field.

As global supply chains continue to be challenging, Vulcan is leveraging our strong cash position to be strategic and proactive in procuring long lead items and key equipment. Our drilling company, Vercana, has secured long lead items required for the first drilling project and orders have been placed for all key equipment for the electrolysis demonstration plant, LiLy.

Vulcan Energy share price snapshot

The Vulcan Energy share price is down around 29% year to date. That’s more than the S&P/ASX 200 Index (ASX: XJO), which has lost 8% over the same period.

The company’s market capitalisation is around $1.04 billion.

The post ‘Well positioned’: Why the Vulcan share price is climbing today appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 300 shares off to the races on Wednesday
• Why Life360, Novonix, Pilbara Minerals, and Vulcan shares are storming higher today
• 4 ASX lithium shares surging more than 10% today
• Vulcan share price rockets 12% on lithium update
• Which ASX All Ords shares avoided a sell-off during the last recession?

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australian Clinical Labs Ltd (ASX: ACL) share price is crashing deep into the red on Thursday.

In morning trade, the pathology services provider’s shares are down 12% to $3.12.

Why is the Australian Clinical Labs share price sinking?

The Australian Clinical Labs share price has been sold off today after the company revealed that it was the victim of a cyber incident all the way back in February!

According to the release, the company Medlab Pathology business, which was acquired in December 2021, has experienced a “notifiable cyber incident” involving personal information of some of its patients and staff.

Australian Clinical Labs has conducted a forensic analysis of the affected information and has determined that personal information of approximately 223,000 individuals has been affected. This group of individuals is largely confined to New South Wales and Queensland.

The company has released a summary of the records breached of most concern. They are:

• ~17,539 individual medical and health records associated with a pathology test
• ~28,286 credit card numbers and individuals’ names (Of these records ~15,724 have expired and ~3,375 have a CVV code)
• ~128,608 Medicare numbers and an individual’s name

Australian Clinical Labs advised that the Office of the Australian Information Commissioner (OAIC) has been notified and both the OAIC and the Australian Cyber Security Centre (ACSC) are being kept up to date.

The company also highlights that there is no evidence of misuse of any of the information or any ransom demands, to date. But as we have seen with Medibank Private Ltd (ASX: MPL), that could change quickly.

As mentioned above, the company revealed that it was actually first aware of unauthorised third-party access to its IT system all the way back in February but did not inform patients or the share market. Even worse, this customer data was found on the dark web in June but once again the company chose not to notify patients or investors.

This was because it has apparently taken its forensic analysts and experts four months “to determine the individuals and the nature of their information involved.”

Australian Clinical Labs’ CEO, Melinda McGrath, said:

On behalf of Medlab, we apologise sincerely and deeply regret that this incident occurred. We recognise the concern and inconvenience this incident may cause those who have used Medlab’s services and have taken steps to identify individuals affected. We are in the process of providing tailored notifications to the individuals involved. We want to assure all individuals involved that ACL is committed to providing every reasonable support to them. We will continue to work with the relevant authorities.

The post Another ASX All Ords share is plunging 12% on cyberattack news appeared first on The Motley Fool Australia.

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More reading

• Why is Ethereum Classic surging today?
• Core Lithium share price crushed on Tesla deal collapse
• Lynas share price jumps despite 44% revenue fall
• If the government has this right, the BHP share price could come under some serious pressure
• Why is the ANZ share price sinking today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

As the world’s second-largest cryptocurrency, Ethereum (CRYPTO: ETH) generally dictates the way that many Ethereum-related tokens perform on any given day. Such is the case today, with Ethereum, Ethereum Classic (CRYPTO: ETC), and Lido Staked Ether (CRYPTO: STETH) all surging within a relatively tight band. As of 11:45 a.m. ET on Wednesday, these three tokens had risen 13.3%, 10.3%, and 13.2%, respectively, over the past 24 hours.  

These moves come on the heels of some rather impressive liquidation data for Ethereum. Over the past 24 hours, according to the website Coinglass, Ethereum liquidations surged to more than $575 million. These liquidations were skewed by more than 5 to 1 toward short trades, suggesting leveraged short-sellers are getting hit at a staggering pace. In fact, this pace of short liquidations is the fastest since July of 2021, providing retail investors with a potential short squeeze to jump on today.  

As more bullish sentiment builds in the market around Ethereum and other megacap tokens, staking interest on the Ethereum network could surge. For Lido Staked Ether, this is an obvious catalyst. That’s because it’s the token that represents the equivalent of a receipt for holders of ETH tokens staked on Lido’s liquid staking platform.   

For Ethereum Classic, this network, which is actually a fork of the original Ethereum blockchain, has seen a surge in interest from crypto miners who have switched over to mining ETC to make up for lost revenue previously mining Ether. Accordingly, this blockchain is distinct from Ethereum itself, but appears to be rallying based more on broadly bullish macro conditions today.

So what

The moves Ethereum Classic and Lido Staked Ether have made today generally follow the high correlation of these tokens to Ethereum. As tokens that are generally viewed as proxies on Ethereum itself, Ethereum Classic and Lido Staked Ether have both seen a surge in interest as short positions are replaced by more risk-on trades in today’s market.

However, it’s important to consider the catalysts that drove this short-liquidation surge in Ethereum today. It appears that expectations that central banks could slow interest-rate hikes have driven most of today’s bullish shift. The Bank of Canada announced a slower-than-expected rate hike of 50 basis points (0.5%) today, which hinted at the potential of an eventual central bank pivot. That’s an obvious bullish catalyst for crypto investors, who have seen leverage come under pressure as rates rise and capital seeks a safe haven in fixed-income assets.

Now what

The crypto market’s surge today, led by Ethereum, Ethereum Classic, and Lido Staked Ether, is one that many crypto investors have been longing for. It’s been a tough year, to say the least, for most crypto investors, with the overall market still down roughly two-thirds from its peak in late-2021. 

Accordingly, whether the rally we’ve seen over the past few days can be sustained is the real question. For now, there’s a lot to like about the momentum we’re seeing with the upside among these three tokens.

But we’ve also seen downside volatility overwhelm bulls this year more often than not. Accordingly, investors looking to time the bottom might want to wait for more-conclusive data before jumping in with two feet.      

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why is Ethereum Classic surging today? appeared first on The Motley Fool Australia.

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More reading

• Core Lithium share price crushed on Tesla deal collapse
• Lynas share price jumps despite 44% revenue fall
• If the government has this right, the BHP share price could come under some serious pressure
• Why is the ANZ share price sinking today?
• Could ASX 200 lithium shares bask in sky-high lithium prices into the future? Here’s what Argo says

Chris MacDonald has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia owns and has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.            

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Core Lithium Ltd (ASX: CXO) share price is having a difficult morning.

In early trade, the lithium miner’s shares were down 10% to $1.31.

The Core Lithium share price has since recovered a touch but remains down 7% to $1.35.

Why is the Core Lithium share price being crushed?

Investors have been selling down this lithium miner’s shares on Thursday after it released an update on its offtake agreement with Tesla.

As you might have guessed from the Core Lithium share price performance, it wasn’t a positive update.

According to the release, the agreement to supply the electric vehicle giant with up to 110,000 dry metric tonnes of lithium spodumene concentrate from the Finnis Lithium Project is off.

That’s because the date for concluding the term sheet was 26 October 2022 and passed without the agreement being completed.

Tesla’s CEO, Elon Musk, has previously complained about how lithium prices were at ridiculously high levels, so it is possible the auto giant was playing hardball with negotiations.

What now?

Core Lithium doesn’t appear concerned by the failure to complete the deal.

It notes that the recent official opening of the Finniss Lithium Mine has positioned the company to take advantage of strong global demand and constrained lithium supply.

The company highlights the recent sale of 15,000 tonnes of direct shipping ore (DSO) as proof of this. This DSO sale was tendered on a CIF basis to several pre-screened participants active in the lithium-ion battery supply chain and received a strong price.

Furthermore, agreements are in place with Ganfeng and Yahua that bring total concentrate sales under offtake contracts to about 80% of the Finniss Lithium Project production over the first four years of operations.

Core Lithium’s CEO, Gareth Manderson, commented:

I want to thank Tesla for the time taken to negotiate with Core and look forward to maintaining an open and ongoing dialogue. The recent DSO sale, predicted commencement of lithium concentrate sales in H1 2023 and an increasing lithium price environment indicate that Core Lithium is well positioned to capitalise on the high demand and current shortage of available battery grade lithium spodumene concentrate.

The post Core Lithium share price crushed on Tesla deal collapse appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why are Core Lithium shares lifting another 5% on Tuesday?
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lynas Rare Earths Ltd (ASX: LYC) share price is climbing 5.19% in early trade this morning. This comes after the company announced its quarterly activities report for Q1 FY23 before market open.

Shares of the company are currently trading for $8.31 each. That marks a strong recovery after they slumped to $7.72 soon after open.

Let’s go over the report’s highlights.

What did Lynas Rare Earths report?

• Quarterly sales revenue down 44.38% from Q4 FY22 to $163.8 million
• Sales receipts down 33.21% to $234.4 million
• Total rare earth oxide (REO) production down 4.10% to 3,500 REOt
• Neodymium-praseodymium oxide (NdPr) production down 33.81% to 1,045 REOt

Sales of Lynas’s production were affected in September by a “catastrophic” water shortage that reduced its overall production volumes.

Furthermore, the average selling price of its REO production fell drastically in the reported period, down to $49.3/kg from $79.2/kg in the previous quarter, or a 37.75% discount.

The average selling price of its REO was impacted by Lynas fulfilling several large orders of Cerium due to its lower selling price than NdPr, and due to high volumes.

Lynas notes that overall it expects strong demand for its neodymium and praseodymium from its customers in the foreseeable future.

What else happened in Q1 FY23?

Lynas announced a $500 million capacity expansion for its Mt Weld flotation plant located in Western Australia.

This was partially funded by a US$9 million contribution from its senior lender, JARE (Japan Australia Rare Earths BV), via a subscription of ordinary shares in the company.

Meanwhile, the company continued to make progress with the construction of its Kalgoorlie Rare Earths Processing facility. An upgrade to the plant’s facilities was announced as it will incorporate an industry-first carbonate refining process, which was pre-funded by the federal government’s modern manufacturing initiative.

With this new initiative in mind, the project will cost the company roughly 15% more than the original $500 million budget estimate.

What did management say?

Lynas Rare Earths CEO Amanda Lacaze made the following comments:

We continued to face significant operational challenges including a complete outage of water supply in Malaysia. A catastrophic equipment failure experienced by the local water supplier to our Malaysian facility resulted in approximately 16 days of lost production during the quarter.

Ore mining commenced at Mt Weld during the quarter as part of Mining Campaign 4-1 and blended ores from this campaign were introduced into the process plant. Mt Weld and Kalgoorlie integration activities also commenced in the quarter and we continued to use a combination of both commercial and charter shipping to transport concentrate product to Malaysia.

Lynas continues to work with the U.S. Government on the follow-on phase for the commercial Heavy Rare Earths separation facility and the site for the combined Heavy Rare Earths and Light Rare Earths facility is in the final stages of selection.

What’s next?

The report noted that future REO pricing largely hinges on the economic recovery in China. It also notes that demand for materials has suffered from “weak demand” in the recent past.

The company will continue to roll out upgrades and expansion efforts at its Kalgoorlie and Mt Weld sites.

Lynas share price snapshot

The Lynas share price is down around 20% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8% over the same period.

The company’s market capitalisation is around $7.15 billion.

The post Lynas share price jumps despite 44% revenue fall appeared first on The Motley Fool Australia.

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More reading

• Does the AMP share price undervalue the ASX 200 company?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Why is the Whitehaven share price getting beaten up today?
• Is the Lynas share price a buy ahead of tomorrow’s update?

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price, as you’d expect, is significantly impacted by the price of iron ore.

The industrial metal is responsible for roughly half of BHP’s revenue, bringing in approximately as much as its copper and coal segments combined.

So, it should come as no surprise that the BHP share price rocketed to new record highs in July 2021, shortly after the iron ore price was trading north of US$215 per tonne.

BHP shares then retraced right alongside the iron ore price for the rest of the year as the metal fell to US$92 per tonne.

To round this off, iron ore charged back above US$161 by early April 2022, which saw the BHP share price leap to another near record of $53.17.

Today, iron ore is fetching US$94 per tonne. And BHP shares are trading for $38.54. (Though we should note that the S&P/ASX 200 Index (ASX: XJO) mining giant paid out almost $13 billion in final dividends in September.)

So, having established the link between the iron ore price and the performance of the BHP share price, what exactly is the government forecasting?

Why government forecasts could see the BHP share price under pressure

If you’ve had a gander over this week’s Federal government budget, you may have noticed the iron ore price forecasts.

Government analysts predict the iron ore price will slide to US$55 per tonne (Free on Board (FOB) Australia) by the end of Q1 2023. That’s a big drop from today’s prices and could put some serious pressure on the BHP share price.

But not everyone agrees with the bearish assessment for iron ore spelled out in the budget.

In its Economic Insights report, Commonwealth Bank of Australia (ASX: CBA) said, “We think that the Government’s forecasts for Australia’s key mining and energy commodities in the coming years are broadly too conservative.”

The report goes on to state:

The Budget’s iron ore price forecast is lower than our outlook through the outlook period. The differences though lessen in later years. The difference reflects our view that prices will only gradually fall to $US60/t-$US65/t (FOB Australia) by late 2026/27 following a volatile year ahead.

Spot prices have come under pressure as China’s property downturn weighs on demand. Policy in China remains the key driver of prices, particularly China’s COVID-zero policy.

We broadly expect iron ore prices to bottom in Q1 2023 as China’s COVID-zero policy continues to weigh on demand. A shift away from China’s COVID-zero by the end of March 2023 should see iron ore prices lift in the following quarters.

If CBA has this one right, the BHP share price should follow iron ore higher in the latter quarters of 2023.

BHP share price snapshot

Atop the miner’s healthy dividends, the BHP share price has marched 48% higher over the past five years. That handily outpaces the 16% gains posted by the ASX 200 over this same period.

The post If the government has this right, the BHP share price could come under some serious pressure appeared first on The Motley Fool Australia.

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More reading

• Here’s how ASX 200 banks stand to benefit from the budget
• Why this expert is loading up on CBA shares in case of a recession
• CommSec penalised $20 million for rorting customers
• Why did the South32 share price take a beating on Tuesday?
• BHP share price dips following rough night on Wall Street

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is dropping on Thursday.

At the time of writing, the banking giant’s shares are down 4.5% to $24.67.

This follows the release of ANZ’s full year results this morning.

How did ANZ perform?

For the 12 months ended 30 September, ANZ reported a 5% lift in cash profit from continuing operations to $6,515 million. This was driven by solid performances across all its operations and the benefits of rising interest rates.

In respect to the latter, ANZ’s second half NIM improved to 1.68%, with an exit margin of 1.8%.

Though, don’t expect the bank’s NIM to keep improving wildly from its exit level. Management warned that the current environment is “supportive for margins in the first half” but any “change from the exit margin is likely to be more modest.”

This ultimately allowed the ANZ board to declare a fully franked final dividend of 74 cents per share, bringing its full year dividend to 146 cents per share. This is up 2.8% from 142 cents per share in FY 2021.

Why is the ANZ share price falling?

The reaction to this result has been relatively lukewarm, which may explain the ANZ share price performance today.

Commenting on the result, Goldman Sachs said:

ANZ reported FY22 cash earnings (company basis) from continued operations were up 5% on pcp to A$6,515 mn, 1.4% ahead of GSe, with the beat driven by primarily by outperformance on the BDD charge and supported by slightly better expenses.

FY22 PPOP came in 1% lower than GSe, as an in-line NIM performance was more than offset by slightly weaker volumes and weaker than expected performance in Markets income. The proposed final DPS of A74¢ was higher than GSe (A72¢) and implies a payout ratio of 65% and will come with a non discounted DRP.

Net interest margin could drive estimate upgrades

One thing Goldman Sachs was particularly pleased with was ANZ’s exit margin. It notes that if the bank can improve or maintain this margin for the whole of FY 2023, it would likely result in higher than forecast earnings. It said:

if we assume i) the 1H23 NIM is c. 3 bp ahead of the 2H22 exit NIM of 1.80%, and then this holds through 2H23, and ii) 5% expense growth, then this would represent 8%/9% upside to FY23 GSe/Visible Alpha Consensus PPOP, all else being equal. If the FY23E NIM only holds the 2H22 exit of 1.80%, then the FY23E PPOP upside would still be 6%/7% respectively.

Goldman currently has a neutral rating and $26.09 price target on the ANZ share price.

The post Why is the ANZ share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• ANZ share price on watch after reporting $6.5b cash earnings for FY22
• 5 things to watch on the ASX 200 on Thursday
• Here’s how ASX 200 banks stand to benefit from the budget
• Own ANZ shares? Here’s why the bank just copped a $25 million fine
• 22 high-yield ASX dividend shares Wilsons is targeting

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investment giant Argo Investments Limited (ASX: ARG) predicts demand for the commodities underpinning electric vehicles (EVs) will rise well into the future. This could include lithium.

Argo has expanded its exposure to ASX 200 lithium share IGO Ltd (ASX: IGO) in 2022.

In an AGM investor presentation this week, Argo managing director Jason Beddow placed the spotlight on the lithium price. He said:

The price of spodumene, which is the base or for lithium production, has increased over +500% in 12 months, as, as global automakers and battery manufacturers fight to lock in limited supply at almost any price.

EV demand driving commodities

Argo noted demand for EVs was expected to rise right up until 2030. Lithium is an essential component in EV batteries.

Reflecting on the demand for commodities used in EVs, Beddow said:

Sustainable energy and electric vehicles are two trends that fall into the decarbonisation category. The commodities that underpin these themes will likely remain in demand well into the future.

IGO has 49% ownership in a joint venture with the Tianqi Lithium Corporation, which is currently focused on lithium assets in Western Australia.

As my Foolish colleague Bronwyn reported yesterday, Argo has lifted its position in ASX 200 lithium share IGO by 20% in 2022, with 600,000 new shares. Commenting on IGO, Beddow said:

Lithium remains one of the key components in batteries for electric vehicles. IGO is one of the biggest lithium producers in Australia and provides high quality exposure to the rapidly growing battery materials market, with low-cost lithium and nickel operations.

Argo also opened a position in ASX lithium share Liontown Resources Limited (ASX: LTR) for the first time in 2022, buying up 7,575,758 Liontown shares. Liontown is exploring the Kathleen Valley lithium mine in WA.

Share price snapshot

The Liontown Resources share price has increased 16% in the year to date, while IGO shares have soared 44%.

For perspective, the S&P/ASX 200 (ASX: XJO) has fallen 8.2% since January.

The post Could ASX 200 lithium shares bask in sky-high lithium prices into the future? Here’s what Argo says appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AMP Ltd (ASX: AMP) share price has had a disastrous few years on the market. It’s tumbled a whopping 76% over the last five years amid shocking findings from the Financial Services Royal Commission.

The AMP share price last closed at $1.19, leaving the company with a market capitalisation of around $3.7 billion.

Though, many a transformation has occurred at AMP recently. Could it be that its current valuation doesn’t consider some of its major assets? Let’s take a look.

Does the AMP share price undervalue the company?

The AMP share price has caught the eye of one expert this month.

Speaking to my Fool colleague Bernd, Bennelong Kardinia Absolute Return Fund portfolio manager Kristiaan Rehder heralded the stock as a potential winner, saying:

It’s been out of favour for some time … [but] our analysis shows that there’s considerable excess capital. And we think it can surprise the market in regards to the extent of its capital returns in the near term.

Excess capital indeed. The company had $1.45 billion of surplus capital on its books at the end of the first half. It has already begun returning some of that to shareholders through an on-market share buyback.

It’s also awaiting the finalisation of the sale of its Collimate Capital business ­– set to bring in around $700 million of upfront cash payments.

Thus, the company will likely soon boast more than $2 billion of surplus capital.

Its fund management platforms’ cash outflows have also notably improved recently. AMP’s North and New Zealand Wealth Management divisions each saw net cash inflows in the September quarter, while its Australian Wealth Management segment’s outflows markedly improved.

Finally, AMP Bank recorded growth of 1.4 times above system last quarter. And the company’s CEO Alexis George is hopeful of its future, saying:

We’ve seen a reduction in cash outflows to other superannuation funds and we’re winning new customers on our North platform.

[W]e have already launched our digital mortgage and unique-to-market retirement offer. These are important strategic deliverables that will support AMP’s longer-term growth.

But could the AMP share price really undervalue the company?

Well, the ASX 200 stock boasted $4.6 billion of equity and reserves attributable to shareholders at the end of June.

That’s around $900 million more than AMP’s valuation at its share price’s previous close and leaves the stock with a price-to-book (P/B) ratio of around 0.8. That’s relatively undervalued, if you ask me.

The post Does the AMP share price undervalue the ASX 200 company? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), the world leader in online advertising, released its third-quarter financial report after the market closed Tuesday, and the results were disappointing. Furthermore, these results were seen as a harbinger of what’s to come for the rest of the digital advertising industry.

As a result, many adtech and digital advertising stocks fell in sympathy on Wednesday, as investors considered what was to come. Shares of The Trade Desk (NASDAQ: TTD) and Meta Platforms (NASDAQ: META) slumped as much as 8.1% and 5.5%, respectively, while Amazon (NASDAQ: AMZN) and Roku (NASDAQ: ROKU) had fallen as much as 4.8% and 3.9% respectively. As of 1:59 p.m. ET, the quartet was down 3.9%, 5.1%, 3.9%, and 2.9%, respectively.

This sell-off was broad based, taking down a wide variety of companies that rely on digital advertising for their livelihood. Earlier this year, Google’s ad revenue seemed largely immune to the recessionary fears that gripped much of Wall Street. It’s well documented that advertising is among the first items in corporate budgets to be slashed in times of economic uncertainty, and it seems that reality has finally caught up with the digital advertising kingpin.

So what

In the third quarter, Alphabet reported revenue of $69.1 billion, which grew just 6% year over year. Foreign currency headwinds played a part, as revenue would have been up 11% in constant currency. For context, revenue in the prior-year quarter grew by 41%.

The pressure on the top line also dented profits, as earnings per share (EPS) of $1.06 declined 24%. Analysts’ consensus estimates had called for revenue of $71 billion and EPS of $1.26, so Alphabet failed to clear either bar.      

However, commentary by the company sent investors running for the exits, as management detailed several factors that will weigh on results for the coming quarter. Alphabet cited tough comps, worsening foreign exchange headwinds, and lower ad spending as companies shore up their financial positions in the face of growing economic uncertainty.

As a result of the disappointing results, analysts issued a flurry of price target reductions, with no fewer than 14 of Wall Street’s finest cutting their expectations. JMP Securities analyst Andrew Boone seemed to capture the prevailing mood, saying the results were a warning sign that digital advertising this quarter will likely be weaker than originally imagined. 

Bernstein analyst Mark Shmulik echoed those sentiments, writing, “Google is an ad business first, and digital ads [are] no longer a safe place to hide.”  

Now what

Alphabet’s results seemed to suggest the writing is on the wall for the rest of the digital advertising and adtech space. That said, investors shouldn’t be too quick to jump ship but rather assess the potential for each of these companies on their own merit.

Meta Platforms leads the social media space and is widely regarded as the other company in the Google/Facebook duopoly that dominates much of the digital advertising space. Given the similarities in their business models and Meta’s reliance on digital advertising for more than 97% of its revenue and all of its profits, the comparison is an appropriate one. After that, however, the contrasts become more pronounced.

Amazon derives the lion’s share of its revenue from e-commerce and cloud computing, though in recent years, digital advertising has been one of the company’s fastest-growing businesses. Amazon’s advertising services revenue grew 20% so far this year but still represents just 7% of the company’s total revenue, so the sell-off in this case is likely related to the state of the broader economy and the potential to slow growth in its e-commerce and cloud segments.

Roku is an interesting one. Investors inexorably link the company with its namesake streaming devices, but many are unaware that Roku derives the majority of its revenue from the digital advertising that appears on its streaming video platform. Alphabet said that digital ads on YouTube, the company’s streaming platform, declined 2% year over year, the first such decline since Alphabet began reporting the platform’s results in 2019. This could spell trouble for Roku in the coming quarters.  

Finally, there’s The Trade Desk. The company’s adtech platform places digital ads across a wide spectrum of online locations, acting as a go-between for some of the world’s largest ad agencies.

When The Trade Desk released its second-quarter report in early August, the results were surprisingly robust. Revenue grew 35% year over year, while adjusted EPS climbed 11%. At the time, CEO Jeff Green made a startling pronouncement, saying (emphasis mine), “This trend also gives us confidence that we will continue to gain market share in any market environment.”  

The Trade Desk is seen as a striking alternative to advertising in the walled gardens offered by Google, Facebook, and Amazon. It also has one of the highest valuations, a function of its consistently strong results and entrenched position in the industry. While the stock may yet feel the impact of the economic downturn, The Trade Desk is still my top pick among these digital advertising and adtech stocks. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why were Meta and Amazon stocks falling today? appeared first on The Motley Fool Australia.

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Danny Vena has positions in Alphabet (A shares), Amazon, Meta Platforms, Inc., Roku, and The Trade Desk. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Meta Platforms, Inc., Roku, and The Trade Desk. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Meta Platforms, Inc., and The Trade Desk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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