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  • A $10,000 investment in the Zip Co IPO would be worth $350,000 today

    Zip Co share price

    Recently I’ve been looking at how investments in the IPOs of a number of ASX shares have fared.

    Today, I thought I would turn my attention to one of the most popular shares on the market at present – Zip Co Ltd (ASX: Z1P).

    Zip Co is a fast-growing payments company which competes with Afterpay Ltd (ASX: APT) in the buy now pay later market.

    The Zip Co IPO.

    It has been almost five years since Zip Co listed on the Australian share market.

    Its shares hit the ASX boards in September 2015 after raising $5 million through the issue of 20 million shares at 20 cents per share.

    This means that if you had invested $10,000 into its IPO, you have would have received 50,000 shares.

    Since then the company has gone from strength to strength thanks to the increasing popularity of buy now pay later with both consumers and retailers globally.

    Consumers, particularly those in the millennial and Gen Z demographic, are turning to platforms like Afterpay and Zip Co instead of credit cards. This has led to Zip Co delivering stellar underlying sales growth over the last few years.

    This has continued during the pandemic. After smashing expectations in the third quarter, Zip Co’s explosive growth continued in April when it delivered monthly transaction volume of $181.6 million. This was an 86% increase on the prior corresponding period.

    The good news is that this is still only scratching at the surface of its overall market opportunity. Especially now it is expanding into the $5 trillion U.S. retail market via the acquisition of QuadPay.

    It is largely because of this strong form and acquisition that the Zip Co share price hit a record high of $6.97 this morning.

    When its shares hit that level, the 50,000 shares you would have received by investing in its IPO would have been worth a massive $348,500. That certainly is an impressive return in less than five years, right?

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    James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post A $10,000 investment in the Zip Co IPO would be worth $350,000 today appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/3cOfY9P

  • What is the ASX impact of a fall in house prices?

    model house and reducing stacks of coins with percentages, house prices asx

    I don’t know about you but I’m starting to get a feeling in my bones that our febrile ASX is headed for trouble. For me, the market seems to have recovered too quickly and the cynics are starting to become very loud. Moreover, I think real estate is likely to be the bellwether sector. From retail to housing to commercial real estate, the indicators lie somewhere between confusing and concerning. So if there is a fall in commercial property values and residential house prices, how will this impact the ASX?

    The retail sector

    GPT Group (ASX: GPT) yesterday downgraded the value of its seven directly held retail assets by $476.7 million. This is approximately 8.8% of book value at 31 December 2019. This resulted from an independent valuation. GPT’s Chief Executive Officer Bob Johnston explained the revaluation as resulting from the effects of COVID-19. He held up reduced foot traffic, reduced rental growth, as well as increasing vacancy and abatement rates as contributing factors. 

    The recent release of the Australian Bureau of Statistics official retail data for April painted a further bleak picture. The report contained the strongest seasonally adjusted fall ever published from the retail trade survey.

    Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) also have high exposure to the same retail headwinds.

    The housing sector

    The third-quarter update from Commonwealth Bank of Australia (ASX: CBA) forecasts a fall in the Australian house price index, a proxy for house prices, of between 11% to a worst-case scenario of 32%. REA Group Limited (ASX: REA) also reported a 33% slide in residential real estate listings during April.

    According to its 2019 portfolio report, Stockland Corporation Ltd (ASX: SGP) has a development pipeline of 76,000 lots of residential real estate. The company estimates this has an end market value of $21.4 billion. In the event of falling house prices, the negative financial impact on this ASX 200 company is inevitable, in my view. 

    Of course the impact of falling house prices spreads a lot wider than just ASX listed real estate investment trusts (REITs) and developers. Boral Limited (ASX: BLD), for example, is likely to see the impact of a real estate downturn on its earnings, among its other issues. Furthermore, the major banks will also likely see a reduction in lending, with CBA being the country’s largest mortgage lender.

    Commercial real estate

    The commercial real estate market is still very uncertain. It remains to be seen what the impacts of the ‘work from home model’ and widespread business closures will be on this sector. GPT Group also has significant exposure in this sector as it has 41% of its funds invested in premium office space. 

    Another major participant in the commercial real estate sector is DEXUS Property Group (ASX: DXS). Dexus is a ‘pure play’, Australian office REIT. It has around $15 billion invested in office real estate across central Sydney, Melbourne, Brisbane and Perth.

    Foolish takeaway

    A real estate downturn is likely to weigh heavily across many sectors on the ASX. However, I believe Vicinity Centres has the balance sheet to withstand this disruption. I also feel that with all major REITs on the ASX underperforming the market since the 23 March trough, they should still see high share price growth once the market stabilises.  If you can withstand the near-term volatility, the Vicinity Centres share price is currently selling at a P/E ratio of 5.42.

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    Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post What is the ASX impact of a fall in house prices? appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2UuaESz

  • Tesla (TSLA): Don’t Believe the Hype, Says Analyst

    Tesla (TSLA): Don’t Believe the Hype, Says AnalystElectric car giant Tesla (TSLA) is at the top of its game, hitting another all-time high on Wednesday, and reaching the long-ballyhooed $1,000 mark. The latest surge ensued when a memo from CEO Elon Musk telling employees it was "time to go all out" on the production of the Tesla Semi, began making the rounds.But Tesla’s latest rally picked up steam earlier this week, when reports came out that demand for Model 3s in China has accelerated. News outlets focused on the 11,095 Model 3s that zoomed out of Tesla’s Shanghai Giga 3 factory last month and are now sitting pretty outside a new home.However, GLJ Research analyst Gordon Johnson argues the celebrations are premature and, in fact, the figures are misleading.“The China May 2020 Sales numbers released yesterday, which have been covered by nearly every news outlet, were from China Passenger Car Association (“CPCA”)… Stated more clearly, the numbers from CPCA yesterday, according to CPCA, were just an estimate, and have not been confirmed,” Johnson said.According to Johnson, the figures to look out for are those released by the China Automotive Technology and Research Center (CATARC) or the China Banking and Insurance Regulatory Commission (CBIRC).Ok, so where are they? “Those numbers are not yet available,” Johnson added, “So all the Reuters and Bloomberg articles from yesterday are wrong. Also, the many analysts commenting on these numbers today on TV are also wrong.”While TSLA’s production number of 11,501 is not disputed by the analyst, Johnson believes “we do not yet know how many cars TSLA sold in May in China.”What we do know, Johnson adds, are Tesla’s EU sales figures. “They were pretty bad,” he said.Down by 5.2% month-over-month and 33% year-over-year, as it happens. Additionally, through June 8, quarter-to-date, 2Q20 sales dropped by 54% quarter-over-quarter and 75% year-over-year in “Norway + the Netherlands + Spain, which accounted for 47% of all of TSLA’s EU sales in 2019.”“But,” Johnson summed up, “Who cares about numbers/facts when Ron Barron is on TV nearly monthly saying TSLA’s stock will increase 10x with no supporting details – and also saying he wants to buy more, despite the fact he’s been selling… why won’t the media focus on the numbers vs. perpetually having people on to give their opinions on what Tesla will do in 2025? what about 2020?”Unsurprisingly, Johnson rates Tesla shares a Sell, without suggesting a price target. (To watch Johnson’s track record, click here)While not quite as flummoxed as Johnson, the Street appears out of sync with Tesla’s ascent, too. 9 Buys, 9 Holds and 10 Sell ratings add up to a Hold Consensus rating. With an average price target of $633.95, the analysts expect Tesla stock to drop by 38% over the next 12 months. (See Tesla stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

    from Yahoo Finance https://ift.tt/30wmoI8

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