Category: Stock Market

The Block Inc (ASX: SQ2) share price is leaping higher in morning trade, up 4.4%.

Block shares closed yesterday trading for $96.65 and are currently trading for $100.94 apiece.

The ASX buy now, pay later (BNPL) share, which acquired Afterpay in January this year, isn’t the only tech stock enjoying a good run today.

While the S&P/ASX 200 Index (ASX: XJO) is up a healthy 0.4%, the S&P/ASX All Technology Index (ASX: XTX) is charging 1.9% higher at the time of writing.

Rival BNPL shares Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL) are also both outperforming. Zip shares are currently up 3.6% and the Sezzle share price has gained 3.5%.

What’s piquing investor interest?

The Block share price is leaping higher following a strong rebound in US markets yesterday (overnight Aussie time).

The tech-heavy NASDAQ led the charge, closing up 2.1%.

Block is dual listed. And its NYSE-listed shares also outperformed yesterday, closing the day up 3.9%. Typically, when the Block share price gains on the NYSE, you’ll find a similar trend playing out on the ASX the following day.

So why the broader market rally?

According to Edward Moya, senior market analyst at Oanda (courtesy of Bloomberg):

Stocks are rebounding as the global bond market selloff takes a break. Economic momentum remains for the US economy, and that could only improve if inflation continues to soften. Investors seem poised to enter a holding pattern until the September 13th inflation report.

Should US inflation figures come in on the lighter side, that would portend potentially less aggressive tightening for the Federal Reserve. That, in turn, would offer some welcome tailwinds to BNPL stocks.

Block share price snapshot

It’s going to take a fair bit more than today’s rally to see the Block share price return to where it stood when the company first listed on the ASX on 20 January.

At that time, Block shares were swapping hands for $176.63. Shares closed for highs of $194.36 on 30 March, but it’s been mostly downhill since then.

Since 20 January, the Block share price is down a painful 43%. That compares to an 8% loss posted by the ASX 200 over that same period.

The post Why is the Block share price charging higher today? appeared first on The Motley Fool Australia.

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More reading

• Why has the Block share price dumped 24% in a month?
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Why is the Block share price plunging 8% today?
• These are the 10 most shorted ASX shares

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 positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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 Link Administration Holdings Ltd (ASX: LNK) share price is surging this morning on news Australia’s competition watchdog will not oppose the company’s acquisition.

Shares in the administrative technology company are currently trading 6.26% higher at $4.58 each after reaching an intraday high of $4.71 a share. That represents a 9.28% jump.

This morning, the Australian Competition & Consumer Commission (ACCC) gave the green light to a takeover proposed by legal technology company Dye & Durham Corporation (TSX: DND).

The ACCC said it came to its conclusion after accepting a court-enforceable undertaking from Dye & Durham that will see it divest its existing Australian business.

Let’s check the details.

Link share price catches bid with ACCC tick

Way back in December 2021, Dye & Durham made its initial proposal to buy Link through a scheme of arrangement.

It originally offered $5.50 per share, however, came back with a revised offer of $4.30 per share more than seven months later.

Spurring the lower valuation was the ACCC’s initial involvement in the proposed transaction and the downturn in equity markets this year.

Unsurprisingly, Link declined the offer. This led to another offer of $4.81 per share which Link shareholders eventually accepted with a 98% majority.

The ACCC initially voiced concerns due to Link’s ownership of PEXA Group Ltd (ASX: PXA).

Link holds a 42.77% shareholding in PEXA, a company that operates an electronic lodgement network for digital conveyancing settlements. Both Link and Dye & Durham also operate in conveyancing via their exposure to data management and analytics.

“To accept [Dye & Durham’s] D&D’s proposed undertaking, we need to be satisfied that it will effectively address all competition concerns but is also structured in a way that can be relied upon to be workable and effective,” the ACCC said at the time.

ACCC’s seal of approval

Now, the competition watchdog has revised its stance after a court order that forces D&D to sell its existing Australian businesses to select buyers approved by ACCC.

“Without the divestment of D&D’s Australian businesses, the proposed acquisition would have aligned PEXA, a near monopoly provider of Electronic Lodgment Network services, with D&D, a significant supplier of software to lawyers and conveyancers,” the ACCC said today.

“Ultimately, the ACCC concluded that the proposed acquisition, taking into consideration the divestiture undertaking, would be unlikely to substantially lessen competition,” it concluded.

Today’s price action sees the Link share price down less than 1% over the past 12 months although it remains around 18% lower year to date.

The post Link share price surges 9% on ACCC takeover nod appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Link share price marching higher on revenue boost
• Pexa share price higher as revenue, profit surges in FY22
• Why I’m watching these ASX All Ordinaries shares like a hawk
• Why are ASX 200 tech shares having such a cracker of a day?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Link Administration Holdings Ltd and PEXA Group Limited. 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 oil price has undergone its fair share of twists and bends this year to date. The spike in energy prices in 2022 so far has been the second-highest on record since the oil shocks of the 1970s.

Except this time it’s different. Today, the oil industry is contending with an entirely new set of challenges.

Supply disruptions from the conflict in Europe, rising energy demand amid the impending European winter, and lower oil reserves are all contributing to sustained volatility in the pricing of oil.

Brent Crude oil, the world’s oil pricing benchmark, has seen its price gyrate substantially from December 2021. It now trades at US$87.7/Bbl, down from its last peak of US$120/Bbl on 9 June.

Brent’s journey to stardom – and then back again – is seen on the chart below, alongside West Texas Intermediate (WTI) crude oil futures for the 12 months to date.

Oil price continues to falter

After a short reversal, the oil price turned sharply on 29 August and has been pushing south ever since.

This week, futures on Brent Crude oil fell to their lowest mark since January this year, as concerns mount around global economic growth and a strong US dollar.

Investors seem particularly concerned at the prospects of a looming recession – especially in Europe – driven by higher energy prices and surging interest rates.

“[T]he market is basing its concerns about what will happen due to sharply higher energy prices in Europe, slowing demand in Europe, and interest rates rising,” analysts led by Paul Flynn at Price Futures Group said in a recent note.

Meanwhile, “[w]eak customs data from top importer China and renewed coronavirus-induced restrictions in several cities threatened further economic damages and subdued fuel consumption,” Trading Economics says.

“On top of that, lingering global growth concerns amid anticipation of an extended period of tightening financial conditions continued to rattle sentiment,” it added.

In addition, the OPEC+ alliance, in its most recent meeting, agreed to slash its daily oil output by 100,000 barrels per day, an unexpected move that added further volatility to the oil price.

Finally, another wave of fresh downside pressure came from weaker import data from China, showing that its crude oil imports fell 9.4% year on year to August.

“The world’s largest crude importer brought in 40.35 million tonnes of crude oil last month, equivalent to about 9.5 million barrels per day (bpd), data from the General Administration of Customs showed,” Reuters reported.

“That compared to 8.79 million bpd in July and 10.49 million bpd in August 2021.”

What the reduction in oil futures says for the level of inflation, energy prices, and cost of living is yet to be seen. Nevertheless, the declines are certainly worth thinking about.

Meantime, the volatility has been a boon for ASX oil shares like Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO). Their share prices are up 44% and 21% this year to date respectively, whilst broad equity markets have suffered significant drawdowns.

The post Why has the oil price been so volatile lately? appeared first on The Motley Fool Australia.

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More reading

• Why is the Woodside share price crashing 7% today?
• 5 things to watch on the ASX 200 on Thursday
• Why is the Woodside share price on the slide today?
• Why is the Santos share price slipping on Wednesday?
• Hoping to pocket the monster Woodside dividend? Read this

Motley Fool contributor Zach Bristow 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 FBR Ltd (ASX: FBR) share price is jumping, up 6.4% today.

For readers who haven’t heard of FBR before, it is designing, developing, building and operating an automated and stabilised bricklaying robot called Hadrian X.

It continues to make progress. For example, in November 2021, it announced that it had executed a term sheet with GP Vivienda to supply its ‘wall as a service’ (WaaS) for between 2,000 to 5,000 homes in Mexico using the Hadrian X robot. FBR has also entered into a memorandum of understanding (MoU) with Liebherr-Mischtechnik. The MoU intention is to co-operate, industrialise and commercialise the next Hadrian X robot for the global construction market.

These promising signs haven’t been missed by Australia’s biggest brickmaker, Brickworks Limited (ASX: BKW).

Last week, it was revealed that Brickworks had increased its ownership of FBR from 7.16% to 11.94%. It paid around $6.5 million for this increased holding.

But now, there is speculation that the business is a takeover target, which could be boosting the FBR share price.

Brickworks to make a move?

Brickworks has been strategically building up its stake in the business. According to reporting by the Australian Financial Review, it could mean that an actual takeover offer is getting close.

The AFR reported that fund manager sources believe the FBR business “has always made sense” for Brickworks as a way for it to provide low-cost bricklaying. Particularly at a time when construction costs are increasing, which is hurting the margins of both the builders and building product producers like Brickworks.

How could this play out? Speculation is that Brickworks may aim to increase its shareholding to 20% of the business, “make the most of a few creep provisions,” and then launch a takeover attempt.

It was suggested that the takeover approach could happen sooner rather than later. The newspaper also pointed out that FBR may need to raise more capital in the future to fund its ongoing operations and growth. This could enable Brickworks to buy more shares at a cheaper price.

Brickworks has previously taken part in a placement with FBR, raising $1.93 million, which helped it increase its shareholding of the business.

FBR share price snapshot

Over the last month, FBR shares have risen by 63%. The Brickworks share price is up 1.28% today, at the time of writing.

The post FBR share price climbs amid Brickworks takeover rumours appeared first on The Motley Fool Australia.

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More reading

• Dividend beasts: 3 ASX 200 shares that have delivered reliable payouts over the past 7 years

Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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 Tyro Payments Ltd (ASX: TYR) share price is rocketing higher after the company knocked back an unsolicited takeover bid.

A consortium of private equity investors put forward a $1.27 per share bid for total control of the financial technology company. That represents an enterprise value of $693.9 million.

The bid was rejected by the company this morning. It said the offer significantly undervalues it.

The Tyro share price is $1.235 at the time of writing, 25.08% higher than its previous close, after touching an intraday high of $1.295. That represents a 31.47% jump.

Let’s take a closer look at today’s news from the payments services provider.

Tyro share price leaps on rejected takeover bid

The Tyro share price is surging on news the company has rejected a near-$700 million takeover bid.

The offer was put forward by a consortium led by tech-focused investment firm Potentia Capital Management. The group also includes HarbourVest Partners, MLC Investments Limited, and The Construction and Building Unions Superannuation Fund.

Tyro’s board slapped the $1.27 per share offer away, saying:

The indicative proposal is materially below Tyro’s fundamental value and highly opportunistic given [it] is substantially below where Tyro’s share price has traded in the past 12 months.

The company also said the offer is highly conditional.

On top of that, Tyro pointed out its growth prospects and its increasing share of the Australian payments and business banking markets. It also said it expects its operating leverage will strengthen in the medium term and noted it’s well funded for growth.

Interestingly, the consortium secured the support of major Tyro shareholder Grok Ventures.

Readers might recognise Grok as the investment vehicle of Atlassian Corporation (NASDAQ: TEAM) co-founder Mike Cannon-Brooks. It was an integral piece of the puzzle that ultimately dismantled AGL Energy Limited (ASX: AGL)’s planned demerger.

The consortium struck a deal with Grok that would see the firm’s 12.5% stake in the company voted towards its bid.

Grok will also be blocked from acting on any competing proposals unless such a proposal is at least 25 cents greater than that of the most recent bid from the consortium.

The Tyro share price fell 66% between the start of 2022 and Wednesday’s close. At its current price, it’s down 57% year to date.

The post Tyro share price rallies 31% following rejected takeover bid appeared first on The Motley Fool Australia.

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More reading

• 2 heart-breaking ASX shares finally turning it around: Morgans
• 3 ASX All Ords shares that leapt over 10% today
• Why did the Tyro share price surge 12% today?
• Why Deep Yellow, Nitro, Tyro, and Webjet shares are storming higher
• Why A2 Milk, Lovisa, McMillan Shakespeare, and Tyro are storming higher

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 positions in and has recommended Atlassian and Tyro Payments. The Motley Fool Australia has recommended Tyro Payments. 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 Electro Optic Systems Hldg Ltd (ASX: EOS) share price has returned from its lengthy suspension and crashed deep into the red.

In morning trade, the embattled defence and space systems company’s shares were down as much as 35% to 47 cents. It has since recovered a touch and is currently down 23% to 55.5 cents.

Investors have been selling down the Electro Optic Systems share price following the eventual release of its delayed half-year results.

Electro Optic Systems share price crashes on half-year update

• Revenue down 45% to $53.8 million
• EBITDA loss of $34.7 million
• Net loss after tax increased from $11.7 million to $99 million
• Financing agreement signed with Soul Patts
• FY 2022 guidance being reassessed

What happened during the half?

For the six months ended 30 June, Electro Optic Systems reported a 45% decline in revenue to $53.8 million. Management blamed this on delayed revenue recognition arising from supply chain disruptions.

Things were even worse further down the income statement, with the company reporting a whopping $99 million loss after tax for the six months. This was a ~750% increase on the $11.7 million loss it recorded a year earlier.

However, it is worth noting that $54.4 million of this loss is attributable to the impairment of assets and onerous contracts held in SpaceLink.

Spacelink is the company’s satellite communications business which has an almighty task of competing against Elon Musk’s Starlink and Apple’s new satellite-connected handsets.

Though, whether the company will hold onto the cash-burning Spacelink business, only time will tell. Management revealed that it continues to explore opportunities to realise value from the SpaceLink assets and remains in active negotiations with potential partners and purchasers.

The rest of the loss has been blamed on the company having a cost structure larger than required for the current level of revenue. Positively, this is being addressed as part of the organisational restructure being implemented following a strategic review.

Restructure

Electro Optic Systems revealed that it is adopting a leaner structure that will prioritise existing business lines that are profitable and respond to customer procurement activity rather than anticipating requirements through customer planning documents.

Significant management changes, reductions in workforce, and a simplified strategy and business plan are also in the works. Full-year cost savings of at least $20 million are expected from these changes.

To support it through these challenging times, major shareholder Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has agreed to refinance the $35 million Roadnight debt facility that was due to expire on 6 September 2022 and extended the current maturity date to 26 September 2022.

Management expects to seek further extensions from Soul Patts as part of a staged refinancing of the company. Though, it acknowledges that there can be no guarantee that such extensions will be obtained.

Soul Patts has also agreed to provide the company with a $20 million working capital facility.

Outlook

Electro Optic Systems was previously guiding to FY 2022 revenue at or above 2021 levels of $212 million.

However, in light of the challenging first half and supply chain uncertainties, the company is reviewing its guidance and will provide an update at a later date.

The post Electro Optic Systems share price crashes 35% after first-half shocker appeared first on The Motley Fool Australia.

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More reading

• Why is the Electro Optic Systems share price frozen today?
• Why has the Electro Optic Systems share price soared 16% in 2 days?

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 positions in and has recommended Electro Optic Systems Holdings Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. 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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With the unwinding of the high-growth/tech trade of the past two years, many biotechnology names suffered equally in nasty selloffs this year.

Shares of Mesoblast Ltd (ASX: MSB) have taken a hit in 2022 having slipped more than 42% into the red this year to date.

Shares of the regenerative medicine player are currently at 84 cents apiece in early trading on Thursday, gaining the 3% they lost in yesterday’s session.

What’s Mesoblast been up to?

It was a busy period in the last financial year for Mesoblast, especially in its liaison with the US Food and Drug Administration (FDA).

Mesoblast has made, and is set to make, a host of submissions to the FDA regarding its lead drug candidates, Remestemcel-L and Rexlemestrocel-L.

It intends to resubmit a biologics license application (BLA) with the FDA this quarter for the approval of Remestemcel-L in treating children with steroid-resistant acute graft-versus-host-disease (SR-aGVHD). It is aiming for this approval in early 2023.

Meanwhile, Mesoblast also plans to meet with the FDA in the next quarter under its existing regenerative medicine advanced therapy (RMAT) designation to discuss Rexlemestrocel-L.

They will look over data from the company’s recent phase 3 trial of 565 patients with heart failure condition HFrEF.

Rexlemestrocel-L also “gained alignment” with the FDA last period on key metrics for a pivotal phase 3 clinical trial in patients with chronic low back pain (CLBP) associated with disc pathology.

This follows on from the first phase 3 trial covering the same condition and Mesoblast hopes to replicate favourable results produced there.

The company also plans to have received clearance from the FDA by the end of 2022 so it can commence the pivotal trial.

As such, it will be a busy few months for Mesoblast as it looks to progress through this next round of trials in both of its leading drug segments.

In the last 12 months, the Mesoblast share price has faltered 54% into the red.

The post Looking to buy Mesoblast shares? Here’s the latest on where the ASX biotech is at with the FDA appeared first on The Motley Fool Australia.

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More reading

• Mesoblast share price lifts 5% despite hefty loss
• Why has the Mesoblast share price tumbled 10% so far in August?
• These are the 10 most shorted ASX shares
• Why Block, CBA, Mesoblast, and NAB shares are dropping today
• Mesoblast share price slides 8% following $65m capital injection

Motley Fool contributor Zach Bristow 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 Woodside Energy Group Ltd (ASX: WDS) share price has crashed deep into the red on Thursday morning.

In early trade, the energy producer’s shares are down 7.5% to $31.43.

This compares unfavourably to the ASX 200 index, which is up 0.5% at the time of writing.

Why is the Woodside share price crashing?

There have been a couple of catalysts for the weakness in the Woodside share price on Thursday.

The first is a very poor night of trade for oil prices. Both Brent and WTI crude oil prices sank over 5% to seven-month lows amid concerns over recession risks and the release of downbeat Chinese trade data.

Fellow energy producers Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT) are also dropping on the news.

What else?

Also weighing particularly heavily on the Woodside share price is its upcoming dividend payment.

Last month, the company released its half year results and reported a huge increase in its earnings. This allowed the Woodside board to reward its shareholders handsomely with a big dividend hike.

For the half, Woodside declared a US$1.09 per share interim dividend, up from 30 US cents per share a year earlier. This equated to A$1.58 per share based on the exchange rates at the time and represented a 4.6% dividend yield at yesterday’s close price.

This morning, Woodside’s shares have traded ex-dividend for this interim payout. This means that the rights to the dividend payment now remain with the seller and won’t transfer to buyers of its shares between now and the payment date.

In light of this, the Woodside share price has dropped to reflect this. After all, if you were buying shares you wouldn’t want to pay for something you won’t receive.

Eligible shareholders can now look forward to receiving this dividend in just under a month on 6 October.

The post Why is the Woodside share price crashing 7% today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Why is the Woodside share price on the slide today?
• Hoping to pocket the monster Woodside dividend? Read this
• 5 things to watch on the ASX 200 on Wednesday
• What happened to Woodside shares on Tuesday?

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 Commonwealth Bank of Australia (ASX: CBA) share price could get a boost over the long term from ongoing growth in its business banking division.

There are many banks in Australia. Some are huge like CBA, National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Whereas others are a bit smaller, but still pretty big, like Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), and MyState Limited (ASX: MYS).

Just how big are the biggest banks? According to the ASX:

CBA has a market capitalisation of around $160 billion.

NAB has a market capitalisation of $92.75 billion.

Westpac has a market capitalisation of $73 billion.

ANZ has a market capitalisation of $66.6 billion.

As you can see, CBA is by far the biggest bank and it has plans to become even bigger.

Focused on business banking growth

In its FY22 result, CBA reported that it achieved home lending growth of 7.4% and 13.2% growth in household deposits.

But, in percentage terms, the business segment of its operations grew even quicker. Business lending rose by 13.6% (or $15.4 billion in dollar terms) and business deposits increased by 15.1% (or $23.9 billion).

In its annual report, CBA said that its goal is to build Australia’s leading business bank. It’s focused on continuing to differentiate its transaction and merchant banking propositions, and digitising its business banking experience.

It wants to be the main bank of choice for business customers by partnering with them, proactively meeting more of their needs, and delivering a superior customer experience.

New leadership team member

CBA announced earlier this week the appointment of independent non-executive director Lyn Cobley, starting 1 October 2022.

Cobley has more than 30 years of experience in financial services. Notably, she’s the former CEO of Westpac’s institutional banking business and chair of Westpac’s Asia advisory board, as well as group treasurer of CBA.

CBA Chair Paul O’Malley said:

On behalf of the board, I am delighted to announce Lyn’s appointment, and to welcome her breadth of financial services experience in her role as a non-executive director of CBA.

What to make of this

CBA is already growing at a good pace in its business banking, but Cobley may be able to provide some valuable expertise for the board and the business. Business banking growth could also be good for the CBA share price.

Motley Fool Australia chief investment officer Scott Phillips spoke on Nine’s Late News on Tuesday night about this appointment. He said:

This is fascinating…because CBA’s done a really good job over the past year or two of really diving deeply into the business market.

It’s always been the king of the kids when it comes to the mortgage market, the property market, but business lending and business relationships in general are more the remit of NAB and Westpac in-particular. Institutional banking is a really important part of the Commonwealth Bank growth strategy and this does bolster their activities and their expertise in this area.

CBA share price snapshot

Over the last month, CBA shares have dropped by 8%.

The post Could this help give the CBA share price an even bigger jump on its ASX counterparts? appeared first on The Motley Fool Australia.

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More reading

• Why is the NAB share price diving more than the other big 4 ASX banks today?
• Why rising rates are a ‘sugar hit’ for ASX 200 bank shares: Macquarie
• Rates go up, and CBA beefs up its business cred. Scott Phillips on Nine’s Late News
• Own CBA shares? Here’s the bank’s warning on rapid RBA rate hikes
• How might falling house prices impact the CBA share price?

Motley Fool contributor Tristan Harrison 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 positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. 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

Many investors have become notably more bearish on Netflix (NASDAQ: NFLX) lately, but you wouldn’t know that by looking at the stock’s performance on Wednesday. It surged nearly 5% higher on the day, thanks to an article in a top financial news outlet highlighting some potentially beneficial moves it’s making, and an analyst recommendation upgrade. 

So what

The article was published Wednesday morning in the finance world’s newspaper of record, The Wall Street Journal. Citing “people familiar with the matter,” the report states that Netflix is actively reviewing its operations for areas in which it can cut costs. Among other activities currently being assessed are its real estate holdings and cloud computing expenses.

In the personnel sphere, the article’s sources say the company has actively been hiring more junior staff, presumably because such individuals require lower salaries.

All told, Netflix’s operating expenses were $23.5 billion in 2021, which was up 15% from the 2020 level. Meanwhile, the streaming video king’s subscriber count has been falling lately. The company has already said that it will cut spending on both content and non-content costs.

Netflix has not yet officially commented on the Journal article.

Now what

Meanwhile, Macquarie analyst and longtime Netflix tracker Tim Nollen lifted his recommendation on the stock. He now feels it’s worthy of a neutral rating, rather than his previous tag of underperform (sell). He’s also lifting his price target substantially, boosting it to $230 per share from the preceding $170.

Nollen is basing this on Netflix’s plan to introduce an ad-supported subscription tier. He wrote in a new note that the company could draw $3.6 billion in revenue from this, although that tally shakes down to $1.1 billion when factoring in the almost certain lower subscription prices for such a tier.

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

The post Why Netflix was a star stock today appeared first on The Motley Fool Australia.

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More reading

• What makes ‘Dividend Aristocrats’ a great investment for you?
• 3 great foreign companies to invest in right now
• Did Bill Ackman give up on Netflix too soon?

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netflix. The Motley Fool Australia has recommended Netflix. 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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