Category: Stock Market

The Bubs Australia Ltd (ASX: BUB) share price is edging higher today following a market update from the company.

At the time of writing, the infant formula company’s shares are fetching at 64.5 cents apiece, up 4.03%.

Let’s take a look at what management provided to the ASX this morning.

What did Bubs announce?

In its update released to the ASX, Bubs advised it entered into supply agreements with two new retail groups.

This comes ahead of the fourth plane delivery to the United States scheduled on 6 July under the Operation Fly Formula. Management noted that all 90,000 baby formula tins onboard worth $3 million in gross revenue have been presold.

The supply agreements are with a supermarket chain based in Texas, H-E-B Grocery Company, and American supercentre chain, Meijer.

Furthermore, 22 state agencies in the US have authorised Bubs Infant Formula products as suitable under the WIC program.

The WIC program is a special subsidy supplement nutrition program from the United States Government for women, infants and children.

Evidently, this opens the door for Bubs products to hit more retailers across the country.

On another note, management noted that Bubs infant formula products will receive the benefit of tariff concessions under the AUSFTA Agreement.

This comes after the United States and Australian Government held discissions surrounding the correct tariff classification of Bubs Infant Formula products.

Bubs founder and CEO, Kristy Carr commented:

We are grateful for the opportunity to assist parents under the WIC Program. As Bubs continues to replenish retailer shelves with up to six Bubs Infant Formula products, it is comforting that many more American parents will have the opportunity to access our clean nutrition that is and will continue to be available on shelves.

We are thankful to the U.S. and Australian Government for their assistance in helping us understand our tariff obligations. It is great to see that the strong trade relations and reciprocal recognition of food standards between the two countries have reflected in greater market access for our category, particularly during this time of crisis for American families.

Bubs share price summary

Despite a difficult 12 months amid COVID-led channel disruptions, the Bubs share price has gained 40% over the period.

The company’s shares touched a 52-week high of 86 cents on the back of the supply agreement with the United States.

However, since then, its shares have retraced due to market volatility across the ASX which weighed down Bubs shares.

Based on valuation grounds, Bubs commands a market capitalisation of around $379.92 million.

The post Why is the Bubs share price taking off today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Best ASX shares to buy in July 2022
• Bubs share price drops despite new Target deal
• Where to find value in growth? Here are 2 ASX shares I’d buy in July
• Why ANZ, Block, Bubs, and PayGroup shares are pushing higher
• Bubs share price up 4% on further US update

Motley Fool contributor Aaron Teboneras 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 recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/zws9WFt

The Block Inc (ASX: SQ2) share price has started the week strongly.

In late morning trade, the payments company’s shares are up over 5% to $92.57.

Why is the Block share price charging higher?

Investors have been bidding the Block share price higher today following a rebound in the tech sector.

This follows a solid night of trade for tech stocks on Wall Street on Friday, which saw the company’s NYSE listed shares rise 4%.

The Block share price then edged slightly higher in after hours trade to end the week at US$63.99.

Based on current exchange rates, that would equate to approximately $94.10 for its ASX listed shares, which is a touch ahead of where they trade currently.

It isn’t just Block that is trading higher today in the tech sector. The S&P ASX All Technology index is up 1% at the time of writing thanks to gains from the likes of WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO).

However, despite this rise, the S&P ASX All Technology index remains down by a disappointing 37% since the start of the year.

The post Why is the Block share price racing 5% higher? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Should investors zero in on the Xero share price in July?
• 5 things to watch on the ASX 200 on Monday
• The Xero share price lost 14% last month. Here’s the tea
• What on earth happened to ASX 200 tech shares in June?
• Brokers name 3 ASX shares to buy today

from The Motley Fool Australia https://ift.tt/UHryKfs

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.

The stock market just wrapped up its worst first half in more than 50 years. The benchmark S&P 500 index is down 21% so far in 2022, and the tech-heavy Nasdaq Composite index is down by 30%. And many of the most widely held stocks in the market are down by 50% or more this year, especially those of fast-growing businesses.

Amid all the volatility, every investor has the same question: When will things start to get better?

While none of us have a crystal ball that can accurately predict the future, the answer to that question will be directly connected to the issues that have caused the market’s decline so far this year. Let’s lay those out, and consider the potential catalysts that could cause it to rebound — or move even lower — in the second half.

Why has the stock market fallen so steeply this year?

In a nutshell, we’ve had a perfect storm of negative catalysts. Let’s run through some of the biggest.

Inflation: After many central bankers and economists repeatedly assured us that any surges in inflation caused by the pandemic’s secondary effects would be “transitory,” we’ve all come to realize that’s not the case. U.S. inflation is at its highest level since the early 1980s, and the Federal Reserve is aggressively trying to get it back under control. This has led to fears that its fiscal tightening will trigger a recession. 

Rising interest rates: In its inflation-fighting efforts, the Fed has raised benchmark interest rates significantly from their pandemic lows of near zero, and this has driven consumer interest rates upward too. For example, the average rate for a new 30-year mortgage has increased from about 3% at the beginning of the year to just under 6% now. So, not only is inflation making things cost more, but borrowing has become far more expensive.

Declining consumer confidence: When consumers don’t feel confident about the economy, they spend less money. That’s bad for business. And according to the latest report from the Conference Board, consumer confidence is at its lowest level in almost 10 years.

War: Growth stocks had been under pressure since late 2021, but there’s a solid case to be made that the event that triggered the broad market decline was when Russia invaded Ukraine. The short explanation is that markets hate uncertainty, and wars in economically vital regions bring a lot of uncertainty to the table. 

There are other factors in play as well, such as ongoing supply chain disruptions, labor shortages, and wage pressures on businesses, just to name a few.

Catalysts that could move the market in the second half

It’s important to realize the stock market is largely a forward-looking indicator. In other words, the price of stocks doesn’t necessarily reflect the current state of things, but what the market expects the state of things will be. And this is true for individual stocks as well.

Right now, investors expect inflation to run hot for the foreseeable future. The market expects that the Fed will raise the federal funds rate by another 175 basis points or more by the end of this year alone. There’s no end in sight for the war in Ukraine. The market expects consumer spending to decline. And the market is starting to expect a recession to begin in the near future.

So if any of these things turn out better than the market expects, it could lead to a rebound in the second half of 2022. For example, if the data clearly starts to show inflation has peaked and is beginning to decline, it could trigger a market rally. If the Ukraine conflict gets resolved, investors could breathe a sigh of relief. You get the idea.

It’s important to recognize that the opposite is true as well. For example, if U.S. inflation — currently in the 8% to 9% range year over year — spikes into the double-digit percentages, it could result in another downward move for the broad market.

Keep your eye on the long term

The bottom line is that while we know what catalysts would be generally positive or negative for the stock market, we have no idea if and when they will actually happen. So there’s simply no way to predict with any degree of accuracy what the stock market will do for the rest of the year.

This is why we are so steadfast in our advice that long-term investing is the smart way to go. The stock market is down 21% so far this year and it could certainly fall even further if things don’t go well in the near term. But historically speaking, investing during the periods that follow market drops of 20% or more has worked out very well from a long-term perspective. I have absolutely no idea what the stock market will do over the next six months. But I have every confidence that in 20 years, it will be much higher than it is today. 

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

The post Down 21%, is the stock market ready to recover in the back half of 2022? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is the Bubs share price taking off today?
• Why is the Block share price racing 5% higher?
• Why did the Evolution share price freefall 38% in June?
• Why did the BHP share price have such a lousy FY22?
• What’s going on with the Firefinch share price?

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.

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

from The Motley Fool Australia https://ift.tt/yAzPIth

A month of volatile trading conditions led the Evolution Mining Ltd (ASX: EVN) share price to sink 38% last month.

At the start of June, the gold miner’s shares picked up from $3.84 but finished at $2.38 on June 30.

Across the sector, the S&P/ASX 200 Resources (ASX: XJR) index declined by roughly 11% over the same time frame.

Nonetheless, the beginning of July has led Evolution shares to trade sideways as investors remain cautious for the time being.

At the time of writing, the mining outfit’s shares are up 4.20% at $2.48.

What impacted Evolution shares in June?

Investors sold off the Evolution share price following concerns about further market falls in 2022 along with a business update.

A downbeat economic outlook impacted by rampant inflation and rate hikes by major central banks weighed on investor sentiment.

This led to consumer confidence dropping to a 16-month low in the United States, whilst GDP contracted 1.6% for the first quarter of 2022.

However, a business update released by the company on June 27 drove Evolution shares to plummet almost 22%.

An expected fall in annual gold production along with higher all-in-sustaining-costs (AISC) will drag down its FY22 guidance.

Subsequently, the price of gold continued to tread lower, fetching just above the psychological US$1,800 barrier.

This means that a decline in the price of the yellow metal translates to a loss of potential revenue for Evolution.

It appears that investors have been turned off by the company’s misfortunes with heavy trading volumes occurring last week.

Evidently, this has put selling pressure on Evolution shares as investors seek better risk/reward opportunities.

Is now the time to buy into the Evolution share price?

The Evolution share price could be trading at attractive levels. As reported by my Foolish colleague, Brendon, UBS upgraded its rating on the miner’s shares to a buy.

The broker believes there is still significant value in Evolution and has put a 12-month price target of $4.05.

Based on the current share price, this represents a 63% upside for investors.

Evolution commands a market capitalisation of approximately $4.55 billion.

The post Why did the Evolution share price freefall 38% in June? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Do Evolution Mining shares pay a dividend?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• These 3 ASX gold mining shares are digging new 52-week lows today
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Aaron Teboneras 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.

from The Motley Fool Australia https://ift.tt/daCbXxB

The BHP Group Ltd (ASX: BHP) share price dropped in FY22. It wasn’t just a small falter either; it was a fall of around 17.5%.

It dropped enough that the total shareholder return — the combined share price and dividend total return — was negative in the mid-single-digits, according to CMC Markets. That’s despite the large dividends the miner paid.

As a resource business, changes in commodity prices can have a significant influence on what investors believe a company can achieve in terms of future revenue, net profit after tax (NPAT), cash flow and dividends. Each of those financial measures can also have a sizeable influence on the BHP share price.

As it turned out, the BHP business underwent quite a few changes during FY22.

Volatile iron ore price

The iron ore price was particularly strong at the start of FY22. At one stage, it was above US$200 per tonne amid strong demand from China, the main buyer of iron ore.

BHP generates a significant portion of its profit from iron ore, so changes in the iron ore price can have a sizeable impact on the profitability of the business.

In the first half of FY22, BHP’s iron division generated almost US$10 billion of the US$15.6 billion continuing operations earnings before interest and tax (EBIT). In FY21, iron ore generated US$24.3 billion of the US$30.3 billion EBIT.

By November 2021, the iron ore price had fallen to below US$100 per tonne. This also saw the BHP share price fall below US$36 briefly.

While the iron ore price is still above US$110 per tonne currently, it has fallen by more than US$20 per tonne over the last month, reducing the potential profit from BHP’s iron division.

Petroleum divested

Investors also have to weigh up what BHP’s profitability will be going forward without the company’s gas and oil segment after BHP divested it to Woodside Energy Group Ltd (ASX: WDS).

The plan was that BHP shareholders would get Woodside shares as payment for the BHP division. At the time of the announcement, it was expected to create a global top 10 energy company by production and the largest energy company listed on the ASX.

This combined company is expected to have “a high margin oil portfolio, long life LNG (liquified natural gas) assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition”.

However, that segment is no longer in the BHP portfolio and not generating the earnings it was when it was part of the BHP business.

Big FY22 dividend expected

FY22 is now over but shareholders will still benefit from the payment of the final dividend adding to the total FY22 dividend, which is expected to be large.

Indeed, CMC Markets suggests BHP could pay a total FY22 dividend of $4.91 per share, equating to a grossed-up dividend yield of 17.5%.

The broker Macquarie isn’t expecting the dividend to be quite as big, however. It’s projecting a grossed-up dividend yield of 15.8% from BHP for FY22.

The post Why did the BHP share price have such a lousy FY22? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• Why Argosy Minerals, BHP, Ingenia, and Woodside shares are dropping today
• ASX 200 midday update: Regis Resources jumps, BHP and Rio Tinto drop
• These ASX 200 mining shares are digging a deeper hole on Friday
• Why did the BHP share price take a tumble in June?

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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/hsOcLBS

The Firefinch Ltd (ASX: FFX) share price won’t be returning to trade on Monday.

This morning the struggling gold miner requested that its suspension continue until the end of July.

What’s going on with the Firefinch share price?

The Firefinch share price was halted and then suspended originally while it prepared to release an update on the operational performance and production guidance of the Morila Gold Project in Mali.

However, with that now released, the company has requested that its suspension continue while it seeks to finalise funding.

Management notes that this funding is being designed to place the company in a more robust and sustainable working capital position. It will also support the capital investment required to take the operations to a long term sustainable and profitable operation of scale.

Operational update

In respect to its operational update, things have not been going well for the company and its Morila Gold Project. The release reveals that gold production during the June quarter was estimated to be 13,300 ounces. This compares to guidance of 17,000 ounces to 20,000 ounces.

Management advised that this has been driven largely by poor equipment availability, which has been exacerbated by the delayed delivery of additional mining equipment. This delay is a result of sanctions imposed on the State of Mali restricting the movement of goods.

Unfortunately, this also means that its production ramp up is behind schedule and its calendar year guidance has been withdrawn.

Costs rising

But it gets worse. Firefinch has experienced significant cost pressures in the last quarter. This has included material increases in diesel prices, the cost of explosives, and other consumables

Management is hoping to offset this by creating a new mine plan to target 8,000 to 9,000 ounces of gold production per month in the short term. The company is also cutting costs by reducing its board and putting capital projects on hold. Combined, this is expected to move the operation to positive operating cashflow.

But in order to achieve its goals, it expects to require funding via a capital raising. Firefinch is currently in the process of determining how much it will require and the structure of this capital raising.

Management commentary

Firefinch’s executive chairman, Dr Alistair Cowden, remains positive on the company’s longer term outlook. He said:

A confluence of events, including cost inflation, ECOWAS sanctions and contractor performance has resulted in underperformance at Morila. The Board has acted decisively to address this with management changes, cost cutting, a pivot in the mining strategy and the acceleration of a new mine plan to inform the way ahead.

I also want to make it clear that the orebody has not underperformed, rather production has not ramped up as fast and as cost effectively as planned. Morila is a world-class gold deposit with extensive operational infrastructure and which has produced over 7.5 million ounces of gold and has a current resource of 2.5 million ounces. This asset, together with our stake in Leo Lithium, provides a solid underpinning to the Company.

The post What’s going on with the Firefinch share price? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Leo Lithium share price fails to roar and sinks 26% following demerger
• Leo Lithium shares hit the ASX this week. Here’s what you need to know
• Why BrainChip, Firefinch, Magellan, and Westpac shares are dropping

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.

from The Motley Fool Australia https://ift.tt/VDAXJ9T

The South32 Ltd (ASX: S32) share price tumbled into a bear market last month despite perceptions that miners are better placed to weather economic turmoil.

Runaway inflation, the war in Ukraine, and strong balance sheets should put ASX mining shares in investors’ good books.

But these weren’t enough to save the South32 share price from losing more than 20% in June. This means the diversified miner is officially in a bear market, which is defined as a peak-to-trough drop of 20% or more.

The South32 share price steps into a bear trap

The recent retreat in commodity prices is mainly to blame. Worries of a global economic slowdown, or even a recession, is dragging on metal prices.

This is why Dr Copper dived to its lowest level since February last year. Copper consumption is closely linked to economic activity and is seen as a bellwether for other metals. The red metal has lost around 25% of its value since its high in early March.   

That’s bad news for other industrial metals. The price of nickel shed 3.9% and zinc fell nearly 10% last week, the Australian Financial Review reported.

The South32 share price is sensitive to the weakness. The company produces a range of metals, including copper, zinc, nickel, and alumina, among others.

Conflicting market signals

But herein lies the irony. Markets have been pricing in both higher for longer inflation and weaker commodity prices for some weeks now.

Inflation expectations have been pumped up by soaring input prices – this means commodities. Rising prices are forcing central banks, including ours, to hike interest rates. That, in turn, is putting the broader S&P/ASX 200 Index (ASX: XJO) under pressure.

But if commodity prices weaken, this should theoretically flow through to slowing inflation. If so, markets may be overestimating how far the US Federal Reserve, and its global counterparts, can hike rates.

It’s difficult to see how both the falling prices of the South32 share price (and Dr Copper) and inflation expectations can be right at the same time!

Can bad news be good news for the South32 share price?

As we speak, we might already be seeing some of this inflation expectation unwind. The ASX 200 is gaining ground today following a positive lead from Wall Street on Friday. At the time of writing, it’s up 1.72% in early trade. The rally is fuelled by a retreat in bond yields – a signal that investors are paring bets on where interest rates will peak in the US.

That is not only good news for all risk assets but also ASX miners like South32 because lower rates are good for equities.

Let’s hope the renewed enthusiasm is enough to offset the falls in commodities.

The post South32 crashes into bear market in June as recession fears bite appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Monday
• The Xero share price lost 14% last month. Here’s the tea
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Embattled ASX 200 retail shares primed for a comeback: experts

Motley Fool contributor Brendon Lau has positions in South32 Ltd. 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.

from The Motley Fool Australia https://ift.tt/140IKCq

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

Shares of Meta Platforms (NASDAQ: META) dipped 16.7% in June, according to data from S&P Global Market Intelligence. The social media conglomerate that owns Facebook, Instagram, and WhatsApp is slowing down hiring this year and was probably affected by the broad market sell-off in technology stocks last month. Shares of the stock are now down more than 50% this year, marking one of the worst drawdowns in the company’s history.

So what

There was no official news from Meta Platforms this month, but, being one of the most valuable companies in the world, there was plenty of other news to dig into.

First, on June 30, Reuters reported that CEO Mark Zuckerberg told employees the company would be slowing down hiring this year. That’s better than layoffs, which a lot of technology companies are going through right now, so I don’t think it’s a huge concern for Meta Platforms shareholders, but the stock was still down big following the news. Zuckerberg and the executive staff are scaling back hiring because they’re seeing what they’re calling one of the worst business drawdowns in the company’s history. Since Facebook and Instagram both make money selling digital advertising space, an economic downturn is likely to hurt its bottom line — less consumer spending means less spending on advertising.

This may already be showing up in Meta’s financial results. Revenue grew only 7% year over year last quarter, one of the slowest in the company’s history, and could be headed for worse results in the next few quarters. It’s also dealing with Apple‘s new iOS privacy changes, which severely impeded Meta’s ability to target advertisements effectively. Investors are also probably worried about TikTok, the gigantic social network that exploded out of China a few years back. It’s very popular among younger social media users and could threaten Instagram’s business this decade.

Lastly, the downturn in the Nasdaq 100 Index put a hurt on Meta’s stock, as it did for most technology companies last month. The index was down a little less than 10% in the month.

Now what

Down so much this year, Meta Platforms now trades at a market cap of “only” $450 billion. With $40 billion in free cash flow generated over the past 12 months, the stock trades at a very cheap price-to-free cash flow (P/FCF) multiple. While there are some short-term concerns to be worried about with Meta’s business, now could be a solid time to buy if you’re a long-term believer in the company. 

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

The post Why Meta Platforms sank 16.7% in June appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Meta Platforms plunged on Tuesday
• 2 oversold stocks to buy in the Nasdaq bear market
• Why Meta, Amazon, and Apple shares were falling today
• Better buy: Twitter vs. Meta Platforms

Brett Schafer 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 Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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.

from The Motley Fool Australia https://ift.tt/lhDZzNJ

Financial year 2022 was brutal for the Kogan.com Ltd (ASX: KGN) share price, falling by around 75%.

Since peaking in October 2020, Kogan shares have dropped around 90%.

Why has the market hurt the ASX e-commerce share so much? Investor sentiment has turned against the business and other ASX growth shares.

There were a few key events in FY22 as the business went lower and lower. Let’s look at some of those events in the last financial year.

FY21 result release

The company started FY22 somewhat positively with the release of its FY21 result. It reported that gross sales went up 52.7% to $1.18 billion, gross profit increased 61%, and ‘adjusted’ earnings per share (EPS) grew by 27.2% to 41 cents per share.

However, the company noted that its statutory net profit after tax (NPAT) fell 86.8% to $3.5 million.

Excess inventory in the second half of FY21 “significantly” increased storage costs. This led to variable costs more than doubling from $20.1 million in FY20 to $44.9 million in FY21. Subsequently, the company incurred elevated marketing costs through promotional activity to “rebalance inventory levels”.

There were also ‘logistics detention charges’, known as demurrage costs, amounting to $7.7 million. This was due to warehousing and supply chain interruptions from late 2020 to April 2021.

In a trading update for July 2021, the first month of FY21, the company said gross sales had grown 5.1% year on year. Kogan made ‘adjusted’ earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.1 million for the month, reflecting high operating costs. But it said those costs were gradually reducing.

Furthermore, in the first 18 days of August 2021, the company saw gross sales go 24.5% higher than July 2021. Gross profit also went up 25% for the equivalent number of days.

However, the optimism was short-lived for the Kogan share price.

Losses in the FY22 first half

In February 2022, the company reported its result for the first half. Profitability reduced in HY22.

While HY22 gross sales went up 9.4% to $698 million, gross profit fell 8.1% to $108.1 million. Kogan made a $2 million EBITDA loss and a statutory net loss of $11.9 million. Losses are not particularly helpful for the Kogan share price.

Kogan said it had experienced continuing supply chain interruptions ongoing from COVID and “associated fluctuations” in consumer demand.

Although, one of the positives in the report was that its active customer numbers had grown 9.4% year on year to 4.07 million.

The final kick in the teeth for the Kogan share price

At the end of April 2022, the company released its quarterly update for the three months to March 2022.

The company said that consumer demand did not meet expectations, pointing to a slowdown in e-commerce activity in Australia.

In the FY22 third quarter, gross sales dropped 3.8% year on year to $262.1 million, while gross profit fell 11.2%. Adjusted EBITDA was a loss of $0.8 million. However, Kogan First members rose by 264% year on year to 328,000.

On top of this, investors need to figure out how inflation and interest rates may affect the Kogan share price and other ASX growth shares.

However, in a glimmer of hope for future profitability and perhaps the Kogan share price, the company said it will recalibrate its operating costs in line with current activity levels to support a return to historical operating margins.

The post Why did the Kogan share price go backwards in FY22? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why did the Kogan share price sink 22% in June?
• Best ASX shares to buy in July 2022
• Kogan shares slide 7% nearing a 52-week low
• Why is the Kogan share price jumping 12%?
• Why is the Kogan share price soaring 6% on Monday?

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 positions in and has recommended Kogan.com ltd. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/7SAC4e6

June turned out to be a month to forget for S&P/ASX 200 Index (ASX: XJO) bank shares. And some of the market’s biggest names were the hardest hit.

Here’s how some of the major ASX 200 bank shares performed last month:

• Commonwealth Bank of Australia Ltd (ASX: CBA) – fell 13.4%
• Westpac Banking Corp (ASX: WBC) – fell 18.3%
• National Australia Bank Ltd (ASX: NAB) – fell 12.4%
• Australia New Zealand Banking Group Ltd (ASX: ANZ) – fell 12%
• Macquarie Group Ltd (ASX: MQG) – fell 11.5%
• Bank of Queensland Limited (ASX: BOQ) – fell 11.2%
• Bendigo and Adelaide Bank Ltd (ASX: BEN) – fell 12.9%

For context, the ASX 200 slipped 8.9% over the course of June. Meanwhile, the S&P/ASX 200 Financials Index (ASX: XFJ) slumped 11.8%.

Did interest rates weigh on ASX 200 bank shares?

Australia’s biggest banks were thrust into the spotlight in early June when the Reserve Bank of Australia hiked the benchmark interest rate for a second consecutive month. The rate was lifted 0.5% in June to 0.85% in an effort to tackle inflation.

On top of that, RBA Governor Philip Lowe noted further rate hikes are likely over coming months.

Readers might be wondering how news of a rate rise has weighed on ASX 200 bank shares, given it’s normally good news for the sector.

Indeed, rate hikes allow banks to increase net interest margins (NIM), thereby potentially boosting their profitability.

However, higher rates and inflation also increase the risk of mortgage foreclosures – particularly given 23.1% of new residential mortgage loans funded during the March quarter had a debt-to-income ratio of at least six times.

Increasing rates could also see house prices fall.

Both happenings would spell bad news for banks’ loan books.

In other banking news from last month, neobank Volt buckled at the knees last week. It’s leaving the Australian market, citing funding issues as the cause of its downfall.

What did ASX banking giants get up to last month?

There was plenty of news out of ASX 200 banks last month as well.

Both NAB and Macquarie underwent capital raises in June.

NAB announced a $1 billion capital notes offer on 6 June. Macquarie announced its own capital notes offering – worth $400 million – on 28 June.

ASX 200 insurance and banking giant Suncorp Group Ltd (ASX: SUN) was also in the spotlight late last month amid rumours it’s looking to spin out its banking arm. The company responded to such speculation, saying:

Suncorp, from time to time, reviews its strategic alternatives in relation to all of its businesses and is currently doing so in respect of its banking operations.

Suncorp was also the best performing ASX 200 bank share in June, falling just 3.2%.

The post June was a terrible month for ASX 200 bank shares. Here’s why appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why did the Westpac share price crash 18% in June?
• Could the CBA share price turn over a new leaf in July?
• Why did the CBA share price crash 13% in June?
• Why this fundie favours NAB and Westpac shares out of the big four
• Westpac tips another big RBA rate hike next week

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 positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/NCr4OVc