Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) gold mining shares are having a tough day of it with gold prices down 0.25% overnight.

At the time of writing the ASX 200 is up 0.2% while the S&P/ASX All Ordinaries Gold Index (ASX: XGD), which contains miners outside of the top 200, is down 2.9%.

All the ASX 200 gold shares are in the red.

But St Barbara Ltd (ASX: SBM) is doing it particularly tough.

Why is this ASX 200 gold share tumbling to 7-year lows?

St Barbara finished last week with a strong showing, gaining 6.1% on Friday.

This week things have gone decidedly the other direction.

After posting moderate losses on Monday and Tuesday, the stock crashed 18.6% yesterday. With today’s intraday losses factored in, the miner is now down 33.6% since Friday’s close.

That puts shares at 7-year lows.

So, why the brutal sell-off?

It appears investors were less than pleased with the company’s announcement yesterday that it will delay its final investment decision on its Simberi Sulphide Project expansion and undertake a strategic review. Simberi is located in Papua New Guinea.

As The Motley Fool reported, the ASX 200 gold share will undertake the strategic review to determine the best capital allocations between Simberi and two of its other projects.

Also dragging on the St Barbara share price was the announcement that its Canada based Touquoy project faces disruption. Regulatory authorities are seeking more details on the miner’s plan to convert the Touquoy open pit into a Tailings Management Facility after it finishes the open pit mining.

St Barbara share price snapshot

The ASX 200 gold share finds itself at the bottom of the list of performers among the top listed gold stocks.

Year-to-date the St Barbara share price is down 44%, with shares down 55% since this time last year.

For some context, the ASX 200 is down 11% over the full year while the ASX Gold Index has dropped 17%.

The post Here’s why this ASX 200 gold share is tumbling 15% to a 7-year low appeared first on The Motley Fool Australia.

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More reading

• Why Blackmores, Lake Resources, St Barbara, and Zip shares are dropping
• ASX 200 midday update: St Barbara and Zip drop to multi-year lows
• Why is the St Barbara share price crashing 14% to a multi-year low?
• These were the best performing ASX 200 shares last week
• 5 things to watch on the ASX 200 on Friday

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. At the time of writing, the benchmark index is up 0.4% to 6,534.1 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are sinking:

Cooper Energy Ltd (ASX: COE)

The Cooper Energy share price is down 22% to 24.5 cents. This follows the completion of the energy company’s institutional entitlement offer and placement. Cooper Energy raised $183 million at a 22% discount of 24.5 cents per new share. The proceeds will be used to fund the transformational acquisition of the Orbost Gas Processing Plant.

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price has crashed a further 16% to 70.7 cents. This lithium developer’s shares have been hammered this week amid the sudden exit of its CEO and concerns over future prices of the white metal. In respect to the former, Lake’s CEO left without comment and sold all his 10.2 million shares the following day.

Leo Lithium (ASX: LLL)

The Leo Lithium share price has dropped 23% to 54 cents. This morning this lithium developer’s shares hit the ASX boards following a demerger from Firefinch. As part of the demerger, the company raised $100 million via an IPO at 70 cents per new share.

Zip Co Ltd (ASX: ZIP)

The Zip share price is down 3% to 45 cents. Not even a business update has been able to stop the rot. This latest decline means that Zip now has a market capitalisation of just over $300 million. To put that into context, this is less than the adjusted loss before tax it recorded in FY 2021 of $359.6 million.

The post Why Cooper Energy, Lake Resources, Leo Lithium, and Zip shares are sinking appeared first on The Motley Fool Australia.

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More reading

• The Lake Resources share price has crashed 50% since joining the ASX 200 on Monday. What’s going on?
• Own Zip shares? Here’s how much debt the company has and what this could mean amid rising interest rates
• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• Leo Lithium share price fails to roar and sinks 26% following demerger
• Zip share price dives 11%, closing below 50c for first time in 6 years

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 ZIPCOLTD FPO. 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 has tumbled in June followed by a broader market decline.

The negative sentiment across the ASX appears to be coming from news of a potential recession in the United States.

The popular saying, “When America sneezes, Australia catches a cold” has led investors to switch to safe-haven assets.

As such, the rare earths producer’s shares are trading at $8.30, which means they are down almost 16% in June so far.

In comparison, Iluka Resources Limited (ASX: ILU), and Arafura Resources Limited (ASX: ARU) shares have also fallen in June. They are currently down 21% and 43% respectively.

Both are competitors to Lynas in the rare earths market but are some distance away from being a threat.

When looking at the sector as a whole, the S&P/ASX 200 Materials (ASX: XMJ) index has dipped 13% over the past three weeks.

What’s happened with Lynas lately?

Despite the company announcing a major deal with the US Government last week, the Lynas share price has tanked.

The release was particularly positive given that Lynas depends on China for final separation of its heavy rare earths.

In the past, China has weaponised rare earths supply to the market. And if geopolitical tensions reach boiling point in future, it is likely to happen again. This has caused Western analysts to rethink their strategy to secure the crucial commodity.

To put that into perspective, heavy rare earths are used in cutting-edge weapons and communications systems. This includes electrical power systems and magnets in the advanced, fifth-generation F-35 fighter jet.

In what should have been a day in the green for Lynas shares, investors shrugged off the good news.

It is worth noting that Lynas is the world’s second-largest producer of Neodymium-Praseodymium (NdPr), behind China. The Asian powerhouse accounted for 60% of global production of rare earths last year.

Lynas share price summary

Despite its recent slump, the Lynas share price has soared by more than 50% over the past 12 months.

The company’s shares touched a multi-year high of $11.59 in April 2022 before treading lower in the following months.

Lynas has a price-to-earnings (P/E) ratio of 28.41 and commands a market capitalisation of roughly $7.55 billion.

The post How is the Lynas share price performing against its sector this month? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• 3 ASX 200 shares stretching higher on Wednesday
• Why Computershare, Lithium Plus, Lynas, and ResApp shares are pushing higher
• ASX 200 midday update: ResMed’s US$1bn acquisition, tech shares continue to sink
• Lynas share price sinks 9% despite major US deal

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.

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Consumer confidence is down as rising inflation and interest rates push up the costs of living.

ASX 200 share price movements are reflecting these concerns. The benchmark S&P/ASX 200 Index (ASX: XJO) has fallen 14% year to date.

As my Fool colleague Mitch reported last week, the latest Westpac-Melbourne Institute consumer sentiment index fell by 4.5% from the prior quarter to 86.4. A reading below 100 indicates pessimism — and the lower it goes, the more uncertain and cautious people are feeling.

Westpac chief economist Bill Evans said the June figure was not far off some of our worst financial periods. This includes COVID-19 (75.6) and the global financial crisis (79).

So in other words, Aussies are feeling pretty down in the dumps, economically speaking.

Which ASX 200 shares are the best ones to buy?

Supermarkets usually do well during periods of inflation, says Will Riggall, the chief investment officer at Clime Investment Management.

In a recent interview with the Australian Financial Review (AFR), Riggall said:

The segment of the market that has historically performed well during periods of inflation are the Australian supermarket players, namely Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL).

While we may see some trading down to lower-priced items, consumers will continue to buy food and other goods. The size and strength of the big two players will see margins remain stable amid a more challenging environment for the broader consumer sector.

Consumer staples over consumer discretionary

As Mitch also reported, consumers are now putting off household purchases. The ‘time to buy a major household item’ sub-index slipped 3.3% to 89.5 in June. Such a number has only been recorded prior to a severe economic contraction.

In a new note, Bell Asset Management says consumer discretionary shares face more risk than consumer staples with pricing power.

Bell Asset Management said:

At present, the economy remains on a reasonably strong footing, but there is an increased
risk of reduced consumer discretionary spending as priorities of the household wallet shift
more toward essential purchases of fuel, utilities and food.

Bell says investors often overlook company fundamentals and indiscriminately sell their ASX shares.

We are very cautious since our research and modelling shows that the magnitude of earnings downgrades will likely increase in the second half of the year.

Poor quality companies will take the brunt of the fall, whereas quality companies with pricing power will be far better placed to outperform.

As active stock pickers, it is times like this where there are large disconnects between quality and value, often making an opportune time to buy out of favour stocks.

The post Which ASX 200 shares could benefit from falling consumer confidence? appeared first on The Motley Fool Australia.

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More reading

• Has 2022 proven Woolworths is a defensive ASX share?
• How to start investing in stocks: This ASX 200 share is where I’d begin
• Analysts name 2 ASX dividend shares with attractive yields to buy next week
• Why is the Coles share price getting off lightly today?
• 2 defensive ASX dividend shares with good yields that analysts rate as buys

Motley Fool contributor Bronwyn Allen 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 COLESGROUP DEF SET. 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 Webjet Limited (ASX: WEB) share price is trading 2.8% down today at $5.21. It started the session higher but has since crawled its way down to intraday lows.

Meanwhile, the benchmark S&P/ASX 200 Index (ASX: XJO) has lifted in afternoon trade and is 0.16 higher at 6,518.

More broadly, Webjet shares have whipsawed sideways these past six months. They are now trading roughly in line with their December 2021 levels.

What’s up with the Webjet share price?

ASX travel shares have gained momentum in recent days amid positive economic data showing travel spending is now above pre-COVID levels.

As the Motley Fool reported on Monday, the insights, from National Australia Bank Ltd (ASX: NAB), showed its customers spent 600% more on overseas travel in the 12 months to 1 May 2022.

In May 2022 alone, NAB customers spent $46 million on international flights, up from $43 million in 2019.

The Webjet share price also got a vote of confidence from Goldman Sachs. Its analysts reckon that Webjet is a buy, valuing the company at $6.90 per share in doing so.

The Goldman team say Webjet has a strong balance sheet and opportunities for growth, a recipe it likes.

Despite the positive reports, investors have punished the share in recent weeks, selling it down from a high of $6.13 on 8 June.

That’s after it had touched the $6.12 mark three times in the last three months, as seen on the chart below. In that time, it is down 5% after some wide volatility both ways.

This year to date, the Webjet share price has gained 1.16%. It is also up 2.95% over the past 12 months.

In comparison, the ASX 200 is down 12.48% year to date and 10.73% over the past year.

The post Why is the Webjet share price tailgating the ASX 200 today? appeared first on The Motley Fool Australia.

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More reading

• Analysts name 2 top ASX 200 shares to buy today
• ASX 200 travel shares take off again on Tuesday. Here’s why
• Why are ASX 200 travel shares lifting off on Monday?
• How did ASX 200 travel shares perform amid today’s sell-off?
• These are the 10 most shorted ASX shares

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 Goldman Sachs. The Motley Fool Australia has recommended Webjet Ltd. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. At the time of writing, the benchmark index is up 0.1% to 6,516.6 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are pushing higher:

Australia and New Zealand Banking Group Ltd (ASX: ANZ)

The ANZ share price is up 1.5% to $22.15. Investors have been buying this banking giant’s shares amid rumours that it could be making a major acquisition. ANZ is understood to be running the rule over a multi-billion-dollar purchase of accounting software company MYOB. The bank is believed to be interested in building a one-stop platform for small businesses.

Block Inc (ASX: SQ2)

The Block share price is up 3% to $87.49. This is despite the payments giant’s US listed shares having an average night on Wall Street. However, when adjusting for current foreign exchange rates, this gain brings Block’s ASX listed shares largely in line with the value of their US counterparts.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is up 3% to 64 cents. This follows the release of yet another announcement relating to its US infant formula shipments. Today’s update, the sixth in the space of a month, reveals that two planes have been sourced for its next shipments. No changes have been made to Bubs’ overall plan to ship 1.25 million tins to the US to help with shortages.

PayGroup Ltd (ASX: PYG)

The PayGroup share price is rocketing 157% higher to 94 cents. The catalyst for this impressive gain has been a takeover approach for the human capital management (HCM) solutions company. According to the release, Deel has offered $1 per share in cash, which equates to a total consideration of $119.3 million.

The post Why ANZ, Block, Bubs, and PayGroup shares are pushing higher appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX software share just rocketed 150% on takeover news
• Block shares are back on the buy list for this big-name investor
• Should you ‘buy the dip’ in ASX 200 bank shares?
• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• ANZ share price rises as MYOB acquisition rumours swirl

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 Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. 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.

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An attractive dividend yield and a 30% upside? Well, that sounds peachy. But could Macquarie Group Ltd (ASX: MQG) shares really deliver both of those things in 2022?

Macquarie is one of the most well-followed ASX shares on the market. Many call it a bank, or even the ASX’s fifth big four bank. Macquarie does offer traditional banking products such as term deposits and mortgages. But this company does a whole lot more than just that. Macquarie is a broad player in the financial space. It does investment banking and asset management amongst other things.

And it does this exceptionally well, judging by its share price performance. Over the past five years, Macquarie shares have given investors a return of over 83%, not including dividends. That runs rings around the other big ASX bank shares like Commonwealth Bank of Australia (ASX: CBA).

Macquarie shares have a 30% upside: broker

One ASX broker reckons Macquarie shares can run even higher going forward.

As my Fool colleague James covered this week, Morgans is currently very bullish on Macquarie shares.

Although the broker notes that it will be tough for Macquarie to top the net profit after tax (NPAT) of $4.7 billion it delivered in FY2022, it is still rating the company a buy with a 12-month share price target of $215.

If that came to pass, it would indeed represent an upside of 31.25% on current pricing.

Here’s how Morgans justified its bullish outlook:

We anticipate some near-term earnings volatility over FY23 but we like MQG’s favourable longer-term growth profile and consistent history of delivering strong returns (~15% average ROE over time).

What about dividends?

Not only is Morgans pencilling in a 30% share price upside, it is also factoring in some big things when it comes to dividend payments.

The broker anticipates a full-year dividend of $7.07 per share over FY2023, and then $7.47 per share over FY2024. For some context, Macquarie has paid out $6.22 in dividends per share over FY2022, giving it a current trailing dividend yield of 3.78%.

So according to Morgans, Macquarie has a 31.25% upside over the next 12 months, with a forward dividend yield of 4.32%. No doubt that would sound pretty good for most investors. But we shall have to wait and see if Morgans’ tips prove to be accurate.

At the current Macquarie share price, this ASX 200 share has a market capitalisation of $63.1 billion.

The post Can Macquarie shares deliver an attractive dividend yield AND 30% upside in 2022? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• 5 things to watch on the ASX 200 on Thursday
• What’s the outlook for ASX 200 bank dividends?
• How has the BrainChip share price performed since joining the ASX 200?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Sebastian Bowen 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.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is underperforming on Thursday amid reports a new Queensland tax has worried the company’s boss.

Flight Centre CEO Graham Turner told the Australian Financial Review (AFR) a new levy on large businesses represents “a big blow” to the company.

At the time of writing, the Flight Centre share price is $17.65, 0.9% lower than its previous close.

For context, the broader market is currently in the green. The S&P/ASX 200 Index (ASX: XJO) has lifted 0.27% while the All Ordinaries Index (ASX: XAO) is up 0.1%.

Let’s take a closer look at the new tax that’s reportedly expected to drag on the ASX travel giant’s bottom line.

Flight Centre share price slips as boss slams new tax

The Flight Centre share price is in the red today. Meanwhile, the Brisbane-based company’s boss is said to have slammed a new tax on large businesses.

Turner has reportedly called the levy, designed to fund mental healthcare services in Queensland, “another financial blow”.

“The reality is we … put a lot of effort into [mental health initiatives] already and a lot of money,” Turner said, per the AFR.

The levy was announced alongside the state’s budget on Tuesday.

It will see businesses with payrolls greater than $10 million paying a 2.5 cent levy for every $10 of taxable wages they pay above that level. Businesses with payrolls of more than $100 million will pay an extra levy of 5 cents for every $10 of taxable wages they pay above that figure.

That’s expected to inject an extra $1.64 billion into the state over five years to support mental health and wellbeing and combat substance abuse. Fewer than 6,000 businesses are expected to be impacted by the levy.

Queensland treasurer Cameron Dick commented businesses eligible to pay the tax will also benefit from additional mental health services.

“The productivity gains from additional investment in mental health will dwarf the costs … and larger businesses are well-positioned to reap these productivity rewards,” Dick said, continuing:

Big businesses like large supermarkets and banks have done well out of COVID … and are well placed to chip in to address mental illness.

But Flight Centre hasn’t, in fact, benefited from the pandemic. Turner was quoted as saying:

I’ve got nothing against the coal companies but at least they are doing pretty well at the moment. For us, it’s not great news that’s for sure.

The Flight Centre share price has slipped more than 20% since the company announced its return to profitability in March.

The post Flight Centre share price stumbles amid ‘big blow’ from new tax appeared first on The Motley Fool Australia.

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More reading

• ASX 200 travel shares take off again on Tuesday. Here’s why
• Why are ASX 200 travel shares lifting off on Monday?
• These are the 10 most shorted ASX shares
• Flight Centre share price climbs amid $30m investment in staff
• How did ASX 200 travel shares perform amid today’s sell-off?

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 recommended Flight Centre Travel Group 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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It has been another disappointing day for the BHP Group Ltd (ASX: BHP) share price.

In afternoon trade, the mining giant’s shares are down 3% to $39.80.

This means the BHP share price is now down over 6% since this time last week.

Why is the BHP share price under pressure?

Investors have been selling the Big Australian’s shares following further weakness in the iron ore price.

According to Metal Bulletin, the benchmark iron ore price fell a further 5.5% to US$109.40 a tonne during overnight trade.

This has been driven by continued softness in downstream demand in China despite the announcement of accelerated fiscal expenditure, as well as the sale of infrastructure-related government bonds.

Global recession fears may also be weighing on commodity prices. For example, other base metals also took a tumble last night. This includes aluminium falling 2.2%, copper dropping 2.5%, nickel sinking 5.8%, and tin tumbling 7.2%.

Other miners follow suit

It isn’t just the BHP share price that has dropped into the red today. Fellow mining giants Fortescue Metals Group Limited (ASX: FMG), Rio Tinto Limited (ASX: RIO), and South32 Ltd (ASX: S32) are also trading lower and dragging on the ASX 200 index.

This has led to the S&P/ASX 200 Resources index losing 2.7% of its value so far today.

The post Here’s why the BHP share price is in the red today appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Pilbara Minerals’ lithium price update, BHP tumbles
• Why we just bought these 3 ASX shares: fund
• 5 things to watch on the ASX 200 on Thursday
• Could China ‘steel’ the show for the iron ore price?
• BHP share price claws back half of Monday’s losses 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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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.

On June 6, Amazon (NASDAQ: AMZN) completed a 20-to-1 stock split, bringing its share price to around $100 at the time of this writing. While this change doesn’t reduce the company’s $1.1 trillion market cap, it makes the stock more accessible to investors who might not have thousands to put into the market. 

Let’s discuss the pros and cons of investing in the stock today.

First-quarter earnings weren’t as bad as they seem

The ubiquitous online retailer has become a one-stop-shop for everything from electronics to grocery delivery through its brick-and-mortar subsidiary, Whole Foods. Like many companies, Amazon has seen its retail operations come under pressure from inflation, which increases the cost of doing business while potentially eroding consumer purchasing power. Weaker-than-expected first-quarter results have also left many investors wondering if it’s time to jump ship. 

Amazon posted a net loss of $3.8 billion in the first quarter, down from an $8.1 billion profit in the prior-year period. While this looks like a shocking deterioration, it isn’t as bad as it looks on the surface. 

Most of Amazon’s bottom line weakness comes from a pre-tax loss of $7.6 billion from its investment in electric automaker Rivian Automotive, which has fallen 66% from its IPO price of $78 per share. Investors should note that Amazon purchased Rivian before its IPO, recording an $11.8 billion noncash gain in the fourth quarter of 2021. So while the loss looks scary, it is unrelated to Amazon’s core business. 

Pivoting to new growth drivers

Amazon’s North American e-commerce segment grew revenue by 8% year over year to $69.2 billion in the first quarter. But the flagship business posted a $1.57 billion operating loss because of inflation and supply chain-related challenges. It is unclear when these headwinds will resolve, but Amazon’s massive scale and diversified business model should help it bounce back over the long term. 

Amazon’s cloud computing business, AWS, has already grown to become a dominant force in the company. Revenue in this segment increased 37% year over year to $18.4 billion, with operating income jumping 57% to $6.5 billion.

And cloud computing isn’t the only trick Amazon has up its sleeve. According to Business Insider, Amazon has become the third-biggest digital advertising company behind Alphabet and Meta Platforms‘ Facebook. The advertising business grew 23% to $7.9 billion in the first quarter. And Amazon’s user base of over 300 million shopping-motivated active users should help it maintain its healthy growth rate. 

Amazon is also pushing into direct-to-consumer streaming with its $8.5 billion acquisition of the MGM film studio. While investors probably shouldn’t expect Amazon to become the next Netflix, MGM’s intellectual property could boost Amazon Prime and help enhance customer satisfaction. Amazon’s subscription services brought in $8.4 billion in first-quarter revenue, up 11% from the prior-year period. 

Inflation is still a massive challenge

With the May inflation rate standing at 8.6% and rising interest rates increasing the cost of capital, this is a challenging time for stock market investors. But while it is difficult to time the bottom, Amazon is a stock to watch. The company’s retail operations will be hit hard by the weak macroeconomic environment, but its massive scale and diversified growth drivers could make it a great way to bet on a rebound. 

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

The post Is Amazon a buy after the stock split? appeared first on The Motley Fool Australia.

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Will Ebiefung has no position in any of the stocks mentioned. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Netflix. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and 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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