Category: Stock Market

Key points

• Zip shares have already plunged a further 25% this year to date (YTD).
• The BNPL sector has suffered heavy losses of late, amid a violent selloff in ASX tech shares.
• Zip is now trading at 52-week lows.

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Shares in payments solutions company Zip Co Ltd (ASX: Z1P) closed the week 10% down last Friday, continuing an extended run into the red.

After gliding down 55% in the past 12 months, Zip shares have already plunged a further 25% this year to date (YTD) amid a sector-wide selloff in ASX tech shares.

With BNPL heavyweights like the recently-acquired Afterpay Limited (ASX: APT) and EML Payments Limited (ASX: EML) suffering heavy losses this YTD (down 20% and 11% since January 1 respectively), the BNPL party surely isn’t as cheerful as it was back in early 2021.

Not to mention smaller, high-beta names such as Laybuy Group Holdings Ltd (ASX: LBY) and Sezzle Inc (ASX: SZL) saw deeper losses of 86% and 75% in the last year respectively. The mathematics of percentages and stock gains/losses shows us that a 70% loss needs a 233% gain to recover and an 80% loss needs more than a 400% gain to recover to its original value. Ouch.

So is the BNPL party over, and the hangover started to set in? Let’s take a look.

BNPL suffers amid a brutal tech-wide selloff

BNPL shares like Zip Co have suffered extensive losses across the 12 month period to date. However, investors turned the heat up on the sector rolling into the new year, amid talks of a shifting interest rates regime and economic uncertainty from inflation.

The increase in US Treasury yields disproportionately impacts tech-weighted sectors – including the BNPL segment of the Australian tech industry.

As such, the S&P/ASX All Technology index (XTX) is also down 13% this YTD and the carnage has spilled over into the financial services and FinTech domains as well.

Although, the Zip share price was already in a fragile position coming into the selloff. Shares were under immense selling pressure coming into the new year after tumbling from a high of $13.92 back in February 2021.

Whilst Afterpay and EML were catching headlines for various reasons across the year, resulting in some volatility to the upside, Zip shares marched steadily south, showing no signs of recovery.

Zip is now trading at 52-week lows, with support looking weak at the present time. Shares have failed to break through key resistance points after being tested at those levels for several months, as shown on the chart below (in dark blue). Notice it began diverging away from the benchmark index around September — and it hasn’t slowed since.

Hence, Zip was in prime position to absorb the selloff as the trend was already in place for the point-of-sale credit and payment solutions provider.

Not even a record result from its second-quarter update is enough to entice investors back in for another round. In the quarter, the company recognised a record $2.6 billion in transaction volume and grew revenue 58% to a record of $167.4 million.

However, with the carnage set to continue across the Australian primaries and futures this week, it appears that investors are reshuffling capital to avoid more losses across the board.

Macquarie certainly advocates this course of action, recently slashing its valuation on the company by 40% to $3.40 and retaining its underperform rating.

The broker was disappointed with Zip’s quarterly performance, as it came in behind the investment bank’s estimates.

Citi on the other hand remained neutral after the trading update and held its valuation on the company at $5.85 per share.

The brokers differ on their opinion for Zip’s growth potential in the US. Macquarie reckons the wick has burned for Zip’s US customer additions, whereas Citi reckons the company is “in advanced discussions with top 50 US retailers”.

Alas, for now, the BNPL party is certainly starting to fizzle out, at least with respect to the current share prices and stock valuations within the sector.

More about the Zip share price

Zip shareholders are swimming in a sea of red across all major time frames. The Zip share price has collapsed around 55% in the last 12 months, sliding 25% in the past month alone.

The pressure has continued in today’s session and, at the time of writing, Zip shares have tumbled a further 2.55% from the open so far today.

The post Is the BNPL party over? The Zip Co (ASX:Z1P) share price plunges 25% this YTD appeared first on The Motley Fool Australia.

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• Zip (ASX:Z1P) share price sinks 8% to 52-week low after brokers weigh in on its Q2 update
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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. owns and has recommended Afterpay Limited, EML Payments, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Afterpay Limited and EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key Points

• Regis shares in freefall following a disappointing guidance update
• A geotechnical incident and other operational challenges have impacted production levels
• ASIC expected to increase due to lower production over the FY22 period

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The Regis Resources Limited (ASX: RRL) share price is being heavily sold off on Monday morning.

At the time of writing, the gold miner’s shares are down 13.81% to $1.81 apiece.

Let’s take a look at what’s driving the company’s shares south today.

Regis readjusts guidance due to ‘operational challenges’

Investors are dumping the Regis share price following the company’s revised full-year guidance for the 2022 financial year.

In today’s statement, Regis advised that a geotechnical incident at its Rosemont mine and other operational challenges have impacted its FY22 guidance.

As such, the group is estimating production to be somewhere around 420,000 ounces to 475,000 ounces of gold. Previously, it estimated that production would stand somewhere between 460,000 ounces to 515,000 ounces of gold.

Consequently, all-in-sustaining costs (ASIC) guidance range is forecasted to come at $1,425 to $1,500 per ounce of gold. The company’s prior assumption was that ASIC would be in the vicinity of $1,290 to $1,365 ounces of gold.

Management noted that heavy rains at Rosemont led one of the walls of the main pit to slip. This caused a breach through multiple benches and geotechnical fences, reaching the pit floor.

A geotechnical engineer attended the site thereafter and deemed on-site operations as unsafe, halting all activity. Evaluations concluded that the ore can only be replaced in the mill feed by low grade stockpiles for the remainder of FY22.

Regis stated that the event is confined to the Rosemont Main Pit and has no negative impact on the ongoing operation of the Rosemont Underground or Rosemont North Pit.

As a result, work is now underway by mining from the existing development in the Rosemont Main Zone Underground area.

Regis share price summary

Since this time last year, Regis shares have lost 49% in value. In 2022 alone, the company’s shares are down by 7% after today’s heavy falls.

Based on valuation grounds, Regis has a market capitalisation of roughly $1.37 billion, with approximately 754.78 million shares on issue.

The post Here’s why the Regis Resources (ASX:RRL) share price is nosediving 14% today appeared first on The Motley Fool Australia.

More reading

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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 Bruce Jackson.

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Key points

• The Dusk share price is moving to the downside as shareholders digest its trading update
• Company sales take a hit in the first half due to store closures and customer caution around COVID-19
• Eroma acquisition looks set to be finalised in February

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The Dusk Group Ltd (ASX: DSK) share price is under pressure on Monday morning following the release of a trading update.

In morning trade, shares in the home fragrance specialty retailer are trading at $2.74, down 2.8%.

Dusk share price takes a ride to the downside on lower sales

Shareholders are disappointed this morning as Dusk reveals the extent of challenges experienced in the first half of FY22. Here are some key highlights from the update:

• Sales fall 12% to $80 million compared to $90.9 million in prior corresponding period
• Like for like sales decrease 10.1% as Dusk cycles strong comparables
• Pro forma earnings before interest and tax (EBIT) expected to be between $21 million and $21.5 million
• Store network expands by 6 to finish the half at 128 stores
• Online sales increase 4.3%, now making up nearly a tenth of total sales
• Net cash at the end of the period was $33 million

What else happened in the first half?

It was a challenging period for Dusk in the 26 weeks ending 26 December 2021. The company’s difficulty primarily stemmed from government-mandated store closures across New South Wales, Victoria, and the ACT.

According to the release, the mandated closures resulted in Dusk’s store trading days taking a 24% hit — equating to 5,483 days lost. On top of this, foot traffic to Dusk stores remained impacted upon reopening as people exercised caution with the Omicron variant.

Another notable event during the half-year period included Dusk acquiring Eroma Group. Upon announcing the acquisition in December last year, the Dusk share price jumped more than 5%.

The deal struck with the supplier of candle-making materials for $28 million is now expected to be completed around 28 February 2022. Dusk stated, it foresees Eroma being a strong contributor to earnings per share (EPS) in its first year of ownership.

What did management say?

Commenting on the trading update, Dusk CEO Peter King said:

Given the circumstances faced during the half, there is much to be pleased about in the overall result delivered, especially having regard to the fact we cycled exceptional LFL sales growth from the prior corresponding period. We remain focused on our customer and strategic priorities, and have made tangible progress on our growth strategies, including continued store roll out in Australia, preparing to commence operating in New Zealand, and the acquisition of Eroma.

What’s next?

From here, Dusk will be working closely with suppliers and logistics partners as supply chain issues linger. Additionally, the company stated it held $19.6 million in inventory at the end of the half. This reflects an increase from the $18.7 million in the prior corresponding period.

Undoubtedly, shareholders will be watching Dusk for how it manages elevated operations costs. For example, increased occupancy costs, higher salaries, and warehouse costs.

However, there were no details pertaining to operational costs in today’s first-half trading update.

Dusk share price snapshot

Since listing on the ASX in the latter half of 2022, Dusk has performed exceptionally well. Investors who held on to the company’s shares during this time are sitting on a 59% return before dividends.

Although, on a more recent timeline, it has been a rough patch for the Dusk share price. In the past 6 months, the candle retailer has suffered a 24% selloff. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has managed to only lose 3.6% during the same time.

Finally, Dusk currently holds a market capitalisation of $170 million.

The post Dusk (ASX:DSK) share price slides as 5,483 trading days get smoked appeared first on The Motley Fool Australia.

More reading

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• Top ASX shares to buy in January 2022

Motley Fool contributor Mitchell Lawler 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 Dusk Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• The BetMakers share price is currently trading 3.51% lower at 63.2 cents
• The dip follows news the company’s exclusive agreement to provide fixed odds betting for thoroughbred racing in New Jersey has been extended
• New terms have also been added to the deal, allowing the company to sub-licence the offering

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The Betmakers Technology Group Ltd (ASX: BET) share price is in the red this morning despite the company announcing its exclusive fixed odds betting agreement in New Jersey has been extended.

The extension means the company will be the state’s only provider of fixed odds betting on thoroughbred racing for 15 years. The extended agreement also includes new rights, allowing the company to sub-licence the offering.

At the time of writing, the BetMakers share price is 63.2 cents, 3.51% lower than its previous close.

Let’s take a closer look at the news moving the betting technology provider’s stock this morning.

BetMakers share price slumps despite extended agreement

The BetMakers share price is sliding despite the company announcing the operator of Monmouth Park racetrack and the New Jersey Thoroughbred Horseman Association have extended the company’s fixed odds betting licence to 15 years. Previously, the deal was for 10 years.

The extended agreement also includes updated terms. It gives BetMakers the right to sub-licence New Jersey thoroughbred fixed odds wagering to sportsbook operators, casinos, and online wagering operators.

The company expects to be releasing news of sub-licence deals to the market over the coming months.

It also announced fixed odds betting on thoroughbred racing is set to be rolled out at Monmouth Park in March.

New Jersey legalised fixed odd wagering on horse races in August 2021. Betmakers – through its subsidiary Betmakers DNA, trading as the Global Racing Network ­– will exclusively provide the state’s betting service.

What did management say?

BetMakers North America CEO Christian Stuart commented on the extended agreement. Stuart said there’s been an “overwhelmingly positive response” to fixed odds betting in the US:

Fixed odds – and the certainty of price setting for the person placing the bet – has attracted a new audience of people betting on sport, and I expect this will be the case for horse racing…

Racing as a product for sportsbook operators to offer their customers is placed to be a very important wagering vertical because of the frequency of events and the margins that can be delivered.

How has BetMakers’ stock performed lately?

2022 hasn’t been kind to the BetMakers share price.

The company’s stock has tumbled 21% since the final close of 2021. It’s also 11% lower than it was this time last year.

The post BetMakers (ASX:BET) share price slips despite extended US deal appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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.

FAANG stocks — essentially the top five stocks of the tech sector — as a group, cooled off in 2021. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) led the group of growth stocks with a 65% return for the year, followed by Apple‘s (NASDAQ: AAPL) near-34% return. The rest of the group — Meta Platforms (NASDAQ: FB), Amazon (NASDAQ: AMZN), and Netflix (NASDAQ: NFLX) — all underperformed the S&P 500 index, which returned nearly 27% for the year. Amazon stock was the biggest underperformer of the year, climbing just 2.4% in 2021.

But investors should always be looking forward, so here’s what they can expect from the FAANG stocks in 2022.

Easier comparables will benefit Amazon and Netflix

2020 was a great year for both Amazon and Netflix. Amazon benefited from a massive shift to e-commerce amid the worst parts of the coronavirus pandemic. Likewise, Netflix saw a rush of subscribers as more consumers stayed home and sought living-room entertainment.

But the hangover hit both of them hard last year. Amazon’s core online retail business grew just 13% and 3% in the second and third quarters of 2021, respectively. Its profits shrunk relative to 2020 levels, too, as it invested in building out its fulfillment network, hired more workers, and paid them more.

Netflix saw subscriber growth fall off starting in the third quarter of 2020 after it managed to add nearly 26 million subscribers in the prior two quarters. It added fewer than 10 million subscribers through the first nine months of 2021.

Yet both companies should see more normalized growth in 2022. Amazon says its capacity constraint issues are mostly behind it and it should continue to outpace the growth of online retail. Also, Netflix is set to release more originals in 2022 than 2021, including several highly anticipated series like the finale of Ozark and season four of Stranger Things. 

Meta Platforms could be an advertising winner

The digital ad industry saw a big change last summer when Apple introduced new privacy features in iOS 14. Users are now prompted to opt into cross-app data tracking, which can make tracking ad conversions very difficult. As a result, social media apps saw a reduction in ad spending across the board, as advertisers could no longer determine whether they were spending wisely or not.

Google was a clear winner from the shift in ad spending. It posted its fastest advertising revenue growth rate in more than a decade — 43% — in the third quarter. Its core search advertising business benefits from easily tracked advertisements on any web browser without the need to share data between multiple apps.

But Meta could recover more quickly than its peers in the all-important social media advertising channel. It’s developing new ad measurement tools and systems while building up services that could allow ads to convert within its walled gardens like Facebook Shops.

Meanwhile, engagement with its apps remains strong, with Instagram recently surpassing 2 billion users. Compared to most other social media platforms, Facebook and Instagram historically offer the ability to target and convert better, commanding a premium price. So, Meta could see its core revenue source grow faster relative to its competitors, leading its stock price higher in 2022.

That said, it’ll be harder for Alphabet to maintain its momentum built in the back half of 2021. The benefits of the privacy changes on the mobile operating systems seem to be baked into the stock price. Nonetheless, it remains a top channel for digital advertising with Google, YouTube, and various other advertising platforms all interconnected, allowing more ad retargeting opportunities (getting users to see ads more than once). Google should at least keep pace with the overall industry, but that could seem disappointing after a stellar 2021.

Can Apple push past $3 trillion?

With a market cap pushing $3 trillion, it’s hard to see Apple’s share price continuing to grow at the same pace it did last year. Doing so would mean an additional $1 trillion flows into Apple stock over the next year. Even so, Apple has a few big positives that could allow its stock to remain a strong investment.

First of all, it could see another record year for iPhone sales in 2022 with greater adoption of 5G and subsiding supply chain constraints. The iPhone accounts for half of Apple’s revenue, so growing unit sales would have a massive impact on its top line.

Second, Apple continues to grow its services business, which produces much higher profit margins than its hardware business. The services business growth is the result of a larger install base and greater revenue per user as it increases adoption of its first-party subscriptions and grows App Store sales per user.

Third, Apple may introduce new hardware in 2022: an AR/VR headset. While a new device may not generate significant revenue right away, it could spur further adoption of headsets and the development of metaverse applications. It could be Apple’s next Apple Watch or AirPods. 

Finally, Apple has become a safe harbour for many investors. With bonds offering very low returns, Apple’s ironclad balance sheet and strong cash flow make it attractive in the low-yield environment. Not to mention, it still offers a 0.5% dividend yield, which will likely see another increase this year.

Although Apple may not provide market-trouncing returns again in 2022, it’s still a solid investment option for most.

Ranking the FAANGs

I think all five of the FAANG stocks could make a good investment in 2022, and I continue to hold positions in all of the stocks. But if I were to add to those positions, here’s how I would prioritize them based on today’s prices and the outlook for 2022.

1. Amazon. Its retail business should see a reacceleration in growth while its cloud-computing and advertising businesses drive the bottom line higher.
2. Netflix. After underperforming on subscriber additions since late 2020, it should see a return to normalized growth and content releases in 2022.
3. Meta. The impact of mobile OS privacy changes is priced in, and it’s best positioned to overcome those challenges.
4. Alphabet. A simple play on the secular growth of digital advertising.
5. Apple. If history has taught me anything, it’s to never bet against Apple.

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

The post FAANG Stocks: 2022 Winners and Losers appeared first on The Motley Fool Australia.

More reading

• Will Netflix earnings sink the stock market Friday?
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• 835 reasons to invest in Netflix stock right now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Levy owns Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares) and Meta Platforms, Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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Key points

• Fortescue to acquire Williams Advanced Engineering for approximately AU$310 million
• Fortescue Future Industries (FFI) to manage the integrated company
• Collaborative effort to create battery electric solutions to decarbonise mining operations

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The Fortescue Metals Group Limited (ASX: FMG) share price is down 1.43% in morning trade.

Following another day of heavy selling in US markets on Friday, the S&P/ASX 200 Index (ASX: XJO) is also selling off, down 0.47%. 

Below we take a look at the ASX 200 miner’s acquisition announcement.

What acquisition was reported?

The Fortescue share price is edging lower after the company reported it’s entered into a share sale and purchase agreement to acquire 100% of Williams Advanced Engineering Limited (WAE).

WAE is currently held by EMK Capital and Williams Grand Prix Engineering Limited. The acquisition cost was reported at £164 million (approximately AU$310 million).

WAE, a technology and engineering services business, works with Tier 1 customers in advanced engineering in the premium automotive and motorsports sectors. Calendar year 2021 revenue for the business came in at approximately US$84 million.

Fortescue said that WAE’s technology and expertise in high-performance battery systems and electrification will aid its efforts to decarbonise its mining operations alongside launching a new business growth opportunity.

Upon completion of the acquisition, the company will be managed by Fortescue Future Industries (FFI). The combined team will work to develop battery electric solutions for Fortescue’s rail, mobile haul fleet and other heavy mining equipment. Fortescue expects to announce details on the first major collaborative project, a battery electric train concept, within the next few months.

Commenting on the acquisition, Fortescue’s founder, Andrew Forrest said:

FFI and WAE will work together to decarbonise Fortescue – and in turn the global heavy industry and hard to abate sectors – for the good of our planet, and the benefit of our shareholders.

Today’s announcement builds on our commitment to remove fossil fuel powered machinery from our operations and to replace it with zero carbon emission technology, powered by FFI green electricity, green hydrogen and green ammonia.

Fortescue’s CEO, Elizabeth Gaines added:

The potential global market for WAE is significant and will extend beyond the decarbonisation of Fortescue, further demonstrating our commitment to the diversification of Fortescue to a renewable energy and resources company.

The transaction is expected to be complete by the end of March 2022, subject to meeting customary conditions precedent, which in this case includes meeting the UK’s foreign investment approval.

Fortescue will fund acquisition from its existing liquidity sources.

Fortescue share price snapshot

The Fortescue share price is up 7% so far in the new year. That compares to a year-to-date loss of 4% posted by the ASX 200.

Over the past 12 months, Fortescue shares are down 15%. 

The post Fortescue (ASX:FMG) share price slides on $310 million acquisition appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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Key points

• The crypto market is down $1.4 trillion from its peak
• Bitcoin and Ethereum are trading like risk assets
• Higher interest rate prospects have investors seeking havens

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Crypto investors aren’t having the best start to the New Year.

To say the least.

Since the height of the crypto market in November last year, when both Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) hit new all-time highs, more than US$1 trillion (AU$1.38 trillion) has been wiped from the global cryptocurrency market cap. That currently stands at around US$2 trillion.

And 2022 has been a shocker.

According to data from CoinMarketCap, 98 of the top 100 cryptos are down for the calendar year. The 2 that are flashing green are both US dollar-linked stable coins. And their fractional gains (both up some 0.05%) are hardly anything to write home about.

While Bitcoin has edged up 1.4% over the past 24 hours to US$35,467, the world’s original crypto remains down 48% from its 10 November record high of US$ 68,790. And it’s down 26% so far in 2022.

What’s happening with the crypto crash?

Crypto investors are being caught up in the wider selloff of risk assets.

The selloff is largely being driven by increased certainty that major central banks around the world will be raising interest rates sooner, and more aggressively, than most analysts had forecast last year.

Crypto assets are also facing new headwinds from looming government regulations in the United States and a potential ban in Russia.

Commenting on the risk asset nature of cryptos, Starkiller Capital’s Leigh Drogen said (as quoted by Bloomberg):

It’s even more of a risk asset now that most of the crypto market cap is Ethereum, Solana and all sorts of other stuff that is just basically technology where we’re pulling forward massive assumptions of global growth into the present.

Stephane Ouellette, CEO of crypto-platform FRNT Financial, points to the strong correlation between Bitcoin and altcoin prices and risk assets being hammered across the world:

Crypto is reacting to the same kind of dynamics that are weighing on risk assets globally. Unfortunately for some of the mature projects like BTC, there is so much cross-correlation within the crypto asset class it’s almost a certainty that it falls, at least temporarily in a broader alt-coin valuation contraction.

Hayden Hughes, CEO at Alpha Impact, explained why crypto is facing additional pressure in the current market selloff:

Margin positions being liquidated caused a wave of additional sell pressure, as assets that had been held as collateral were forcibly sold to pay for margin loans. I would expect it to take some time for a bottom to form and for confidence to return, before expecting any sort of bullishness.

The outlook for Bitcoin

The future price moves for the crypto market remain uncertain. As we looked at above, Bitcoin, Ethereum and most altcoins’ prices are closely tied to those of global risk assets, which in turn are closely tied to central bank interest rates and the cost of money.

As for Bitcoin, Antoni Trenchev, managing partner at Nexo, said (quoted by Bloomberg), “Fear and unease among investors is palpable. If we see a bigger selloff in equities, expect the Fed to verbally intervene to calm nerves and that’s when Bitcoin and other cryptos will bounce.”

Looking at the technicals, Trenchev added:

For now, Bitcoin is up against the wall after falling below $40,000 [US dollars]. A swift bounce above that key technical and psychological level can’t be ruled out. Failing a quick reversal, I’m not excluding Bitcoin re-tests $30,000 before the Fed changes tack, but that ought to be the bottom, at least in the mid-term. And from there, I think we can have a nice leg up.

There you have it. If you’re investing in crypto, you’ll want to keep an eye on the US Fed.

The post $1.4 trillion evaporates. What’s happening with the crypto crash? appeared first on The Motley Fool Australia.

More reading

• Investing in crypto? ASIC chairman sounds warning
• Can Ethereum reach $5,000?
• Is Ethereum losing steam in 2022?
• Bitcoin (CRYPTO:BTC) takes most popular crown, here are 3 cryptos hot on its heels
• This under-the-radar cryptocurrency stock could outpace Bitcoin in 2022

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin and Ethereum. 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 Bruce Jackson.

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Key points

• The Flight Centre share price is down in early trade
• The company’s CEO Graham ‘Skroo’ Turner is planning a meeting today on possible legal action over the extended WA border closure
• The European Union removed Australia from a safe travel list last week

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is sinking today amid reports the company’s CEO is reconsidering a legal challenge on the closed Western Australia border.

The company’s shares are currently trading at $16.54, down 1.58% after plunging to a low of $16.30 just after market open. For comparison, the  S&P/ASX 200 Index (ASX: XJO) is 0.42% lower at the time of writing.

Let’s take a look at what might be impacting the travel company’s shares today?

Will Flight Centre launch a legal challenge on borders?

Flight Centre is holding a meeting with lawyers on Monday to consider a legal challenge against the Western Australian government on its extended border closure, the Sydney Morning Herald reported.

As Motley Fool Australia reported on Friday, Western Australian Premier Mark McGowan has delayed the reopening of the state border indefinitely in an announcement Thursday night.

Chief executive Graham ‘Skroo’ Turner told the SMH:

I’m just fine-tuning this with lawyers … we think there’ll be a lot of pressure on (McGowan) to announce a date.

If he announces the borders will open in March or April, we won’t get the case heard before it’s already open. But if he announces July or December or something like that, we’ll have a much greater chance of success of getting into court before borders open.

The Flight Centre share price has been up and down in the past month as Omicron fears and border decisions, both interstate and internationally, have impacted investor sentiment.

Last week, the European Union removed Australia, Canada and Argentina from its safe travel list. However, each member state within Europe is free to make its own decision on these guidelines.

Mr Turner also considered a legal challenge on the WA borders in November but he put this plan on hold.

Mr Turner told the Australian Financial Review:

A constitutional challenge is a three to four month process. The earliest we could get a hearing was March so when they set February 5 we paused.

Looking at Flight Centre’s ASX 200 travel share peers, the Qantas Airways Limited (ASX: QAN) share price is down 1.23% at the time of writing and Webjet Limited (ASX: WEB) is 1.96% lower. Meanwhile, Helloworld Travel Ltd (ASX: HLO) is down 2.86% while Corporate Travel Management Ltd (ASX: CTD) is having a better day so far, up 2.73%.

Share price recap

The Flight Centre share price has gained around 6% in the past year. In the past month, it has also sunk around 6% and is down around 4% in the past week.

Meanwhile, the broader ASX 200 Index has returned around 5% over the past 12 months.

The company has a market capitalisation of about $3.3 billion based on its current share price.

The post Flight Centre (ASX:FLT) share price falls amid potential legal action on borders appeared first on The Motley Fool Australia.

More reading

• ASX travel shares are nosediving today amid border opening delays
• Why did the Flight Centre (ASX:FLT) share price gain 7% in a month?
• Why are ASX 200 travel shares down today?
• Flight Centre (ASX:FLT) share price gains after boss anticipates ‘beginning of the end’ of COVID
• These are the 10 most shorted ASX shares

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 and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Key points

• Westpac thinks the RBA could life rates sooner than expected
• Has brought forward its forecasts
• The cash rate could be at 1.75% by March 2024

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Interest rates are a hot topic right now with the outlook for increases seemingly improving by the week.

In its latest weekly economic report, the team at Westpac Banking Corp (ASX: WBC) has weighed in on when it thinks the Reserve Bank of Australia will start to lift rates at long last.

What did Westpac say?

Westpac notes that the December quarter inflation report will be released next week. It expects underlying inflation to print 0.7% for the quarter and 2.4% for the annual rate.

This, combined with a December unemployment rate of 4.2%, means the Reserve Bank could start to take action. Westpac supports this view by highlighting that the central bank has previously stated: “If better than expected progress towards the Board’s goals was made then the case to cease bond purchases in February would be stronger.”

But what about the cash rate?

But it isn’t just bond purchases that could end sooner than originally expected. Westpac has brought forward its rate hike forecast from early 2023 to mid 2022.

According to the note, Australia’s oldest bank believes the Reserve Bank will begin raising rates at the August meeting.

Westpac’s Chief Economist, Bill Evans, said: “While we expect the omicron variant to lower Australia’s growth rate in 2022 from 6.4% to 5.5% in 2022 inflation; wage growth and unemployment forecasts are largely unchanged.”

“Our forecasts are significantly different to the RBA’s forecasts and expect that if our forecasts prove correct the case for the first rate hike in the next tightening cycle by the August Board meeting in 2022 is strong.”

“We now expect one hike of 15 basis points in August to be followed by a further hike of 25 basis points in October,” Evans added.

This will mean a cash rate of 25 basis points in August and then 50 basis points in October. After which, the bank is forecasting a number of rate hikes through to March 2024, at which point it estimates that the cash rate will stand at 1.75%.

Time will tell how accurate these forecasts are.

The post Here’s when Westpac (ASX:WBC) expects the RBA to raise the cash rate appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Highlights:

• Expensive shares like the Pro Medicus share price have crashed in 2022 due to interest rate fears
• But Morgans believes the >20% crash in Pro Medicus is a buying opportunity ahead of its results
• The broker upgraded its shares to “add” from “hold” with a price target of $54.49 a share

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The beaten-down Pro Medicus Limited (ASX: PME) share price could finally be catching a break with Morgans upgrading the company’s shares.

The spectre of rising interest rates has taken its toll on the medical management software company. But the broker believes there is too much bad news priced into the Pro Medicus share price.

This is despite the fact that Pro Medicus is still trading on a FY22 forecast price-to-earnings (P/E) multiple of 100 times.

Why the Pro Medicus share price is tumbling in 2022

Shares trading at a steep premium have taken the brunt of the latest market sell-off. Their valuations take a big haircut as interest rates rise.

The US Federal Reserve is set to lead the way to higher global rates. The central bank is tipped to lift rates three times in 2022, and some experts are warning the Fed could even hike four times to tame inflation.

Against this backdrop, the Pro Medicus share price crashed by around 26% over the past month. It isn’t the only one swept up in ASX market sell-off. The Zip Co Ltd (ASX: Z1P) share price and Megaport Ltd (ASX: MP1) have also shed around 20% each over the period.

Is it time to buy Pro Medicus shares?

But, according to Morgans, investors should consider buying Pro Medicus shares ahead of next month’s profit reporting season. The broker has upgraded its recommendation to “add” from “hold”.

“With the share price now significantly more attractive than it was a month ago, we view current prices as a good entry for long-term investors, but also potential trading positions with reduced risk heading into in the upcoming result,” said the broker.

“Short-term risks around the upcoming results remain with full expectations.

“While we sit slightly below consensus, we view any miss as more likely due to timing of contract recognition rather than overheated underlying expectations.”

Long and shorter-term value emerging

Consensus forecasts have set a high hurdle for management to jump over. The average analyst estimate is for a more than 44% increase in revenue and more than 58% uplift in earnings before interest and tax over the same period last year.

But for those willing to ignore the shorter-term gyrations in earnings and market sentiment, Morgans believes the long-term growth drivers for the Pro Medicus share price remains strong.

Morgan’s 12-month price target on the shares is $54.49. This should give investors around a 20% upside if dividends are included.

The post Why this broker upgraded the embattled Pro Medicus (ASX:PME) share price to “buy” appeared first on The Motley Fool Australia.

More reading

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• ASX 200 (ASX:XJO) midday update: AGL and Novonix shares shoot higher
• What’s going on with the Pro Medicus (ASX:PME) share price?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO, Pro Medicus Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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