Category: Stock Market

The All Ordinaries Index (ASX: XAO) is down 0.9% in early afternoon trade today, and it’s certainly not getting any help from ASX All Ords energy stock Melbana Energy Ltd (ASX: MAY).

Shares in the oil and gas company closed yesterday trading for 6.1 cents. Morning trade started well for the stock, with shares reaching 6.3 cents apiece, up 3.3%.

Then the company released an intraday update on its appraisal well Alameda-3. And investors sent the ASX All Ords stock crashing.

At the time of writing, shares are swapping hands for 3.3 cents each, down a painful 45.9%.

Here’s what’s happening.

Why did the ASX All Ords stock just crash?

Melbana Energy holds a 30% interest in and is the operator of Block 9 PSC. The oil project is located onshore in Cuba, where the Alameda-3 well is situated.

Flow testing of the Alameda reservoir kicked off at the beginning of this week. Today, the ASX All Ords stock is under heavy pressure after management reported that, consistent with Melbana’s recent results from the deeper Marti reservoir, drill string fluids were unable to be recovered during the flow testing.

While no uncontaminated oil samples were obtained, Melbana said that oil samples were recovered on reverse circulation of the DST string. Those have been sent for lab analysis.

Management noted that the inability of the well to flow does not fit with previous observations and expectations.

They added that the latest failure is consistent with the similar recent failure of the deeper Marti reservoir to flow hydrocarbons to surface. That’s despite both reservoirs demonstrating an ability to do so in the Alameda-1 exploration well.

Commenting on the disappointing results that are seeing the ASX All Ords stock under heavy selling pressure today, Melbana Energy CEO Andrew Purcell said, “Both the Marti and Alameda reservoirs have previously shown the presence of freely moveable hydrocarbons that flowed to surface unassisted.”

Purcell continued:

That both reservoirs should now fail to do so when the appraisal well trajectory is minimally offset to the original exploration well means studies need to focus on the new data that has been acquired and the limited drilling parameters that have changed.

We will incorporate local and international expert advice as to how to remedy such reservoir responses into the newly acquired data to help focus our studies.

Looking to the months ahead, he added, “Our immediate plan is to work on the steps required to export production from the Amistad reservoir this year and to develop more appraisal wells in the Amistad reservoir thereafter.”

With today’s intraday losses factored in, the ASX All Ords energy stock is down 63% over 12 months.

The post This ASX All Ords energy stock just crashed 46%! What happened? appeared first on The Motley Fool Australia.

More reading

• Why Beach Energy, Fortescue, Kina Securities, and Melbana Energy shares are dropping today
• Why did this ASX All Ords stock just crash 45%?

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.

The S&P/ASX 200 Index (ASX: XJO) is having a tough time on Thursday. In afternoon trade, the benchmark index is down 1% to 7,706.8 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Arcadium Lithium (ASX: LTM)

The Arcadium Lithium share price is up 3% to $5.13. Investors have been piling into Arcadium Lithium and other ASX lithium stocks again today. This is despite there being no news out of the company and in the face of a bearish broker note out of Citi warning that lithium prices are going to sink further. It’s possible that short sellers have decided to close positions and are buying back shares today.

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up 20% to $1.48. This has been driven by the release of a trading update from the baby products retailer this morning. According to the release, Baby Bunting’s performance has improved markedly since the end of April. It advised that total sales from 1 May 2024 to 24 June 2024 were up 1% over the prior corresponding period. This compares to a 7.7% decline in sales during January to April. This improvement reflects the benefits of recently introduced new product assortments, a renewed focus on new customer acquisition, the introduction of a refreshed promotional engagement, and a proactive branding and go-to-market campaign.

Cettire Ltd (ASX: CTT)

The Cettire share price is up 6% to $1.12. Investors appear to believe that the online luxury products retailer’s shares have been oversold this week following the release of a disappointing trading update. Even after today’s gain, Cettire’s shares are still down approximately 50% since this time last week. Bell Potter sees this as a buying opportunity. In response to the update, the broker has reaffirmed its buy rating with a reduced price target of $2.60.

Qualitas Ltd (ASX: QAL)

The Qualitas share price is up 4.5% to $2.35. This morning, this alternative real estate investment manager announced the commitment of up to $300 million from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) for the existing QDCI platform. This represents ADIA’s third commitment to QDCI and brings the total committed capital to A$1.67 billion since its initial investment in August 2022. Group Managing Director and Co-Founder, Andrew Schwartz, said: “QDCI has performed well since inception and the pipeline continues to grow. This latest increase in commitment from ADIA demonstrates the depth of opportunities within the Australian CRE private credit market and further evidences Qualitas’ ability to attract, retain and grow our institutional investor base – a key differentiator in the current environment.”

The post Why Arcadium Lithium, Baby Bunting, Cettire, and Qualitas shares are racing higher appeared first on The Motley Fool Australia.

More reading

• 4 ASX mining shares going gangbusters while the market dives
• Why is this ASX retail stock rocketing 17% during today’s market selloff?
• Why Cettire, Collins Foods, Liontown, and Northern Star shares are dropping today
• This smashed up ASX tech stock could rebound 100%+!
• Why Cettire, Metcash, ResMed, and Star Entertainment shares are sinking today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro owns Arcadium Lithium 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 Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ResMed Inc (ASX: RMD) shares are currently 2.13% higher at $28.24, significantly outpacing the market today.

The S&P/ASX 200 Index (ASX: XJO) is down 1.15% as the market continues to process yesterday’s inflation upside surprise.

This time last week, ResMed shares were trading about 12.5% higher at $31.75 apiece.

They took a tumble on Monday following news of a United States medical study showing GLP-1 medicines directly reduced the rate of obstructive sleep apnoea (OSA) in patients with obesity.

ResMed’s products treat sleep apnoea.

The ASX 200 healthcare stock closed at $27.74 on Monday. Since then, it seems ASX investors are taking the opportunity to buy the dip.

Are they doing the right thing?

Here’s what top broker Citi thinks.

Should you buy the dip on ResMed shares?

Top broker Citi reacted to the US study by cutting its rating on ResMed shares to neutral.

The broker also slashed its 12-month share price target from $36 per share to $30 per share.

Given ResMed is currently trading at $28.24, the potential upside is limited to only 6% over the next year.

Citi analyst Mathieu Chevrier said the study by global pharmaceutical giant Eli Lilly And Co (NYSE: LLY) “indicates that GLP-1 are a viable treatment option for the 70 per cent of OSA patients that are obese”.

Chevrier estimates that if half of those patients went into OSA remission, that could mean a 35% fall in the total addressable market (TAM) for continuous positive airway pressure (CPAP) machines.

ResMed sells CPAP machines.

Based on the study, Citi assumes a 15% fall in TAM for OSA from FY26 to FY28.

As such, it has cut its forecast revenue growth for ResMed. The forecast was cut from 6% to 4% for FY26 and from 4% to 3% for FY25. Citi held its forecast steady at 2% for FY26.

The study sought to measure the impact of Eli Lilly’s GLP-1 drug, Tirzepatide, on people with obesity and OSA.

Tirzepatide is the key ingredient in Mounjaro (prescribed for diabetes) and Zepbound (prescribed for obesity).

These drugs compete with alternative GLP-1s, Ozempic and Wegovy, which are made with semaglutide.

Eli Lilly reported that OSA remission was achieved in 52% of patients in the study.

Last year, ResMed CEO Mick Farrell sought to reassure investors that the OSA market was enormous, regardless of the impact of GLP-1 drugs.

He said even with GLP-1 medicines factored in, the TAM for OSA would be 1.2 billion by 2050.

ResMed currently has 22.5 million customers using its OSA products.

The post Should you pounce on ResMed shares at around $28? appeared first on The Motley Fool Australia.

More reading

• ResMed shares rebounding as investors rush to buy the dip
• Leading brokers name 3 ASX shares to buy today
• Why Cettire, Metcash, ResMed, and Star Entertainment shares are sinking today
• ResMed share price plunges 13% as weight-loss results reawaken worries
• ResMed shares are in a two-month lull. Is this a chance to buy?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

FY24 has been a tough year for S&P/ASX 200 Index (ASX: XJO) lithium shares. While it’s good to be hopeful about the future when it comes to investing, some analysts are pessimistic about where the lithium price is headed next.

There are a few lithium stocks to monitor within the ASX 200, such as Pilbara Minerals Ltd (ASX: PLS), IGO Ltd (ASX: IGO), Arcadium Lithium CDI (ASX: LTM), Liontown Resources Ltd (ASX: LTR) and Mineral Resources Ltd (ASX: MIN).

Demand for lithium may increase over the longer term because of electric vehicles and other types of batteries, but rising supply is also having an effect.  

Let’s look at what one broker thinks is in store for the lithium price in FY25.

Rising inventory to hurt lithium prices?

According to reporting by the Australian Financial Review, the broker Citi thinks the lithium price could drop as much as 20% in the next few months because inventories are increasing at a “dramatic pace”. Indeed, the broker is so pessimistic that it suggests investors short the commodity, according to the AFR.

Citi estimates that there is an oversupply in the physical market, with inventory increasing by around 70,000 tonnes since the start of 2024.

At the current lithium price, Citi suggested some mines could be closed and there could be some “industry rationalisation” which could eventually help with the “extremely large surpluses”. The Citi global head of commodities of research, Max Layton, said:

This high and rising low-shelf-life chemical inventories should see lithium prices fall another 15 to 20 per cent to $US10,000 a tonne.

A low-price environment over the next three to six months would force supply curtailments, driving physical markets to rebalance.

Albemarle, the world’s biggest lithium miner, said it wouldn’t make new investments in lithium plants at the current lithium price. However, Albemarle is still optimistic about the long term because of the future demand, which is expected to come from electric vehicles.  

Citi is “very bearish” on lithium and said that demand growth for lithium has halved in 2024 compared to 2023, putting the market in surplus by around 7% of total consumption, which isn’t helpful for ASX 200 lithium shares.

The broker has decreased its expectations of shorter-term global electric vehicle sales due to higher interest rates, limited charging infrastructure, and limited product options.

Layton said:

Lithium consumption is expected to accelerate from 2025 onwards once the current negative EV sentiment fades.

Foolish takeaway

With that backdrop in mind, the outlook is clouded for ASX 200 lithium shares. FY25 could be tricky for the sector if the lithium price fell further. However, commodity prices are notoriously difficult to forecast, so it’s possible that things could turn out better than what Citi is predicting. Time will tell whether Citi is right to be pessimistic.

The post Should investors worry about the outlook for ASX 200 lithium shares in FY25? appeared first on The Motley Fool Australia.

More reading

• 4 ASX mining shares going gangbusters while the market dives
• Bell Potter names the best ASX tech stocks to buy in FY25
• Why are Guzman Y Gomez shares being shorted?
• Why did this ASX healthcare stock just crash 47%?
• Where will Nvidia stock be in 10 years?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 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.

The market may be in free fall today but that hasn’t stopped some ASX mining shares from racing higher.

Let’s take a look at four stocks that are avoiding the selloff and recording strong gains:

Arcadium Lithium (ASX: LTM)

The Arcadium Lithium share price is up 3.5% to $5.17. This follows a very strong gain for the lithium miner’s NYSE listed shares overnight. They rose 12% on Wall Street after investors piled back into lithium stocks. It remains unclear why lithium stocks are suddenly rebounding but it could potentially be due to short sellers believing that they have now bottomed and are buying back shares to close their positions.

Encounter Resources Ltd (ASX: ENR)

The Encounter Resources share price is up almost 12% to 62.5 cents. This means that the mineral exploration company’s shares are now up over 80% since this time last week. Investors have been buying its shares since announcing high-grade niobium intercepts at the Aileron project in West Arunta. The ASX mining share’s managing director, Will Robinson, commented: “Aircore drilling is opening up new fronts of shallow niobium-REE carbonatite hosted mineralisation at Aileron. The aircore rig completed over 10,000m of drilling in its first month on site. This drilling has expanded the near surface footprint of the Crean, Hurley and Emily carbonatites.”

Magnetic Resources NL (ASX: MAU)

The Magnetic Resources share price is up 4% to $1.07. This morning, this gold explorer released drilling results from the Laverton Project. According to the release, its drilling shows that the 400m northern part of the 750m long LJN4 deposit plunges to the south east and is much larger than previously estimated. It is also bigger than the southern silica pyrite and breccia zone. In addition, the company revealed that outstanding intersections continue with strong grades. The company said: “Interestingly, similarly to other world class multi- million-ounce deposits in the Laverton region, we have already identified 8 stacked lodes in the central part of LJN4. We have now completed a 717m hole below these stacked lodes and results are pending.”

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is up 7% to 37.5 cents. Once again, this follows strong gains for lithium stocks on Wall Street overnight. It may be worth looking at short interest data in the coming days to see if short sellers have been closing out of their positions. As of Monday, this ASX mining share had short interest of 9.8%.

The post 4 ASX mining shares going gangbusters while the market dives appeared first on The Motley Fool Australia.

More reading

• Why is short interest in Sayona Mining shares growing?
• These are the 10 most shorted ASX shares
• Why are Sayona Mining shares outperforming other ASX lithium stocks today?
• These beaten down ASX lithium stocks could rise 35% to 85% in 12 months
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro owns Arcadium Lithium 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 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.

The tech sector has been a great place to invest over the last 12 months.

For example, during this time, the S&P ASX All Technology index has delivered an impressive 32% return.

This is approximately four times greater than the return of the ASX 200 index over the same period.

The good news is that Bell Potter remains very positive on the outlook for this side of the market in FY 2025. It commented:

We have a positive or constructive view on the outlook for the tech sector given interest rates both domestically and internationally have stabilised and cuts look likely to start in the not-too-distant future if they have not already. A falling interest rate environment is positive for the tech sector which typically has high growth stocks with low or negative cash flows/earnings now and only reasonable or meaningful cash flows/earnings in several years’ time.

We note there has already been a strong rally in tech stocks offshore in anticipation of interest rate cuts – the NASDAQ is at an all-time high – but there has not been anywhere near as strong a rally in Australia. We therefore believe a rally in tech stocks domestically is overdue and is likely to be led by large caps with the mid and small caps to eventually follow.

Which ASX tech stocks should you buy?

Bell Potter has picked out three ASX tech stocks that it is bullish on for the year ahead.

They are Gentrack Group Ltd (ASX: GTK), REA Group Ltd (ASX: REA), and TechnologyOne Ltd (ASX: TNE).

In respect to billing technology company Gentrack, its analysts believe its recurring revenue and long-term growth opportunity make it a buy. The broker has a buy rating and $10.90 price target on its shares. It said:

GTK generates 85% of its revenue (majority recurring) from its specialised energy/ water utilities enterprise billing/CRM (customer relationship management) platforms and is leveraged to future-facing distributed energy and decentralised storage trends, which have coincided with significant tech debt within legacy solutions. Although it appears expensive at c.40x FY24 and c.30x FY25 EV/EBITDA multiples, we believe the valuation is justified with a long and visible opportunity for revenue growth, as well as margin expansion following investment in headcount to deliver on its pipeline of deployments and integrations in addition to geographic expansion into Asia and EMEA.

Bell Potter has a $203.00 price target on realestate.com.au owner REA Group. It likes the company due to its strong medium and long term growth prospects. It explains:

We remain positive on REA’s medium and long-term prospects through the cycle with a free cash flow profile able to sustain materially higher capex for platform development compared to its nearest competitor, as well as encouraging early signs for penetration in the fledgling-yet-substantial Indian residential property listings market.

Finally, enterprise software provider TechnologyOne could be another ASX tech stock to consider in FY 2025. The broker has a buy rating and $20.25 price target on its shares. It believes another re-rating to higher multiples is possible thanks to its strong growth outlook. Bell Potter commented:

A key strength of the company is the software is now almost purely delivered on a SaaS basis (i.e. software-as-a-service) which is the same as companies like WiseTech (WTC) and Xero (XRO). The advantage of this delivery model is it generates recurring revenue for the company and makes the earnings very predictable. The shift to SaaS and the visibility of earnings has driven a re-rating in the PE ratio of the stock from c.30x a few years ago to c.40x now. We believe this re-rating will continue and think a PE of c.50x is ultimately achievable.

The post Bell Potter names the best ASX tech stocks to buy in FY25 appeared first on The Motley Fool Australia.

More reading

• Are ASX real estate shares building towards a better FY25?
• Brokers name 3 ASX shares to buy now
• Morgans names the best ASX 200 stocks to buy in June
• Here are the top 10 ASX 200 shares today
• Analysts say these 5 ASX 200 growth shares are top buys

Motley Fool contributor James Mickleboro has positions in Technology One and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Gentrack Group, REA Group, Technology One, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Gentrack Group, WiseTech Global, and Xero. The Motley Fool Australia has recommended REA Group and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Guzman Y Gomez Ltd (ASX: GYG) shares have been targeted by shorters after its entry onto the ASX boards. The Mexican food operator’s share price opened at $30 on the first day of trading, jumping more than 30% higher than its initial public offering (IPO) price of $22.

While the GYG share price did drop to $28.80 at the start of this week, it has since climbed to around $29.40.

However, some investors think this valuation is too high. When an investor shorts a stock, it means they’re betting that the stock will go down.

GYG may have large growth ambitions, with an ultra-long-term target of 1,000 restaurants in Australia and international growth intentions, but some investors have questioned whether the business should be valued as highly as it is today.

Shorters attack GYG

According to reporting by the Australian Financial Review, data from the ASX showed that approximately 1.1 million Guzman Y Gomez shares were loaned to shorters on Tuesday.

It was reportedly the largest amount of shares of any stock shorted on that day, totalling around $32.7 million.

These early figures have come ahead of official data, which will be made available by the Australian Securities and Investments Commission (ASIC) in the next few days.

The AFR reported that Bloomberg data showed at least one sizeable shareholder had been selling shares, with around $59 million of GYG shares sold in three big block trades this week.

The newspaper also reported that three fund managers were offered shares to short at a borrowing cost of between 7% and 7.5%.

Brokers then told hedge fund clients that around $50 million was expected to be made available to borrow, with strong levels of interest. The borrowing cost fees were over 10%, but those brokers expected this to reduce, according to the AFR.

One negative view of the Guzman Y Gomez share price valuation

The investment team at Forager Funds Management likes to focus on undervalued shares and avoid overhyped stocks.

On the most recent Forager podcast episode, chief investment officer Steven Johnson said:

…It’s not easy to list companies at the moment, we’ve seen Virgin put off its float here in Australia a number of times and then this Guzman IPO comes along.

It seems like a massive, massive price for a business at the stage that it’s at and not only have they got the IPO away but it popped 30% on the day of the IPO and now trades with a $3 billion market capitalisation.

So, I mean it’s far too expensive for me. There’s far too many things that have to go right. You cannot make the valuation stack up on Australia alone, it needs to work overseas and we know that’s very difficult.

But, I’ve just been fascinated by the amount of, I guess, animosity towards it or jealousy towards it…it’s just a stock and it’s an Aussie-founded business that’s got some plans to go global. I don’t own it and we’re not going to own it but I don’t wish ill upon it and I’d be quite happy to see that business go on and be very, very successful.

GYG share price snapshot

The GYG share price is currently down by 0.3% in today’s morning trade, though it’s up 33% since the IPO price of $22.

The post Why are Guzman Y Gomez shares being shorted? appeared first on The Motley Fool Australia.

More reading

• Should I buy Guzman Y Gomez shares on the ASX?
• Over $100 million of GYG shares sold by insiders on day one. Should investors be worried?
• How rich are the Guzman Y Gomez founders following the company’s IPO?
• How does the Guzman Y Gomez ASX valuation compare to Domino’s?
• Why Guzman y Gomez, KMD, Mineral Resources, and Pilbara Minerals shares are sinking

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 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.

Immutep Ltd (ASX: IMM) shares are having a day to forget on Thursday.

In morning trade, the ASX healthcare stock is down a whopping 47% to a 52-week low of 23 cents.

Why is this ASX healthcare stock crashing?

Investors have been racing to the exits today in response to the release of topline results from the TACTI-003 Phase IIb Trial.

That trial is evaluating eftilagimod alfa (efti) in combination with anti-PD-1 therapy Keytruda (pembrolizumab) as first-line treatment of recurrent/metastatic head and neck squamous cell carcinoma patients (1L HNSCC).

According to the release, the trial enrolled 171 patients with any PD-L1 expression at over 30 centres across the United States, Europe, and Australia.

The ASX healthcare stock advised that its MHC Class II agonist in combination with Keytruda led to higher overall response rates in evaluable patients according to RECIST 1.1.

Cohort A achieved a 31% overall response rate (ORR) and 75.9% disease control rate (DCR) in 29 evaluable patients. As a comparison, a Keytruda monotherapy achieved an 18.5% ORR and 59.3% DCR in evaluable 27 patients.

Management advised that response rates improved for Cohort B patients. However, the data for these patients will be delivered next month.

‘Encouraging’

Dr. Martin Forster, from the UCL Cancer Institute and University College London Hospital NHS Foundation and TACTI-003 Investigator, said:

It is encouraging to see efti safely drive higher response rates in combination with KEYTRUDA in the first line setting for head and neck squamous cell carcinoma patients, regardless of HPV status and levels of PD-L1. The strong, consistent response rates, irrespective of whether patients have high, low, or negative PD-L1 expression, is intriguing and offers a glimpse into this novel combination’s ability to improve patients’ clinical responses and expand patient populations that benefit from anti-PD-1 therapy.

The ASX healthcare stock’s CSO, Dr. Frederic Triebel, adds:

We are pleased with the quality of responses. Once again, durability is tracking well driven by the complementary nature of these two unique immunotherapies in fighting cancer. Efti’s distinct activation of dendritic cells as an MHC Class II agonist and the resulting engagement of multiple facets of the adaptive & innate immune system has consistently translated into promising duration of responses in combination with immune checkpoint inhibitors across multiple oncology indications.

So why the selling?

The selling may have been driven by the absence of a p-value in the announcement.

The p-value is defined as the probability that the observed effect within the trial or study would have occurred by chance if there was no true effect.

Immutep has included p-values in the past. So, investors may be concerned that it was omitted because the trial didn’t achieve statistical significance. This essentially would make the trial a dud.

Investors will no doubt be eagerly awaiting next month’s update on cohort B.

The post Why did this ASX healthcare stock just crash 47%? appeared first on The Motley Fool Australia.

More reading

• This speculative ASX stock could almost double in value
• Why Brainchip, Immutep, Liontown, and Xero shares are tumbling today

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.

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

If you put $10,000 in Nvidia (NASDAQ: NVDA) stock 10 years ago, you would have $2.74 million today — a life-changing return of over 27,400%. Over that time frame, the company has experienced several boom-and-bust cycles based on demand for its graphics processing units (GPUs). Let’s dig deeper into what the next decade could have in store.

A history of boom and bust cycles

Historically, Nvidia has experienced several boom-and-bust cycles based on macroeconomic factors and industry dynamics outside its control. Soon after its initial public offering (IPO) in 1999, the company enjoyed explosive growth based on demand for its GPUs for personal computers and video game consoles like Microsoft‘s Xbox.

These are now somewhat mature and highly cyclical markets because they rely on nonessential discretionary spending that can be cut in challenging economic conditions. But by 2010, Nvidia was rescued by a brand-new industry: cryptocurrency mining.

Blockchain platforms like Bitcoin (and previously Ethereum) run on a system called proof-of-work, where transactions are validated, and new blocks created by solving complex computational puzzles (mining). Nvidia’s consumer GPUs were ideal for these tasks, leading to booming sales for much of the 2010s and some of the 2020s.

But now, Nvidia has finally gotten its big break with generative artificial intelligence (AI), an opportunity so massive, it has made the company’s other business verticals practically irrelevant.

Nvidia over the next 10 years

For better or worse, Nvidia has become almost a pure play on data center AI hardware, with its other segments fading into irrelevance. In the first quarter, data center sales represented 87% of the company’s $26 billion in revenue, while the once-core gaming and PC segment (which includes cryptocurrency mining rigs) has fallen to just 10%.

Nvidia’s poor diversification will likely worsen because the data center segment is growing significantly faster than its other businesses. This dynamic makes the company vulnerable to a potential slowdown in demand for AI chips, which is a significant risk over the coming decade.

Even if the overall industry meets analysts’ lofty expectations (Bloomberg expects generative AI to be worth $1.3 trillion by 2032), there may eventually be chip overcapacity as data centers accumulate massive stockpiles of GPUs and feel less need to update to the latest versions. And like in Nvidia’s previous boom-and-bust cycles, used chips could erode the market for its new products, leading to lower pricing power and margins.

That said, Nvidia is a company that constantly reinvents itself. Few would have expected the video game chipmaker to dominate cryptocurrency mining and eventually generative AI. In the future, new markets such as self-driving car technology, robotics, or warehouse automation could reignite demand for Nvidia’s products and rediversify its customer base.

Is Nvidia still a buy?

Nvidia stock still looks capable of outperforming the S&P 500 over the next 10 years — especially as the AI industry expands out of simple chatbots into more advanced-use cases. That said, the stock has become incredibly risky in the near term because of its overreliance on data center GPUs and the threat of overcapacity in its market.

Investors who buy now should be ready to ride through a potential correction. But the better idea might be to hold and wait for more information.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

The post Where will Nvidia stock be in 10 years? appeared first on The Motley Fool Australia.

More reading

• How do you spot an innovation stock?
• Nvidia is no longer the most valuable company in the world. Here’s what investors need to know
• Where are we in the share market cycle?
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The market may be sinking today, but the same cannot be said for one ASX retail stock.

That stock is Baby Bunting Group Ltd (ASX: BBN).

In morning trade, the baby products retailer’s shares are up 17% to $1.45.

This compares very favourably to a 1.5% decline by the All Ordinaries index.

Why is this ASX retail stock rocketing?

Investors have been fighting to get hold of the company’s shares today following the release of a trading update ahead of its investor day event.

According to the release, Baby Bunting’s performance has improved markedly since its last update.

Total sales from 1 May 2024 to 24 June 2024 were up 1% compared to the prior corresponding period.

And while comparable store sales for the period were still down 0.7% versus the same period last year, this is a significant improvement on what was recorded during January to April. During that period, sales were down 7.7% year on year.

Management notes this improvement reflects the benefits of recently introduced new product assortments, a renewed focus on new customer acquisition, the introduction of a refreshed promotional engagement, and a proactive branding and go-to-market campaign.

In light of this, the ASX retail stock has reaffirmed its FY 2024 pro forma net profit after tax guidance range of $2 million and $4 million.

Management hopes to build on this in FY 2025 and beyond. Its investor day presentation details a five-year strategy that is designed to stabilise and optimise its existing business and provide the blueprint for delivering future growth and over 10% EBITDA margin.

It aims to achieve this by lowering variable costs, leveraging its systems investment, and simplifying its operating structure.

Debt facilities update

Baby Bunting also revealed that its existing National Australia Bank (ASX: NAB) debt facility of $70 million has been rolled over on the same pricing terms.

It was due to expire in March 2025 but has now been extended for a further three years and will mature in September 2027 instead. Management believes this renewed three-year deal provides Baby Bunting with the headroom to support its growth strategy and demonstrates NAB’s continued support of the business.

The ASX retail stock’s CEO, Mark Teperson, was pleased with the company’s performance. He said:

While it is still early days it is pleasing to see the impact of some of our strategic initiatives on our comparable sales performance over the past eight weeks.

We have today in a separate announcement to the ASX released details of our five-year strategy which is designed to stabilise and optimise our existing business and provide the blueprint for delivering future growth and over 10% EBITDA margin.

We are making good progress in implementing the first phase of our strategic initiatives including the introduction of a program of work to simplify our pricing strategy, renegotiating supplier trading terms, and enabling online fulfilment through all stores which is strengthening our operating leverage and inventory utilisation. We’ve also been focused on expanding our newly established New Zealand team to drive growth in that market.

The post Why is this ASX retail stock rocketing 17% during today’s market selloff? appeared first on The Motley Fool Australia.

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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.