Receiving passive income from ASX dividend shares is one of the best things about investing. Dividend income is truly passive income, requiring nothing more than an investment of capital. An investor will receive their dividends, rain or shine, sick or healthy, if they own dividend-paying shares.

But knowing this is the easy part. So how does one choose the ASX dividend sources that are to provide this passive income?

Well, that’s the $64 million question.

Want passive dividend income? Start with an ETF

I would start with an exchange-traded fund (ETF). An ASX index ETF like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) holds all 200 shares in the ASX 200 Index. Right off the bat, this includes dozens and dozens of dividend-paying shares.

Holding the top spots are famous payers like the ASX big four banks, BHP Group Ltd (ASX: BHP), Telstra Group Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW). All dividends and franking credits received by an ETF have to get passed on to investors, so the iShares ASX 200 ETF always pays out dividend distributions that reflect the ASX at the time.

These tend to grow over time in line with the Australian economy too. For example, back in 2017, the iShares ASX 200 ETF paid out a total of 97.84 cents per unit in dividend distributions. Over this year, that same ETF has paid out $1.74 per unit in income.

Considering all of this, I think an ASX index fund like this is a great foundation to build a portfolio of passive income-paying investments.

But what about when it comes to individual dividend shares?

Here are two things to consider. The first is a company’s strength. A strong company can usually afford to pay out strong and consistent dividend income. When I buy a share, I like to ask myself a simple question: will this company be bigger and stronger in ten years than it is today? I think the answer for many of the ASX’s top companies is most certainly ‘yes’.

Woolworths, for example, is the most dominant grocer in Australia. We’ll all continue to need to buy food and other household essentials. And I think Woolworths is the place that most Australians will continue to use to this end. Thus, Woolworths is the kind of ASX dividend share I would consider for a portfolio to provide growing passive income.

The past can tell us what to expect in the future

The second is a company’s dividend history. I believe that if a company can demonstrate a solid track record when it comes to dividend payments, it bodes well for the potential of a future investment. Take Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Soul Patts has one of, if not the, best dividend streak on the ASX 200. It has increased its annual dividend payment every single year since 2000, a feat no other ASX 200 share can match today. That alone gives me a great deal of confidence in including this ASX share as part of a passive dividend income portfolio.

So that’s where I would start if I wished to build a passive income portfolio of ASX shares from scratch. The key is to find investments that you can make a reasonable assumption will be able to fund a growing dividend well into the future.

The post How I’d aim to generate a growing passive income from dividend shares appeared first on The Motley Fool Australia.

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More reading

• Building a passive income for retirement? Check out these 3 ASX 200 dividend shares
• Morgans names 2 of the best ASX 200 dividend shares to buy
• Why did the Telstra share price tumble 3% today?
• 3 reasons I think the Telstra share price can beat the ASX 200 in 2023
• Here are the 3 most traded ASX 200 shares on Monday

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited and Washington H. Soul Pattinson and Company 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

Shares of many Chinese stocks — among them, Alibaba (NYSE: BABA), Kanzhun (NASDAQ: BZ), and Full Truck Alliance (NYSE: YMM) — were up strongly Monday even as US indices were down. Those three stocks were trading higher by 1.9%, 6.4%, and 10.7%, respectively, as of 1:24 p.m. ET.

The broad gains among US-listed Chinese stocks were likely propelled in part by some positive moves made by the Chinese government.

Authorities announced measures to contain the decline in the country’s massive property sector, and on Monday, Chinese President Xi Jinping and US President Joe Biden met in person for the first time since Biden’s election, a meeting that could perhaps pave the way for less strained relations between their two countries.

Additionally, China appears to be relaxing some of its most intensive zero-COVID policies. Those news items combined to give a boost to the beaten-down valuations of Chinese stocks.

So what

On Sunday, the People’s Bank of China, in conjunction with the China Banking and Insurance Regulatory Commission, sent a directive to the country’s financial institutions that featured 16 steps aimed at supporting the nation’s property sector.

Investment bank Jefferies estimated that the new measures would inject around $184 billion into the sector, which should stave off developer defaults for another year, allowing the healthiest developers to continue operating and preventing the whole sector from freezing up.

Home prices across 100 Chinese cities have fallen for four straight months, threatening the country’s economy.

In addition, China began relaxing some aspects of its zero-COVID policy, though cases are rising in the country as the weather cools.

While the zero-COVID policy is likely to remain in place until spring, investors applauded the easing of quarantine rules and the end of routine mandatory community testing, and the shifts likely show that authorities are reassessing the economic trade-offs the policy demands.

In any case, the new measures seemed to light a fire under some of China’s more economically sensitive stocks.

Full Truck Alliance is a digital freight platform that connects shippers with truckers in the country. Kanzhun is a digital employment marketplace that links job-seekers and employers. Increased economic activity, consumption, and employment growth would be positives for each of these companies.

China’s unemployment rate came in at 5.5% in September, higher than expected, and unemployment in the 16- to 24-year-old demographic clocked in at a whopping 17.9%. That’s high by historical standards, and Kanzhun has felt the impact. Its share price is down 69% year to date — a worse decline than Full Truck’s 43% slide or Alibaba’s 46% tumble.

Alibaba shares also gained ground Monday, though by a smaller percentage than these other companies. That perhaps reflects its size as well as its status as a prime target of regulators.

Chinese e-commerce companies last week held their annual Singles’ Day, which is a retail event similar in scope to America’s Black Friday.

Alibaba and other e-commerce players chose not to publicize the details of their Singles’ Day results for the first time ever, leading some to believe China’s current economic malaise may have led to a poor showing.

Instead, Alibaba only noted that this year’s sales figures were roughly “in line with last year’s GMV performance, despite macro challenges and Covid-related impact”.

Alibaba also noted that Singles’ Day ran completely on its cloud for the second year in a row, and pointed to an 8% decline in computing cost per resource unit compared with last year.

Now what

Alibaba will report its third-quarter earnings later this week, and analysts project that it will reveal that its sales increased by only 4.3%. However, analysts also expect to hear that its margins improved compared to the past few quarters thanks to cost-cutting moves and layoffs that took place earlier this year.

With the potential for an economic rebound in 2023, it’s no wonder Chinese stocks are rising off their beaten-down valuations.

Also, the meeting between Biden and Xi is expanding the communication between their two diplomatic teams. Xi cut off some areas of dialogue between the nations after US Speaker of the House Nancy Pelosi visited Taiwan in August.

However, significant tensions still remain between China and the US, especially over the issue of Taiwan, as well as recently imposed restrictions on semiconductor sales to China.

Investors should remember that investments in Chinese companies come with added risks, as the government there can and does clamp down on private enterprise at will, and the geopolitical risks of US-China tensions will continue to be an overhang on US-listed Chinese stocks.

Chinese stocks may have room to run from their current low valuations given Monday’s incrementally “less bad” news, but for the longer term, the picture is much murkier.

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

The post Why Chinese stocks were surging today appeared first on The Motley Fool Australia.

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More reading

• How I’d aim to generate a growing passive income from dividend shares
• Why did Macquarie just downgrade Lynas shares?
• Guess which ASX tech share is surging 46% on news of earlier-than-expected profitability
• Are the Vanguard Australian Shares ETF (VAS) fees expensive?
• Why are ASX 200 lithium shares hitting the dirt on Tuesday?

Billy Duberstein 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 Jefferies Financial Group Inc. 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.

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The Lynas Rare Earths Ltd (ASX: LYC) share price is in the red today.

Lynas shares are down nearly 7% and are currently trading at $8.53. For perspective, the
S&P/ASX 200 Index (ASX: XJO) is falling 0.37% today.

Let’s take a look at what is going on with the Lynas share price.

Broker downgrade

Analysts at Macquarie have downgraded the Lynas share price to a neutral with a $9.10 price target.

Lynas is a rare earths producer exploring the Mt Weld mine in Western Australia. The company also has a processing plant in Malaysia.

Macquarie analysts highlighted that the company’s earnings forecast will depend on the commodity price outlook. In comments cited by The Australian, Macquarie said:

While we believe Lynas enjoys a valuation premium given it is world’s only significant producer of separated rare earth materials outside of China, its earnings outlook depends on commodity prices outlook.

Analysts highlighted there are “signs of NdPr price support” from rising pressures on rare earth concentrate costs, the publication noted. But on the flip side, smartphone sales have declined in the last two quarters.

In its latest quarterly report, Lynas said rare earth prices were “quite volatile during this quarter”. Lynas said:

NdPr oxide pricing started to decrease in July and this continued until mid-September prior to rebounding and stabilising at around 700 RMB/kg at the end of the quarter.

This corresponds to USD88/kg CIF1 China. This pricing trend was triggered by
concerns that the 25% production quota increase in China would lead to oversupply.

However, once these concerns were found to be excessive, prices started to recover.

Lynas was awarded a contract from the United States to establish a commercial heavy rare earths separation facility in June.

The S&P/ASX 200 Materials Index (ASX: XMJ) is 1.62% in the red today.

Lynas share price snapshot

Lynas shares have gained 6% in the past year, while they have descended 16% in the year to date. Lynas shares have climbed nearly 14% in a month.

For perspective, the ASX 200 has fallen 4.69% in the past year.

Lynas has a market capitalisation of about $7.7 billion based on the current share price.

The post Why did Macquarie just downgrade Lynas shares? appeared first on The Motley Fool Australia.

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More reading

• Up 20% in a month, here’s the bull and bear case for the Lynas share price
• Could Lynas shares pay a dividend in the future?
• What’s boosting the Lynas share price on Wednesday?
• Which ASX 200 mining shares managed to dig up gains in October?
• Could the Lynas share price have another 15% upside from here?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Whispir Ltd (ASX: WSP) share price is having an explosive day on Tuesday.

In afternoon trade, the communications management systems provider’s shares are up a massive 46% to 73 cents.

At one stage today, the Whispir share price was up 72% to 85 cents.

Though, this beaten down tech share is still a world away from its 52-week high of $2.95.

Why is this tech share rocketing?

The catalyst for the rise in the Whispir share price on Tuesday has been the release of a positive update on the company’s quest to be profitable.

According to the release, an internal restructure to place the company on track to be cash accretive from the third quarter of FY 2023 has been approved by the board.

Whispir intends to reduce its workforce by 80 roles or 30%, delivering annualised savings of approximately $14.3 million. The company will also scale back its investment in R&D, via a reduction in headcount in the product and technology teams, until sufficient cash is being generated to ensure sustainable and self-funded reinvestment.

Savings will also be realised across marketing, customer services, and administration functions, with the direct sales teams largely unaffected. Approximately 70% of the roles affected are based in Australia. A total of $1.8 million is anticipated to be incurred as a one-off restructuring cost.

Management highlights that this cost reduction will ensure the company’s current annual recurring revenue (ARR) of $62 million exceeds its annualised cost base.

In light of this, with cash reserves of $17.1 million, Whispir will not need to raise capital to fund its ongoing operations. This had been a major concern for investors, which explains the rallying Whispir share price today.

Profitable growth

Whispir’s CEO and founder, Jeromy Wells, commented:

We have taken this step to enable Whispir to establish itself as a profitable growth business. The Company has been through a period of significant growth which means that there are now areas that can be scaled back to pre-COVID levels for a period as the Company transitions to growing sustainably and profitably without the need for additional capital.

With this restructure we expect the Company will be both EBITDA positive and cash accretive from next quarter onwards. Given our confidence in the Whispir platform and the substantial growth opportunities for our Company, we are no less ambitious for the future. This plan ensures we will now have the financial stability to grow profitably and self-sustainably from this coming Quarter.

The post Guess which ASX tech share is surging 46% on news of earlier-than-expected profitability appeared first on The Motley Fool Australia.

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More reading

• 2 ‘interesting’ ASX dividend shares to buy and one growth stock to ignore: expert
• This ASX All Ordinaries tech share just crashed 19%. What’s doing?

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 Whispir Ltd. The Motley Fool Australia has recommended Whispir 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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The Vanguard Australian Shares Index ETF (ASX: VAS) is one of the most popular ways for investors to get exposure to ASX shares. But, does it offer investors a good way to invest?

At the end of October 2022, this exchange-traded fund (ETF) was $11.4 billion in size, making it a sizeable player in the ASX share market.

The idea of this ETF is that it aims to track the return of the S&P/ASX 300 Index (ASX: XKO). That’s a group of 300 of the largest businesses on the ASX.

It’s provided by Vanguard. It operates quite differently to its main competitors.

Vanguard is owned by the investors that use its services, rather than big shareholders.

Vanguard says that this “unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy, and policies throughout the Vanguard organisation worldwide.”

A focus on low-cost investing

The ETF provider explains the benefits of lower fees and how it’s able to provide its cheap service:

Investors can’t control the markets, but they can control the costs of investing. Providing low-cost investments isn’t a pricing strategy for us. It’s how we do business.

We can keep costs low because of our unique ownership structure in the United States, which allows us to return profits to investors through lower costs.

Vanguard’s scale also helps to keep costs low. As our assets under management increase globally, we can reduce expense ratios for the investors in our funds.

Vanguard Australian Shares Index ETF management fee

As of October 2022, the ETF charges investors an annual management fee of 0.10% per annum. There are 0% indirect costs.

In terms of investing in ASX shares, it isn’t the cheapest ETF out there.

I’m thinking about the BetaShares Australia 200 ETF (ASX: A200). It has a management fee of just 0.07% per annum. That’s slightly cheaper than Vanguard, though it’s only invested in 200 ASX shares.

Are there any other cheaper ETFs?

The Vanguard Australian Shares Index ETF is certainly one of the lowest on the ASX.

But, there are a couple of ASX ETFs that are noticeably cheaper.

For example, there’s the iShares S&P 500 ETF (ASX: IVV) which has an annual management fee of 0.04%. This investment gives investors access to 500 of the biggest US-listed businesses.

A Vanguard offering has an even lower management fee with one particular fund. The Vanguard US Total Market Shares Index ETF (ASX: VTS) has an annual management fee of just 0.03%.

Foolish takeaway

In terms of fees, Vanguard Australian Shares ETF is one of the cheapest on the ASX. Definitely not expensive. However, there are a few other options that are even cheaper. But, fees are just one part of the investment equation – the net returns are probably the most important element.

The post Are the Vanguard Australian Shares ETF (VAS) fees expensive? appeared first on The Motley Fool Australia.

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More reading

• Are ASX share investors getting their mojo back?
• 3 excellent ETFs for ASX investors to buy next week
• Are Vanguard Australian Shares ETF (VAS) dividends fully franked?
• 2 ETFs for ASX investors to buy for big dividends
• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended iShares Trust – iShares Core S&P 500 ETF. 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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S&P/ASX 200 Index (ASX: XJO) lithium shares are getting hammered today.

The ASX 200 is down 0.4% in early afternoon trade, with materials shares broadly lagging, as witnessed by the 1.7% decline in the S&P/ASX 200 Materials Index (ASX: XMJ).

But the top ASX lithium stocks by market cap are all having a much worse time of it.

At the time of writing:

• Core Lithium Ltd (ASX: CXO) shares are down 14.2%
• Allkem Ltd (ASX: AKE) shares are down 12.9%
• Pilbara Minerals Ltd (ASX: PLS) shares are down 9.9%
• IGO Ltd (ASX: IGO) shares are down 6.5%

Ouch!

So, why are ASX 200 lithium shares feeling the pressure today?

What’s going on with ASX 200 lithium shares?

Part of the selling pressure comes following a weak performance on US markets yesterday (overnight Aussie time).

While the S&P 500 Index (SP: .INX) closed down 0.9%, major US lithium stocks, including Albemarle Corporation (NYSE: ALB) and Livent Corp (NYSE: LTHM), dropped significantly more.

But we suspect more of the selling action we’re seeing with ASX 200 lithium shares today stems from a potential reversal in sentiment that was witnessed during Monday’s trading. A day that saw Core Lithium shares leap 11.7% by the closing bell.

Though Pilbara Minerals is a notable exception here. Despite trading 4.3% higher earlier in the day on Monday, Pilbara closed down 1.5% yesterday.

As for Monday’s more bullish sentiment, that appears to have been driven by news out of China that authorities are rolling back some of the stricter aspects of the nation’s COVID-zero policies.

China, a voracious consumer of lithium for its booming electric vehicle markets, has seen its economic growth hampered by rolling lockdowns in an effort to stamp out the virus. Any move by the Middle Kingdom to reopen will likely spur greater demand for a range of resources, including lithium.

Today, however, investors may be rethinking the timeline on China’s reopening. This comes amid reports of surging COVID cases. Data released overnight revealed that Sunday marked the fourth consecutive day with more than 10,000 new cases reported inside the nation.

That may test Chinese authorities’ resolve to loosen restrictions. And it looks to be throwing up some headwinds for ASX 200 lithium shares today.

How have these top lithium stocks performed in 2022?

Despite today’s falls, all the ASX 200 lithium shares named above are still well into the green this calendar year.

While the benchmark index itself is down 6% in 2022, the Allkem share price is up 27%, IGO shares have gained 29%, the Pilbara Minerals share price has leapt 35% higher, and the Core Lithium share price is up 154% year to date.

The post Why are ASX 200 lithium shares hitting the dirt on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Why is the Pilbara Minerals share price tumbling 10% on Tuesday?
• Why is the Core Lithium share price falling 12% on Tuesday?
• Why is the Allkem share price crashing 10% today?
• ‘No stress’: Experts name 2 ASX shares to buy for strong long-term growth
• Why did ASX lithium shares have a dream run on Monday?

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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The Incitec Pivot Ltd (ASX: IPL) share price is having a strong day.

In afternoon trade, the agricultural chemicals company’s shares are up 8% to $4.04.

This compares very favourably to the ASX 200 index, which is down 0.45% at the time of writing.

Why is the Incitec Pivot share price storming higher?

Investors have been buying the company’s shares after responding positively to its full year results release this morning.

For the 12 months ended 30 September, Incitec Pivot reported a 186% increase in net profit after tax excluding individually material items (IMIs) to a record $1,027 million.

The Dyno Nobel Americas business was the star of the show, reporting EBIT of US$533 million, which was up from US$141 million a year earlier. Management advised that this was driven by continued uptake of premium technology underpinning excellent volume growth in Q&C, as well as a strong second half manufacturing performance capturing favourable commodity markets

Dyno Nobel Asia Pacific business delivered EBIT of $162 million, up from $140 million in FY 2021. This reflects customer growth and solid take up of Dyno’s premium technology solutions

Finally, Fertilisers EBIT more than doubled to $614 million. Management notes that this was underpinned by its unrivalled distribution platform and manufacturing footprint, which provided customers security of supply.

Big shareholder returns

In light of this strong form, the company’s board has declared a fully franked final dividend of 17 cents per share. This brings the total dividends to 27 cents per share for FY 2022.

But it gets better. An on-market share buyback of up to $400 million has been approved to be conducted over the next 12 months.

In other news, the aforementioned fertilisers business demerger has been delayed for up to a year following the receipt of “unsolicited approaches in relation to the potential acquisition of its ammonia manufacturing facility located in Waggaman, Louisiana.”

Management is now undertaking a review of the strategic options for Waggaman.

Broker reaction

Goldman Sachs has reacted positively to Incitec Pivot’s full year results. It said:

FY22 Adj NPAT of $1,027m was up 8% vs GSe and up 3% vs Visible Alpha Consensus (A$948m/A$993m). […] The biggest variance was in North America where lower than expected explosives earnings were more than offset but higher WALA and Ag & IC earnings.

IPL announced a $400m on market buyback. While we had anticipated strong cash generation (providing scope for capital management), this announcement was sooner than expected given the proposed demerger.

Goldman currently has a buy rating and $4.40 price target on Incitec Pivot’s shares. Though, that could change once it has adjusted its financial model.

The post ASX 200 chemicals giant Incitec Pivot leaps 8% on record year and share buyback news appeared first on The Motley Fool Australia.

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More reading

• Broker names 2 ASX dividend shares to buy next week
• Morgans names 2 ASX dividend shares to buy with big yields

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price is plummeting on Tuesday despite no word having been released by the company.

Right now, stock in the lithium favourite is down 10.02%, trading at $4.76. That’s a slight improvement on its intraday low.

The Pilbara Minerals share price bottomed out at $4.60 earlier today, marking a 13% tumble and its lowest point in nearly a month.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.34% right now, while the S&P/ASX 200 Materials Index (ASX: XMJ) is proving to be its biggest weight, falling 1.72%.

Let’s take a closer look at what might be going wrong for the ASX lithium share today.

What’s dragging the Pilbara Minerals share price lower?

The Pilbara Minerals share price is among the ASX 200’s worst performers on Tuesday, only outperforming some of its fellow lithium stocks.

Joining it in the red are shares in Core Lithium Ltd (ASX: CXO) and Allkem Ltd (ASX: AKE). They’re down 13.94% and 12.33% respectively right now.

Some of their tumble might be chalked up to an international lithium sell-off.

Stock in many of the globe’s most recognisable lithium players, such as Albemarle Corporation (NYSE: ALB), Livent Corp (NYSE: LTHM), and Sociedad Quimica y Minera de Chile (NYSE: SQM), slipped between 2.8% and 5.3% overnight.

Though, the trio each reached their highest closing price in more than a month on Friday, potentially helped along by optimistic US inflation data. Thus, their falls may have represented profit-taking.

Additionally, Wall Street struggled overnight, with the Dow Jones Industrial Average Index (DJX: .DJI) slipping 0.6% and the S&P 500 Index (SP: .INX) falling 0.9%.

Interestingly, there has been a non-price-sensitive release from Pilbara Minerals. The company revealed AustralianSuper has ditched its previously-held 5% stake in its stock after the market closed last night.

Additionally, lithium shares might be front of mind amid Allkem’s annual general meeting, held this morning, as my colleague James reports.

Fortunately, the Pilbara Minerals share price still has a long way to go before it will reach the long-term red. The stock has soared 34% year to date and more than 90% over the last 12 months.

The post Why is the Pilbara Minerals share price tumbling 10% on Tuesday? 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. 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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It has been a tough 12 months for tech stocks, with the S&P/ASX All Technology Index (ASX: XTX) losing 35% as sharply higher interest rates take their toll on the sector.

Notable losers have been the Megaport Ltd (ASX: MP1) share price losing 71% over the past 12 months, and the Xero Limited (ASX: XRO) share price down 53%.

Although still sporting a negative return since this time last year, the RPM Global Holdings Ltd (ASX: RUL) share price has only fallen 12%.

RPM Global provides advisory consulting, technology and professional development solutions to the mining industry. Think of it as a “picks and shovel” play, a company seeking to benefit from the mining sector no matter which company or which mineral is “winning.”

RPM Global shares had a strong October, its share price rising 25%. Late in the month, at its AGM, the company’s stand-in Chairman confirmed it has started the 2023 financial year strongly, reconfirming its guidance for the full year of revenue of $101 million and EBITDA of $14.2 million.

The RPM Global share price trades at $1.88, giving the company a market capitalisation of $432 million. 

Writing in its October monthly update, the Ellerston Australian Micro Cap Fund noted RPM Global’s guidance was a significant increase on the prior year.

The fund believes RPM Global is well placed to benefit from the continued digitisation of mine sites and the increased penetration of its software across its key customers globally. It names global resource leaders such as Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) amongst its diversified client base.

The Ellerston Australian Micro Cap Fund concluded…

“The group continues to be a stand-out in the technology sector, with a combination of strong top-line growth and operating leverage, as well as the announced buy-back underway.”

Whilst not cheap, trading at over four times sales and over 30 times EBITDA, as a software business, RPM Global has strong recurring revenue and expanding profit margins. 

In helping mining companies manage a mine site in the most optimal way over its expected useful life, the company offers a mission critical service. This should make it near impossible for its customers to give up, providing highly sticky recurring revenues for years to come. 

The post Fund manager names this ASX All Ordinaries stock as ‘a stand-out’ in the technology sector appeared first on The Motley Fool Australia.

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Motley Fool contributor Bruce Jackson has positions in RPMGlobal Holdings and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO, RPMGlobal Holdings, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended MEGAPORT FPO and RPMGlobal Holdings. 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.

After months of hinting at job cuts, Amazon (NASDAQ: AMZN) just dropped the ax.

The tech giant is planning to lay off roughly 10,000 people in its white-collar workforce, or around 3% of the total, according to The New York Times. The layoffs will target Amazon’s devices business, which includes Alexa, as well as retail and human resources. The stock was down modestly on Monday, which was a notable contrast to fellow FAANG stock Meta Platforms, which jumped last week when its layoffs were revealed.

This will be the first round of major job cuts in Amazon’s history. They’re the upshot of both a slowdown in the broader economy and an overexpansion during the pandemic that led the company to hire and open new warehouses too aggressively. As the pandemic tailwinds have faded, Amazon has been forced to reassess its cost strucuture, especially as it forecast just 2%-8% revenue growth in the holiday quarter and after it lost more than $8 billion in its e-commerce divisions through the first three quarters of this year.

A changing of the guard

The news of the layoffs, which Amazon hasn’t officially confirmed, and its guidance calling for its slowest revenue growth in 20 years show the company is entering a new, more mature, stage of life, especially as its revenue is set to top $500 billion this year. 

Founder Jeff Bezos, who yielded the top job to CEO Andy Jassy last July, has made “Day One” central to the culture at Amazon. Day One means that employees are to treat the company like a start-up, experimenting, being bold, and, above all, avoiding stasis.  

But a 27-year-old company that dominates industries from e-commerce to cloud computing to books isn’t a start-up, and it has problems that a start-up doesn’t have, like billions of dollars in waste. Not all of Amazon’s experiments are going to pay off, and even a company that has famously embraced failure must eventually cut its losses.

Jassy may be quicker to pull the trigger on cost cuts than Bezos was, and it’s notable that Alexa is included on the hit list. The voice-activated technology was a pet project of Bezos’s, and at one point, he believed that Alexa could become Amazon’s “fourth pillar,” after its retail marketplace, Prime, and Amazon Web Services. However, it’s been eight years since Amazon launched Alexa, and the voice-activated tech has largely been a disappointment. Amazon has struggled to monetize Alexa beyond selling Echo devices at or near cost, and predictions that voice-activated tech would replace conventional internet search or even online shopping have fallen flat. According to The Times, Amazon lost $5 billion on Echo and Alexa in 2018.

What the layoffs mean for Amazon stock

Amazon hasn’t made an official announcement on the layoffs so the details aren’t yet clear. The move is likely to result in cost savings of at least $1 billion. However, cutting expenses by $1 billion or even $2 billion is unlikely to move the needle for the stock. Investors’ lack of reaction to the news shows that Amazon will need to do more to restore profitability and drive a rebound in the stock.

Through the first three quarters of 2021, the company made an $8.1 billion profit in e-commerce. In other words, year-over-year, it lost $16.2 billion in profits in e-commerce, which has crushed its bottom line. That also shows there’s significant opportunity for improvement. 

That business should eventually recover as macroeconomic headwinds fade and it grows into fixed costs like its warehouses, but it’s clear that the company has a lot of fat to trim, and layoffs are just one step in that process. Its international business regularly loses billions of dollars a year, and Amazon may be considering whether to pull out of countries where it isn’t profitable and might never be.

Investors can live with slower growth on the top line if it means restoring profitability to 2021 levels, and Amazon should be able to get back there, though it will take at least a few quarters. In the meantime, expect Jassy and the leadership team to fine-tune the business so that it’s investing in profitable opportunities rather than burning cash on frivolous experiments.

With the focus on cost-cutting, investors should expect a more profitable Amazon in the future, and that’s a good reason to bet on a rebound in the stock.

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

The post Amazon is set for major layoffs. Here’s what it means for the stock appeared first on The Motley Fool Australia.

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Jeremy Bowman has positions in Amazon and Meta Platforms, Inc. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Meta Platforms, Inc., and The New York Times. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: short January 2023 $34 calls on The New York Times. The Motley Fool Australia has recommended Amazon and Meta Platforms, Inc. 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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