The Whitehaven Coal Ltd (ASX: WHC) share price is rallying yet again to another all-time high today.

At the time of writing, shares in the coal producer are up 5.19% to a record high of $8.92.

This means the share has risen 35% in the past month, defying the market sell-off that occurred on Wednesday.

What’s causing Whitehaven Coal shares to steam ahead?

Investors are bidding up the Whitehaven share price as the price of coal continues to accelerate.

According to Trading Economics, Newcastle coal futures are fetching US$444 a tonne, up 1.1% from their previous close.

This is being exacerbated by the war in Ukraine as Europe and other countries race to get their hands on reliable sources of energy.

Several nations have been restarting operations at their respective coal plants ahead of the European winter.

In addition, India has boosted imports as coal inventories are at the lowest pre-summer levels since 2013.

To make matters worse, electricity demand is rising at the fastest pace in almost four decades in India.

Similarly, other ASX coal shares are also on the move today.

The New Hope Corporation Limited (ASX: NHC) share price is up 5.65% to $5.80, while TerraCom Ltd (ASX: TER) is travelling 6.86% higher to $1.09.

Coal prices are expected to remain elevated for the foreseeable future on the back of persistent supply disruptions.

A recent IEA report anticipates that global coal demand will return to its all-time high this year. This is being driven by higher natural gas prices, which have intensified gas-to-coal switching in many countries.

Whitehaven share price snapshot

As coal prices surge to near record highs, the Whitehaven share price has leapt by more than 240% in 2022.

In comparison, the S&P/ASX 200 Energy Index (ASX: XEJ) sector has lifted by almost 40% over the same timeframe.

According to ANZ Share Investing, Macquarie raised its 12-month price target by 9% to $10 per share. Based on where Whitehaven Coal shares trade today, this implies an upside of around 12%.

Whitehaven commands a market capitalisation of approximately $8.11 billion.

The post Whitehaven share price rallies to new all-time high on Thursday appeared first on The Motley Fool Australia.

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More reading

• Why Clover, Select Harvests, Whitehaven Coal, and Woodside shares are storming higher
• How this fundie is beating the ASX 300 without fossil fuels
• Here are the top 10 ASX 200 shares today
• Why did Macquarie just upgrade its target for Whitehaven shares by 9%?
• Why Grange, Link, Ramsay, and Whitehaven Coal shares are dropping

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

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Canva is one of the largest businesses in Australia that isn’t listed on a stock exchange.

It’s a technology business that describes its main service as an online design and publishing tool. It boasts that it is used in 190 countries and that more than 10 billion designs have been created using Canva.

However, it has big plans to become much more than it is today as a graphic design business.

The business announced at its first Canva Create global event that it’s launching the Visual Worksuite, which involves a range of software offerings for clients to use.

In a bid to shake things up in the technology word, it announced a couple of major additions, on top of its graphics design software and video editing.

Canva Docs

The document space was dominated by Microsoft for decades, then Alphabet became a major competitor, but it has largely just been those two.

Canva announced that it’s launching an offering that will enable documents to be “beautiful as well as functional”.

Launching later this year, Canva Docs will “seamlessly combine rich text, engaging media, and powerful data visualizations in any document you create.” It will be able to connect with all of the other Canva products already in existence.

A key selling point will be that people will be able to “embed graphs, videos, and other rich visual elements into your work.”

Collaboration is also an important focus with features like being able to work together in real-time on documents, leave comments, assign tasks, create to-do lists and so on. Documents will be able to be shared online as a Canva link or with a branded URL.

Canva Websites

The Aussie tech business is launching its offering for people to be able to build “beautiful, responsive, and interactive websites for any device…with just a few clicks, anyone can use Canva to easily build a personalized website with its own custom domain.”

There have been 2 million websites already created using Canva.

It’ll come with lots of templates, with things like food menus and school assignments as options.

How much will this mean to Canva?

Canva has previously had a reported value of $40 billion, based on institutional investors buying a small stake at that price level.

However, its value has sunk as the valuation of tech companies on share markets dropped amid fast inflation and rising interest rates.

According to reporting by the Australian Financial Review, Cliff Obrecht, co-founder and chief operating officer of Canva, said:

We very much think we will exceed our previous valuation in the not-too-distant future.

This is the next step in getting inside big businesses, of all different types, through useful tools that tap into this global movement towards visual communication.

We’ve already got deep penetration into every café that wants to create a menu. But the ways that larger businesses are working has changed, and visual communication between teams has become a critical part of organisations.

Instead of using twenty different tools to do all your work, the idea now is to have everything in one place.

Foolish takeaway

While Canva is not an ASX share (yet), it’s interesting to see how it’s progressing. Canva could be a challenge to some of the biggest technology businesses in the world.

The post Could Canva spoil the party of these giant tech stocks? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), and Microsoft. The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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 S&P/ASX 200 Index (ASX: XJO) is bouncing back from yesterday’s selloff. In afternoon trade, the benchmark index is up 0.3% to 6,848.2 points.

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

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is down a further 10% to 95 cents. This follows news that the lithium developer is disputing the terms of a contract that would see its partner Lilac Solutions earn 25% of the Kachi Lithium Project. Given that Lake is heavily reliant on Lilac’s potential DLE technology to make its project economical, investors appear concerned what this could mean for their partnership and the project.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price is down over 8% to 98.5 cents. Investors have been selling this donation platform provider’s shares amid concerns that its takeover could be on the brink of collapsing. Pushpay has responded to the speculation but neither denied nor confirmed that the takeover is on the rocks.

South32 Ltd (ASX: S32)

The South32 share price is down 7% to $4.01. This has been driven by the mining giant’s shares trading ex-dividend this morning for its latest dividend. Eligible shareholders can look forward to receiving its fully franked final dividend of 14 US cents per share and a fully franked special dividend of 3 US cents per share next month on 13 October.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price is down 4% to $1.28. Investors have been selling this payments company’s shares despite it naming a new CEO. Jon Davey will take the top job from the outgoing Robbie Cooke on 3 October. He is currently the CEO of Tyro’s Health business, having joined Tyro in May 2021 following Tyro’s acquisition of health fintech Medipass.

The post Why Lake, Pushpay, South32, and Tyro shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Why a leading fund manager rates these 2 ASX 200 mining shares as buys
• Lake Resources share price continues to dive, down 24% in a week
• Tyro share price slides on CEO news
• Why is the South32 share price sinking 7%?
• 5 things to watch on the ASX 200 on Thursday

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 PUSHPAY FPO NZX and Tyro Payments. The Motley Fool Australia has positions in and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://www.fool.com.au/2022/09/15/why-lake-pushpay-south32-and-tyro-shares-are-dropping/

After the carnage on the share markets that we saw yesterday, no doubt most ASX investors would be relieved to see that the S&P/ASX 200 Index (ASX: XJO) has recovered some ground today.

It was initially a bumpy start for ASX shares this morning. But the ASX 200 seemed to get a boost around midday, hitting an intraday high of 6,878.1 points. That happened to coincide with the release of some rather important economic data.

Today, the Australian Bureau of Statistics (ABS) released the latest employment data for the Australian economy. And it makes for some interesting reading.

According to the ABS, the national unemployment rate actually rose in August 2022, ticking up 0.1% to an unemployment rate of 3.5%.

Of course, last month’s 3.4% figure was a very special one. It showed Australian unemployment at the lowest levels in 50 years.

You might think that ‘lower unemployment is good’ and ‘higher unemployment is bad’. Certainly that is true from a social policy standpoint. So why are ASX shares seemingly responding positively to news that unemployment has risen today?

Well, it comes back to inflation interest rates. Employment figures are one of the most important economic metrics we have. It is also a potent barometer of how the overall economy is tracking. When economic growth slows, unemployment tends to pick up, and vice versa.

What does unemployment have to do with the share market?

As we all know, the Reserve Bank of Australia (RBA) has been undertaking an aggressive shift in monetary policy in 2022. The RBA has now hiked interest rates five months in a row, most of which were ‘double’ rate hikes of 50 basis points. That included the last hike, which was implemented earlier this month.

The RBA has been raising interest rates to deal with the high levels of inflation that have emerged over 2022. Inflation tends to be caused by economies running hot (although supply chain bottlenecks are also contributing to 2022’s inflation). Perhaps, unfortunately, the best way to curb inflation is by slowing the economy down.

The RBA is doing this right now by hiking rates. Higher mortgage rates pull money out of the economy.  Homeowners have less cash to spend on goods and services. And savers are incentivised to store cash in the bank instead of spending it.

This is the key to understanding why the ASX seems to have risen on this employment data.

Rising unemployment might be showing that the RBA’s rate hikes are working as intended. Thus, investors might be betting that the RBA perhaps won’t need to hike rates as much, or for as long, as the markets might have been expecting. And higher interest rates are generally bad news for shares. Along with other assets like property.

So this could explain why the ASX seemed to get a boost from this unemployment data that was released today.

The post ASX 200 hits intraday high following latest unemployment data. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Why Lake, Pushpay, South32, and Tyro shares are dropping
• Neometals share price drops 8% amid China slowdown fears
• Why has the Leo Lithium share price leapt 48% in a month?
• Link share price dips despite Foreign Investment takeover nod
• Why Clover, Select Harvests, Whitehaven Coal, and Woodside shares are storming higher

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 Neometals Ltd (ASX: NMT) share price is plunging today despite a rebound in the broader market.

Shares of the minerals developer currently trade 8.25% lower at $1.335 apiece.

To put this into context, the S&P/ASX 200 Materials Index (ASX: XMJ) is up 0.03% for the day so far while the benchmark S&P/ASX 200 Index (ASX: XJO) is 0.31% ahead.

At the same time, two of Neometals’ peers have recovered from yesterday’s market rout triggered by US equities having their worst day in two years.

Argosy Minerals Limited (ASX: AGY) is the big winner of the two, up 3.77% at the time of writing while St Barbara Ltd (ASX: SBM) is also up a more modest 0.56%.

There are no announcements to report on for Neometals this afternoon. But it seems there may be broader factors at play. Let’s investigate.

What’s going on with the Neometals share price?

There have been numerous media reports of China’s expected economic slowdown which, in turn, could pressure the demand for titanium and vanadium, two of Neometal’s key operating segments.

This afternoon, The Straits Time reported that China could enter into a renewed economic slowdown. It said several factors could play a part, including its real estate crisis, continuing COVID-19 policies, and falling international and domestic demand for its goods.

The sentiment may be dampening enthusiasm for Neometals shares today.

However, prior to today’s slump, Neometals has updated the market with a seemingly uninterrupted stream of good news.

On Tuesday, the company announced cost estimates for the first phase of its integrated battery recycling plant, planned to be built in Germany. It will be Europe’s first integrated discharging and disassembly operation, with capacity to process larger units from electric vehicles.

And in July, the company announced its vanadium recovery project could see it produce the element at highly competitive prices.

Neometals is working to secure a 50% stake in a venture aiming to recover vanadium from the steel-making by-product, slag.

So while Neometals has made significant progress of late, it shows no company is immune to changes in its macro backdrop.

Neometals share price snapshot

The Neometals share price is down almost 19% year to date but up 53% in the past 12 months.

By comparison, the ASX 200 is down almost 10% in 2022 so far and nearly 8% lower over the past year.

The company’s current market capitalisation is $737 million.

The post Neometals share price drops 8% amid China slowdown fears appeared first on The Motley Fool Australia.

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More reading

• Why is the Neometals share price in the spotlight on Tuesday?
• These 6 ASX mining shares are now in the ASX 300

Motley Fool contributor Matthew Farley 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 Leo Lithium Ltd (ASX: LLL) share price is charging higher again today, up 9.9%.

Shares in the ASX lithium explorer closed yesterday trading for 73 cents and are currently trading for 80 cents apiece.

That puts the Leo Lithium share price up a whopping 48% over the past month. And it’s worth noting that the All Ordinaries Index (ASX: XAO) went the other way, losing 3% over the month.

What’s piquing ASX investor interest?

Leo Lithium is a newcomer to the ASX. The company listed on 23 June this year following a demerger with Firefinch Ltd (ASX: FFX), splitting Firefinch’s gold and lithium assets. Shares initially went backwards following the listing, reaching closing lows of 37 cents on 13 July.

Then Leo Lithium began to march higher, and higher. And barring some heavy selling in the final hours of trading today, the explorer should close the day at new all-time highs.

Investors bid up the Leo Lithium share price again on 20 July, after the company announced it had secured an expandable US$40 million debt facility with Ganfeng Lithium Co, its Joint Venture partner in the Goulamina Project.

Located in Mali, Goulamina is reported to be amongst the largest spodumene projects on Earth. The JV partners estimate the mine will eventually produce more than 830,000 tonnes of spodumene concentrate per year. Development is currently underway, with the first lithium production expected in 2024.

With little price-sensitive news released over the past month, the Leo Lithium share price looks to be a beneficiary of continuing near-record high lithium prices.

And as the world continues to transition away from fossil fuels, the longer-term demand for lithium is widely forecast to remain strong, supporting prices well beyond 2024, when Leo Lithium expects Goulamina to be producing its first product.

Leo Lithium share price snapshot

Since its debut on the ASX on 23 June, Leo Lithium has gained 53%. By comparison, the All Ordinaries is up 6% over that same period.

The post Why has the Leo Lithium share price leapt 48% in a month? appeared first on The Motley Fool Australia.

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• Back baby! 5 ASX lithium shares smashing all-time highs today
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• Why Leo Lithium, Myer, Neuren, and Peter Warren shares are rising today
• 3 ASX 300 shares hitting new highs on Friday
• 4 ASX lithium shares hitting all-time highs on Thursday

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 Link Administration Holdings Ltd (ASX: LNK) share price is struggling to find its feet today. 

At the time of writing, Link shares are down 1.42% to $3.48 apiece, despite the company becoming one step closer to being gobbled up by Dye & Durham (TSX: DND).

As a refresher, at the end of last year, Dye & Durham launched a $2.9 billion takeover bid for Link, offering shareholders base consideration of $5.50 per share.

Since then, there’s been plenty of back and forth between regulators and the companies themselves. Ultimately, Link shareholders have accepted a revised offer of $4.81 per share.

Dye & Durham provides mission-critical software for legal, financial, and business professionals. It’s listed on the Canadian stock exchange with a current market capitalisation of just over $1 billion.

Interestingly, Dye & Durham’s market cap is dwarfed by the potential acquisition price for Link. 

As a result, Dye & Durham lined up a $3.5 billion loan from Goldman Sachs, JP Morgan, and Ares Capital. This spooked investors when the details became public in May, sending the Link share price reeling.

Is the Link takeover going ahead?

This morning, Link disclosed that the Foreign Investment Review Board (FIRB) had “no objections” to the proposed takeover. 

This comes after the Australian Competition and Consumer Commission (ACCC) gave the deal the green light last week. 

The ACCC was one of the deal’s biggest hurdles. The competition watchdog raised concerns over Link’s 42.8% stake in PEXA Group Ltd (ASX: PXA), noting:

The proposed acquisition would align PEXA, a near monopoly provider of Electronic Lodgment Network services, with D&D, a significant supplier of software to lawyers and conveyancers, significantly increasing vertical integration in this industry.

To satisfy the ACCC, Dye & Durham will divest its existing Australian business.

However, it had to deal with another spanner in the works earlier this week. In order to gain its seal of approval, the United Kingdom Financial Conduct Authority (FCA) is asking Dye & Durham to put down $519 million towards redress payments relating to the now-collapsed Woodford Equity Income Fund.

The market is yet to receive word about whether or not Dye & Durham will accept this requirement. If it doesn’t, the deal could collapse.

According to reporting in the Australian Financial Review, Link’s CEO Vivek Bhatia has flown to London in an ’emergency dash’ to try to salvage the deal. Bhatia is reportedly in high-level talks with lawyers and the FCA.

In the meantime, Link has pushed back the second court hearing for the proposed transaction to 23 September.  

The wide convergence between the current Link share price and the takeover offer price signals the market’s confidence in the deal going through. 

There’s currently 38% upside on offer if the deal goes ahead at $4.81 per share.

The post Link share price dips despite Foreign Investment takeover nod appeared first on The Motley Fool Australia.

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More reading

• Why Grange, Link, Ramsay, and Whitehaven Coal shares are dropping
• Why is the Link share price crashing 20%?
• Why is the Link share price frozen today?
• Link share price surges 9% on ACCC takeover nod
• Here are the top 10 ASX 200 shares today

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs, Link Administration Holdings Ltd, and PEXA Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has returned to form and is pushing higher. At the time of writing, the benchmark index is up 0.25% to 6,844.9 points.

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

Clover Corporation Limited (ASX: CLV)

The Clover share price is up almost 8% to $1.26. This follows the release of a bullish broker note out of UBS relating to the specialist ingredients company. According to the note, the broker has responded to Clover’s FY 2022 results by upgrading its shares to a buy rating with a $1.35 price target. It sees opportunities for the company to grow in China and through increasing omega-3 demand.

Select Harvests Limited (ASX: SHV)

The Select Harvests share price is up 13% to $5.56. Investors have been buying this almond producer’s shares following the release of a market update. Although that update revealed a softer than expected crop in 2022, it was still up year over year. Furthermore, it expects a price per pound which is better than forecast. Management also spoke about favourable market conditions and its expectation for higher crop volumes in 2023.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up 5% to $8.89. A number of coal miners are charging higher today amid another rise in coal prices overnight. In addition, this morning the team at Morgan Stanley retained its overweight rating and lifted its price target on the company’s shares to a sizeable $11.20.

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price is up almost 4% to $33.58. This follows a decent rise in oil prices overnight amid supply concerns. In addition, the release of a bullish broker note out of Citi has caught the eye of investors. In respect to the latter, this morning the broker upgraded Woodside’s shares to a buy rating with a $36.50 price target.

The post Why Clover, Select Harvests, Whitehaven Coal, and Woodside shares are storming higher appeared first on The Motley Fool Australia.

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More reading

• How this fundie is beating the ASX 300 without fossil fuels
• Up 18% today, why this ASX 300 share is going nuts
• Why is the Woodside share price surging 4% on Thursday?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares 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 positions in and has recommended Clover Corporation Limited. 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 S&P/ASX 200 Materials Index (ASX: XMJ) is climbing 0.056% today, but three ASX mining stocks are soaring far higher.

The Pacific Nickel Mines Ltd (ASX: PNM), Infinity Mining Ltd (ASX: IMI) and Kairos Minerals Ltd (ASX: KAI) share prices are all surging ahead.

So why are these ASX mining stocks having such a great day?

Infinity Mining

Infinity Mining shares are rising 19.51% today. However, in earlier trade, Infinity shares soared nearly 22%. The company discovered high grade rubidium with a significant mineralised zone at South Tambourah in Western Australia. Assay results revealed up to 6,489.4 parts per million of rubidium (0.724% rubidium oxide) at surface. All up, 47 samples showed more than 0.25% rubidium oxide. And 59% of samples had more than 1000 ppm of rubidium.

Commenting on the news, Infinity Mining CEO Joe Groot said:

The Tambourah South Tenement continues to bare out with consistently high-grade results for not only Lithium, but now Rubidium.

The team are totally committed to leaving no stone unturned when it comes to identifying the commercial potential for this Lithium and Rubidium mineralised system.

Pacific Nickel Mines

Pacific Nickel Mines shares are rising 16% today. However, in earlier trade, they exploded nearly 28% before retreating. The company has received a mining lease for the Kolosori Nickel Project in the Solomon Islands. The mining lease has been awarded following the company completing regulatory approvals and entering a Surface Access Rights Agreement with the landowners. Pacific Nickel will now focus on completing a Definitive Feasibility Study for the project. The company also plans to ramp up wharf and haul road construction and establish a construction camp.

Pacific Nickel CEO Geoff Hiller said, “this is a major achievement for the company”. He added:

Pacific Nickel Mines has worked closely with various departments of the Government to obtain a Mining Lease for the Kolosori Nickel Project.

Kairos Minerals

Kairos Minerals shares are soaring 21% today. Kairos is exploring gold and lithium in Western Australia. Late yesterday, Kairos responded to a price query from the ASX. The company confirmed it is complying with listing rules. Kairos highlighted its exploration work at the Mt York Project in the Pilbara, along with the Lucky Sump spodumene prospect. Kairos also noted its gold resource at the Mt York project has recently soared 26%. On 8 September, Kairos advised drilling will start at the Lucky Sump spodumene prospect in the Pilbara, WA. Spodumene pegmatite samples with up to 1.91% lithium oxide have already been discovered during earthmoving activities at the project.

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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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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.

Investors are always searching for the next game-changing company that could generate strong long-term returns. That hasn’t been easy this year because the technology sector is mired in a bear market, and sentiment toward innovative companies is broadly pessimistic, which tends to overshadow their potential.

A looming economic slowdown is the reason for the negativity, as rising inflation is pushing interest rates higher and squeezing consumers’ wallets. But some companies have been less impacted by this — particularly those that sell their products and services to other businesses. 

Snowflake (NYSE: SNOW) is one of them. Its stock is down 53% in 2022 so far, but its revenue continues to soar, which suggests this might be a great opportunity to buy. After all, Snowflake stock is owned by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRKB), and he’s widely regarded as one of the best long-term investors in the world.

Enter the Data Cloud

Snowflake is taking advantage of the digital revolution in the corporate sector. Companies are shifting their operations online at a rapid pace using cloud technology, and they’re generating mountains of data that might seem messy and disorganized at face value, but that actually contains valuable underlying insights when it’s analyzed effectively. 

Large organizations sometimes use multiple providers of cloud services to facilitate their digital transformations, including Amazon.com, Inc.(NASDAQ: AMZN) Web Services, Microsoft Corporation (NASDAQ: MSFT) Azure, and Alphabet Inc. (NASDAQ: GOOGL)‘s Google Cloud. But that often means their data is fragmented because it’s siloed across several platforms. Snowflake has created the Data Cloud, which is designed to unify all of it for maximum visibility. 

The three aforementioned cloud providers are now all tightly integrated with Snowflake because their customers benefit from the platform. In circumstances where they need to share important data with a business partner that operates on a different cloud provider than their own, for example, Snowflake is a game changer. 

Plus, the company has built an innovative data marketplace where Snowflake customers can buy, sell, and exchange data with one another, adding a new dimension to the benefits of being inside its ecosystem.

Snowflake’s growth is soaring

In the second quarter of fiscal 2023 (ended July 31), Snowflake had 6,808 total customers. But the subset of those customers spending at least $1 million with the company more than doubled to 246 compared to the year-ago period. It highlights the rapidly growing need for Snowflake’s platform.

Snowflake’s revenue soared 83% year over year during the quarter, reaching $497 million. The strong result prompted the company to slightly increase its full-year guidance for fiscal 2023, and it now expects to generate a total of $1.915 billion in sales. 

Zooming out, the big picture shows that if it delivers on that estimate, it will have grown its revenue at a compound annual rate of 93% since fiscal 2020. 

Therefore, even in the face of an economic slowdown, Snowflake’s business continues to rapidly expand. This is further supported by the fact it has hired nearly 1,000 additional staff during the current fiscal year, while many other companies in the technology sector have been slashing their head counts.

Snowflake isn’t making money, but it doesn’t matter (yet)

Snowflake is an unprofitable company. In fact, it has lost over $388 million in the first six months of fiscal 2023. But there are three important reasons why this isn’t a problem just yet.

First, Snowflake had a very high gross profit margin of 75% in the second quarter, which affords it plenty of flexibility when it comes to fine-tuning its expenses. Once the company achieves an appropriate level of scale, it can simply trim its operating costs and potentially become profitable on the bottom line. It’s improving already — its net loss was equal to 42% of its revenue during the first six months of fiscal 2023, compared to 78% during the same period last year.

Second, Snowflake has nearly $4 billion in cash, equivalents, and short-term investments on its balance sheet, which means it has a long runway before it hits funding issues. Therefore, it’s a good move to continue spending aggressively as long as the company is growing as quickly as it is right now. 

That introduces the third point. Snowflake most recently had a ridiculously high net revenue retention rate of 171%, which means its existing customers spent 71% more with the company during the second quarter of fiscal 2023 than they did during Q2 of last year. As a result, theoretically speaking, each new customer Snowflake acquires could become 71% more valuable with each passing year, so it’s wise to spend money hand over fist to get them in the door.

It’s little wonder Snowflake has attracted an investment from Buffett’s Berkshire Hathaway. It might not be the type of stock the conglomerate typically buys, but that simply reinforces the quality of Snowflake’s business.

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

The post Amazon, Microsoft, and Alphabet have partnered with this US cloud stock. Is it a buy? appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio 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 Alphabet (A shares), Alphabet (C shares), Amazon, Microsoft, and Snowflake Inc. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Amazon. 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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