In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.5% to 7,449.9 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price has continued its slide and is down a further 3% to $4.62. Investors have been selling the embattled infant formula company’s shares in recent sessions after it copped two broker downgrades. Analysts are concerned over lockdowns in China and weakening reseller prices on Chinese ecommerce platforms. The A2 Milk share price hit a multi-year low at one stage today.

G8 Education Ltd (ASX: GEM)

The G8 Education share price is down 2% to $1.06. This morning the childcare centre operator provided a trading update. It advised that the high volume of omicron cases in all markets materially impacted revenue, occupancy performance, and employment costs in January and February and continued to flow into the early weeks of March.

Nearmap Ltd (ASX: NEA)

The Nearmap share price is down 3.5% to $1.34. This appears to have been driven by weakness in the tech sector and a broker note out of Macquarie. In respect to the latter, its analysts have downgraded the aerial imagery technology company’s shares to a neutral rating with a $1.40 price target. The broker believes Nearmap may be too late to the party to win the North American claims insurance market.

Zip Co Ltd (ASX: Z1P)

The Zip share price has continued to slide and is down almost 6% to a new two-year low of $1.32. This follows weakness in the tech sector and the release of Afterpay’s financials prior to its acquisition. The latter revealed that the Afterpay business recorded a loss of $345.5 million for the six months ended 31 December.

The post Why A2 Milk, G8 Education, Nearmap, and Zip shares are dropping appeared first on The Motley Fool Australia.

More reading

• Zip shares hit new multi-year low. What’s going on?
• The Zip share price is a buy with 180% upside: broker
• These were the worst 3 ASX All Ordinaries shares to hold during the March quarter
• Why A2 Milk, Ionic Rare Earths, Pilbara Minerals, and Tyro shares are dropping
• These are the 10 most shorted ASX shares

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. owns and has recommended Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Nearmap Ltd. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Financial year 2022 has been rough for Telstra Corporation Ltd (ASX: TLS) so far – its share price slipped 4% on the back of its first half results – but the company’s future CEO is “really excited” for the coming years.

Telstra’s longstanding CEO, Andy Penn, announced his retirement last month. The company’s current chief financial officer, Vicki Brady, is to take over the top job.

Today, Brady spoke at ASX CEO Connect. There, she detailed her outlook for the company’s growth over the coming years.

Let’s take a look at what she’s expecting for the telco over the coming years.

At the time of writing, the Telstra share price is $4.01, 0.5% lower than its previous close.

Though, that’s a better performance than that of the broader market on Tuesday. Right now, the S&P/ASX 200 Index (ASX: XJO) is down 0.66% and the All Ordinaries Index (ASX: XAO) has fallen 0.7%.

Own Telstra shares? Here are the company’s ambitions

Owners of Telstra shares, hold on to your hats. The next few years are set to be big for the ASX 200 telco.

“I do think this next decade, there’s just profound opportunities for Telstra … [and] T25 – top of my list in terms of agenda,” said Brady.

She’s set to take the reins in September, just months after the company jumps into the growth-focused strategy.

For now, Telstra is focusing on “finishing the job on T22”, said Brady. And it looks set to achieve 80% of the strategy’s scorecard metrics.

Over the last 3 years, the company has “radically simplified” its business.

It has ditched numerous fees, signed 4 million customers to its loyalty program, and monetised $2 billion of assets to strengthen its balance sheet.

And, after a challenging period, the future is looking bright.

For the first half of this financial year, the telco reported a 14.8% drop in its earnings before interest, tax, depreciation, and amortisation (EBITDA), coming to $3.5 billion, and a 4.4% fall in revenue, which reached $10.5 billion.

However, its underlying earnings demonstrate “clear financial momentum”, said the CFO. She continued:

In the half, we saw our underlying business continue to grow. We saw the benefits of our T22 strategy flowing through for our customers for customers and our shareholders. And we announced the transition to T25 – our new strategy for growth.

We achieved these results because we stayed disciplined and focused on achieving what we said we would. Our T22 Strategy has been a clear success.

We are now a vastly different company, and we are determined to finish the job …

We have confidence this momentum will continue, driven by product growth, delivery of productivity and diversifying our growth, including in infrastructure, health, energy, and through the Digicel acquisition.

Such growth would undoubtedly be good for the Telstra share price.

The company has ambitions (but hasn’t solidified them into guidance) to report between $7.5 billion and $8 billion of EBITDA for financial year 2023.

It’s also aiming to report a compound annual growth rate (CAGR) in the mid-single digits for underlying EBITDA and a CAGR in the high-teens for its earnings per share (EPS).

That will hopefully see it boosting its fully franked dividends over the coming year.

The post ‘Our hard work is paying off’: Here’s why the future Telstra CEO is excited about the ASX share’s ambitions appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX 200 dividend shares to buy now
• Is the Telstra share price a buy for dividends and growth?
• Here’s how the Telstra share price performed last quarter
• Could April be a good month for the Telstra share price?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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As an ASX dividend share, APA Group (ASX: APA) has some fine credentials under its belt. Firstly, this gas pipeline operator was one of the relatively few dividend shares not to give its investors a pay cut during the pandemic. Yes, APA increased its 2020 dividend from 2019 levels, and then increased it again in 2021. Many ASX blue-chip shares, including all of the big four banks, can’t say the same.

Indeed, the company’s latest dividend, its interim payment doled out last month, came in at 25 cents per share. That was another increase on the previous interim dividend of 24 cents per share.

But not just that, APA has now built up a 10-year streak of consecutive annual dividend increases. That’s actually a rather rare feat on the ASX. Only a handful of other ASX shares, such as Washington H. Soul Pattinson and Co Ltd (ASX: SOL), can beat it.

So with APA’s dividend credentials established, many investors might wonder if they can take advantage of this history and participate in a dividend reinvestment plan (DRIP) with their APA shares.

A DRIP is an offering made by some companies to their investors. It allows said investors to receive additional shares in the company instead of receiving their dividends in cash. The company buys additional shares on the behalf of the investor at an amount equal to what they would have received in cash. This is usually done with no brokerage costs and allows investors to roll dividends back into new shares to potentially enhance the effects of compounding.

Does the APA dividend offer a reinvestment plan?

Many ASX shares, especially blue-chip shares, offer DRIPs to their investors. Some even offer a discount to those investors who want to use the DRIP.

So let’s take a look and see if APA is one of those companies.

Unfortunately for DRIP fans, APA does not currently operate a dividend reinvestment plan for its investors. The company has done so in the past but ceased its DRIP in mid-2013.

This means that APA investors today have no option other than receiving their dividends in cash. Perhaps APA will resume its DRIP sometime in the future. But for now, it’s cash that is king when it comes to APA’s dividends.

At the latest APA share price, this ASX 200 blue chip has a dividend yield of 4.12%.

The post Does APA Group have a dividend reinvestment plan? appeared first on The Motley Fool Australia.

More reading

• Here’s what happened to the APA share price in March
• 2 defensive ASX dividend shares offering reliable income
• Why did the APA (ASX:APA) share price just ink a new 52-week high?
• The APA (ASX:APA) share price is up $1 in 7 years. Have the dividends been worth it?
• Are analyst upgrades on the way for APA (ASX:APA) shares?

Motley Fool contributor Sebastian Bowen owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended APA Group 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 Bruce Jackson.

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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is rocketing today, up 21.55% in early afternoon trading.

Paradigm shares closed yesterday at $1.16 and are currently trading for $1.41. However, they climbed as high as $1.60 earlier in the day — a 38% gain on yesterday’s close.

The drug development company is focused on developing and commercialising Pentosan Polysulfate Sodium (PPS) to treat pain associated with a range of musculoskeletal disorders.

Below we look at this morning’s announcement that’s seeing the Paradigm share price surge.

What clinical trial news was announced?

Paradigm’s share price is rocketing after the company reported that the US Food and Drug Administration (FDA) has granted Fast Track Designation for its phase 3 program testing the efficacy of PPS, trademarked Zilosul, to treat osteoarthritis (OA).

OA affects some 16% of the population in the developed world, with more than 72 million people in the US, EU, Canada, and Australia suffering from the affliction.

Paradigm said the FDA’s Fast Track program would help expedite its phase 3 program, providing the company with greater opportunities to interact and collaborate with the FDA.

It added that the Fast Track designation indicates the FDA acknowledges that preliminary data indicates Zilosul has the potential to address the unmet medical needs of people suffering from OA.

Commenting on the FDA’s decision, Paradigm’s interim CEO Donna Skerrett said:

This is welcome news from the US FDA as the company continues to gain momentum in site activation and participant screening across the 56 selected sites in the US. Given the need to improve therapeutic options for patients suffering from pain and loss of functionality associated with OA, we are excited to have this Fast Track Designation granted for Zilosul and the regulatory support it provides in expediting the phase 3 development program to advance this promising treatment to patients sooner.

Paradigm share price snapshot

Despite the big intraday boost today, the Paradigm share price remains down 27% so far this year. That compares to a year-to-date loss of 3% posted by the All Ordinaries Index (ASX: XAO).

The post The Paradigm share price is rocketing 22% today. Here’s why appeared first on The Motley Fool Australia.

More reading

• Why Iress, Krakatoa Resources, Paradigm, and SE Advanced Materials are pushing higher

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

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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 

Cryptocurrencies had a rough start to the week, continuing a decline over the last few weeks. All major cryptocurrencies are down double digits over the last month and today has made the losses even worse. 

As of 2:15 p.m. ET, Polkadot (CRYPTO: DOT) had fallen as much as 12.2% in the last 24 hours, Solana (CRYPTO: SOL) had lost up to 11.7% of its value, and Cardano (CRYPTO: ADA) had dropped 11.6%. 

So what 

The general fear in the market is that inflation data will show another increase in prices when the consumer price index is released tomorrow. Cryptocurrencies were supposed to be a hedge against inflation, but that thesis hasn’t played out as expected over the last six months and as inflation has gone up cryptocurrencies have fallen, just like highly volatile growth stocks. 

Speaking of growth stocks, investors are selling shares of tech and growth stocks today as well, which is often correlated to a move in cryptocurrencies. That’s holding today and it looks like a classic “risk-off” trade as investors worry about the likelihood of increased interest rates on the horizon. 

The other elephant in the room is U.S. taxes being due later this week. Investors who made a lot of money in cryptocurrencies in 2021 may have been hit by a surprise bill, causing a liquidation of cryptocurrency positions in order to pay it. 

Now what 

While there are some small explanations for today’s move in cryptocurrencies it’s important to keep in mind that this is still a volatile space. Investors should be focused on the long term and what’s being built on the blockchain and how that may impact cryptocurrency values, not the daily price movements of crypto. 

This also looks like a broad market move to sell riskier assets in favor of assets that are deemed safer. That’s not unusual in an environment where interest rates are rising, but it can be jarring nonetheless. Just remember that the market has been expecting rising rates in 2022 for months and unless there are big surprises a lot of the rate changes should be priced into the market. 

I actually think days like this are a good buying opportunity for long-term investors. The building the developers and blockchain organizations are doing doesn’t stop when the market is down and there are billions of dollars flowing into these projects right now. 

Long-term, Solana, Polkadot, and Cardano are all built to bring utility to the blockchain, disrupting the way we think about digital assets. That should be a good position to be in, even if the ride is volatile along the way. 

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

The post Why Polkadot, Cardano, and Solana all dropped today appeared first on The Motley Fool Australia.

More reading

• Solana makes another leap
• How these top cryptos stacked up against Bitcoin and Ethereum in March
• Why Solana, Polkadot, and Cardano are down big today
• Why Solana jumped again today
• Why Solana Stock jumped 10% today

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

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

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The Zip Co Ltd (ASX: Z1P) share price hit a fresh multi-year low during early morning trade.

From reaching an all-time high of $14.53 in February 2021, its shares bottomed out to a low of $1.34 today. This represents a decline of more than 90% in a period of around 14 months.

The buy-now pay-later (BNPL) company’s shares have struggled to gain composure since the start of 2021.

At the time of writing, the Zip share price is swapping hands for $1.35, down 3.57%.

What dragging Zip shares down lately?

Investors have continued to sell off Zip shares following negative sentiment across the tech industry.

A selloff in bonds caused the 10-year treasury yield to hit its highest level since 2018. This is being driven by high inflation, a tightening monetary policy and the COVID-19 outbreak in China.

In the past week, the heavily-tech focused Nasdaq has lost about 7.3% in value. When looking since the beginning of the year, the index is down 15%.

This has had an adverse effect on the S&P/ASX All Technology Index (ASX: XTX), down 5.19% in a week, and 20% for 2022.

Inflationary issues have not helped the cause, with the United States experiencing the biggest rise in 40 years.

Australia has been experiencing its own inflation problems, rising 3.5% in the last quarter of 2021 alone. This was being blamed on high levels of building construction activity combined with shortages of materials and labour, as well as record automotive fuel prices.

The Reserve Bank of Australia signalled two rate hikes for 2022 in an effort to slow down the rising price of goods.

What this means is that consumers are less likely to spend on discretionary items when interest rates are picking up. The cost of debt such as credit cards as well as personal loans will require extra payments, affecting consumer spending habits.

Unfortunately for Zip, this is the heart of its business model, in the BNPL sector.

Zip share price summary

Over the past twelve months, the Zip share price has fallen by more than 80%, with year to date down almost 70%.

Based on the current Zip share price, the company has a market capitalisation of approximately $921.68 million.

The post Zip shares hit new multi-year low. What’s going on? appeared first on The Motley Fool Australia.

More reading

• The Zip share price is a buy with 180% upside: broker
• These were the worst 3 ASX All Ordinaries shares to hold during the March quarter
• These are the 10 most shorted ASX shares
• 16 million new Zip shares just hit the ASX. Here’s the deal
• 16 million new Zip shares will hit the ASX on Monday. What does this mean?

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. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Qantas Airways Ltd (ASX: QAN) share price is higher today, now trading up 0.6% to $5.06.

Qantas has shrugged off reports today the consumer advocacy group Choice has lodged a formal complaint with the Australian Competition and Consumer Commission (ACCC) against the airline.

The complaint relates to Qantas’ flight credit policies which have been the topic of heated debate ever since the pandemic started.

‘Unfair terms and deceptive conduct’

Qantas has been pulled into the limelight today amid allegations its flight credits scheme is unfair to consumers and may breach contract terms.

According to an update from the consumer advocacy group:

CHOICE has filed a complaint with the ACCC calling out potentially misleading and deceptive conduct in Qantas’s credit redemption policy.

Aside from the potentially unfair terms, Qantas customers have reported many problems in trying to use their flight credits.

Choice spokesperson Dean Price said that Qantas was “placing unreasonable barriers in the way of travellers trying to redeem their credits or get a refund from cancelled travels”, the ABC reported today.

Price said there were a number of concerns with the system, ranging from price concerns to factors like “unfair expiry dates”.

Choice has conducted a number of surveys over the past few months and found that consumers faced numerous roadblocks when trying to redeem flight credits awarded from COVID-19 cancellations.

“A series of CHOICE surveys over recent months, asking people questions about travel cancellations, have made one thing clear: many have hit obstacles when trying to use the Qantas flight credits they were given in place of refunds,” it found.

“Others haven’t been able to use them at all.”

One recent survey suggested “one in five [20%] customers have been entirely unable to use their credit”, Australian Aviation reports.

Qantas allegedly changed the rules for future bookings for flights cancelled after 30 September 2021.

Choice said that meant an original ticket had to be redeemed on flights of equal or substantially more value than initially booked, even if the same flight now cost less.

For instance, if you have a $500 credit for a Sydney to Melbourne flight and the price is now $475, you wouldn’t be able to use the credit, even if you waived the $25 loss. Instead, you’d have to buy a new ticket and leave your credit untouched.

And customers holding credits for international flights don’t have the option of spreading the credits across several domestic flights if they booked after 30 September 2021.

The ACCC called for public evidence on the matter in March, following reports of “price gouging” raised by media outlets Nine and the ABC.

Qantas share price snapshot

The Qantas share price is down around 5% in the last 12 months of trade, climbing more than 1% higher this year to date.

Australia’s national airline has a market capitalisation of $9.57 billion at its current share price.

The post Qantas share price flies away from ‘unfair and unworkable’ flight credit claims appeared first on The Motley Fool Australia.

More reading

• What went so wrong for ASX travel shares today?
• Why did the Qantas share price have such a tough time of it today?
• ASX travel shares have been flying higher over the past month. Here’s why
• What happened to the Qantas share price today?
• What is the current dividend yield for Qantas shares?

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

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.5% to 7,449.9 points.

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

Iress Ltd (ASX: IRE)

The Iress share price is up 2% to $11.82. This morning the financial technology company announced that it has decided against divesting its UK Mortgages business. Management believes the recent weakness in tech valuations means it will create more value retaining the business. Iress also reaffirmed its underlying net profit after tax growth guidance of 25% to 37% in FY 2022.

Krakatoa Resources Ltd (ASX: KTA)

The Krakatoa Resources share price has rocketed 117% to 12.8 cents. This morning the rare earths explorer reported that it has discovered “widespread clay hosted ionic type REE in the regolith” at its Mt Clere project in Western Australia.

Paradigm Biopharmaceuticals Ltd (ASX: PAR)

The Paradigm share price is up 20% to $1.39. This afternoon the biopharmaceutical company revealed that the U.S. Food and Drug Administration (FDA) has granted Fast Track Designation for Paradigm’s phase 3 program investigating Pentosan Polysulfate Sodium (PPS) for the treatment of osteoarthritis (OA). The release highlights that the Fast Track Designation from the FDA acknowledges that OA can be a serious disease with an unmet medical need and that preliminary data demonstrate that PPS has the potential to address this unmet need.

5E Advanced Materials Inc (ASX: 5EA)

The 5E Advanced Materials share price is up 12% to $3.10. This morning the boron-focused advanced materials company entered into a research collaboration agreement with Georgetown University. The agreement will see the two parties aim to advance boron based materials research in permanent magnets.

The post Why Iress, Krakatoa Resources, Paradigm, and SE Advanced Materials are pushing higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Pendal rejects takeover offer, Mineral Resources rises on broker upgrade
• Krakatoa Resources share price explodes 95% on major discovery
• Why is the Iress share price pushing higher 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 Bruce Jackson.

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Most ASX-listed energy shares are having a rough trot today after oil prices slumped overnight. However, 88 Energy Ltd (ASX: 88E) is one energy company that is firmly in the green.

The oil and gas exploration company is currently fetching 1.6 cents per share, up 6.67% from its previous close.

The notable move upward follows a production update from 88 Energy regarding Project Longhorn.

From ASX exploration energy share to producer

After a relatively disastrous start to the year, 88 Energy shares are experiencing a bounceback on Tuesday. The latest production update appears to have given investors something to get excited about once again.

In its update, the company has provided the first glimpse into the acquisition of Texas oil and gas assets in the Permian Basin — Project Longhorn. Notably, the deal struck in February for US$9.7 million has officially turned 88 Energy into a producer.

Specifically, Longhorn has surpassed 400 barrels of oil equivalent (BOE) per day gross at the end of March. Moreover, this milestone production metric represents more than a 30% increase in production since the small-cap ASX energy share took over the oil and gas assets.

Highlighting the impact of this, the company stated:

The production increase provides additional direct exposure to the higher WTI oil price environment and accelerates payback on both the acquisition of the assets and the capital investment in the work-overs.

Project Longhorn has exceptionally low operating costs (lifting costs), which provides high margins from production.

Lastly, investors are likely salivating at the proposition of 88 Energy deriving revenue from operations. Today, the company stated it received its first payout from Project Longhorn, which came to $0.6 million. This was net of operational and capital expenditure, as well as splitting with co-owner Lonestar I LLC.

How has 88 Energy performed lately?

Prior to March, shares in this ASX-listed energy company were performing remarkably well. In fact, 88 Energy had returned around 400% in a one-year timeframe. However, news of an oil no-show in its target zone of the Merlin-2 well sent shares spiralling downwards on 30 March.

Now, ASX-listed 88 Energy is down 36% compared to this time a year ago.

The post ‘Highly encouraged’: Why this ASX energy share is soaring 7% today appeared first on The Motley Fool Australia.

More reading

• Here’s why the 88 Energy share price is rocketing 14% today
• Guess which 2 ASX shares were the best and worst All Ordinaries performers in March
• Why 88 Energy, Gold Road, Sigma, and Star shares are dropping
• This ASX energy share just plunged 52%. Here’s why

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

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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

Even within the giant US stock market, it’s not every day that a company announces an 11-figure bond issue. Monday was an exception, with Amazon (NASDAQ: AMZN) floating $12.75 billion of debt. For a company of Amazon’s size, that’s quite a bit of scratch and investors responded to the news by trading its stock down by more than 2% on the day.

So what

Amazon’s unsecured senior debt was issued in seven parts, all of which have different coupons and maturities. These range from 2.73% notes maturing in 2024 to 4.1% notes coming due in 2062. At least the interest payments are consistent throughout the series. For each, those disbursements will be effected on 13 April and 13 October of every year starting this October.

In its prospectus on the notes, the retail sector giant wrote that it aims to use the proceeds

for general corporate purposes, which may include, but are not limited to, repayment of debt, acquisitions, investments, working capital, investments in our subsidiaries, capital expenditures, and repurchases of outstanding shares of our common stock.

Any, and even all, of those uses are necessary for Amazon’s functioning. At the end of 2021, the sprawling company had over $116 billion of outstanding debt to service. And in mid-March, it closed an $8.5 billion deal for what’s effectively a big film and TV content warehouse, MGM.

Now what

At the same time, though, Amazon’s encouraging recent fundamentals give the company balance-sheet strength. Its pile of cash and short-term investments rose to over $96 billion at the end of last year, a massive amount that was 11% higher year over year.

Yes, $12.75 billion is a considerable figure and yes, interest rates aren’t as low as they used to be. But considerable figures are the rule and not the exception for Amazon, and the company has more than enough financial muscle and growth potential to handle them. The stock’s bulls shouldn’t fret about this move.

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

The post Why Amazon stock slipped on Monday appeared first on The Motley Fool Australia.

More reading

• Why Amazon stock slumped today
• 3 charts that show why Amazon is an unstoppable growth stock
• Could Amazon help you become a millionaire by 2032?
• Why Amazon stock rocketed off course today
• Will Amazon start paying a dividend?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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