A2 Milk Company Ltd (ASX: A2M) shares are not having a fantastic day today. At the time of writing, the A2 Milk share price is down 0.55% to $7.18. That contrasts with the broader S&P/ASX 200 Index (ASX: XJO) which, presently, is essentially flat with a decline of 0.02%.

But zooming out, and the picture looks a little better for A2 Milk. One could arguably even say it looks as though the embattled dairy company may have found a share price bottom after a disastrous few months.

A2 shares bottomed out last week when they hit a new multi-year low of $6.83 a share last Tuesday. That’s the lowest share price that A2 has experienced since October 2017. It also represents a fall of more than 64% from the company’s 52-week (and all-time) high of $20.05 that we saw back in July last year.

That bottom was the culmination (at least until today) of a series of bad news items for the A2 Milk share price. These mostly revolve around the collapse of the Chinese sales channels known as daigou.

Daigou sales are where customers buy products in bulk in order to ship them to China for resale. They were a very popular and lucrative channel for A2 – at least until the coronavirus pandemic came along. Together with the effects of the deterioration of Sino-Australian relations over the past year or so, demand from this side of the Chinese market has all but dried up.

This is a big deal for A2, which reported a 16% slump in revenues in its last earnings report, largely as a result of the daigou issue.

But since last Tuesday when the A2 share price hit this low, the company has rebounded rather enthusiastically. On the current share price, the gains since Tuesday are clocking at 5.1% which is a pretty sturdy recovery. So have we indeed found the bottom for A2?

Are A2 shares a buy today?

Despite the low share prices we are still seeing for A2 Milk, it still doesn’t have too many fans. As my Fool colleague James reported last month, broker Morgans has a ‘hold’ rating on A2, with a price target of $8.24. Citi is less optimistic, with a ‘sell’ rating and a price target of $7.15. So clearly, some brokers don’t have rose-tinted glasses on this one.

More reading

• Why is the Telstra (ASX:TLS) share price rising today?
• Morgans just added these ASX shares to its “best ideas” buy list
• ASX 200 up 0.25%: Westpac result impresses, PointsBet jumps
• Deterra (ASX:DRR) share price outperforms on royalty update
• A2 Milk (ASX:A2M) share price continues to stink in April

Motley Fool contributor Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia owns shares of and 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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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.

Two years ago, NASA put out a call for America’s biggest space companies to build it a “Human Landing System” to return American astronauts to the moon. Last year three teams signed up to do just that, and NASA doled out $967 million in contracts to help Jeff Bezos’ Blue Origin (in cooperation with Lockheed Martin (NYSE: LMT) and Northrop Grumman, Leidos Holdings subsidiary Dynetics, and Elon Musk’s SpaceX design and build prototypes for NASA to choose from.

And this month, NASA finally picked its winner: SpaceX.

The Washington Post reports, NASA decides

In a story that you know must have just burned Jeff Bezos’s biscuits, The Washington Post (which Bezos also owns) reported last week that SpaceX “beat out Jeff Bezos’s Blue Origin and Dynetics” as well. For $2.9 billion, paid in installments so that it “fits within NASA’s current fiscal year budget,” NASA will hire SpaceX to: 

• Build a Starship spacecraft,
• Dock it with an Orion spacecraft (which will be delivered to lunar orbit by a NASA “Space Launch System” rocket),
• Take onboard two astronaut passengers,
• Land them on the moon, and then
• Bring them back up to re-board the Orion for their return to Earth.

As NASA explained, although SpaceX’s Starship is still in development, the rocket’s enormous capacity promises “to greatly improve scientific operations” on the moon. Perhaps even more importantly, though, SpaceX’s bid “was the lowest [bid] by a wide margin.” Both Leidos’s bid and the bid submitted by Blue Origin, Lockheed Martin, and Northrop Grumman were described as “significantly higher” than SpaceX’s price.

The reason: SpaceX was already building Starships on its own dime as part of Elon Musk’s goal of colonizing Mars. Because SpaceX was willing to pay “over half of the development and test activities” costs of building a Starship itself, it was able to charge NASA much less than the other bidders. In fact, SpaceX is probably viewing the moon contract as NASA helping to pay for some of SpaceX’s development costs, rather than vice versa!

What the losers said

Not everyone was thrilled with NASA’s decision. After absorbing the initial shock, on Monday both Dynetics and Blue Origin filed protests with the Government Accountability Office (GAO).

In a statement to SpaceNews.com, Dynetics questioned “several aspects of the acquisition process as well as elements of NASA’s technical evaluation.” NASA had rated Dynetics’ management “very good,” but rated its bid “marginal” for technical quality, citing concerns about the Dynetics lander’s weight. Additionally, it seems that Dynetics’ bid was well in excess of $6 billion — far more than NASA had budgeted for this leg of the Artemis project. 

Blue Origin bid just under $6 billion, still more than twice SpaceX’s bid. Accusing NASA of running “a flawed acquisition” contest, Blue Origin alleged that the space agency “moved the goalposts at the last minute.” Although it did not specify how NASA moved said goalposts, it argued that awarding only one human lander contract “eliminates opportunities for competition, significantly narrows the supply base, and … delays [and] endangers America’s return to the moon.” 

From that language, it appears Blue Origin was hoping NASA would choose two winners, as initially envisioned. And seeing as it submitted a bid higher than SpaceX’s but lower than Dynetics’, Blue Origin would have been the logical winner of any second contract. So that’s what Blue Origin will probably be asking for now — not that GAO take away SpaceX’s win, but that it demand NASA award a second contract to Blue Origin as well.

Alternatively, Blue might try to couch its bid in installment payments, as SpaceX did, so as to similarly fit “within NASA’s current budget,” suggested Blue Origin CEO Bob Smith in a statement to the Post. That wouldn’t change the fact that Blue’s bid comes in at twice SpaceX’s cost, but it might give NASA the financial flexibility to award a second contract.

What comes next

Ordinarily, the twin GAO protests of SpaceX’s NASA contract would draw work on the lander to a screeching halt, and keep it halted until the GAO renders a decision(s) — which it must do within 90 days. In the current case, however, with SpaceX already building Starship prototypes on its own dime, and presumably not needing NASA’s money to continue the spacecraft’s development, it’s likely SpaceX will continue working. 

As for the challengers, however — Dynetics parent Leidos, and Blue Origin partners Lockheed and Northrop — well, investors in those companies will just have to bide their time and hope for the best. GAO will wrap up its consideration of the challenges by the end of July, and once GAO has decided, NASA intends to “begin work immediately on a follow-up competition” to “provide regularly recurring services to the lunar surface that will enable these crewed missions on sustainable basis.” 

Big as “$2.9 billion” sounds, it’s really only the beginning of what these companies hope to earn from NASA’s return to the moon.

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

More reading

• The A2 Milk (ASX:A2M) share price is up 5% in 5 days. Can it go higher?
• Worley (ASX:WOR) share price down on second contract win for the day
• Why the Kogan (ASX:KGN) share price was sold off in April
• Some takeaways from Warren Buffett’s Berkshire Hathaway meeting
• Is it time to sell, hold or buy Webjet (ASX: WEB) shares?

Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Lockheed Martin. 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.

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Worley Ltd (ASX: WOR) shares can’t seem to catch a break today. The global engineering company’s shares are continuing to fall even after the announcement of a second contract win.

During mid-afternoon trade, the Worley share price is treading 1.98% lower to $10.64.

What’s with the Worley share price?

Investors appear unfazed by the company’s market updates today, sending Worley shares in negative territory.

In another statement to the ASX, Worley advised it has been awarded a front-end engineering design (FEED) services and cost estimate contract by Liquid Wind.

Established in 2017, Liquid Wind is a Swedish circular carbon energy company that aims to bring renewable methanol to market. The emerging group is seeking to meet the growing demand for cleaner fuel alternatives and reduce global carbon emissions.

Under the agreement, Worley will provide works on Liquid Wind’s renewable methanol facility in Ornskoldsvik, Northern Sweden.

Once completed, the plant is expected to generate around 50,000 tonnes of renewable methanol each year. The methanol is formed by by reacting carbon dioxide and green hydrogen together.

Worley noted that the cleaner fuel alternative is intended as a potential pathway to cut carbon emissions in marine transportation.

The project will be executed by Worley’s team in Sweden and the United Kingdom. Support will be on offer from its Global Integrated Delivery team in India.

Chris Ashton, CEO of Worley, hailed the contract win, saying:

We are pleased that Liquid Wind has chosen Worley to deliver this important project. We look forward to developing a strong and long-term relationship with Liquid Wind and supporting its renewable fuels goals, while also supporting Worley’s purpose in delivering a more sustainable world.

While Worley shares are down today, they are up 15% when compared against the broader energy sector over the 12 months.

More reading

• Worley (ASX:WOR) share price slides despite new contract
• Worley (ASX:WOR) share price seesaws on latest contract award
• ASX 200 drops, Santos entices CEO, Centuria acquires again
• Worley (ASX:WOR) share price edges lower despite contract award

Motley Fool contributor Aaron Teboneras 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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The Kogan.com Ltd (ASX: KGN) share price was a disappointing performer again in April.

Despite a rebound late on in the month, the ecommerce company’s shares sank almost 8% during the 30 days.

This meant the Kogan share price had lost 42% of its value year to date at the end of the period.

Why did the Kogan share price come under pressure?

Investors were selling Kogan’s shares in April following the release of its third quarter update.

For the three months ended 31 March, the company reported a 47% increase in gross sales to $271.5 million.

This was driven by a 77% increase in active customers over the prior corresponding period to 3,215,000 for Kogan.com and 742,000 for Mighty Ape. This compares to active customers of 3,003,000 and 719,000, respectively, at the end of December.

However, despite the strong top line growth, things weren’t anywhere near as positive for its earnings. Which is the key reason for the underperformance of the Kogan share price.

Kogan revealed that its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) actually declined by 24% over the three months to $7.2 million.

This comprises $5.5 million EBITDA from Kogan.com, which was down 42.7%, and $1.7 million of EBITDA from Mighty Ape. The latter business was not part of Kogan in the prior corresponding period.

Management advised that customer demand fluctuated below the levels seen in the prior nine months. As a result, Kogan was required to store larger than expected levels of inventory, which led to the company incurring high storage expenses and demurrage fees.

Is this a buying opportunity?

One broker that sees the weakness in the Kogan share price as a buying opportunity is Credit Suisse.

Last week the broker retained its outperform rating but trimmed its price target to $17.93.

With the Kogan share price currently fetching $11.31, this price target implies potential upside of 58% over the next 12 months.

Credit Suisse believes the issues it is facing will only be temporary and feels investors should be focusing on its positive long term growth potential.

More reading

• These are the 10 most shorted shares on the ASX
• 2 ASX growth shares to buy in May 2021
• Top brokers name 3 ASX shares to buy next week
• Top ASX shares to buy in May 2021
• Is there still upside to the JB Hi-Fi (ASX:JBH) share price?

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

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Every year, Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) – holds one of the most anticipated events on the investing calendar. The annual meeting of Berkshire Hathaway shareholders is often branded the ‘Woodstock for capitalists’ for its wide following. 

In this meeting, Buffett, along with his sidekick Charlie Munger, give their opinions on the current state of the share market and the economy, as well as answer questions from shareholders. Since Buffett and Munger are regarded as two of the best investors of all time, what these gentlemen have to say is widely followed.

Berkshire’s 2021 meeting occurred over the weekend just gone. And, as always, Buffett gave us some very interesting insights into the current state of the markets. You can watch the full meeting here, but here are some takeaways.

Buffett: Inflation is here

Buffett was surprisingly upfront about the prospects for the dreaded scourge of inflation. He noted that “We’re seeing very substantial inflation… It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted”.

He did note that this inflation was being caused by a “red hot” economic recovery in the United States. But he seemed to warn that it couldn’t go much hotter without increasing said inflationary pressures. “It just won’t stop… People have money in their pocket and they’ll pay the higher prices”.

Arguably, this is something that all investors should note. Especially given the recent comments on the matter by the Reserve Bank of Australia (RBA) and the US Federal Reserve.

Thumbs down for Robinhood

Another notable point that Buffett made was his ongoing distaste for the popular brokering platform Robinhood. He labelled the millennial-focused app as being “a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year and a half”. He went on to say that:

American corporations have turned out to be a wonderful place for people to put their money and save but they also make terrific gambling chips… If you cater to those gambling chips when people have money in their pocket for the first time and you tell them they can make 30 or 40 or 50 trades a day and you’re not charging them any commission but you’re selling their order flow or whatever…I hope we don’t have more of it.

Berkshire’s recent moves

Many investors were disappointed in the lack of activity from Berkshire Hathaway last year. Berkshire and Buffett have long enjoyed a reputation as crisis dealmakers. Buffett stitched together more than a few lucrative deals during the global financial crisis more than a decade ago.

But last year, Berkshire and Buffett seemed caught in the headlights. There were no big deals or large purchases made during the worst throes of the market crash last year. In fact, Berkshire’s most prominent move was to aggressively sell down stakes in airlines during the worst of the crash.

Buffett and Munger defended this action (and inaction). Munger stated that it would have been “crazy” for Berkshire to open its chequebook amid such uncertainty. In regards to the airline businesses, Buffett said that the politics of the government bailouts that the airlines received would likely result in a different outcome if the airlines were backed by Berkshire.

Still not wild on Bitcoin

Buffett and Munger have long been some of the most vocal critics of Bitcoin (CRYPTO: BTC) and other cryptocurrencies. It looks as though the recent rally in the pricing of these assets hasn’t changed any minds over at Berkshire.

“Of course I hate the Bitcoin success”, Munger said at one point. “I don’t welcome a currency that’s so useful to kidnappers and extortionists, nor do I like just shovelling out a few extra billions and billions of dollars to somebody who just invented a new financial product out of thin air. I think I should say modestly that I think the whole damned development is disgusting and contrary to the interests of civilisation”.

Ok Charlie, let us know how you really feel!

More reading

• ASX 200 Weekly Wrap: Shares have average week but a great month
• Why the Ether price gains are outpacing Bitcoin’s price rise
• Tesla’s $293 million of free cash flow in Q1 was an incredible year-over-year improvement
• Is today’s soaring Dogecoin price an attractive bargain or a dangerous bubble?
• Tesla’s Bitcoin sale helped boost quarterly profits

Sebastian Bowen owns shares of Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and Bitcoin and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short June 2021 $240 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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Webjet Limited (ASX: WEB) shares are polarising investors at the moment.

As a leader in the online booking field, it feels like it will be a beneficiary of the post-COVID resurgence in travel.

However, it has had to raise capital multiple times since the pandemic struck just to stay alive. And in recent times, it has regularly featured at the top of the league table of most shorted stocks on the ASX.

This year Webjet shares started the year at $5.14 then rose to as high as $6.24. Now they have sunk down to $4.99 at the time of writing.

So if you were fortunate enough to buy this stock during the depths of coronavirus despair last year, do you take your winnings and run?

Three fund managers offered their take:

The case to sell Webjet shares

Sage Capital chief investment officer Sean Fenton reckons Webjet shares have had a good pandemic recovery run, and investors should cash in now.

“You might look at a share price chart and think ‘wow, it’s still cheap’. But they’ve done at least two,… maybe even three, equity issues in the last 12 months. Due to that, their market cap is now greater than it was pre-COVID,” he told a Livewire video.

Despite the rollout of vaccines and more freedoms for travel, there are still too many immediate hurdles for the company.

“It’s not necessarily the end of the pain in terms of generating cash flow for the business. For me, the value is not there for a company with so much uncertainty and earnings risk.”

The case to not sell Webjet shares

Perpetual portfolio manager Anthony Aboud would hold onto Webjet.

He thinks it’s “dangerous” to sell at the moment due to almost 10% of its stocks being shorted.

“With a big short interest like that, it can be dangerous to be short here,” said Aboud. 

“One thing working in their favour is that this is one of the companies people go to for exposure in the reopening trade. But I do agree with Sean. It has a higher enterprise value now than pre-COVID and I’m not 100% sure that the outlook is better.”

The case to buy Webjet shares

Not everyone is pessimistic about Webjet.

The Motley Fool reported last month that Ord Minnett brokers retained their buy rating for the online travel agency. The price target was even raised to $7.15, which would be a more than 40% gain from the current level.

“The broker believes the company is well-positioned financially to strengthen its competitive position in the B2B segment,” wrote my colleague James Mickleboro.

“This is due to a number of its competitors struggling financially during the pandemic.”

More reading

• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• Are ASX travel shares about to go through a big recovery?
• 5 things to watch on the ASX 200 on Wednesday
• Airbnb predicts huge rebound, ASX travel shares in the hot seat

Motley Fool contributor Tony Yoo owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Magnis Energy Technologies Ltd (ASX: MNS) share price is lifting slightly today. As of writing, shares in the lithium-ion battery manufacturer are trading for 37.5 cents each – up 0.53%. At opening, shares were trading for 41.5 cents each. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.08% lower.

Today’s price movement comes after the company announced it has increased production capacity at one of its plants.

Let’s take a closer look at today’s news.

What did Magnis announce today?

In a statement to the ASX, Magnis said it has increased the production capacity at its 63% owned Imperium3 New York (iM3NY) lithium-ion battery plant in Endicott, New York to 1.8 gigawatt hours per year.

The increased productivity is possible, according to the company, because of equipment purchased from fellow manufacturer A123 Systems. The purchase was possible due a US$85 million funding package completed mid-last month. The equipment can be used to produce more of the same product iM3NY already makes, or to manufacture different cell designs.

Magnis claims it already has an estimated US$655 million in sales, through the form of binding offtake orders. 

Management commentary

Magnis Chair, Frank Poullas, said “with financing completed, the team in NY is focused on meeting production milestones.”

iM3NY CEO, Chaitanya Sharma, added “we are working around the clock to fast-track production at the iM3NY battery plant following the recent injection of substantial funding.”

Lithium’s bright future

Lithium-ion batteries, and by extension lithium itself, are seeing record levels of demand. That’s because demand for electric vehicles, which need lithium-ion batteries to function, is surging. It’s part of a broader trend that is seeing demand for greener technology in general increasing. Copper and platinum group elements are seeing similar price rises to lithium because of this clean technology dynamic.

Looking at lithium specifically, its price is up 93.55% since the beginning of 2021 to be at a 24-month record of approximately US$13,900 per tonne. The website Trading Economics expects its value to increase for at least the next 12 months.

Magnis share price snapshot

Over the past 12 months, the Magnis share price has risen 660%. In fact, since the first day of trading this year, the company’s value has appreciated 100%.

Magnis has a market capitalisation of $314 million.

More reading

• Why the Magnis Energy (ASX:MNS) share price is on a wild ride today

Motley Fool contributor Marc Sidarous 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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Brokers believe that there are a few ASX shares that are worthy of investor attention in May 2021.

If several brokers think that the business is a buy then it might be worth looking into. But there’s a possibility that they’re all wrong together.

These two businesses are well liked at the moment:

Idp Education Ltd (ASX: IEL)

This ASX share is rated as a buy by at least five brokers, including UBS which has a price target on the education business of $29.05. That suggests that the return over the next 12 months could be around 30%.

IDP Education is a business that helps people with course applications and visa requirements. It also helps people book and prepare for English language testing. It’s the co-owner of IELTS, the world’s leading English language test for study, work and migration purposes.

UBS thinks that the ASX share will get through COVID and have a better market position, whilst being able to utilise its technology to be better.

The FY21 first half result still showed a decline – revenue was down 29% and net profit was down 49%. However, it showed a recovery through the period. In-fact, by the end of December 2020, testing volumes were broadly in line with those experienced in December 2019.

The board even felt confident enough to pay a dividend of 8 cents per share.

However, the broker UBS pointed out that the COVID situation in India is troubling as the country makes up more than a third of forecast FY21 revenue.

At the current IDP share price, it’s valued at 53x FY22’s estimated earnings according to UBS.

Bapcor Ltd (ASX: BAP)

Bapcor is currently rated as a buy by at least six brokers. One of those brokers is Citi, which has a price target of $9.50. That means the return could be around 25% over the next 12 months.

This business has a number of sector-leading divisions such as Burson and Autobarn.

There are a number of different trends that are helping the ASX share right now. All of the government stimulus and the strong COVID circumstances means that the retail environment is strong for Autobarn. Supply chain disruptions also means that new car supply has been limited. Second hand cars are in high demand and people are also trying to make their own car last longer. That creates a strong market for many of Bapcor’s businesses.

The FY21 result showed a number of strong numbers for Bapcor. It reported revenue grew 25.8% to $883.6 million. Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew 36.5% to $145.6 million and pro form earnings per share (EPS) went up 28.9% to 20.7 cents. The dividend was also increased by 12.5% to 9 cents per share.

In the coming years, Bapcor aims to significantly increase its earnings from Asia. It’s growing a network in Thailand and it has also made a large investment into Tye Soon – an auto parts business that has operations across several Asian countries.

Based on the Citi projections, Bapcor is valued at 21x FY21’s estimated earnings.

More reading

• Why Bubs, IDP Education, ResMed, & Tyro shares are dropping today
• Brokers name 3 ASX shares to buy now
• 2 excellent ASX growth shares tipped as buys
• Leading brokers name 3 ASX shares to buy today
• 3 ASX shares that keep growing the dividend every year

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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Seven West Media Ltd (ASX: SWM) shares are on the slide in afternoon trade after having been up by more than 9% earlier in the day. At the time of writing, the Seven West share price is trading 1.05% lower at 47 cents.

The movement comes after the company announced the signing of two agreements, along with providing an FY21 trading and debt update.

Let’s take a look at what the media company has been up to.

Sign-off on Google and Facebook deals

Judging by today’s Seven West share price, investors are ambivalent over the company’s latest statement to the ASX.

According to its release, Seven West Media has finalised its partnership with Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)’s Google and entered into a long-form agreement with Facebook Inc. (NASDAQ: FB).

This follows the signing of letters of intent (LOI) with both of the tech giants that Seven West announced in February this year.

In today’s update, Seven West Media managing director and CEO, James Warburton commented:

The transformation of SWM continues. Finalisation of the Google and Facebook agreements completes one of the key objectives outlined in our February results, delivering further digital transformation, and realising the true value of our news and current affairs product on third-party digital platforms.

Both of the agreements are expected to initially produce digital revenue before the end of the current financial year. Most of the revenue, however, will come during FY22. Seven West Media anticipates it will need to spend a minimal amount to deliver project revenue.

The Google agreement will run for a period of 5 years, and the Facebook agreement is valid for a 3-year term.

Trading and debt update

In further news appearing to temporarily boost the Seven West share price, the company provided an update on its FY21 third-quarter (Q3) advertising revenue. In its half-year briefing delivered in February, Seven West had advised it expected revenue for the second half to grow by 7% to 10% on its February first-half results. In today’s update, the company reported that Q3 advertising revenue growth had been at the upper end of this range.

Net debt is projected to stand at around $270 million and $280 million by the end of FY21. The company noted that net proceeds of $45 million from the Airtasker Ltd (ASX: ART) initial public offering (IPO) in March were used to repaid debt obligations. In H2 FY21 to date, over $195 million in debt has been retired.

Mr Warburton went on to add:

Our balance sheet is now in a much stronger position and our FY21 Q4 content is positioned to deliver audience and share growth, particularly among people 25 to 54 and on 7plus.

Review of the Seven West Media share price

Seven West Media shares went through a difficult year in 2020, marred by the impact of COVID-19 on the industry. The company’s shares however, have since recovered strongly, posting roughly a 490% gain over the last 12 months. When looking at the year to date, its shares have increased by around 30%.

On valuation grounds, Seven West Media commands a market capitalisation of about $731 million, with 1.53 billion shares outstanding.

More reading

• 2 must-see takeaways from Facebook’s earnings call
• Why Facebook reported the most impressive earnings of 2021 so far
• Retail just changed. Forever…
• Why Facebook and Apple couldn’t lift the Nasdaq Thursday
• Why Airtasker, Ecofibre, Nuix, & Woolworths shares are sinking

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. 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 S&P/ASX 200 Index (ASX: XJO) has started the week in a subdued fashion. In afternoon trade, the benchmark index is up a few points to 7,028.5 points.

Four ASX shares that are weighing on the market today are listed below. Here’s why they are dropping:

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is down 3.5% to 39.5 cents. This morning analysts at Citi retained their sell rating and 35 cents price target on the infant formula company’s shares. This follows the release of its third quarter update. While the broker notes that there are signs of improvement, it isn’t enough to become more positive. Particularly given how difficult it is for a small brand like Bubs to compete with far bigger players in China. It also sees the declining Chinese birth rate as a potential issue.

IDP Education Ltd (ASX: IEL)

The IDP Education share price has fallen 4.5% to $21.67. This decline appears to be due to concerns over demand for its services in the key India market due to rising COVID-19 cases. The Indian market is the biggest contributor to IDP Education’s profits, so the current crisis poses significant downside risk to earnings.

ResMed Inc. (ASX: RMD)

The ResMed share price has sunk 5.5% to $24.75. Today’s weakness follows a sharp decline on Friday night on Wall Street by its US-listed shares. Investors were selling ResMed’s shares after its third quarter update fell a touch short of expectations. Elsewhere, this morning Citi downgraded its shares to a neutral rating with a $28.50 price target.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has fallen 2.5% to $3.65. This morning the payments company released its weekly update. And while that update revealed a 147% year on year increase in transaction value in April to $2.246 billion, this was broadly flat month on month. Investors appear disappointed with its lack of sequential growth.

More reading

• ASX 200 up 0.25%: Westpac result impresses, PointsBet jumps
• Leading brokers name 3 ASX shares to buy today
• Is the ResMed (ASX:RMD) share price good value after its Q3 update?
• ASX 200 drops 0.8%, Pointsbet jumps, Beach sinks
• Why Beach Energy, Bigtincan, Pointerra, & ResMed are sinking today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and Idp Education Pty Ltd. The Motley Fool Australia has recommended BUBS AUST FPO and ResMed Inc. 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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