In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week strongly. At the time of writing, the benchmark index is up 0.4% to 6,825.7 points.

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

Ampol Ltd (ASX: ALD)

The Ampol share price is tumbling 5% lower to $29.27. This morning Ampol announced the completion of its $300 million off-market buyback. The fuel retailer bought the shares back at $26.34, which represents a 14% discount. Ampol advised that it expects $24.33 of the buyback price to be treated as a fully franked dividend for Australian capital gains tax purposes.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price is down 3% to $15.17. Flight Centre and a number of other travel shares have come under pressure today. This may have been driven by concerns that there could be delays to the rollout of COVID-19 vaccines in Australia.

Syrah Resources Ltd (ASX: SYR)

The Syrah share price has tumbled 6% lower to $1.23. This decline appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has downgraded the graphite producer’s shares to a neutral rating with a price target of $1.25. Credit Suisse doesn’t believe graphite prices have recovered sufficiently to warrant the restart of its Balama operation just yet. It suspects it could happen in the final quarter of the year.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price is down 4% to $4.35. This is despite the release of a positive announcement this morning. That update reveals that the company has dosed the first patients from the phase 3 Zircon clinical trial. The Zircon (Zirconium Imaging in Renal Cancer Oncology) trial is a prospective imaging trial in approximately 250 renal cancer patients undergoing kidney surgery to determine the sensitivity and specificity of TLX250-CDx PET imaging to detect clear cell renal cell cancer (ccRCC).

More reading

• ASX 200 up 0.35%: Afterpay & Appen push higher, big four banks rising
• Why the Telix (ASX:TLX) share price is dropping lower today
• The Syrah (ASX:SYR) share price is up 8% today. Here’s why
• Here are the 10 most shorted shares on the ASX
• Why the Ampol (ASX:ALD) share price is flat today

Motley Fool contributor James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia has recommended Flight Centre Travel Group 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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There are some S&P/ASX 200 Index (ASX: XJO) growth shares that could be worth watching for growth over the coming years.

Here are two businesses which have a long-term history of growth:

Altium Limited (ASX: ALU)

Altium is one of the world’s leading electronic PCB software businesses. It has various software segments like Altium Designer, Octopart and Nexus which service the needs of different software engineers.

Over the past five years the Altium share price has risen by 500%.

The ASX 200 growth share has a large, blue chip client base. Some of its clients include: NASA, Space X, Boeing, Lockheed Martin, Tesla, Toyota, Google, Bosch, Proctor & Gamble, CSIRO, the University of Melbourne, ABB, Siemens, Honeywell, Qualcomm, Broadcom, Texas Instruments, Disney, Apple and Amazon.

Altium 365 is the product from the business to pivot towards the cloud. The company says that the total global electronic manufacturing and supply chain is estimated to be over $2 trillion. The cloud move should help significantly increase the total addressable market according to management.

One of the ways that Altium is planning to grow using Altium 365 is with Altimade, a new premium service which is about ‘smart manufacturing’.

Over the long-term, the ASX 200 growth share is aiming for US$500 million of revenue and 100,000 Altium Designer subscribers, perhaps by 2026.

However, in the short-term the company is suffering from COVID-19 effects. In the FY21 half-year, Altium expects to report that total revenue fell 3% to US$89.6 million. This was led by a 10% drop in revenue in the Americas.

Nexus recorded a decline of 14% for the half because of the timing of deals – there’s a significant pipeline in the second half.

The final main negative point was that China revenue underperformed with a decline of 15% in revenue for the half as licence compliance activities became more difficult at the low end of the market because of uncertain economic conditions in China.

On the positive side of things, board and systems revenue has been improving – revenue was down 11% in the first quarter but flat in the second quarter, despite the reorganising to the cloud pivot. Also, Octopart saw revenue growth of 19% for the half, which is a positive leading indicator for PCB design growth that should drive Altium Designer sales in the second half according to management.

According to Commsec, the Altium share price is valued at 42x FY23’s estimated earnings.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the oldest businesses on the ASX, it was listed in 1903. Since then it has evolved into a large investment conglomerate.

Over the past five years the Soul Patts share price has risen by 65%.

The biggest part of Soul Patts’ performance comes from the returns of its underlying holdings. The biggest positions in the portfolio are names like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC).

Soul Patts hopes that some of its smaller investments can grow to become more larger companies within the portfolio. Clover Corporation Limited (ASX: CLV) and Palla Pharma Ltd (ASX: PAL) are two of the smaller names that Soul Patts has a large position in.

Not only can Soul Patts grow from its existing investments, but it’s regularly making new investments too with the excess cashflow from its dividend income (less expenses). Some agriculture assets were among the latest investments that Soul Patts made. It also tried to acquire Regis Healthcare Ltd (ASX: REG) at the end of last year, though that was knocked back.

More reading

• ASX 200 up 0.35%: Afterpay & Appen push higher, big four banks rising
• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• 3 ASX dividend shares rated as strong buys by brokers
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 5 things to watch on the ASX 200 on Monday

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended 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 Tesla Inc (NASDAQ: TSLA) earnings announcement is scheduled to take place on Wednesday following market close.

The Wall Street Journal (WSJ) notes that this year so far, Tesla has added $134 billion to its market capitalisation. At the start of 2020, it was worth $78 billion.

The United States-based electric vehicle producer has experienced unprecedented success. While some investors consider Tesla overvalued, other market participants, as featured in the WSJ article, see a bubble. 

Let’s take a closer look at these theories.

Is the Tesla share price overvalued?

According to one analyst, the Tesla share price is “dramatically” overvalued. JP Morgan (NYSE: JPM) analyst Ryan Brinkman believes that the share price has been pumped up by the market based on factors that have nothing to do with the fundamentals of the business.

In terms of determining the value of a company, there are different approaches to take. It all starts with a fundamental analysis. Metrics pulled from this analysis, like price-to-earnings (P/E) numbers and balance sheet data, helps investors form an opinion of whether a company is overvalued.

People who argue that Tesla is overvalued believe that the share price is moving based on investor perception, opposed to fundamentals.

Considering the Tesla share price one-year performance, it’s no wonder investors are curious about the company’s fundamental value. Tesla shares have shot up nearly 650% over the past year, pricing in at US$846.64 at last market close.

Is the electronic car industry a bubble?

The Wall Street Journal‘s article compared today’s markets with the dot-com bubble, discussing 5 market qualities that have signified or led to a bubble in the past. Among them, it mentions “exponential growth in the price of story stocks”.

The term ‘story stock’ is used to describe a company everyone already knows about because it’s in the news so much. Some investors think that this type of hype overvalues the share price because it starts to be based more on people’s opinions and expectations opposed to literal data.

As a company that makes news headlines daily, it’s a pretty safe bet to regard Tesla as a story stock. The debate comes in when people try to determine what that means for the share price.

The Elon Musk factor

Considering Telsa’s monster performance last year, it comes a little surprise to learn a few weeks ago that CEO Elon Musk is now the richest man in the world.

Musk does not seem to have a problem figuring out how to spend his money. The Tesla SpaceX subsidiary recently announced it will be drilling for natural gas near the company’s Boca Chica spacecraft development facility. Musk further tweeted last Friday that he’s going to donate a $100 million prize “towards a prize for best carbon capture technology” with details on the way. I expect we’ll learn more along with the announcement.

Am donating $100M towards a prize for best carbon capture technology

— Elon Musk (@elonmusk) January 21, 2021

https://platform.twitter.com/widgets.js

Foolish takeaway

One thing Tesla and Elon Musk have consistently delivered is surprises. We’ll find out on Wednesday about what’s been happening and what’s coming up.

More reading

• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• Why the Ioneer (ASX:INR) share price is up 16% this week
• 2 reasons to avoid Tesla stock right now
• The Syrah (ASX:SYR) share price is up 8% today. Here’s why
• 3 ASX shares powering the electric car revolution

Gretchen Kennedy 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 Tesla. 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 morning, Australia’s medical regulator, the Therapeutic Goods Administration (TGA), gave the thumbs up for use of the Pfizer Inc (NYSE: PFE) COVID-19 vaccine, as reported by The ABC.

The approval comes one year after the first recorded case of coronavirus on Australian shores. Pfizer’s product is the first COVID-19 vaccine to be approved for use within Australia, beating out other suppliers, including Moderna Inc (NASDAQ: MRNA) and AstraZeneca plc (NYSE: AZN). Health Secretary Professor Brendan Murphy advised that the Australian Government will not be seeking to procure Moderna’s vaccine, due to the similarity with Pfizer’s.

Prime Minister’s comments

Prime Minister, Scott Morrison addressed the public regarding the approval this morning. Mr Morrison noted the premise of today’s approval.

This is not an emergency approval, as has been done in some other jurisdictions around the world. This is a formal approval under the ordinary processes of the TGA – and we are one of the first countries, in the handful of countries, to have gone through that comprehensive and thorough process here in Australia, to ensure the approval of that vaccine.

As mentioned in the press briefing held this morning, initial Pfizer vaccines are expected to be rolled out closer to late February than mid-February, due to stresses on global supply.

The impact on supply means that the government’s original guide of 4 million people injected by the end of March now looks more likely to be targeted for late April.

Mr Morrison remarked on how this reflects the importance of having domestic manufacturing capability.

..and it was for that reason, around August of last year, that we took the decision that we didn’t want to be in a situation where we are completely reliant on the production of vaccines overseas.

The product of that early decision is the working relationship between CSL Limited (ASX: CSL) and AstraZeneca to manufacture ‘our own vaccine’ here in Australia, pending TGA approval. Overseas supply is expected in early March, with domestic production of the AstraZeneca formulation through CSL to yield around 1 million doses per week by late March.

COVID-19 vaccine details

Reportedly, the Pfizer vaccine will be supplied in Australia for people aged 16 years and older. The inoculation will be provided in two doses, with a minimum of 21 days between each dose.

Professor Murphy also noted that the immunity length is still unknown, “It may be that people will need additional doses of vaccines, possibly annually. These things are completely unknown at the moment.”

Additionally reported by The Australian Financial Review, there is currently no data on the Pfizer vaccine’s effect on pregnant women. Professor Murphy commented, “We will be getting advice, that is just going to be based on the best guess of what the risks are are at the moment and that is coming very shortly, before the vaccine is administered.” 

It is advised that Australia will have access to around 50 million injections of the AstraZeneca vaccine once approved by the TGA.

More reading

• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 2 ASX growth shares to buy for big returns
• Afterpay and BrainChip were some of the most traded ASX shares last week
• CV Check (ASX:CV1) share price flat on results update
• ASX 200 Weekly Wrap: ASX drops despite promises of more US stimulus

Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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At lunch on Monday the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a gain. The benchmark index is currently up 0.35% to 6,823.9 points.

Here’s what has been happening on the market today:

Tech shares push higher

It has been a positive day of trade for the tech sector. The likes of Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) are helping to drive the S&P/ASX All Technology Index (ASX: XTX) higher on Monday. At the time of writing, the All Technology Index is up 0.65%. This follows a positive night of trade on Friday on Wall Street for tech stocks, which saw the Nasdaq index climb to a record high.

Big four banks rise

The big four banks are pushing higher today and doing a lot of the heavy lifting on the ASX 200. At the time of writing, all the major banks are up at least 0.5% for the day. The best performer in the group has been the Commonwealth Bank of Australia (ASX: CBA) share price with a gain of just over 0.6%. This is despite there being no news out of the sector today.

Ampol completes buyback

The Ampol Ltd (ASX: ALD) share price is tumbling lower today after announcing the completion of its $300 million off-market buyback. The fuel retailer bought the shares back at $26.34, which represents a 14% discount. Ampol expects $24.33 of the buyback price to be treated as a fully franked dividend for Australian capital gains tax purposes.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the Nearmap Ltd (ASX: NEA) share price with a 4% gain. Investors appear to have been buying the aerial imagery technology and location data company’s shares amid positive sentiment in the tech sector. The worst performer has been the Lynas Rare Earths Ltd (ASX: LYC) share price with a 5% decline. This appears to be due to profit taking after some very strong gains last week.

More reading

• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 2 outstanding ASX tech shares to buy today
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

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 Appen Ltd and Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nearmap 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. At the time of writing, the benchmark index is up 0.2% to 6,815.5 points.

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

IDP Education Ltd (ASX: IEL)

The IDP Education share price is up 2.5% to $20.92. Investors have been buying the student placement and language testing company’s shares following the release of a broker note out of UBS. According to the note, its analysts have retained their buy rating and lifted the price target on the company’s shares to $23.00. UBS believes that trading conditions are continuing to improve and expects IDP Education to deliver strong earnings growth over the medium term.

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is up over 14% to 24 cents. This morning the clean lithium developer announced a $20.6 million placement to global institutional investors. This means Lake’s flagship Kachi Lithium Brine Project is now fully funded through to the construction phase in 2022. This allows the company to speed up the development of sustainable, high purity lithium. Lake Resources raised the funds at 16.5 cents per new share.

Mach7 Technologies Ltd (ASX: M7T)

The Mach7 share price has jumped 9% to $1.45. Investors have been buying the enterprise imaging platform provider’s shares after it announced a contract expansion. According to the release, Adventist Health has now signed a license for the Mach7 PACS solution and associated services. This is on top of its existing deal to provide its eUnity Diagnostic Viewer and Mach7 Universal Worklist to Adventist Health Tulare. The new contract is valued at over $7.9 million, including migration services and five years of support and maintenance.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has risen 2% to $2.59. This follows the release of its weekly transactions update. According to the release, despite the well-documented outages some of its customers have been facing, Tyro reported that its transaction value is up 6% month to date to $1.408 billion.

More reading

• Here’s why the Lake Resources (ASX:LKE) share price is rocketing 24% today
• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• Why the Mach7 (ASX:M7T) share price is surging 8% higher today
• Why Frontier Digital Ventures, JB Hi-Fi, Regis, & Tyro are dropping lower
• Kogan (ASX:KGN) pays price for illegal emails

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 MACH7 FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd and Tyro Payments. The Motley Fool Australia has recommended MACH7 FPO. 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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National Tyre & Wheel Ltd (ASX: NTD) shares soared nearly 20% to $1.13 at today’s open after a strong trading update from the Aussie company. At the time of writing, the National Tyre share price has retreated slightly and is trading at $1.09, up 14.7%. 

Why is the National Tyre share price surging?

The Aussie motor vehicle product distributor released a half-year trading update after the market close on Friday. Trading in the first half of 2021 (1H 2021) has “exceeded expectations” with all business units performing better than expected.

National Tyre said it had achieved record sales of agricultural tyres and 4-wheel drive wheels. That has contributed to a pick up in expected half-year earnings for the period ended 31 December 2020. Margins have also improved with less discounting and favourable foreign exchange rate movements.

The National Tyre share price has surged higher following the update and upgraded earnings before interest, tax, depreciation and amortisation (EBITDA) guidance. National Tyre is forecasting $15.0 million and $15.5 million of operating EBITDA for 1H 2021. That figure excludes $1.4 million of non-recurring and abnormal costs from the company’s Tyres4U acquisition. It also excludes AASB16 adjustments and the five months of contributions from Tyres4U.

Shares in the Aussie motor vehicle distributor had previously surged back in November 2020. That came after another earnings guidance upgrade in which operating EBITDA was forecast to total $11.5 million and $12.5 million. That means today’s upgraded figures represent a 24% to 30% increase on previous figures from the company.

On the balance sheet side, National Tyre said the group’s financial position remains strong. The group reported $22.4 million of cash on hand and $18.0 million of net debt. Despite the positive update, management noted that it’s “too difficult to say” if the first half results will be more indicative of second-half performance compared to prior guidance. 

National Tyre is expecting to announce interim results (including any dividends) on or about 24 February 2021.

Today’s jump means the National Tyre share price has now surged more than 150% in the twelve months since 28 January 2020. 

More reading

• Does Netflix have a competitive advantage?
• Here’s why the Lake Resources (ASX:LKE) share price rocketed 24% higher today
• Why are people watching the oil price right now?
• Why the Telix (ASX:TLX) share price is dropping lower today
• Why the Youfoodz (ASX:YFZ) share price is pushing higher

Motley Fool contributor Ken Hall 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.

Netflix Inc (NASDAQ: NFLX) shares touched an all-time high on Wednesday after the company delivered another impressive earnings report. It added 8.5 million subscribers in the period and said it would no longer need to take on debt.

Despite record subscriber growth in 2020, which was aided by the coronavirus pandemic, Netflix bears continue to roar about the onslaught of competition the streamer is facing.

Over the last year or so, Disney+, Apple TV+, Peacock, HBOMax, and Discovery+ have all joined the streaming fray, and ViacomCBS’s Paramount+ is set to launch in March. 

Streaming clearly reached a tipping point last year and the coronavirus pandemic has only accelerated the transition from linear TV to streaming TV that co-CEO Reed Hastings predicted several years ago. For Netflix, the question of whether the company has a sustainable competitive advantage with all the new competition entering the streaming arena bears asking, but after the latest report, there are a number of clear signs that Netflix does have an economic moat. Even better, it is widening.

Pricing power

Netflix said it would raise prices in the US in the fourth quarter, from $13 a month to $14 a month for its standard subscription. With that move, Netflix is now significantly more expensive than all of its competitors except HBOMax.

Service	Owner	Standard Price
Netflix	Netflix Inc	$14/month
HBOMax	AT&T Inc (NYSE: T)	$15/month
Disney+	Walt Disney Co (NYSE: DIS)	$8/month
Hulu	Disney	$5.99/month with ads, $11.99/month without
ESPN+	Disney	$5.99/month
Amazon Prime	Amazon.com Inc (NASDAQ: AMZN)	$119/year with Prime
Peacock	Comcast Corporation (NASDAQ: CMCSA)	Several tiers ranging from free to $10/month
Discovery+	Discovery Communications Inc (NASDAQ: DISCA)	$4.99/month with ads, $6.99/month without
Paramout+	Viacom CBS Corporation (NASDAQ: VIAC)	Pricing yet to be announced
Apple TV+	Apple Inc (NASDAQ: AAPL)	$4.99/month

Data source: Company websites. Table: Author’s own.

As you can see, most competing services are just about half the price of Netflix, and the only one in Netflix’s range is HBOMax, though ad-free Hulu comes close. That’s because, like Netflix, HBOMax has also earned pricing power as HBO has built a powerful brand in premium television over the last 40 years, and the network regularly brings home the most Emmy awards among networks. Netflix has managed to do something similar over its shorter history as its aggressive content spending strategy and efforts to offer something for everyone has paid off. 

Asked about pricing power in the recent earnings call, COO Greg Peters said, “We do think we’re an incredible entertainment value, and we want to remain incredible entertainment value.” He also explained how the company thinks about price hikes, saying: “OK, we’ve added more value in the service. Now it’s the right time to go back to those members and ask them to pay a little bit more so that we can reinvest it and keep adding it.”

Netflix prices its service to optimize its content spend, and that strategy and the quality of its content has allowed it to charge more than its peers, giving it a competitive advantage. It’s worth noting also that Netflix as the streaming pioneer has a much larger subscriber base than any of its rivals, giving it another advantage as it can allocate its content spend across more members.

Increasing profitability

Cash burn has long been a problem for Netflix, but the company just told investors that it was very close to being sustainably free cash flow positive, forecasting break-even free cash flow for 2021.

Though cash flow has long been a challenge for the company as the nature of its business demands high upfront costs, on a generally accepted accounting principles (GAAP) basis, Netflix’s profitability has significantly expanded in recent years. The company posted an operating margin of 18% in 2020 and expects to deliver a 20% operating margin this year. From there, it gets better as management projects an improvement of three percentage points each year going forward, giving the company a margin of 29% by 2024.

That along with its pricing power also indicates an economic moat in streaming. The debutantes are still trying to figure out a way to build out audience and generate a profit. Netflix, with the help of a long first-mover advantage, has been there for a while, and is pressing its foot on the gas pedal at will.

In addition to those strengths, the company’s local content focus and global strategy also separates it from the streaming wannabes as it already has a large library of original foreign language content that drives international growth.

Video entertainment is a huge industry and it won’t be monopolized. There’s room for more than one winner in streaming, especially as the cable ecosystem continues to weaken, but Netflix remains the leader, setting the pace in the industry. Its competitive advantages are clear.

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

More reading

• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• Why Amazon.com stock just popped
• Why Netflix stock jumped to an all-time high today
• Here are the US shares ASX investors are buying
• Netflix is considering a stock-buyback program

Jeremy Bowman owns shares of Amazon, Netflix, and Walt Disney. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Netflix, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Comcast and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, Netflix, and Walt Disney. 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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The Lake Resources N.L. (ASX: LKE) share price has been an outstanding performer on Monday morning.

At the time of writing, the clean lithium developer’s shares are up a massive 24% to a multi-year high of 26 cents.

Why is the Lake Resources share price rocketing higher?

Investors have been fighting to get hold of Lake Resources shares this morning after it raised A$20.6 million from global institutional investors via a placement.

According to the release, the company raised the funds at a price of 16.5 cents per new share, which represents a 21.5% discount to its last close price of 21 cents.

The institutional investors will also receive one attached option for every two shares they acquired in the placement. The options will have an exercise price of A$0.30 and a two-year expiry. Though, they remain subject to shareholder approval.

If the 62.5 million options are ultimately exercised, it will inject a further ~A$19 million of cash into the company. 

Why is Lake Resources raising funds?

Management advised that the company intends to use the net proceeds from the placement for a number of activities.

One of those is to operate the lithium chloride direct extraction pilot plant in California.

It will also use the funds to commission the demonstration plant on site at Kachi to produce larger samples for off-takers, complete the Definitive Feasibility Study (DFS) at Kachi, and complete the Environmental and Social Impact Study (ESIA) at the Kachi Project.

This means Lake’s flagship Kachi Lithium Brine Project is now fully funded through to the construction phase in 2022. This allows the company to speed up the development of sustainable, high purity lithium.

Lake Resources’ Chairman, Stu Crow, believes this placement is a transformational moment for the lithium developer. He commented:

“This is a transformational moment for Lake and its shareholders. We are excited to secure this support from North American, European and Australian institutional investors at this defining moment of the company’s development. Roth Capital has introduced a number of new investors to Lake who follow the rapidly growing clean tech battery materials sector and will broaden our exposure to international financial markets.”

This sentiment was echoed by Lake Resources’ Managing Director, Steve Promnitz. He said:

“Securing these funds delivers certainty to deliver the flagship Kachi project through the Definitive Feasibility Study amid the rapid growth of the clean energy sector. This transaction places the company in its strongest financial position ever. Lake will hold in excess of A$25 million following this placement and anticipates a further $6m to be added by July as existing options convert.”

More reading

• Why the Lake Resources (ASX:LKE) share price jumped 16% to a 52-week high

Motley Fool contributor James Mickleboro 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 price of Brent crude oil finished off last Friday at $55.41, says Bloomberg, down 1.23% for the day. This means the oil price has dipped for two straight sessions and is an indication, according to the Wall Street Journal, that investors have ongoing concerns about the impact of COVID-19 on travel restrictions and general economic activity.

Let’s consider two of the bigger ASX listed oil businesses and how they’ve been navigating fluctuations of the oil price. 

Oil Search Ltd (ASX: OSH)

The Oil Search share price surged earlier this month. This followed release of the company’s FY20 interim result. As stated in the results, Oil Search produced 14.7 million barrels of oil equivalent (mmboe) for the half year ended 30 June 2020.

The Oil Search share price jumped more than 5% following this announcement to trade around $4.10 a share that day. Last week, Oil Search finished off at $4.35 

Back in November, the company announced that it has started the search for a new chief financial officer (CFO). The current CFO, Stephen Gardiner, will continue in the role until 31 May 2021.

For the previous 12-month period, the Oil search share price has dropped more than 42%.

Santos Ltd (ASX: STO)

Santos was downgraded by Citi a week ago from ‘buy’ to ‘neutral’ based on a bouncy share price and lack of catalysts. If the analysts feel like they’re not getting enough information from a company, this is what can happen. Potentially impacting the Santos share price.

Back in December, the Australian Financial Review mentioned that Santos was preparing to kick off $8.5 billion worth of oil and gas projects. This includes the $US2 billion Dorado oil project in Western Australia. 

Credit Suisse analyst Saul Kavonic said that the company’s approach to growth “seems sensible”. 

The Santos share prices has dropped more than 18% over the past 12-month period.

Will US politics and COVID-19 swing the oil price?

US president Joe Biden didn’t waste any time signing executive orders that bring very different positions to effect than what we saw from his predecessor Donald Trump. The Australian Financial Review reported that Mr Biden cancelled the Keystone XL pipeline and implemented a 60-day suspension of new oil and gas leasing permits.

As countries continue being ravaged by COVID-19, the impacts continue to hit the travel industry. According to this weekend’s Australian, the lack of international visitor’s is currently costing Australia’s tourism industry about $4 billion a month.

Regardless of these influences, one Credit Suisse analyst believes that oil can hit $US196 a barrel. Credit Suisse’s impression is that the current business environment could present a buying opportunity, and it predicts the price is on the way up.

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• These ASX energy stocks just got zapped by a broker downgrade

Motley Fool contributor Gretchen Kennedy 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.

The post Why are people watching the oil price right now? appeared first on The Motley Fool Australia.

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