At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. The benchmark index is currently up a fraction to 6,185 points. 

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

Big four banks push higher.

The big four banks are on form on Wednesday and are doing a lot of the heavy lifting on the ASX 200. While all four banks are recording gains, the best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a 1.5% gain. Hopes that a U.S. stimulus package will soon be signed appears to be lifting the sector.

Tech shares out of form.

It has been a rare off-day for the technology sector. At lunch, the S&P/ASX All Technology Index (ASX: XTX) is down a disappointing 1.1%. The likes of Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) are weighing on the index with declines of approximately 2%. After U.S. markets closed, Netflix released a quarterly result which fell well short of analysts’ expectations.

Megaport Q1 update disappoints.

Another tech share which is falling heavily today is Megaport Ltd (ASX: MP1). Investors have been selling the elastic interconnection services provider’s share following the release of its first quarter update this morning. Although Megaport delivered further growth in customer and recurring revenues, it was much slower than the market is used to. One positive was a strong rise in port numbers during the quarter. This is a leading indicator for growth, which could mean Megaport bounces back in the second quarter.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Wednesday has been the Orora Ltd (ASX: ORA) share price with a 6.5% gain. This follows the release of a positive trading update at the packaging company’s annual general meeting. The worst performer on the index has been the Megaport share price with a disappointing 10% decline following its Q1 update.

More reading

• Why Lynas, Orora, Praemium, & Tabcorp shares are racing higher today
• Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower
• Why the Megaport (ASX:MP1) share price is dropping lower today
• 3 ASX shares I’d buy for summer 2021
• Warning: Here’s why keeping your savings in the bank is hurting your financial future

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 MEGAPORT FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10% appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31qWKnI

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) has been one of the best-performing stocks of the last decade, returning 2,400% as the company has successfully transitioned from DVDs by mail to a streaming giant. Nonetheless, it’s had its fair share of detractors along the way, and their complaints are familiar at this point.

Bears have long argued that Netflix’s streaming advantage will eventually be eroded by new competition, which will steal market share as they make streaming a priority. In the same line of reasoning, they tend to believe that most of Netflix’s original content is mediocre, implying that the leading streamer isn’t even particularly good at what it does and that it would easily be surpassed by a dedicated competitor.

Netflix has faced a wave of new streaming competition in the U.S. as services like Walt Disney Co‘s (NYSE: DIS) Disney+, Apple Inc‘s (NASDAQ: AAPL) Apple+, Comcast Corporation‘s (NASDAQ: CMCSA) Peacock, and AT&T Inc‘s (NYSE: T) HBOMax have all come on the market in the past year. There are signs that Netflix has ceded market share as it encounters new competition, though it’s still the biggest piece in what is an ever-growing pie.

But the biggest thing Netflix bears seem to be missing with these arguments is that they are almost all focused on the U.S. market, which now accounts for only about one-third of Netflix’s total subscribers. The company’s business is maturing in its home market, where more than half of all households in the country subscribe to the service, and it’s already reached its target range of 60 million to 90 million subscribers. Its biggest growth opportunities are abroad, and that’s also where Netflix has its greatest advantage.

Signs of strength abroad

Netflix recently showed its confidence in Canada by raising monthly subscription prices for the first time in two years, boosting the price by a Canadian dollar to CA$14.99 ($11.38) on standard plans and by CA$2 on premium plans to CA$18.99.

Netflix dominates the Canadian market since the company has historically faced less competition north of the border, though content tastes are nearly the same as in the U.S. For example, Disney’s Hulu is over a decade old now, but never made the trip north, and is still only available in the U.S. 

According to eMarketer, 52% of Canadian households subscribe to Netflix, making it the clear leader over No. 2 Amazon.com Inc‘s (NASDAQ: AMZN) Prime at 25% and No. 3 Disney+ at 17%. The research firm also sees the number of Canadian Netflix viewers rising from 14.6 million in 2019 to 18.4 million in 2024.

In Australia, meanwhile, Netflix said it would raise prices by a similar amount on its two lowest tiers. Canada and Australia are among the markets most similar to the U.S., and they attest to the company’s belief that it has added value to warrant the price increase. The price hikes also seem to indicate that subscriber growth has continued to be brisk despite tamped-down expectations for the third quarter.

The international advantage

While competitors may be leveling the playing field in the U.S., Netflix has a huge head start over competitors in the international market. Hulu, HBOMax, and Peacock aren’t even available outside the U.S. right now.

While Amazon Prime Video is offered all over the world, the Prime package that Americans are familiar with, which is best known for free two-day delivery, is only available in about 20 countries. So the primary incentive to join the service doesn’t exist in much of the world.

And Disney+ has expanded rapidly into Europe and elsewhere, but the company has currently staked its business almost entirely on legacy content since The Mandalorian has been its only original series to get much attention.

On the other hand, Netflix regularly releases new local-language content at a pace that its competitors simply aren’t equipped to match, and has generated foreign-language hits like Money Heist and Roma.

Despite setbacks from the coronavirus pandemic, Netflix had restarted production on 22 shows in 11 countries in Europe by July, and the company never stopped in countries like South Korea. That puts Netflix in a better position than rivals to emerge from the crisis with a steady pipeline of content, and it also isn’t facing the challenges of not being able to release movies in theaters.

But most importantly, Netflix’s robust growth abroad and the content production infrastructure it’s built outside the U.S. give the company a significant advantage over its new competitors, which are only just starting to expand into foreign markets. Overvaluing the domestic market and ignoring its international potential is a mistake. That edge is unlikely to go away anytime soon and will drive the company’s growth over the coming years. 

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

More reading

• Can Netflix stock double in 2020?
• How this fund manager is 60% UP in the year of COVID-19
• Analyst: Netflix Inc (NASDAQ:NFLX) will surge 21% to $670 due to a ‘dramatically changing world’
• 3 ASX tech shares that pay dividends
• 3 things you’ll want to know when Netflix announces earnings

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 2021 $60 calls on Walt Disney, 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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The biggest mistake Netflix (NASDAQ:NFLX) bears are making appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/2TblmN5

The Whispir Ltd (ASX: WSP) share price may surprise shareholders today following the release of its first quarter update.

At the time of writing, shares in the software-as-a-service (SaaS) provider are down 9.33% to $3.79. During market open, Whispir shares fell to as low as $3.73.

So how did Whispir perform for the start of FY21?

Strong Q1 growth

For the period ending September 30, Whispir reported its strongest start to a financial year on record.

Cash receipts totalled $10.5 million for the quarter, an increase of 35% over the prior corresponding period (pcp). This was underpinned by a surge platform usage by existing customers in the Australia, New Zealand and Asia region, up 41.3%.

Annualised recurring revenue (ARR) also grew to $43.7 million, representing a 26.7% lift on Q1 FY20, and 3.6% in the June quarter. Customer revenue retention is tracking to achieve 120% for FY21.

New customer growth saw its biggest performance to date, with the onboarding of 35 net new customers. This brings the total of customer numbers for the company to 665.

Whispir advised it was continuing to provide support to its customers during this uncertain climate. The company noted its ability to integrate with existing IT systems has enabled many customers to use its platform within days.

In addition, Whispir is continuing to invest in development activities to increase and enhance functionality as part of its five-year roadmap. The SaaS provider is well-funded to achieve its strategic objectives.

The company recorded a cash balance of $12 million at the end of the quarter.

Commenting on the result, Whispir CEO Jeromy Wells said:

While Q1 is traditionally the quietest period in our annual sales cycle, September was our strongest ever monthly revenue. Our strong growth in ARR and record net new customers over the past quarter reflects ongoing demand for multi-purpose communications software to improve productivity and stakeholder engagement as our customers navigate ‘the new normal’.

Sales and channels

Throughout the quarter, the company increased its market presence in Asia with new customers acquired in Sri Lanka and the Philippines. Established channel partners in the region, such as Deloitte, are helping Whispir achieve new customers and sales.

Most notably, Whispir strengthened its relationship with Amazon Web Services, becoming the first Australian business to do so. In recognition, the company was awarded the newly launched AWS Digital Workplace Competency status.

The award acknowledges Whispir’s proficiency in facilitating digital workplaces.

Outlook for the Whispir share price

Whispir performance over the quarter was ahead of expectations, and remains on track to meet its FY21 guidance.

Mr Wells spoke about the company’s progress and short-term challenges. He added:

We continue to build momentum within the business, increasing use cases with our existing customers and onboarding new customers. Many of those onboarded in Q3 FY20 are now increasing their platform usage in line with our land and expand strategy and we expect these customers will have a positive impact on revenues later in FY21.

While Whispir has had its strongest Q1 on record, we are still seeing suppressed transaction activity from some customers in some industries, such as aviation, due to COVID-19. As restrictions ease, we anticipate these customers will return to normal volumes.

More reading

• Looking for the next big thing? Check out these exciting ASX tech shares
• Are these the best small cap ASX shares to buy for FY 2021?
• 3 small cap ASX shares to put on your watchlist right now
• Why have ASX tech founders been unloading shares?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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 Amazon and Whispir Ltd 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 and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Whispir (ASX:WSP) share price tumbles 9% on robust Q1 performance appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35loTxV

The S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is pushing higher in late morning trade. At the time of writing the benchmark index is up 0.3% to 6,203.6 points.

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

Lynas Corporation Ltd (ASX: LYC)

The Lynas share price is up 4.5% to $3.00 following the release of its quarterly update. During the first quarter, the rare earths producer reported a strong quarter on quarter rise in both production and revenue. Total Rare Earth Oxide production came in at 4,110 tonnes, up from 2,579 tonnes during the fourth quarter. Invoiced quarterly sales revenue lifted to $87 million, more than double the fourth quarter invoiced sales revenue of $38 million.

Orora Ltd (ASX: ORA)

The Orora share price has jumped over 7% to $2.69 following the release of its annual general meeting update. That update revealed that the packaging company has started FY 2021 in a relatively positive fashion despite challenging market conditions. Earnings in its Australasian Beverage business are flat year on year, but its North American businesses have delivered earnings growth during the first quarter. This follows the successful implementation of a number of improvement initiatives.

Praemium Ltd (ASX: PPS)

The Praemium share price is racing 9% higher to 61 cents. Investors have been buying the investment platform provider’s shares following the release of its first quarter update. According to the release, at the end of the first quarter, Praemium’s Global funds under administration reached $31.2 billion. This was a 54% increase on the end of FY 2020. And while this was driven predominantly by the acquisition of Powerwrap, the company also reported strong net inflows.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is up 5.5% to $3.63. This gain appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has retained its outperform rating and lifted the price target on the gambling company’s shares to $4.40. This follows the release of its first quarter update yesterday.

More reading

• The Lynas (ASX:LYC) share price hits 16-month high
• Why the Praemium (ASX:PPS) share price is surging 9% higher today
• 5 things to watch on the ASX 200 on Wednesday
• Tabcorp (ASX:TAH) releases Q1 results ahead of AGM
• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher

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 Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Lynas, Orora, Praemium, & Tabcorp shares are racing higher today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35jxGjW

In late morning trade the S&P/ASX 200 Index (ASX: XJO) has bounced back from yesterday’s decline and is pushing higher. At the time of writing, the benchmark index is up 0.2% to 6,196.6 points.

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

CIMIC Group Ltd (ASX: CIM)

The CIMIC share price is down 2% to $22.04. Investors have been selling the engineering company’s shares after it advised that it will write-off a further $1 billion after losing a court battle with Chevron. This relates to cost blowouts on a jetty for the Gorgon natural gas project in Western Australia.

Megaport Ltd (ASX: MP1)

The Megaport share price has sunk almost 8% lower to $15.48. This follows the release of its first quarter update this morning. Although the elastic interconnection services provider delivered further growth in customer and recurring revenues, it was slower than the market has become accustomed to. However, a strong rise in port numbers during the quarter means that management expects its growth to accelerate again in the second quarter.

Mesoblast limited (ASX: MSB)

The Mesoblast share price has fallen 3.5% to $3.28. The catalyst for this appears to news that the biotech company is being sued by shareholders in the United States. Bronstein, Gewirtz & Grossman has launched a class action alleging that Mesoblast made materially false and misleading statements. This includes comparative analyses between its Phase 3 trial and three historical studies that did not support the effectiveness of remestemcel-L for steroid refractory acute graft versus host disease (aGVHD).

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has crashed 15% lower to $11.94. Investors have been selling the online homewares and furniture retailer’s shares after the release of a trading update. Although that update revealed further explosive growth, it appears as though some investors were expecting even better. Though, it is worth noting that the company’s revenue and earnings growth were well ahead of Goldman Sachs’ estimates. It is forecasting first half revenue growth of 70.3% and EBITDA of $7.3 million. Temple & Webster’s financial year to date revenue growth is 138% and first quarter EBITDA is $8.6 million.

More reading

• Why the Temple & Webster (ASX:TPW) share price is tumbling lower today
• Why the Megaport (ASX:MP1) share price is dropping lower today
• CSL (ASX:CSL) share price and 2 other ASX stocks among latest broker “buy” ideas
• ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale
• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher

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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2HcuzSW

The Lynas Corporation Ltd (ASX: LYC) share price hit a 16-month high this week and is up more than 15% in October.

Lynas is regarded as the world’s second largest producer of rare earth materials and the only significant producer outside China. The geopolitical tensions about rare earth supply has positioned Lynas as a serious global player. 

Quarterly report

Following temporary shutdowns in both Malaysia and its flagship mine, Mt Weld in Western Australia, production has resumed at 75% production rates during the quarter. Total NdPr production during the quarter was 1,342 tonnes, up from 775 tonnes in the previous quarter.

Total rare earth oxide production was 4,110 tonnes, compared to 2,579 tonnes in the previous quarter. Sales revenue was A$87 million in the September quarter, up from A$38 million in the previous quarter. The company remained cash flow positive during the quarter. 

Growth initiatives for 2025

Lynas has outlined a number of key projects to secure the runway for future growth and to meet increasing rare earths demand. These initiatives include ramping up production to meet forecast demand growth at Mt Weld and building a new rare earths processing facility in Kalgoorlie. Lynas will also invest in increasing downstream processes at its Malaysia plant and is progressing the planning and design work for its heavy rare earths separation facility in the US. 

The company has signed a sub-lease with the City of Kalgoorlie Boulder for the industrial zoned site selected for its Kalgoorlie facility and obtained a general purpose lease under the mining act. 

The Phase 1 work on the US-based heavy rare earths separation facility is expected to be completed in the 2021 financial year. Lynas signed a contract for the work on 27 July with the US Department of Defense. 

Heighted political focus on rare earths supply

Late in the quarter, US President Donald Trump announced an executive order to build reliable and resilient critical minerals supply chains for the US economy. The European Union also identified the need for a diversified and sustainable supply chain, launching a new strategy to secure access to rare earths and other critical minerals.

In addition, the Australian Government released its Modern Manufacturing Strategy, with resources technology and critical minerals processing identified as one of the six national manufacturing priorities. 

Looking ahead for the Lynas share price

The average selling price for NdPr for Q1 FY21 was A$19.4/kg, down from A$20.2/kg in Q4FY20 and A$23.7/kg in Q1FY20. During the September quarter, rare earth prices were volatile. Global demand for magnets appear to still be affected by the COVID-19 situation.

However, positive news continued to support the magnet market as the EU decided to accelerate the decarbonisation of its economy, now targeting a 60% reduction of emissions by 2030, instead of the 40% previously targeted. The acceleration of renewables and electric and hybrid vehicles is likely to increase rare earths demand in the medium to long term. 

The Lynas share price is up 2.44% at $2.94 in opening trade today.

More reading

• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher
• Why rare earth miners could be the next ASX shares to boom 
• ASX 200 rises 1%, Reliance Worldwide (ASX:RWC) climbs 11%
• Lynas (ASX: LYC) share price boosted 5% by PM’s budget plan
• Potential ASX winners from government’s $1.5bn manufacturing blueprint

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The Lynas (ASX:LYC) share price hits 16-month high appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/35fk5dr

The Praemium Ltd (ASX: PPS) share price is storming higher on Wednesday following the release of its first quarter update.

At the time of writing, the investment platform provider’s shares are up a sizeable 9% to 61 cents.

How did Praemium perform in the first quarter?

It was a busy first quarter for Praemium, with the company not only delivering strong growth, but undertaking an off-market takeover of Powerwrap Limited (ASX: PWL).

And while the Powerwrap takeover didn’t complete until after the end of the quarter, its funds under administration (FUA) have been included in Praemium’s numbers today.

According to the release, at the end of the first quarter, Praemium’s Global FUA reached $31.2 billion. This was a 54% increase on the end of FY 2020 and driven predominantly by the inclusion of Powerwrap’s FUA.

However, it was supported also by $733 million in net inflows and $377 million in positive market movements, offset slightly by outflows from an ongoing client transition of $269 million.

Praemium’s Global FUA comprises Australia platform FUA of $15 billion, International platform FUA of $3.5 billion, and Virtual Managed Accounts and Administration Service (VMAAS) FUA of $12.8 billion. The latter two were up 7% and 12%, respectively, over the prior quarter.

Management commentary.

The company’s CEO, Michael Ohanessian, was pleased with the quarter and particularly the acquisition of Powerwrap.

He commented: “The addition of Powerwrap is Praemium’s most important acquisition in our 20-year history. We are delighted to welcome the Powerwrap team to Praemium and to work together to further enhance our market-leading solutions for all segments of the advice market and their clients. Leveraging the strengths of both groups will allow Praemium to be one of the few platforms to deliver a holistic wealth management solution on a single platform.”

“We are well advanced in the planning phase for the integration of both businesses. Given a common underlying technology, we see considerable opportunities for a more efficient operating environment as well as a better client experience,” he added.

No guidance has been given for the remainder of the financial year, but the CEO appears confident in the company’s trajectory.

He explained: “This quarter has seen good underlying growth for our global managed account platforms, as key industry themes continue to drive advisers to seek more efficient ways to meet client needs. We continue to see growth across the global markets in which operate and a solid pipeline for both platform and software services.”

More reading

• The Lynas (ASX:LYC) share price hits 16-month high
• Tesla (NASDAQ:TSLA) earnings: What to watch
• Why the Temple & Webster (ASX:TPW) share price is tumbling lower today
• Why the Megaport (ASX:MP1) share price is dropping lower today
• 3 ASX shares I’d buy for summer 2021

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 Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Praemium (ASX:PPS) share price is surging 9% higher today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3jhHSOA

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.

It’s been a wild year for Tesla Inc (NASDAQ: TSLA) shareholders. The stock is up more than 400% year to date. Over the past year, shares are up nearly 800%.

While the growth stock’s big gain recently is great for shareholders, it means expectations are high going into the electric-car company’s third-quarter earnings report this week. Ahead of the quarterly update on Oct. 21, here’s a preview of some of the key areas investors may want to check on. 

Profitability

Sharp revenue growth for Q3 is pretty much already in the bag. A few days after the quarter ended, Tesla said it delivered record quarterly deliveries during the period, with total deliveries rising 43% year over year.

The bigger question about Tesla’s financials during the quarter is regarding the company’s profitability. Analyst estimates for the automaker’s earnings per share (EPS) for the period span a wide range, with the lowest estimate calling for $0.23 per share and the highest for $0.98. The average estimate is notably $0.56, which translates to a 51% jump compared to the year-ago quarter. 

Factory construction progress

Investors will also look to Tesla’s quarterly shareholder presentation to get a progress update on the company’s ongoing expansion efforts. In Q2, Tesla said it had an annual production capacity at its factory in Fremont, California of 400,000 units for Model 3 and Model Y combined. But management said that this installed capacity would extend to 500,000 units at some point in 2020. Did Tesla achieve this before Q4 started?

Further, Tesla said it was building Model Y production capacity at its factories in Shanghai and Berlin. Look to see whether the automaker completed construction on these important production lines. 

Guidance for vehicle deliveries

Finally, investors will want to see whether Tesla is maintaining its guidance for 500,000 deliveries this year. To deliver 500,000 vehicles in 2020, Tesla would need to deliver more than 181,000 vehicles in Q4 alone. This would imply huge growth both year over year and sequentially, as Tesla delivered about 112,000 and 139,000 vehicles in the fourth quarter of 2019 and the third quarter of 2020, respectively.

Regarding vehicle delivery guidance, investors should also look to see if Tesla provides any commentary on demand for its vehicles. Did Tesla exit Q3 with a record backlog of vehicle orders? Without record orders, Tesla may not maintain full confidence from investors in the company’s growth story.

Tesla reports its third-quarter results after market close on Wednesday.

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

More reading

• 2 big challenges as Tesla (NASDAQ:TSLA) aims for a $25,000 car
• Is Tesla Inc (NASDAQ:TSLA) stock a buy ahead of earnings?
• How this fund manager is 60% UP in the year of COVID-19
• Billionaire investor says Tesla (NASDAQ:TSLA) is a $2 trillion stock
• Short-sellers are stepping up their attack on these ASX stocks

Daniel Sparks 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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Tesla (NASDAQ:TSLA) earnings: What to watch appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/2Hmzyjs

The Temple & Webster Group Ltd (ASX: TPW) share price is dropping lower on the day of its annual general meeting.

At the time of writing the online homewares and furniture retailer’s shares are down 2.5% to $13.70.

Why is the Temple & Webster share price dropping lower?

Investors have been selling the company’s shares this morning despite its annual general meeting presentation including a trading update which reveals that its exceptionally strong growth has continued in October.

According to the release, as of 19 October 2020, financial year to date, Temple & Webster’s revenue was up 138% on the prior corresponding period. Revenue growth so far in October is up over 100% year on year.

This strong top line growth led to its earnings before interest, tax, depreciation and amortisation (EBITDA) coming in at $8.6 million for the first quarter. While no figure was provided for the prior corresponding period, management notes that this is more than the entire EBITDA it generated in FY 2020.

A key driver of this strong earnings growth was Temple & Webster’s contribution margin. This is its margin after all variable costs including advertising and customer service costs. Management advised that its contribution margins continue to run ahead of its 15% target.

Finally, another positive is its customer satisfaction, which remains at record levels. The release shows that its Net Promoter Score is ~70%.

What now?

No guidance has been given for the remainder of the half or full year.

Management has reiterated that Temple & Webster is committed to a high growth strategy to take advantage of the structural shift towards online and capitalise on both organic and inorganic opportunities.

It also notes that its core furniture and homewares category is a ~$15 billion market, with accelerating online adoption.

The company’s CEO, Mark Coulter, commented: “Lock-downs and forced offline retail closures have no doubt accelerated the adoption of online shopping in our category, however we believe these trends were already at play as the oldest millennials enter their prime furniture buying years (35-65 years). This generation of shopper has already adopted online shopping to a high degree in other categories such as fashion and appliances, and we believe the furniture and homewares category is next.”

More reading

• New $259 million ASX tech player listing Thursday
• Should you stay invested in an ASX share after a strong run?
• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• 2 hot e-commerce ASX shares to buy 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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Temple & Webster (ASX:TPW) share price is tumbling lower today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2T9j0y4

In morning trade the Megaport Ltd (ASX: MP1) share price is dropping lower following the release of its first quarter update.

At the time of writing the leading elastic interconnection services provider’s shares are down 4% to $16.07.

How did Megaport perform in the first quarter?

Megaport continued its positive form in the first quarter, delivering further growth in recurring revenues, albeit at a slower than normal rate.

For the three months ended 30 September, Megaport recorded revenue of $17.3 million, up 2% since the end of the previous quarter. This led to its monthly recurring revenues (MRR) also increasing 2% quarter on quarter to $5.8 million.

This revenue growth would have been stronger if the Australian dollar hadn’t appreciated during the three months. Management notes that this adversely impacted its MRR by $0.2 million and its total revenue by $0.3 million. Also weighing on its revenue growth was slower net customer and port additions in the fourth quarter.

Growing at a stronger rate was its customer base. At the end of the quarter, Megaport’s customer numbers reached 1,980. This was up 7% since the end of the last quarter. It was a similar story for its Total Enabled Data Centres, which grew 5% quarter on quarter to 702.

Finally, a key highlight was a 10% quarter on quarter increase in Total Ports to 6,333. This is a leading indicator for growth, which is likely to bode well for the second quarter.

At the end of September, the company’s cash position was $152.8 million.

How did Megaport perform in different markets?

Management notes that its growth was strongest in the North American and APAC regions. North American MRR grew 11% in local currency and Asia Pacific MRR lifted 4%.

In Europe, MRR declined quarter on quarter due to a one-time change in Internet Exchange contract pricing. This was undertaken to secure long term strategic customers which will be competitive and stable going forward.

MRR growth from the second quarter onwards is expected to benefit from the record increases in Ports and customers this quarter.

Outlook.

Vincent English commented: “Megaport remains committed to driving value for our customers, partners, and shareholders. We are constantly evolving our platform so our customers can more easily connect with the services they need to power their business. MVE [Megaport Virtual Edge] will play a fundamental part in our success by allowing our customers to access Megaport’s elastic interconnection platform from locations beyond traditional data centres — including branch offices, corporate campuses, and point-of-sale locations.”

Mr English also revealed that the company is focused on becoming breakeven on an operating profit basis this year.

The CEO explained: “Profitability remains a company-wide priority. We are focused on achieving EBITDA breakeven on an exit run-rate basis by the close of Fiscal Year 2021 by driving further customer growth across all regions.”

“With our SDN reaching over 700 enabled data centres across 24 countries, we are well positioned to capture the demand for elastic interconnection to support the ever-increasing surge of data powered by the digital economy,” he concluded.

More reading

• Should you stay invested in an ASX share after a strong run?
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• These were the worst performing shares on the ASX 200 last week
• 3 ASX growth shares to buy with $3,000 in October
• 2 ASX tech shares I’d like to buy 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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Megaport (ASX:MP1) share price is dropping lower today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3jgfmgx