For long-term investors, investing in ASX commodity shares can be a bit dicey. That’s because the price of commodity stocks tends to rise and fall in step with the price of the commodities they grow or dig from the ground. And commodity prices are generally much more volatile than those of services or finished goods.

Interestingly, the share prices of companies that provide the proverbial picks and shovels – the logistics – required to source, store and transport commodities to their end users, are prone to similar ups and downs as the commodity shares they service.

Atop that, agricultural shares are subject to weather conditions. And miners are exposed to the quality and life expectancy of their mines, alongside their ability to uncover fresh resources. In the latter case, when they get it right and uncover ‘the motherlode’, stand back and watch their share prices rocket. Likewise, if they get it wrong and uncover little but dirt, their share prices are likely to plummet.

Just pull up the long-term price chart of most any ASX hard or soft commodity shares. You’ll inevitably see boom periods and bust periods for the listed miners and agricultural companies and the shares that service them. Both of which may last several years or more.

With that in mind, the 2 shares we look at below might not be ones you hold for life, but rather 6 to 12 months before reassessing.

So what was that about 2 booming trends?

Growing demand and tightening supply

First up is copper. Or ‘Dr Copper’ to be precise.

If you’re not familiar with this term, copper is said to have a PhD in forecasting the outlook for the world economy. That’s because it’s used extensively in infrastructure and building construction for plumbing, roofing and wiring, among others. When the global economy is in growth mode, the price copper tends to reflect this.

Not only is copper resistant to corrosion, it’s also highly conductive. That makes it a core element in electric vehicles and home battery setups.

As the world increasingly moves towards sustainable energy sources, copper miners should benefit. More immediately, developed nations the world over are launching, or preparing to launch, huge new infrastructure programs to lift their economies from their COVID-19 driven recessions.

This has already seen demand in China grow more than 30% year-on-year as the nation engages in a fresh building boom. And China doesn’t have a lot of domestic copper supply, making it reliant on imports from Australia, among other nations.

And the growth in demand comes as the supply tightens. Global copper production is forecast to fall more than 1% due to mining disruptions caused by the pandemic.

No surprise then that the price of copper, currently at US$6,923 per tonne is near 2-year highs. Not only is the price up 50% from its 23 March 2020 lows, it’s up 12% since 2 January, well before anyone had heard of the coronavirus.

The booming copper price has been a boon for OZ Minerals Limited (ASX: OZL) shareholders.

Oz Minerals owns and operates the Prominent Hill copper-gold mine and the Carrapateena advanced exploration copper-gold project, both in South Australia. It also has operations in Brazil and an exploration project in Sweden.

Oz Minerals’ share price is up 167% from the 23 March lows, more than 3 times the increase in the price of copper. Year-to-date the share price is up 51%. By comparison the S&P/ASX 200 Index (ASX: XJO) is down 8% in 2020.

Now you won’t see another 167% share price leap over the next 7 months. But with strong demand for copper and a sliding global supply, I believe Oz Minerals is well-placed to ride this booming trend into 2021.

Moving on…

Selling ‘picks and shovels’ to Australia’s agricultural industry

After suffering through a difficult drought, Australia’s agricultural industry is enjoying the fruits of above average rainfall across much of the east coast. This is forecast to result in the biggest wheat harvest in 4 years.

As Bloomberg reports:

New South Wales is now set for a record season, according to IKON Commodities, which recently lifted its national forecast to over 30 million tons, more than double last year… Barley crops are also set to benefit from the rains, with output poised to rise more than 25% from last year, IKON said.

GrainGrowers chair Brett Hosking says, “It’s looking really exciting at the moment on the east coast of Australia. Even if they weren’t coming off a drought, they’d be looking at a really good harvest.”

That’s great news for the farmers, their communities, and an Australian economy that can use any boost it can get.

From an investors’ perspective, one way you can gain exposure to the forecast surge in wheat and barley output is via Graincorp Ltd (ASX: GNC).

The company has an integrated supply chain, starting from accumulation and storage which links up to road and rail freight options as well as port facilities. In other words, a lot of GrainCorp’s revenue comes from storing and transporting grains.

The GrainCorp share price is up 27% from its 25 March lows, and down 1% year-to-date.

With a bumper crop set to come in on the east coast, I believe the current share price of $3.68 per share could represent a good entry point to ride this second booming trend.

More reading

• Is the Megaport (ASX:MP1) share price in the buy zone today?
• The 10 ASX stocks worst hit by a Biden US presidential election win
• ASX 200 down 0.3%: NAB announces provisions, BlueScope impresses, Webjet higher
• 5 things to watch on the ASX 200 on Friday
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation

Motley Fool contributor Bernd Struben 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.

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The Adore Beauty Group Limited (ASX: ABY) share price has been a very strong performer after completing its IPO this morning.

At one stage today, the online beauty retailer’s shares were up as much as 10% to $7.42.

The Adore Beauty share price has since dropped back from there and is currently fetching $7.00, which is up 3.7% from its IPO price of $6.75.

The Adore Beauty IPO.

This morning Adore Beauty listed on the Australian share market having raised $269.5 million at a price of $6.75 per share through its IPO.

This gave the company a market capitalisation of $635.3 million, which certainly is a far cry from its humble beginnings.

Adore Beauty was created in a garage in Melbourne 20 years ago and funded by a $12,000 loan from family.

Today, the company is expecting to generate revenue of $158.2 million in calendar year 2020, with gross profit of $50.8 million and net profit after tax of $3.5 million.

Based on the latter, the company’s shares have a forward price to earnings ratio somewhere in the range of 185x. This is a notable premium to Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW).

What is Adore Beauty’s business model?

Adore beauty generates its revenue through online sales of third-party beauty and personal care products to Australian and New Zealand consumers.

Over the last few years the company has attracted and retained a large and active customer base. Management notes that it has grown over 278% over the past four years to over 590,000 Active Customers today.

Pleasingly, the company still has a long growth runway. Frost & Sullivan estimates that beauty and personal care products sales in Australia (both online and offline) reached $10.9 billion in 2019.

Furthermore, the research firm estimates the online penetration rate of the beauty and personal care market in Australia is just 7.3%. This lags international markets such as the United States and the United Kingdom, with estimated online penetration levels of 15.4% and 12.7%, respectively.

Adore Beauty believes that online penetration of the beauty and personal care market in Australia will continue to increase, and that COVID-19 may accelerate the rate of online penetration going forward.

What now?

The company intends to use the proceeds of its IPO to support its growth strategy and future growth opportunities.

This includes growing its brand awareness, strengthening its offering, and expanding into new markets and adjacent categories.

Time will tell if it can live up to the high expectations that are implied by its high PE ratio.

More reading

• Why Iluka, Link, Resolute, & Temple & Webster shares are tumbling lower today
• Why you should pay attention when management buy (or sell) ASX shares
• Why it makes sense to invest in ASX shares
• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• Why Aerometrex, Healius, Megaport, & Temple & Webster shares are pushing 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 Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd 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.

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This year had been shaping up as a breakout for ASX technology company Megaport Ltd (ASX:MP1). Despite challenges posed by COVID-19, Megaport reported total revenues of $58 million for FY20, an uplift of 66% year-on-year. And, after executing two successful capital raisings during the year, Megaport ended FY20 with a cash position nearing $170 million.

In navigating the tough market conditions in FY20, Megaport seemed like it had the cash reserves to execute on its growth strategy in FY21.

However, the company’s share price tells a slightly different story. After surging to a new 52-week high of $17.67 in late August, the wind has gone out of its sails more recently. And, after the release of the company’s September quarter cash flow report on Wednesday, its share price was savaged. It dropped almost 15%, making it the worst-performing stock on the S&P/ASX 200 Index (ASX: XJO) that day.

What does it all mean?

So, is this a signal that it’s time to jump ship? Or is it instead a chance to snap up shares in a growing company for a bargain?

First, let’s take a look at what Megaport actually does, and then we’ll review the details of the recent quarterly update.

Megaport develops customisable ‘on-demand’ network services to corporate clients. It helps clients expand their network connectivity beyond the limits of traditional infrastructure by leveraging cloud-based technology. It also gives companies the flexibility to manage their bandwidth usage: customers can scale up their bandwidth when demands are high, and then reduce consumption during off-peak times. This allows companies to be more efficient with their data usage, cutting operational costs.

Expanding network connectivity and managing bandwidth usage has been a high priority for many companies this year, as COVID-19 restrictions have forced them to adopt remote working arrangements. So, it’s no real wonder that Megaport enjoyed significant growth in FY20.

Is there a problem?

Well, the real issue for Megaport might simply be that it has grown too fast. Short-term investors, who had become accustomed to certain levels of growth, felt let down by the figures in Megaport’s most recent quarterly report. But, for longer-term investors, there was actually plenty to like in the update.

Although quarter-on-quarter revenues only grew a modest 2% to $17.3 million, Megaport still reported a record quarterly increase in customer numbers. Most of that growth came from the US, where the company has been rapidly expanding its presence. Of the 19 new data centres the company added globally during the quarter, 10 were in the US.

Additionally, the company increased its investment in intellectual property due to the development of a new product, Megaport Virtual Edge, which it plans to launch in the second half of FY21. The Virtual Edge will expand Megaport’s network capabilities and increase security and performance for customers.

What’s ahead for the Megaport share price?

Despite short-term investors jumping ship, Megaport remains an exciting company to watch over the next 12 months for those with a longer-term outlook.

It is executing on its expansion plans and rapidly increasing customer numbers. Monthly recurring revenues in the second quarter should benefit from investments made during the September reporting period, which could signal that a share price recovery is just around the corner.

More reading

• The 10 ASX stocks worst hit by a Biden US presidential election win
• ASX 200 down 0.3%: NAB announces provisions, BlueScope impresses, Webjet higher
• 5 things to watch on the ASX 200 on Friday
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation
• ASX 200 recovered throughout today, but finished 0.3% lower

Rhys Brock owns shares of MEGAPORT FPO. 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.

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The Austal Limited (ASX: ASB) share price has fallen flat today following an announcement to expand its Australian support business.

From market open, shares in the global shipbuilder reached an intra-day high of $3.27, but have since retreated. At the time of writing, the Austal share price is down 0.9% to $3.16.

New support business

Austal advised it has entered an agreement to acquire Australian-based BSE Maritime Solutions. The new deal will see Austal build on its growing support business to service vessels on Australian shores.

BSE Maritime Solutions is a leading ship repair and support business that operates in defence, commercial, tourism and luxury vessels. The company has dockyards in both Cairns and Brisbane, Queensland. Current customers include Australian Border Force, BAE Systems, Thales and Svitzer.

The takeover aligns with Austal strategic direction to develop its support segment. Revenue from servicing vessels jumped at an annual rate of 28% over the past four years to reach $360 million in 2020. The ongoing revenue stream is considered an integral part alongside Austal’s shipbuilding operations.

Agreement terms

Under the acquisition, Austal will purchase BSE Maritime Solutions for $27.5 million. The purchase will be funded from Austal cash reverses, which held a total of $272.4 million at the end of June.

Austal expects the new business will generate earnings before interest, tax, depreciation and amortisation (EBITDA) of $5 million in FY21. This will then rise to $11 million by FY25 as more contracted Austal ships are delivered to the Australian government.

The agreement is scheduled to be completed by the end of November.

What did the CEO say?

Commenting on the new deal, Austal CEO David Singleton said:

BSE Maritime Solutions is a quality business and its acquisition aligns with our stated strategy of growing our support division, adding further scale to our operations on the east coast of Australia in addition to our existing support services at Henderson, Cairns, and Darwin.

In particular, the acquisition provides Austal with dockyard and ship lift capability in the north- east region of Australia – including the Pacific’s largest mobile boat hoist, capable of moving 1120 tonnes – supporting our existing and future customers and reinforcing our commitment to grow in the region.

It further enhances our in-service support capabilities, currently provided across multiple facilities in Cairns, for the Austal designed and constructed Cape-class and Guardian-class Patrol Boats.

About the Austal share price

The Austal share price has been relatively stagnant over the past 6 months, hitting its resistance level of around $3.50. With a market capitalisation of $1.13 billion, shares in Austal reached as low as $2.25 in March. Prior to the COVID-19 pandemic, the company broke an all-time high record of $4.99 in November.

More reading

• The Austal (ASX:ASB) share price has dropped slightly amid corruption allegations
• Why Austal, Challenger, Orocobre, & Whitehaven Coal are dropping lower
• Why is the Austal (ASX:ASB) share price on the move?
• Top brokers name 3 ASX shares to buy today
• Potential ASX winners from government’s $1.5bn manufacturing blueprint

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 Austal Limited. 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.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a disappointing decline. At the time of writing, the benchmark index is down 0.4% to 6,150.6 points.

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

Iluka Resources Limited (ASX: ILU)

The Iluka share price has crashed 46% lower to $5.26. However, this decline relates to the demerger of its Deterra Royalties business which has taken place today. Eligible shareholders will receive 1 Deterra Royalties share for every Iluka share they own.

Link Administration Holdings Ltd (ASX: LNK)

The Link Administration share price is down 1% to $4.89. Investors have been selling the administration services company’s shares today after it rejected a takeover approach by a consortium comprising Pacific Equity Partners, Carlyle Group and their affiliates. The Link board has unanimously concluded that its $5.20 per share offer materially undervalues the company and is not in the best interests of shareholders.

Resolute Mining Limited (ASX: RSG)

The Resolute Mining share price has fallen 4% to 84 cents. This appears to have been driven by a pullback in the gold price overnight. It isn’t just Resolute that is dropping lower today. The S&P/ASX All Ordinaries Gold index is down a sizeable 2.6% at the time of writing.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has tumbled 5.5% to $10.95 despite there being no news out of the ecommerce company. However, with its shares up materially since the start of the year, this appears to have been driven by profit taking. In addition. some of these investors may be switching funds into the latest ecommerce to list on the ASX. Adore Beauty Group Limited (ASX: ABY) shares hit the ASX boards this morning after completing its IPO.

More reading

• ASX 200 down 0.3%: NAB announces provisions, BlueScope impresses, Webjet higher
• Link (ASX:LNK) share price drops lower following takeover update
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• Why it makes sense to invest in ASX shares
• MyDeal (ASX:MYD) share price rockets 120% higher following IPO

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 Link Administration Holdings Ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd 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.

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Livetiles Ltd (ASX: LVT) has today strengthened its partnership with Microsoft Corporation (NASDAQ: MSFT) with a new deal.

The Livetiles share price has rocketed up after the company shared details of the extended partnership in an announcement to the ASX this morning.  At the time of writing, the Livetiles share price has lifted 11.63% to 24 cents.

Livetiles is a global leader in intranet and workplace technology software. It specialises in creating solutions that drive digital transformation in modern workplaces. Additionally, the company operations expand across 30 countries and service more than 1,000 Enterprise clients.

So what’s the deal?

In key points, Livetiles announced it had entered a “co-sell” agreement with Microsoft in the United States. The Microsoft US sales teams will be trained to sell Livetiles Reach and Livetiles Discover, and joint marketing is occurring between the two companies, targeting retail, manufacturing and healthcare industries.

In addition, Livetiles has secured its largest ever Livetiles Intranet deal with a US apparel retailer.

What is a co-sell agreement?

In this case, ‘co-sell’ means that Microsoft sales teams are being trained to sell Livetiles products alongside their own Microsoft products. Miscrosoft runs its sales teams as ‘centres’ known as small, medium and corporate. This will occur in the United States.

Livetiles mentioned a number of products in the announcement today including Directory, Quantum, Reach and Discover. The Livetiles Directory is a component of Livetiles Quantum offering.

The US based sales team are being asked to target companies that have a minimum of 1,000 staff. The idea behind this training and co-selling concept is to empower Microsoft sales staff to directly sell the Livetiles products. Alternatively, they also have the option to bring the Livetiles sales staff in on any potential business. Ultimately, they will work closely together to secure the client. It could be a very effective alliance.

What is a co-marketing agreement?

Livetiles and Microsoft will target the same potential customers and enterprise accounts. Again, these will focus on key industries such as retail, manufacturing and healthcare. It essentially means that both companies will continue with their own marketing efforts, but align their focus to the same potential clients for more effect.

Microsoft has identified 6 high priority ‘vertical’ markets in the United States. The above industries represent 3 of those 6. Those 3 jointly represent a potential 25,000 customers. The Livetiles average contract value at the end of FY20 stood at AUD$53,000. This means that securing a few more deals results in a lot more revenue for the tech provider.

Microsoft as a strategic partner

Commenting on the partnership, Livetiles CEO and co-founder Karl Redembacj said:

Our partnership with Microsoft has been instrumental in growing Livetiles Intranet into the leading industry provider in just a few short years.

Deepening Microsoft’s understanding of how Livetiles Reach and Livetiles Directory helps companies better manage their workforces in a COVID-19 impacted world will be a catalyst for growth this financial year.

There is already a strong relationship between the 2 retailers in this space with more than 50% of Livetiles clients originating through the Microsoft partnership. This deal only strengthens that further. 

Record intranet deal

In another highlight, Livetiles announced it had secured a record intranet deal with a US apparel retailer.

Today’s announcement did not name the apparel retailer. However, Livetiles president Daniel Diefendorf had this to say:

We’re thrilled to have secured a record deal with a leading US company for Livetiles Reach and Livetiles Intranet. It validates our product diversification strategy and focus on large Enterprise as companies emerge from the initial impacts and changes that COVID-19 has made to our working lives.

The deal represents a multi-year, multi-million-dollar win for the company. It will help the major US apparel retailer with its COVID-19 re-opening strategy. The delivery will see the Livetiles products deployed to 40,000 employees and 15,000 seasonal workers across 3,100 stores in 27 countries.

Additionally, the announcement stated that Livetiles was selected as a provider because its solutions could be rapidly deployed. They could also be scaled across all required regions, languages and regulations.

More reading

• Why the LiveTiles (ASX:LVT) share price is tumbling lower today.
• Microsoft (NASDAQ:MSFT) Azure partners with SpaceX to offer cloud computing in space
• Is Apple (NASDAQ:AAPL) stock overvalued?
• Buy alert: Microsoft (NASDAQ:MSFT) stock is headed higher
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. glennleese 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 Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of LIVETILES FPO and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended LIVETILES 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.

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As the world focuses on the upcoming US elections, we are reminded that a Biden win may not be good news for some S&P/ASX 200 Index (Index:^AXJO)  stocks.

This is despite the fact that Joe Biden is the popular choice for president compared to Donald Trump. A Biden presidency is more likely to increase stimulus to the US economy and that can only be good news for the rest of the world.

But the Democrat contender is also seeking to reverse Trump’s company tax cuts. This will see the tax rate increase to 28% from 21%, according to Macquarie Group Ltd (ASX: MQG).

Taxing issues for some ASX stocks

“While there are many uncertainties, IF the US corporate tax were to rise to 28% in say FY23, we estimate this would reduce ASX Industrials EPS [earnings per share] [by] 1.3%,” said the broker.

This may not sound like much, but some ASX stocks will be more impacted by the increase in company taxes.

Macquarie looked at the sales and earnings mix of ASX stocks under its coverage and picked those that could see an EPS reduction of 5% or more in FY23.

ASX stocks most affected by a Biden presidency

This includes the Appen Ltd (ASX: APX) share price, the Janus Henderson Group CDI (ASX: JHG) share price and the Incitec Pivot Ltd (ASX: IPL) share price.

Other stocks on the list are the Aristocrat Leisure Limited (ASX: ALL) share price, the James Hardie Industries plc (ASX: JHX) share price, Sims Ltd (ASX: SGM) share price, Breville Group Ltd (ASX: BRG) share price, Cochlear Limited (ASX: COH) share price, News Corporation Class B Voting CDI (ASX: NWS) share price and Computershare Limited (ASX: CPU) share price.

But you shouldn’t be basing your decision to sell these stocks solely on the tax issue. There are other factors to consider.

A Biden win can create tailwinds too

For one, the potential increase in fiscal stimulus could top US$2 trillion or more. This could give some of these ASX stocks a big shot in the arm that will offset the tax risk.

Macquarie pointed out that cyclicals will benefit much more from stimulus than defensive stocks. This means building materials supplier James Hardie and kitchen appliances group Breville may weather the earnings headwinds better than others.

Wages and China impact

Other potential positives from a Biden win include higher government spending and higher infrastructure investment.

Wages for the low-income earners, a weaker US dollar and easing tensions with China are other likely outcomes under Biden.

But how easily Biden can pass legislation depends on whether the Democrats control both houses. On that note, Macquarie is telling investors to prepare for a “Blue Wave”.

The odds of a Biden victory with Democrats also controlling the House and Senate is 76%, a more than 10 percentage point increase over the last month.

More reading

• ASX 200 down 0.3%: NAB announces provisions, BlueScope impresses, Webjet higher
• 5 things to watch on the ASX 200 on Friday
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation
• ASX 200 recovered throughout today, but finished 0.3% lower
• Why Ardent Leisure’s (ASX:ALG) share price is up 46% from 28 September

Brendon Lau owns shares of Aristocrat Leisure Ltd., Breville Group Ltd, and James Hardie Industries plc. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Cochlear 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.

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It’s no secret that some of the most exciting shares out there are those involved in the payments space. How we pay for things has been of the areas most ripe for disruption, particularly in the shadow of the coronavirus pandemic. Much has been made of the pandemic-induced acceleration of the ‘death of cash’ this year. Just look at how ASX payments company shares like Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL) have performed this year (both up more than 1,000% since March).

But that’s just on the ASX. Some of the world’s most exciting payments shares are listed over in the United States – Visa Inc (NYSE: V), Mastercard Inc (NYSE: MA) and American Express Inc (NYSE: AXP) to name a few.

One of the most exciting companies that I’ve been watching in 2020, however, has been PayPal Holdings Inc (NASDAQ: PYPL). You might be familiar with PayPal, and perhaps its history as one of Tesla Inc (NASDAQ: TSLA) CEO Elon Musk’s earliest innovations.

Today, PayPal is a payments giant, with a market capitalisation of US$239 billion.

But a new development today has grabbed my attention further.

According to reporting in the Australian Financial Review (AFR), PayPal is set to offer users “the option to buy, hold and sell” bitcoin and other cryptocurrencies. According to the report, PayPal said this week that, “from early next year Bitcoin and other cryptocurrencies can be used as an instrument of exchange for those wanting to buy things from PayPal’s 26 million merchants.

With this move, PayPal joins Square Inc (NASDAQ: SQ), another US payments company that has offered cryptocurrency transactions for a while now. The AFR also reports that the pandemic has triggered a massive increase in usage of Square’s Cash App for cryptocurrency transactions.

So why is this significant?

Well, PayPal is a gorilla in the payments space. By making this move, it lends a lot of legitimacy to cryptocurrencies like bitcoin as an accepted payment method – and perhaps even as a store of wealth.

Whilst cryptocurrencies like bitcoin have been embraced by many investors, they remain a controversial asset for their anonymity, and use for nefarious purposes such as money laundering and black market commerce.

This move by PayPal might be a significant one in hindsight if it truly allows the legitimate use of cryptocurrencies as a proper currency.

If this endeavour proves successful for PayPal, I wouldn’t be surprised if it spurs further adoption of cryptocurrencies in the payments space. Fast forward 5 years, and we may well see ASX players like Afterpay and Zip Co Ltd (ASX: Z1P) offering cryptocurrency payments. Watch this space!

More reading

• Top brokers name 3 ASX shares to sell today
• Why you should pay attention when management buy (or sell) ASX shares
• Broker updates are mixed on these 6 high profile ASX 200 shares
• 3 super reasons to buy ASX 200 shares today
• The best ASX shares to buy during a market crash

Sebastian Bowen owns shares of American Express, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard, PayPal Holdings, Square, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Mastercard, PayPal Holdings, and Sezzle Inc. 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.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) has failed to follow the lead of U.S. markets and is dropping lower. The benchmark index is currently down 0.3% to 6,154.3 points.

Here’s what has been happening today:

NAB provisions update

The National Australia Bank Ltd (ASX: NAB) share price is pushing higher despite announcing a number of items that will impact its upcoming second half results. According to the release, the bank’s second half earnings will be reduced by a net increase in provisions and impairments of $642 million before tax. The biggest contributor to this is customer-related remediation matters of $380 million before tax.

BlueScope impresses.

The BlueScope Steel Limited (ASX: BSL) share price is surging higher on Friday after the steel producer revealed that its performance has improved materially in FY 2021. BlueScope released a trading update which revealed that it expects to report underlying earnings before interest and tax (EBIT) of $340 million for the first half. This will be a 30% increase on the second half of FY 2020 and a 12.4% lift on the prior corresponding period.

Webjet pushes higher.

The Webjet Limited (ASX: WEB) share price is pushing higher today following the release of a trading update. That update revealed that the online travel agent’s bookings and transaction value are still down materially from pre-COVID levels. The WebBeds business, for example, reported total transaction value (TTV) of 12% of 2019’s levels for the first week of October. Two big positives, though, were that Webjet’s cash burn is lower than forecast and its Webjet OTA business is winning market share.

Best and worst ASX 200 performers.

The BlueScope share price is the best performer on the ASX 200 today with an 11% gain. This follows the release of its guidance for the first half. The worst performer has been the Iluka Resources Limited (ASX: ILU) share price with a 46% decline. However, this relates to the demerger of its royalties business which has taken place today.

More reading

• Why Adore Beauty, BlueScope, Qantas, & Webjet shares are charging higher
• NAB (ASX:NAB) share price pushes higher despite announcing further provisions
• BlueScope Steel (ASX:BSL) share price on watch after first half profit guidance
• 1 ASX 200 share to buy before an effective COVID vaccine announcement
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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.

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The Weebit Nano Ltd (WBT: ASX) share price has surged today following the release of its Q1 FY21 update.

In early morning trade, the technology company’s share price has risen 17.6% to $1.56. In comparison, the All Ordinaries Index (ASX: XAO) is dead flat at 6,381 points.

Q1 FY21 update

For the period ending 30 September 2020, Weebit reported significant technical progress despite COVID-19 challenges. Its ReRAM technology is on track to transfer to the semiconductor fabrication plant, bringing it a step closer to commercialisation.

During the quarter, Weebit received $2.75 million from a successful capital raise, further strengthen its balance sheet.

Operating cash flows consisted of staff costs and administration, which totalled $1 million for the 3-month period. Payments to related parties over Q1 FY21 were $584,000, which also included fees paid to the directors.

Weebit closed the quarter with $9 million in cash on hand and equivalents

ReRAM progress

Weebit announced on 7 October that it had completed the stabilisation process for its ReRAM technology at Leti’s development facilities.

The stabilisation process saw reduced cell-to-cell and die-to-die non-uniformity, which increased the level of functional cells and batch-to-batch repeatability. The key requirement achieved improved memory functionality to 99%, and was in line with industry standards.

Weebit CEO, Mr Coby Hanoch commented on the milestone:

The successful completion of the stabilisation process follows four years of extensive research and development by the joint Weebit and Leti engineering teams, which has created a unique and highly competitive ReRAM technology. We remain on track to initiate the transfer our technology to a production fab by the end of the 2020, with discussions already underway with potential production partners.

Management appointment

In September, Weebit appointed Mr Eran Briman as vice president of marketing and business development. The role will see Mr Briman defining the company’s business model and structuring partnership agreements.

Mr Briman’s background entails extensive knowledge of the semiconductor industry. He previously held the title of vice president marketing and corporate development at Ceva. Mr Briman was responsible for outlining the business strategy, stakeholder relationship management, and enhancing market penetration into various applications. This included mobile, automotive, artificial intelligence, and internet of things (IoT).

Commenting on the appointment, Hanock said:  

Eran’s vast industry experience within the embedded and standalone memory markets will be invaluable as we continue to engage with potential partners and customers to secure first commercial agreements. In the future, we will also leverage Eran’s knowledge of the Artificial Intelligence domain as we look to commercial our neuromorphic computing technology.

Outlook

Weebit noted it is now engaging in discussions with a production partner ahead of its technology transfer to the production fab. This follows the successful testing of its silicon oxide ReRAM technology meeting all production requirements.

The development of the memory module remains a key priority for Weebit, and the company reports it is on track to be available to market.

The Weebit share price has skyrocketed this year, up more than 280% since 2 January.

More reading

• Why the Carbon Revolution (ASX:CBR) share price soared 14% higher today
• The ResApp (ASX:RAP) share price is soaring 10% today. Here’s why.
• Why the Weebit (ASX:WBT) share price soared 24% Tuesday
• WISR (ASX:WZR) share price jumps higher on strong trading update
• Why did the Forbidden Foods (ASX:FFF) share price tumble 5% today?

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. 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.

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