Tag: Motley Fool Australia

Recently I’ve been digging into business conglomerate Wesfarmers Ltd (ASX: WES).

From the outside, Wesfarmers looks like an odd collection of businesses. What does Kmart have to do with chemical production?? But the deeper I dig, the more congruence I find within the group.

For starters, the collection of businesses makes more sense when you look at the company’s history. Wesfarmers was originally a general trading cooperative borne in sun-glazed, rural Australia. It originally sold hardware, chemicals and farming supplies. That’s not too dissimilar from its businesses of today.

The second critical connection to recognise is that all Wesfarmers businesses follow the same, deeply valuable competitive advantage; low-cost leadership from large-scale operations. This applies across the board, from Bunnings and Kmart to the bulk production of ammonia.

To better understand how these large-scale businesses contribute to the Wesfarmers group, here is a breakdown of the company’s 2019 revenue by business unit (rounded to the nearest billion):

Source: Revenue from Wesfarmers 2019 Annual Report. Chart compiled by author.

Bunnings Australia and New Zealand (47%)

Low-cost hardware chain Bunnings is the jewel in the Wesfarmers crown. In the 2019 financial year Bunnings brought in $13 billion of revenue and had a robust earnings before interest, tax, depeciation and amortisation (EBITDA) margin of 12.3%. Yet the huge volume that Bunnings turned over across its more than 370 stores means that the division delivered a huge return on invested capital (ROIC) of 50%.

Kmart Group (31%)

Large-scale retailers Kmart and Target made up 31% of revenue in 2019 with a 6.3% EBITDA margin. Earnings actually fell in 2019, performing below management expectations. However the group still returned an impressive, 29% ROIC for the year.

Industrials (14%)

Wesfarmers industrial group includes the production of fertilisers, chemicals and energy and harks back to the organisation’s roots as a rural trading company. Although the division brings in less than half the revenue of the Kmart Group, it contributed almost the same amount of profit at $524 million.

Officeworks (8%)

Officeworks needs little explanation. It made up 8% of total revenue in 2019 and operated with a moderate 7.2% EBITDA margin.

Foolish takeaway

At first glance, Wesfarmers is made up of a strange group of businesses which makes it more complex to assess as a potential investment. However, understanding the history of the business and the over-arching, low-cost approach of its portfolio helps to explain the make up of the company.

More reading

• Breville share price surges as top broker reckons it’s worth $62 a share
• 3 top ASX 200 blue chip shares to buy
• The difficulty of investing in shares right now
• 3 ASX shares with incredible cost moats
• These ASX dividend shares will help you beat low interest rates

Motley Fool contributor Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia owns shares of Wesfarmers 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 Chart: the 4 ways Wesfarmers Ltd makes money appeared first on Motley Fool Australia.

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

With bank interest rates and term deposits at record lows, and unlikely to grow much over the next five years, I believe that investing in ASX 200 shares is a great strategy to grow your long-term wealth. Unlike term deposits, ASX shares including dividends have returned around 9% to 10% per annum on average over the past few decades. 

On that note, let’s take a look at two of my top ASX 200 share picks right now: Transurban Group (ASX: TCL) and Domino’s Pizza Enterprises Ltd. (ASX: DMP).

Transurban

Transurban has grown to become one of the world’s largest toll-road operators, particularly in its home market of Australia. The company owns a virtual monopoly on Sydney and Melbourne toll roads with a number also in Brisbane. In addition, Transurban manages and develops toll-roads in North America.

From mid April up until late June, Transurban reported a steady recovery in traffic across its Australian toll roads. This growth was in line with the gradual lifting of coronavirus lockdown restrictions. However, since that market update, Victoria has now been placed into a second lockdown, which is likely to impact traffic flows over the next six weeks at least.

Despite the short-term challenges faced by Transurban, I believe its long-term future still remains bright. Both Sydney and Melbourne have fast growing populations and road systems that will require additional toll roads in the years to come. Transurban also has an expanding overseas presence.

In addition,  the Transurban share price is still well below its level before the pandemic hit. This in my mind, offers a buying opportunity for investors with a long-term investment horizon.

Domino’s

The pizza chain’s revenue base has proven to be fairly resilient during the coronavirus pandemic so far. This ASX 200 share revealed in its most recent market update in late April that Australian store sales were generally at levels witnessed prior to the pandemic. Domino’s doesn’t typically have a sit-down restaurant service. In addition, in-store pick-up by patrons is normally a very quick process, as it is optimised with an online ordering app with accurate pick-up times. Furthermore, Domino’s has an extensive home delivery service that has experienced higher demand during the pandemic.

The Domino’s share price is currently trading at $71.61 which is close to its 12-month high. However, despite this, it is still in my buy zone. Over the next five years I believe there is still potential for Domino’s to grow its global brand and sales base driven by a strong pipeline of future stores to open. In particular, the company’s international operations offer significant growth potential across Japan, France, Germany, The Netherlands, Belgium, Luxembourg, and Denmark.

Foolish takeway

Both Transurban and Dominos have very different business models, however both are in my buy zone right now. Both companies have entrenched market positions and, in my opinion, a long runway for growth over the next three to five years.

More reading

• Why the Domino’s share price gained 30% in the first half of 2020
• St Barbara and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide
• These ASX growth shares could be market-beaters during the 2020s
• 3 top ASX dividend shares to buy instead of Westpac

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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 Transurban and 1 other ASX 200 share to buy right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2DxcfS2

While investing $1,000 into the share market may not seem like it will change your life, it certainly can if you do it frequently on a long-term basis.

For example, if you were to invest $1,000 into ASX shares every three months ($4,000 per year), and continued doing this for 30 years, you could amass a small fortune.

Based on an average total return of 9.2% per annum, these investments would grow to be worth approximately $620,000 after 30 years.

Think you can afford a little more? Invest $2,000 every quarter ($8,000 a year) and at the end of the period you would have just under $1.25 million.

With that in mind, I thought I would pick out three top shares which I think could be great options for that first $1,000 (or $2,000) investment. Here they are:

a2 Milk Company Ltd (ASX: A2M)

I think a2 Milk Company would be a great option for that first $1,000 investment. Although the infant formula and fresh milk company has been growing at a very strong rate over the last few years, I believe it still has a long runway for growth. Especially given the increasing demand for its infant formula products in the China market. Another positive is that the company has a sizeable cash balance which could be used to boost its growth through earnings accretive acquisitions.

Afterpay Ltd (ASX: APT)

I think this payments company could be a great long term investment option for that $1,000. I believe Afterpay is well-positioned for strong growth over the next decade thanks to the growing popularity of buy now pay later with consumers and merchants, the accelerating shift to online shopping, and its international expansion opportunity. All in all, I believe Afterpay is on a path to becoming a giant of the payments industry.

CSL Limited (ASX: CSL)

A final option for a $1,000 investment is this global biotherapeutics giant. Thanks to CSL’s portfolio of high quality therapies and vaccines and its high level of investment in research and development, I believe CSL is well-positioned to continue growing its earnings at a solid rate for a long time to come. And with the CSL share price down almost 20% from its high, now could be an opportune time to invest.

More reading

• Why Afterpay, Altium, Northern Star, & Pushpay shares are sinking lower
• ASX 200 down 0.5%: Altium sales update, Afterpay tumbles, Breville shoots higher
• 2 high growth ASX 200 shares to buy with $10,000 amid the coronavirus pandemic
• 3 top ASX 200 blue chip shares to buy
• 3 high quality blue chip ASX shares Warren Buffett might buy

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 CSL Ltd. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T 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 New investors could invest $1,000 into these top ASX shares appeared first on Motley Fool Australia.

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

The Freedom Foods Group Ltd (ASX: FNP) share price is non-existent right now. The company is still operational, but in accordance with its wishes, Freedom Foods shares will not be publicly available for trading until 30 October 2020. That’s over 3 months away (in case maths isn’t your strong suit!).

It’s starting to look like a rather spectacular fall from grace for this niche foods manufacturer. So what can we learn from this debacle?

Freedom isn’t free

I have a confession here. I (thankfully in hindsight) don’t own Freedom Foods shares. But it was a company I considered investing in a few months ago. The thing I found attractive in Freedom was its strong brand and the fact I could see the company growing in the ‘health foods’ market niche.

Healthy eating is a long-standing but growing trend. As Australians became more health-conscious and congruently more affluent over the past decade, demand for gluten-free, allergy-friendly foods and snacks boomed. Freedom markets a range of ‘health-conscious’ foods that cater to these trends, including A2 milk (not to be confused with the a2 Milk brand), dairy-free products, plant-based milks, and wholegrain snacks. The company has a large portfolio of brands which include the eponymous ‘Freedom Foods’, as well as Cheeky Monkeys, Heritage Mill, Barley+ and Arnold’s Farm. Freedom Foods told investors in its 2019 annual report that sales increased by 34.9% year on year. That’s a growth rate I found exciting.

Freedom shares lose their liberty

But things have recently started unravelling for the company. On 24 June, Freedom Foods announced that its CEO, Rory Macleod, would go ‘on leave pending a further announcement that is expected to be made early next week’. The shares were then suspended from trading for 14 days.

Then, on 26 June, the company announced Mr Macleod would be permanently leaving his CEO role and the company entirely, just 2 days after ‘going on leave’. It was also announced that Freedom Foods’ Chief Financial Officer (CFO) would be leaving, and the stock would stay off the ASX trading desks until 30 October.

The catalyst for this fracas appears to be the revelation that Freedom Foods has discovered some significant issues regarding its balance sheet. It was ‘discovered’ that inventory stocks had been misrecorded. $25 million has already been written off by the company, and Freedom is investigating if further write-downs are required to reflect obsolete stock, out of date stock, and product withdrawals. As my Fool colleague James Mickleboro reported at the time, this is expected to lead to an additional write-down of approximately $35 million, which means Freedom is looking at a total of ~$60 million in writedowns for FY2020.

What can we learn from Freedom’s woes?

That a strong brand in a growing market isn’t enough to make a great investment, that’s what. At the end of the day, a company is only as strong as its management, and that has been Freedom’s downfall. It’s clear that there have been some seriously questionable activities going on behind closed doors at the company. When I see a fiasco like the one described above, I would need to see some big changes. It’s even possible that there is a ‘culture’ issue at Freedom Foods that a management shakeup might not even resolve. As such, I’m very happy to be watching this sorry saga from the sidelines, until I can see the ship has been righted. Until then, I’m just sitting back with some popcorn until the Freedom Foods share price is back on the market.

More reading

• Here are the 10 most shorted shares on the ASX
• Why the Freedom Foods share price will be suspended until 30 October
• ASX 200 rises 1.4%, Collins Foods delivers tasty returns
• Here’s why the Freedom Foods share price will be suspended for 14 days
• ASX 200 finishes higher, Afterpay hits new record

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods Group 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 What can we learn from the Freedom Foods share price saga? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3h0OlwV

In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. At the time of writing the benchmark index is down 0.5% to 5,945.7 points.

Four shares that have fallen more than most today are listed below. Here’s why they are sinking lower:

The Afterpay Ltd (ASX: APT) share price is down 7.5% to $66.26. Investors appear to be taking profit in the tech sector after some stellar gains in recent weeks. At the time of writing the S&P/ASX 200 Information Technology index is down a sizeable 3.8%. Overnight on Wall Street the technology-focused Nasdaq index was up as much as 1.9% before ending the day 2.1% lower.

The Altium Limited (ASX: ALU) share price has fallen 2.5% to $32.64. This follows the release of the electronic design software company’s sales update for FY 2020 this morning. As management previously warned, Altium fell short of its US$200 million aspirational revenue target because of the pandemic. It delivered a 10% increase in revenue to US$189 million. This means Altium has now recorded eight consecutive years of double-digit revenue growth.

The Northern Star Resources Ltd (ASX: NST) share price is down 3% to $14.43. Investors have been selling the gold miner’s shares after the price of the precious metal weakened during Asian trade. According to CNBC, the spot gold price is currently down 0.75% to US$1,800.30. Northern Star isn’t the only gold miner dropping lower. The S&P/ASX All Ordinaries Gold index is down 2.5% at the time of writing. 

The Pushpay Holdings Ltd (ASX: PPH) share price has crashed 10.5% lower to $7.79. The donor management system provider’s shares have come under pressure today after shareholders associated with the Huljich family entered into a block trade agreement to sell 25% of their stake. The sellers agreed a price of at least NZ$8.60 per share for the 14,406,494 shares, which represents a total sale price of ~NZ$123.9 million. This sale price was a 7% discount to the last close price of its New Zealand-listed shares.

More reading

• New investors could invest $1,000 into these top ASX shares
• ASX 200 down 0.5%: Altium sales update, Afterpay tumbles, Breville shoots higher
• Altium share price on watch following FY 2020 sales update
• Why the Pushpay share price could tumble lower today
• 2 high growth ASX 200 shares to buy with $10,000 amid the coronavirus pandemic

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 Altium and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Afterpay, Altium, Northern Star, & Pushpay shares are sinking lower appeared first on Motley Fool Australia.

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

At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is out of form and on course to record a decline. The benchmark index is currently down 0.5% to 5,946.4 points.

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

Big four banks drop lower.

The big four banks are all trading lower at lunch and are weighing on the ASX 200 index. The Westpac Banking Corp (ASX: WBC) share price is the worst performer in the group with a decline of 1.2%. This is despite the banking giant announcing the appointment of its new chief financial officer this morning.

Altium sales update.

The Altium Limited (ASX: ALU) share price has dropped lower on Tuesday after the release of its sales data for FY 2020. As was expected, the electronic design software company fell short of its US$200 million aspirational revenue target because of the pandemic. Altium delivered a 10% increase in revenue to US$189 million thanks largely to a 17% lift in its subscription base to well over 50,000 subscribers. This means Altium has now recorded eight consecutive years of double-digit revenue growth.

Tech shares sinking lower.

Altium isn’t the only tech share tumbling lower today. A large number of tech shares have dropped deep into the red on Tuesday after their U.S. counterparts were sold off overnight. The tech-heavy Nasdaq index was up as much as 1.9% last night before ending the day 2.1% lower. Notable declines in the local tech sector include Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), which are down 7.5% and 4.5%, respectively.

Best and worst ASX 200 shares.

The best performer on the ASX 200 index is the Breville Group Ltd (ASX: BRG) share price with a 7% gain. The appliance manufacturer was the subject of a bullish broker note out of Morgan Stanley this morning. The worst performer has been the Afterpay share price with a 7.5% decline. Investors appear to be taking profit off the table in the tech sector on Tuesday.

More reading

• New investors could invest $1,000 into these top ASX shares
• Why Afterpay, Altium, Northern Star, & Pushpay shares are sinking lower
• Why Breville, Credit Corp, Pendal, & Whitehaven shares are charging higher
• Breville share price surges as top broker reckons it’s worth $62 a share
• Westpac share price lower despite announcing key executive appointment

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Xero. The Motley Fool Australia owns shares of AFTERPAY T 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 down 0.5%: Altium sales update, Afterpay tumbles, Breville shoots higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3j7pj15

In late morning trade the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is tumbling lower. At the time of writing the benchmark index is down a sizeable 0.8% to 5,929.4 points.

Four shares that have not let that hold them back are listed below. Here’s why they are charging higher:

The Breville Group Ltd (ASX: BRG) share price is up 5% to $24.06. Investors have been buying the appliance manufacturer’s shares after it was the subject of a positive broker note out of Morgan Stanley. According to the note, the broker has initiated coverage on Breville with an overweight rating and $28.00 price target. It believes the company is well-positioned for growth thanks to its $10 billion market opportunity.

The Credit Corp Group Limited (ASX: CCP) share price is up 5% to $16.03. This solid gain appears to have also been driven by a broker note. According to a note out of Morgans, its analysts have retained their add rating and lifted the price target on the debt collector’s shares to $19.10. This follows the release of its unaudited results for FY 2020 on Monday.

The Pendal Group Ltd (ASX: PDL) share price is up over 2% to $5.88. This morning the fund manager released its funds under management (FUM) update. That update revealed a 4% increase in FUM to $89.4 billion for the June quarter. This was driven largely by a significant rebound in global equity markets. Its FUM increase would have been stronger were it not for currency headwinds due to a strengthening Australian dollar.

The Whitehaven Coal Ltd (ASX: WHC) share price is up almost 5% to $1.53. Investors have been buying the coal miner’s shares following the release of its quarterly update. During the June quarter, Whitehaven delivered record ROM coal production and record managed saleable coal production. This means the company achieved its full year production guidance for both.

More reading

• Whitehaven Coal share price surges 10% on production data
• Breville share price surges as top broker reckons it’s worth $62 a share
• Top brokers name 3 ASX 200 shares to buy next week
• Why Lovisa, New Hope, Temple & Webster, & Whitehaven Coal are tumbling lower
• Why the Afterpay share price zoomed to a new record high today

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. 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 Breville, Credit Corp, Pendal, & Whitehaven shares are charging higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fqVR3R

The NextDC Ltd (ASX: NXT) share price has risen strongly since the beginning of 2020, increasing from $6.58 to its current price of $11.03. That’s an increase of over 67%. An increased demand for cloud and data centre services during the coronavirus pandemic has helped to push the NextDC share price higher.

The locally based data centre provider continues to rapidly expand its portfolio of Tier III and Tier IV data centres throughout Australia.

Is the NextDC share price in the buy zone right now?

A compelling business model

In the data centre service market, ‘scale’ is very important.

When NextDC first entered the Australian market around 10 years ago, the data centre market locally was dominated by a few large global providers. These included United States based Equinix, Global Switch and Digital Realty. Also, the cloud computing trend was in the early stages of its development. However, NextDC has evolved significantly in recent years. It has now reached sufficient size and scale to be able to compete very effectively with these global giants in the Australian market.

NextDC is now the largest, locally-based provider by a long margin. The company has an impressive nationwide network of Tier III and Tier IV data centre facilities. Its extensive data centre network enables local and international customers to connect with a growing range of cloud platforms. This enables them to scale-up their critical IT infrastructure services.

Strong expansion nationwide continues

Over the last few years in particular, NextDC has continued to expand its national data centre footprint rapidly. And it is showing no signs of slowing down this expansion. NextDC recently announced that its data centres based in NSW had won several important customer contracts.

The continued strong growth of cloud computing is driving the ever increasing need for hyperscale data centres. Global technology research firm Gartner predicts that 80% of all organisations will shift their workloads into third-party data centres by 2025.

Over the last 4 years, NextDC’S customer base has grown at an impressive compound annual growth rate (CAGR) of 21%. It continues to expand with a number of data centres currently under construction. NextDC is also adding capacity at existing data centres.

Foolish takeaway

Despite its strong recent rally, the NextDC share price is still in my buy zone right now. I believe that the company is well placed to grow its market in Australia over the next few years. If achieved, this will flow through to strong revenue and profitability growth over the next 5 years.

More reading

• Why this small cap ASX tech share could be the next big thing
• How ASX investors can profit from the cloud computing boom
• Why the NextDC share price jumped 10% higher in June
• 3 high quality ASX 100 shares to buy right now
• Where to invest $1,000 in ASX tech shares today

Motley Fool contributor Phil Harpur owns shares of NEXTDC 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.

The post Is the NextDC share price in the buy zone right now? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/32bDU5r

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.

Twitter‘s (NYSE: TWTR) stock recently rose after the social networking company seemingly revealed the development of a new subscription platform in a job listing. The listing, which called for engineers to join its new “Gryphon” team of web engineers, stated the subscription platform would be “reused by other teams in the future” and be developed with its Twitter.com and Payments teams.

Twitter subsequently removed any mentions of “subscriptions” from the job posting, but many investors are likely wondering what Twitter is cooking up — and if it would diversify its business away from its online ad revenue, which rose less than 1% annually to $682 million, or 84% of its top line, amid the COVID-19 crisis last quarter.

Why would Twitter develop a subscription platform?

Twitter hasn’t revealed any more details about Gryphon yet, but the announcement hints at several potential projects.

Several years ago, Twitter surveyed users regarding their interest in paying for new analytics tools, breaking news alerts, and additional data regarding their followers’ tweets. Former CFO and COO Anthony Noto also previously discussed the possibility of adding paid services to TweetDeck, the power user app it acquired in 2011.

Those paid services, which were never implemented, could complement Twitter’s data licensing business, which gives companies (including news services and high-frequency trading platforms) paid access to a “firehose” of bulk tweets. Twitter’s “data licensing and other” revenue rose 17% annually to $125 million, or 15% of its top line, last quarter. Adding more services to that segment would boost the high-growth segment’s weight on Twitter’s top line.

Meanwhile, Facebook‘s privacy issues caused many people, including chief operating officer Sheryl Sandberg, to declare the social network would need to become a paid service if it removed its ads. Twitter CEO Jack Dorsey has repeatedly criticized Facebook over the past year, so he could be mulling the launch of a paid ad-free tier for Twitter.

Twitter could also allow its top tweeters to offer paid subscriptions to their accounts, as Amazon‘s Twitch does for its top broadcasters. Those subscribers could generate higher revenue per user than the platform’s online ads.

Twitter’s mention of its Payments team, which handles billings for ad campaigns, also suggests its “subscriptions” could target advertisers and developers instead of users. The Payments team could also expand Twitter’s partnership with online payments company Square (NYSE: SQ), which is also led by Jack Dorsey.

Twitter and Square teamed up for in-app payments five years ago, but that deal focused on political donations instead of the e-commerce market. Integrating Twitter’s tools into Square’s payment platform as a permanent subscription service for merchants could benefit both companies.

A chilly reception for paid social networks

Those ideas are interesting, but there doesn’t seem to be much demand for paid versions of social networks right now.

Fifty-eight percent of the respondents in a Washington Post poll in 2018 said they wouldn’t pay Facebook for a subscription. Of the rest, 16%, 15%, and 11% were only willing to pay $7, $5, and $1 per month, respectively.

Citi analyst Jason Bazinet recently estimated Twitter would need to charge U.S. users $50 annually and international users $20 annually to replace its lost ad revenue. Based on the chilly reception for a paid version of Facebook, those targets could be tough to hit for Twitter, which only has about 10% as many daily active users as Facebook.

But it’s all speculation for now

Twitter raised a lot of eyebrows with its latest job listing, but investors shouldn’t assume it’s launching a paid service to reduce its dependence on ads. Twitter already offers subscription services to companies and advertisers, and there’s no indication it will start charging users to remove ads or gain access to premium services yet.

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

More reading

• Why Breville, Credit Corp, Pendal, & Whitehaven shares are charging higher
• Is the NextDC share price in the buy zone right now?
• Whitehaven Coal share price surges 10% on production data
• Is the Webjet share price a buy after falling 40% from its June high?
• 2 ASX shares that could be 10-baggers

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Leo Sun owns shares of Amazon, Facebook, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Facebook, Square, and Twitter and recommends the following options: short September 2020 $70 puts on Square, long January 2022 $1920 calls on Amazon, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and Facebook. 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 Will a Subscription Service Stabilize Twitter’s Business? 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/3fs3DKI

The Whitehaven Coal Ltd (ASX: WHC) share price has rallied nearly 10% this morning after the miner released its June quarter report. Whitehaven revealed record coal production and sales in the June quarter. FY20 managed run-of-mine (ROM) coal production was 20.6 million tonnes (Mt) while managed coal sales were 17.5 Mt, achieving full year guidance.

What does Whitehaven Coal do? 

Whitehaven Coal operates four mines in the Gunnedah Basin of New South Wales, three open-cut and one underground. The mines produce metallurgical and thermal coal for export to economies in North and South East Asia. Coal is used in energy generation and steel production. Whitehaven’s high-quality coal delivers among the lowest carbon emissions per tonne of coal consumed in the seaborne trade. 

What did Whitehaven Coal announce? 

Whitehaven released its June quarterly report today which showed record ROM coal production of 8.2Mt for the quarter, up 17% on the prior corresponding period (pcp). June quarter managed saleable coal production was 6.2Mt, up 29% on the pcp. Managed sales of produced coal increased 13% on the pcp to 5.3Mt. This meant Whitehaven Coal met its full year production and sales guidance.

CEO Paul Flynn said, “Despite drought, bushfires and COVID-19 it was great to finish the year so strongly and achieve our ROM and managed sales guidance. Against an uncertain global economic backdrop Whitehaven is focused on optimising existing operations and observing disciplined capital management”. 

How has the Whitehaven Coal share price been performing? 

The Whitehaven Coal share price fell 46% from its February peak of $2.67 to its March low of $1.42. Since then, despite recovering somewhat, the share price has not been able to reach its previous highs. This morning’s announcement has, however, seen the Whitehaven Coal share price rally 9.6% to its current price of $1.60 (at the time of writing). The company’s reduced share price overall has meant Whitehaven Coal was removed from the S&P/ASX 100 (ASX: XTO) in the most recent quarterly rebalance. 

Bearish views on coal prices may account for the failure of the Whitehaven Coal share price to significantly rally since March. Coal prices have been under heavy pressure amid oversupply concerns. Production in Indonesia and Australia have remained strong despite weaker demand from China and India. The coal price has fallen from around US$75 per tonne at the start of the year to around US$50 per tonne currently. The rise of renewable energy sources, especially wind and solar power, is also putting downward pressure on coal prices. 

Whitehaven Coal is scheduled to release its full year results next month. At the same time it will reveal FY21 coal production and sales tonnages, as well as capital expenditure and unit cost guidance. 

More reading

• Why Breville, Credit Corp, Pendal, & Whitehaven shares are charging higher
• Why Lovisa, New Hope, Temple & Webster, & Whitehaven Coal are tumbling lower
• Why the Afterpay share price zoomed to a new record high today
• These ASX 200 shares were the worst performers of FY20
• Webjet and these shares were the worst performers on the ASX 200 in June

Motley Fool contributor Kate O’Brien 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 Whitehaven Coal share price surges 10% on production data appeared first on Motley Fool Australia.

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