Tag: Motley Fool

The Life360 Inc (ASX: 360) share price is heading northwards along with the broader ASX tech sector this morning.

At the time of writing, the Life360 share price is $3.03, up 4.12%. A little earlier, it hit $3.11 — a 6.87% gain on yesterday’s closing price of $2.91.

There is no news out of the location technology company this morning. However, the tech sector is the best performer on the ASX so far today.

ASX tech share prices are up 1.26% in early trading on Tuesday.

What’s pushing the Life360 share price higher?

Today’s rise is likely to do with the technology sector performing well overall.

However, as fellow Fool James reported on Saturday, Life360 is a top pick for one broker.

Bell Potter rates Life360 shares highly despite the company not yet making a profit.

As James reported: “[Bell Potter] feels investors should look beyond this due to its explosive growth, strong balance sheet, and expectation to be cash flow positive next year.”

Bell Potter commented:

Life360 develops and delivers a mobile app for families – called Life360 – that provides communications, driving safety and location sharing. The company adopts a freemium model to attract customers but has been successfully converting a portion of these customers to paying subscribers over the last several years by providing valuable features.

The company has also recently made two acquisitions – Jiobit and Tile – so that now it not only connects and protects people but also pets and things. Yes Life360 is currently not profitable but is expected to be operating cash flow positive from 4Q2023 and has more than sufficient cash to fund its operations till then.

Bell Potter has a buy rating and a $7.50 target on the Life360 share price.

Taking into account the current 4.12% share price rise, that’s a potential 147% upside for Life360 shareholders.

The post Why is the Life360 share price jumping 7% today? appeared first on The Motley Fool Australia.

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More reading

• Broker names 3 of the best ASX tech share to buy in FY23
• Why are ASX tech shares struggling today?
• Why is the Life360 share price sinking 9% today?
• ASX 200 midday update: Tech shares tumble, Collins Foods jumps
• Why I think these two ASX shares could turn $5,000 into $100,000

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Atomos Ltd (ASX: AMS) share price is rocketing on Tuesday morning after the company delivered another record sales result.

The video technology company’s shares are up 31.11% to an intraday high of 29.5 cents at the time of writing.

Let’s take a closer look at the company’s release today.

Atomos continues to achieve record sales growth

The Atomos share price is on the move after announcing it has ended the financial year with a strong finish.

In a statement to the ASX, Atomos advised it has achieved unaudited revenue in excess of $82 million for FY22.

This was underpinned by an outstanding Q4 sales result of $37.5 million, representing a 37% increase over the prior corresponding period.

The company believes that the ongoing positive momentum will run into FY23 which appears to have excited investors.

The Q4 finish reflected a turnaround in fortunes for Atomos when looking at the previous Q3 sales performance. The latter registered just $3.6 million in revenue for the January – March quarter which was 80.5% lower than Q3 FY21.

Atomos blamed the weak numbers on a change in marketing approach and lower promotional activity. This tactic was corrected in mid-April leading to a significant positive impact in Q4 FY22.

Furthermore, management noted the launch of its Atomos cloud strategy during the final quarter. This includes the company’s new series 2 generation of connected devices (Atomos Connect, Shogun Connect and Zato Connect).

Nonetheless, Atomos is forecasting its FY22 pro forma EBITDA margin to be at the lower end of the 6% – 8% guidance range.

What did management say?

Atomos CEO, Trevor Elbourne touched on the strong result, saying:

It is extremely pleasing to be reporting another year of record sales. Given the challenges we faced through the year, including supply chain difficulties, disruption to tried and proven marketing strategies and leadership changes, it is a testament to the entire team that we have been able to deliver this growth despite those challenges.

…I am looking forward to a strong FY23 with our new pipeline of cloud enabled products.

Atomos share price snapshot

Despite today’s euphoric gains, the Atomos share price is down 74% over the course of the past 12 months.

Its shares were particularly hit hard in early May following a disappointing trading update from the company.

Atomos commands a market capitalisation of $52.25 million.

The post Why is the Atomos share price soaring 31% today? appeared first on The Motley Fool Australia.

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More reading

• These 3 ASX All Ords shares are delivering double-digit gains on Friday
• These 2 ASX tech All Ords shares are hitting new 52-week lows today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Atomos Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSL Limited (ASX: CSL) share price had an eventful month in June.

Although the biotherapeutics giant’s shares ended the period largely flat, this was actually a very good outcome for investors.

That’s because the CSL share price was down by 6% in the middle of the month but rebounded strongly.

Furthermore, it was significantly better than the performance of the ASX 200 index, which lost approximately 9% of its value during the period.

Why did the CSL share price outperform?

The outperformance of the CSL share price appears to have been driven by the release of some bullish broker notes.

One of those came from the team at Citi, which retained its buy rating with a slightly trimmed price target of $330.00. This price target implies potential upside of almost 20% for investors over the next 12 months.

Citi highlighted that plasma collection levels have now returned to pre-COVID levels and immunoglobulins pricing is increasing. And with demand remaining strong for plasma products, the broker appears to believe the tide is now turning for CSL.

In light of this, the broker suspects that the market will start to focus on demand rather than supply. And given that demand is strong, it feels that this should bode well for the CSL share price performance in the coming months.

Citi explained:

Recently, there have been several data points influencing our view on the plasma sector. In this report, we review them and the implications for the sector as a whole. US CMS data indicates continued price increases in immunoglobulin products. This is consistent with our expectation, as donor fees continue to remain elevated.

Underlying demand for plasma products remains strong but supply is constrained due to low plasma collection volume. With plasma collections now back to pre-pandemic levels, we expect the market to shift its focus to the strong underlying plasma product demand. This should lead to strength in the CSL share price. Maintain Buy, A$330 TP.

The post Here’s what happened to the CSL share price in June appeared first on The Motley Fool Australia.

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More reading

• How did the Vanguard Australian Shares Index ETF perform in June?
• Leading brokers name 3 ASX shares to buy today
• Here’s how ASX 200 healthcare shares performed in June
• Why a CSL share price above $300 is on the cards: expert
• ASX 200 healthcare shares provided some pain relief today. Here’s why

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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June was one of the toughest months in recent years for the Vanguard Australian Shares Index ETF (ASX: VAS).

In June 2022, the VAS ETF dropped by 8.7%. We haven’t seen a drop that hard since the COVID-19 crash in 2020.

Remember, an exchange-traded fund’s (ETF) return is decided by the returns of the underlying businesses.

The Vanguard Australian Shares Index ETF follows the S&P/ASX 300 Index (ASX: XKO), comprising 300 of the biggest businesses on the ASX.

This means, collectively, the ASX 300 fell by 8.7%. At the end of May 2022, these were the positions with a weighting over 3%: BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG).

As readers can see, a majority of the biggest holdings are banks. The big four banks accounted for almost 20% of the portfolio at the end of May 2022. Including Macquarie, it was around 23% of the portfolio. BHP by itself was 10.2% of the portfolio. These few ASX blue-chip shares account for more than a third of the portfolio.

Declines for ASX blue-chip shares

June was not a kind month for many of the VAS ETF holdings I just mentioned.

The BHP share price saw a 7.5% drop over June.

The CBA share price fell 13.4%.

The NAB share price dropped 12.4%.

The Westpac share price declined 18.3%.

The ANZ share price fell 12%.

I’m not going to list every ASX 300 share’s performance in June, but the above movements were some of the biggest contributors to the Vanguard Australian Shares Index ETF’s fall.

Why did they fall?

With BHP, movements in the iron ore price can have significant impacts on the BHP share price because that’s what generates a lot of the profit for the company. Over the month, the iron ore price fell by around US$20 per tonne.

With the banks, the move by the Reserve Bank of Australia (RBA) to increase the interest rate by 50 basis points, or 0.5%, in June may have stirred things up.

While a higher interest rate may assist the banks’ net interest margins (NIM), analysts think it could also cause problems for banks as well. For example, Morgan Stanley noted that higher interest rates could cause higher arrears and bigger loan losses.

Time will tell how low the iron ore price goes and how high the RBA interest rate is going to go. Another rate hike is expected later today by the RBA.

The post How did the Vanguard Australian Shares Index ETF perform in June? appeared first on The Motley Fool Australia.

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More reading

• Why ASX 200 value shares are surviving the sell-off better than growth shares
• 5 things to watch on the ASX 200 on Tuesday
• 3 more of Morgans’ best ASX share ideas for July
• Leading brokers name 3 ASX shares to buy today
• Why are these ASX 200 mining shares behind the eight ball today?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. 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 Pilbara Minerals Ltd (ASX: PLS) share price has had a positive financial year in FY22.

Pilbara shares have surged from $1.455 at market open on 1 July 2021 to $2.29 at market close on 30 June. This is a 57% gain.

So how did the financial year play out for Pilbara Minerals?

Pilbara Minerals share price hits a high in January

The Pilbara Minerals share price surged 165% to a high of $3.86 on 18 January. Between market close on 7 December and 18 January alone, the company’s share price soared 64%.

Pilbara Minerals owns the Pilgangoora lithium project in the Pilbara region of Western Australia.

Investors bought up Pilbara shares in 2021 and early 2022 amid a positive outlook for lithium. As my Foolish colleague James reported in early January, investors bought up the company’s shares amid the rise in electric vehicle (EV) demand.

Pilbara also benefited from positive broker coverage. Macquarie confirmed its outperform rating on the company’s shares in December with a $3.70 price target. The broker forecasts record-level lithium prices in the next four years. Bank of America also lifted its guidance for the Pilbara share price by 13% in early January.

The company also achieved strong results from spodumene concentrate auctions on the Battery Material Exchange. In October, a buyer bid US$2,350 per dry metric tonne (dmt), while in September Pilbara received a bid of US$2,240 per dmt.

On 21 December, the Pilbara share price suffered a downgrade to spodumene concentrate production and shipping guidance. Pilbara downgraded FY2022 production guidance from 460,000 to 510,000 dry metric tonnes (dmt) to 400,000 to 450,000 dmt. Shipping guidance was lowered from 440,000 to 490,000 dmt to 380,000 to 440,000 dmt. Managing director and CEO Ken Brinsden said:

Notwithstanding this, Pilbara Minerals remains incredibly well-placed to make a significant contribution towards satisfying the world’s burgeoning appetite for lithium raw materials.

A rough few months

The Pilbara Minerals share price tumbled nearly 41% between market close on 18 January and 30 June.

In late February, Brinsden revealed he would step down as CEO of Pilbara at the end of 2022 to spend more time with his family and on his personal interests.

In May, Pilbara and project partner Calix was awarded a $20 million grant from the Federal government to develop a lithium chemicals facility at the Pilgangoora project.

On 1 June, Pilbara appointed Dale Henderson as the company’s new managing director and CEO. This followed a thorough executive search process.

In June alone, the company’s share price plunged 22%. However, it was not alone. Core Lithium Ltd (ASX: CXO) shares dropped 29.6%, while Lake Resources N.L. (ASX: LKE) shares fell 48.7%.

A note from Goldman Sachs predicting lithium carbonate and spodumene concentrate prices to drop in the future appeared to hurt ASX lithium shares. Chinese EV company BYD also revealed plans to buy six lithium mines in Africa, impacting the demand outlook for lithium.

In late June, Pilbara provided a positive June quarter production update. The company advised of an estimated 54% increase in spodumene concentrate production compared to the March quarter.

Pilbara Minerals share price recap

The Pilbara Minerals share price has soared nearly 56% in the past year, but it has shed 29% year to date. In the past month, Pilbara shares have lost nearly 8%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has lost nearly 10% in a year.

In the past five years, Pilbara shares have returned 465% to investors.

The post Why has the Pilbara Minerals share price soared 57% in FY22? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why did the Pilbara Minerals share price tumble 22% in June?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Why have ASX lithium shares had such a lousy month in June?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Value Index is down 5.45% year to date while the S&P/ASX 200 Growth Index is down 16.5%.

Why the disparity, you might ask?

Well, in order to understand why, you need to know a bit about what value investing is first.

What is value investing?

Firstly, ‘value’ isn’t a permanent character trait of a share — rather, it’s a situation. In order to be a value share, the stock must be trading below its intrinsic worth and, therefore, offer ‘value’ to the investor.

As you can read in our ‘Guide to value investing‘, the ASX shares that value investors seek look cheap compared to the underlying revenue and earnings of those businesses.

According to our guide:

Investors who use the value investing strategy hope that a company’s share price will rise as more people come to appreciate the true intrinsic value of the company’s fundamental business.

Shares in any industry can be value shares. But generally speaking, value investing does tend to centre around well-established blue-chip companies with “consistent profitability [and] stable revenue streams”.

Value investors want to buy the highest-quality ASX shares as cheaply as possible. Then they wait for the rest of the market to catch on and bid the share price up in order to achieve some profit.

What’s the first rule of value investing?

The first rule with buying ASX value shares is to buy low and sell high. Easy right? Well, no.

Buying low requires you to be able to identify when an ASX share is trading below what it is worth.

That’s why value investors spend a lot of time doing research. Their key goal is to understand the intrinsic value and a fair share price for each business they’re interested in.

Then, they wait for opportunity, which can come in many forms. One form is when general negative sentiment drags down the entire ASX 200. You see where I’m going with this, right?

Value investors are having a party right now

Today, there’s significant negative sentiment in the share market. People are worried about rising inflation and interest rates. They’re not just worried about the impact on their personal wallets. They’re also worried about how these macro-economic issues will impact the companies they are invested in.

When there’s fear in the market, people often sell. They lose confidence and they sell on emotion. Many just want their money out while the market is jumpy.

That means the highest quality companies get sold off with the rest of the market. Their share prices fall, and that’s when value investors pounce.

Whether it’s the right time for value investors to buy yet is a matter of opinion. But you can bet they’re at least actively watching the market right now!

Why ASX value shares aren’t falling as much

It’s this pouncing effect from value buyers that might be why ASX 200 value shares aren’t falling in price as much as ASX growth shares.

After six months of falls during which time the ASX 200 has lost 12.5%, value investors might already be out there buying the dip and dollar-cost averaging their holdings.

In general, ASX investors are feeling nervous right now. When people are fearful, they want to mitigate risk. And it’s the boring (but reliable) blue chips that can provide the certainty investors are craving.

And they sure look appealing at today’s prices.

Examples of ASX 200 value shares

S&P Global has categorised a bunch of ASX shares as value shares right now. Let’s test a few of them.

The top five constituents of the S&P/ASX 200 Value Index (by market capitalisation) are:

• National Australia Bank Ltd (ASX: NAB) — share price down 5.65% year to date
• BHP Group Ltd (ASX: BHP) — share price down 5.85% year to date
• Commonwealth Bank of Australia (ASX: CBA) — share price down 10.8% year to date
• Westpac Banking Corp (ASX: WBC) — share price down 9.2% year to date
• Australia and New Zealand Banking Group Ltd (ASX: ANZ) — share price down 20.4% year to date.

Who sees good value here?

Other reasons why ASX value shares aren’t falling as much

Remember, ASX value shares are generally well-established companies selling at a discount. They’re not young unproven companies yet to make a profit (like many ASX tech shares) selling at a discount.

This means that, by nature, value shares don’t exhibit the same share price volatility as growth shares.

It’s also probably fair to assume that there’s less selling activity on value shares compared to growth shares, too.

Long-term owners would be far less inclined to sell their highest-quality shares because of short-term headwinds like inflation.

Some long-term investors have held their blue chips through 9/11, the global financial crisis, and the pandemic. What’s a little inflation compared to these events?

The quintessential value investor: Warren Buffett

Famous investor Warren Buffett is one of the world’s most eminent value investors. He’s got two rules of investing, which go something like this: “The first rule of investing is don’t lose money, and the second rule is don’t forget the first rule.” 

So, value investing suits him. He says: “If you buy things for far below what they’re worth and you buy a group of them, you basically don’t lose money.” 

As my fellow Fool in the US, Keith Speights, reports, Buffett is already in the market buying up value stocks.

Click here to learn how to identify ASX value shares.

The post Why ASX 200 value shares are surviving the sell-off better than growth shares appeared first on The Motley Fool Australia.

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More reading

• Why did the Qantas share price outperform the ASX 200 in FY22?
• The NAB dividend is being paid today. Here’s what you need to know
• 5 things to watch on the ASX 200 on Tuesday
• The Telstra share price outperformed the ASX 200 in June
• Here are the top 10 ASX shares today

Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Commonwealth Bank of Australia, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 Regis Resources Limited (ASX: RRL) share price is having a strong day.

In morning trade, the gold miner’s shares are up 9% to $1.58.

Why is the Regis Resources share price jumping?

Investors have been bidding the Regis Resources share price higher this morning in response to the release of an update.

According to the release, the company delivered record gold production during the fourth quarter.

Regis Resources reported a 20% quarter on quarter increase in total gold production to 123.9k ounces. This reflects a 24% increase in Duketon gold production to 92.8k ounces and a 10% lift in Tropicana gold production to 31.1k ounces.

This took the company’s annual gold production to 437k ounces. This is up 17% year on year and in line with its guidance of 420k ounces to 475k ounces.

Inflationary pressures persist

One slight negative that could be holding back the Regis Resources a touch today is that inflationary pressures are persisting and weighing on margins.

The release notes general industry inflationary pressures have continued across its operations and are expected to lead to its all-in sustaining cost (AISC) coming in slightly above the top end of its FY 2022 cost guidance of $1,425 to $1,500 per ounce.

Management commentary

Regis Resources’ Managing Director, Jim Beyer, was pleased with the quarter. He said:

We are very pleased to deliver a record quarter of gold production for the June 2022 quarter. We have seen reliable delivery on our improvement plans that were developed and implemented to address the operational challenges we experienced in the first half of the year. This has seen the company deliver an improved performance despite the challenging external conditions.

The result is a record production performance for the quarter and overall annual gold production that sits comfortably within FY22 production guidance. The company is now well set for increased annual gold production into FY23. We look forward to releasing the full June Quarter Report along with company guidance later in the month.

The post Regis Resources share price jumps 9% on record quarter appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares
• Why did the Regis Resources share price sink 35% in June?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why Austal, Mesoblast, Regis Resources, and Zip shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It was the best of times; it was the worst of times. Fortunately, the Qantas Airways Limited (ASX: QAN) share price sailed through financial year 2022 relatively unscathed. Though, that doesn’t mean it was easy for the national carrier. It suffered major disruptions, lockdowns, and travel bans.

As of the final close of June, the Qantas share price was $4.47. That marks a 4% tumble over the course of last financial year.

That was a better performance than that of the broader market. The S&P/ASX 200 Index (ASX: XJO) slumped around 10% in that time.

Let’s recap what the last 12 months have been like for the flying kangaroo.

Qantas share price outperforms the ASX 200 in FY22

Cast your mind back to July 2021. Australia was pushing forward with its COVID-19 vaccine rollout while its borders remained tightly locked. Meanwhile, Sydney was suffering through what grew to be a four-month lockdown and Omicron wasn’t to be identified for another five months.

Qantas’ earnings

With all that in mind, it likely came as no surprise that Qantas’ full-year earnings – released in August 2021 – may have disappointed investors. The airline posted a $2.35 billion pre-tax loss for financial year 2021. It brought in just $5.93 billion of revenue over the period.

And the first half of this financial year – dubbed by CEO Alan Joyce “one of the worst halves of the entire pandemic” – wasn’t much better. The airline announced another $1.28 billion loss for the six months ended 31 December. Though, its debt position was notably stronger.

In fact, at the end of this financial year, the airline’s debt levels are expected to have fallen to well below pre-pandemic levels. Much of that improvement was due to the sale of 13.8 hectares of land in Sydney’s Mascot for $802 million.

What else happened last financial year?

Of course, lessening travel restrictions likely helped the stock outperform in financial year 2022.

Australia’s international borders slowly reopened from November and tourists were welcomed back to the country in February.  

Though, a plan for Qantas to work with Japan Airlines was knocked back by the ACCC in September while the Australian airline battled with unions and the Fair Work Commission over an enterprise agreement.

Qantas also announced its plan to acquire Alliance Aviation Services Ltd (ASX: AQZ).

 What could drive the Qantas share price next?

The future looks set to be bright for the airline. Qantas previously announced its expectations that it would turn its first post-COVID-19 profit in the second half.

It expects to announce underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $450 million to $550 million for the six months ended 30 June.

However, it also expects to post another loss for the financial year just been. It’s on track to return an underlying profit for financial year 2023.  

Finally, Qantas has announced plans to grow both its international and domestic fleets, ordering a number of new aircraft to be delivered in the coming years.

The post Why did the Qantas share price outperform the ASX 200 in FY22? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Alliance Aviation Services Ltd. 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 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.

Meta Platforms (NASDAQ: META) held an internal conference on June 30, during which CEO Mark Zuckerberg told employees to brace for impact. The social media giant that has turned into a metaverse business has, for several quarters, warned investors that it faces headwinds that are hurting its ability to grow revenue. 

Those include changes from Apple (NASDAQ: AAPL) that make it more difficult for Meta to track its users across apps. Rising competition from short-form video site TikTok has also forced Meta to make adjustments, hurting sales in the near term. Let’s look at the recent revelation and determine if investors should jump ship and sell the stock now. 

Meta Platforms takes austerity measures amid slowing growth

One of the significant insights from reports of the meeting was Meta’s reduced plans for hiring. The company had initially planned to hire 10,000 engineers. It has now reduced that goal to between 6,000 and 7,000. And the company is increasing performance goals, making work more challenging for existing staff.

Zuckerberg admitted this might cause some employees to quit, and that self-selection is something he said he would be totally fine with. Instead of outright layoffs, it looks like Meta is raising work standards. The result could be improved performance by many workers, while others quit.

“Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn’t for you, and that self-selection is OK with me,” Zuckerberg said.

The increased focus on cutting costs is no surprise considering earlier updates from Meta Platforms suggesting the slowest revenue growth in the company’s history. In its most recent quarter, revenue increased by 7% from the same quarter in the prior year. Management expects revenue to be flat in the upcoming quarter.

META revenue (quarterly YoY growth). Data by YCharts.

For years, the company has benefited from collecting information on its users across apps and then using that data to sell targeted advertising. Marketers were willing to pay more for this type of advertising because it offers more precision and less waste. No longer were restaurants in San Diego paying for ads shown to folks in Boise, Idaho.

Another headwind is resulting from Meta’s adjustment to changing consumer tastes. Folks are increasingly engaging with short-form videos in favor of photos. Meta’s apps have been geared to benefit from interaction with photos. It will take time for Meta to optimize the platforms to the newer consumer habits, hurting revenue in the near term.

Those headwinds appear to be longer lasting than initially expected, hence the austerity measures mentioned above. 

The challenges are already priced into Meta Platforms’ stock

META P/E ratio. Data by YCharts. P/E = price to earnings.

While Meta’s challenges should not be underestimated, they are no reason to sell now. The stock is already down 58% off its highs, so the risks mentioned above are arguably already priced in. Meta is trading at a price-to-earnings ratio of 12 and a price-to-free-cash-flow of 11, near the lowest the stock has sold for in the last five years. 

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

The post Headwinds will slow growth for Meta; Should investors sell now? appeared first on The Motley Fool Australia.

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• Why Meta Platforms sank 16.7% in June
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Parkev Tatevosian has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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

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The Ardent Leisure Group Ltd (ASX: ALG) share price has taken an almighty tumble on Tuesday morning.

In early trade, the entertainment company’s shares are the worst performers on the All Ordinaries index with a whopping 67% decline to 47 cents.

Why is the Ardent Leisure share price crashing?

The good news for shareholders is that today’s decline has nothing to do with the company’s performance or a bearish broker note. Instead, this decline is because a big payday is coming to shareholders next week.

Last week, Ardent Leisure shareholders voted in favour of a return of capital following the completion of the sale of its Main Event business in the United States to Dave & Busters.

This morning, the Ardent Leisure share price is trading ex-dividend for this return.

What’s the capital return?

Ardent Leisure will be returning a massive $455.7 million or 95 cents per share to shareholders next week on 13 July.

This comprises a return of capital of $221.0 million or 46.0699 cents per share and an unfranked dividend of $234.7 million or 48.9301 cents per share.

To be eligible for the return, investors needed to own the company’s shares at the market close on Monday. This means that anyone buying Ardent Leisure shares today will not receive this capital return or dividend. Instead, the rights to these returns remain with the seller.

What’s left of Ardent Leisure?

Following the sale of Main Event, Ardent Leisure will be left with its Theme Parks & Attractions business, which comprises Dreamworld, WhiteWater World, and SkyPoint.

Management remains optimistic on the future of these businesses. The company’s chair, Dr Gary Weiss, commented:

Dreamworld, WhiteWater World and SkyPoint are iconic attractions with proven historical performance, underpinned by freehold land ownership in one of the fastest growth corridors in Australia. The sale of Main Event now provides Ardent Leisure with the capital required to support the ongoing recovery, growth and development of our Theme Parks & Attractions business which is the Board’s principal focus. Further investment in this business will better position it to benefit from expected increases in leisure spending, including as a result of increased levels of interstate and international travel to Queensland following the suppressed levels experienced during the COVID-19 pandemic.

The post Why is the Ardent Leisure share price crashing 67% today? appeared first on The Motley Fool Australia.

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More reading

• Why is the Ardent Leisure share price jumping 9% today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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