Tag: Motley Fool

The Lake Resources N.L. (ASX: LKE) share price is outperforming on Thursday following the release of the company’s quarterly activities and cashflow report.

The lithium developer had a busy 3 months ended 31 March, and the market is reacting positively to its report.

At the time of writing, the Lake Resources share price is flat with its previous close, trading at $2.20. However, earlier today, it reached a high of $2.35, representing a 6.8% gain.

Additionally, while the broader market is enjoying a day in the sun – the All Ordinaries Index (ASX: XAO) and the S&P/ASX 200 Index (ASX: XJO) have gained 0.34% and 0.41% respectively – many of the lithium stock’s peers are struggling.

The S&P/ASX 200 Materials Index (ASX: XMJ) is slumping 0.91% right now.

So, what’s driving the lithium developer’s share price to outperform its sector? Let’s take a look.

Lake Resources share price up on quarterly report

The Lake Resources share price is doing well after the company released its report for a busy March quarter.

Over the period, Lake Resources signed offtake agreements with Ford Motor Company and Japan’s Hanwa, doubled the production base of its Kachi Lithium Project, and made progress on the project’s demonstration plant.

The company also pushed on with drilling to bring forward the development of its lithium brine projects at Olaroz, Cauchari, and Paso, in Argentina.

On top of that, it launched its TARGET 100 Program. The program aims to see Lake Resources produce 100,000 tonnes of lithium annually from the projects by 2030.

Finally, the company continued progressing discussions that could see debt finance provided for Kachi by UK Export Finance and Export Development Canada. The finance could provide around 70% of the cash needed for Kachi’s expanded production.

As of 31 March, Lake Resources held $111 million of cash and no debt. Its strong cash position was helped along by a $39 million capital raise performed in March.

That sees it financed through to the final investment decision and construction finance phase.

The Lake Resources share price gained 98% last quarter.

The post Why is the Lake Resources share price beating its sector today? appeared first on The Motley Fool Australia.

More reading

• What are the 10 biggest ASX shares in the lithium space
• Here are the top 10 ASX shares today
• Lake Resources share price spikes 14% as lithium prices begin to ease
• Analysts name 3 top ASX lithium stocks to buy now
• 3 ASX lithium shares that rocketed between 10% and 24% today

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/C7ofWzb

Shares in Westpac Banking Corp (ASX: WBC) are shifting higher on Thursday as the company shrugs off reports it will be fined $12 million for overcharging customers on credit card interest rates.

At the time of writing, the Westpac share price is $24.64, up 1.13% on the day. It raced to these levels in early trade and has held the line since.

What happened to Westpac today?

Recall that the Australian Securities and Investment Commission (ASIC) began proceedings against Westpac in November last year. In total, the regulator launched six actions against the bank, and today’s outcome resolves just one of those.

The Federal Court has found that Westpac charged customers interest rates higher than it was contractually allowed to and then onsold this debt to institutional fixed-income investors.

As a result of the conduct, ASIC alleged that more than 16,000 Westpac customers – who were allegedly already in financial distress – were likely impacted.

Justice Jonathan Beach of the Federal Court handed down his judgment and was unreserved in his assessment findings.

“Undoubtedly, the customers impacted by Westpac’s conduct were likely to be customers who could least afford to be overcharged with interest and who faced financial hardship. Clearly, the extended consequences of Westpac contraventions were serious to say the least,” he said, cited by Business News Australia.

“It appears that the contraventions were not brought about by deliberate or reckless conduct on the part of Westpac and they were not commercially motivated.

“The $12 million penalty reflects the seriousness and impact of the contraventions on a large number of vulnerable consumers.”

Not just today

The finding builds on the Federal Court ordering Westpac to pay a separate $20 million earlier this month for incorrect insurance charges. The Westpac share price ended that day almost flat.

Just prior to that, the bank was ordered to pay $1.5 million for misleading consumers with both credit card and insurance policies.

As ASIC reported on 7 April:

The Federal Court has ordered Westpac Banking Corporation pay a $1.5 million penalty for mis-selling consumer credit insurance with its credit cards and Flexi Loans to customers who had not agreed to buy insurance policies.

ASIC has identified consumer credit insurance to be a poor value product that leads to poor outcomes for consumers. In this case, customers were charged for insurance policies they had not agreed to buy and therefore were unlikely to use. The sale of these products benefitted the bank and not the consumer.

Westpac share price snapshot

The Westpac share price has soared to a 15% gain this year to date. It is also up 4% over the past month.

However, it has fallen 2.4% into the red over the past year.

The post Westpac share price lifts despite $12 million ASIC fine appeared first on The Motley Fool Australia.

More reading

• 2 ASX 200 dividend giants named as buys by brokers
• Does Westpac have a dividend reinvestment plan?
• Do CBA shares offer the highest big bank dividend yield?
• What to expect from the Westpac half year result
• Why are ASX 200 bank shares having such a stellar start to the week?

Motley Fool contributor Zach Bristow 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/zCAhc1V

The Santos Ltd (ASX: STO) share price is in the green today amid the company releasing quarterly results.

At the time of writing, Santos shares are trading at $8.32, a 1.09% gain.

Let’s take a look at what the company reported today.

Santos share price heads north following quarterly update

Highlights included:

• Record production of 26 million barrels of oil equivalent (mmboe)
• Sales revenue of US$1.9 billion, 25% more than the previous quarter
• Sales revenue up 99% on prior corresponding period (pcp) of Q1 2021
• Free cash flow of US$865 million, a 186% boost on pcp.

What happened during the quarter?

Santos reported record production, sales revenue, and free cash flow in the first quarter of 2022.

Sales volumes were higher due to the completion of the Oil Search merger in December 2021. This was partially offset by lower domestic gas volumes in Western Australia.

Sales revenues were higher due to both the merger and higher gas, LNG, and oil prices.

The average realised LNG price for the quarter was US$13.77 per metric million british thermal unit (mmBtu), up nearly 1% from the prior quarter. However, it was more than double the US$6.12 price realised in the pcp.

Santos sold 13 LNG cargoes in the first quarter. Santos also delivered the 2022 Climate Change Report outlining the company’s vision for a cleaner energy future.

Between 1 January and 31 March, the Santos share price gained 17.1%.

Management commentary

Commenting on the results, managing director and CEO Kevin Gallagher said:

Today’s results demonstrate that our business has the size, scale and cash flows to enable Santos to deliver stronger shareholder returns.

By designing our portfolio to provide strong cash flows throughout the commodity price cycle, our disciplined, low-cost operating model has positioned us to take full advantage of the increase in commodity prices.

Our goal is to deliver superior shareholder returns while being a global leader in the transition providing cleaner energy and clean fuels that are affordable and reliable.

What’s next for Santos?

Santos has maintained its guidance for 2022. This includes production of 100 to 110 millions mmboe and sales volumes of 110 to 120 mmboe. Upstream production costs are expected to be $8 to $8.50 per barrel of oil equivalent (boe).

The company is on track to achieve US$90 to US$115 million of synergies per year from the merger.

Commenting on the future outlook, Gallagher said the next stage of growth will be disciplined and phased. He added:

The Barossa project is 33 per cent complete and making excellent progress, while the Moomba carbon capture and storage project will deliver a step-change in our emissions profile when it comes online in 2024.

Santos share price snapshot

The Santos share price has surged 19% in the past 12 months. It has gained 26% in the year to date.

In comparison, S&P/ASX 200 Index (ASX: XJO) has returned 8% in the past year.

Santos has a market capitalisation of about $28 billion based on the current share price.

The post Oil boom: Santos share price climbs following record quarter appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 midday update: Ramsay rockets and Rio Tinto disappoints
• Santos share price dips amid $330m share buyback
• 5 things to watch on the ASX 200 on Wednesday
• What sort of dividend yield do Santos shares currently trade on?

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/Bv6YKqa

The Zip Co Ltd (ASX: ZIP) share price is heading in the right direction at long last on Thursday.

In afternoon trade, the buy now pay later (BNPL) provider’s shares are up just over 1% to $1.22.

Why is the Zip share price rising today?

Investors have been bidding the Zip share price higher in response to the release of the company’s third quarter update.

For the three months ended 31 March, Zip reported quarterly transaction volume growth of 27% year on year to $2.1 billion and quarterly revenue growth of 39% to $159.2 million. This was underpinned by a 78% year on year jump in active customers to 11.4 million and a 90% lift in merchants to 86,200.

How does this compare to expectations?

Despite what you might think by the performance of the Zip share price today, this top line growth appears to have actually fallen short of the market’s expectations.

For example, a note out of the extremely bearish UBS highlights that Zip’s transaction volume growth of 27% is tracking well short of consensus second half estimates of 53%. As a result, it will now need a stellar fourth quarter to hit these estimates.

This softer growth appears to have been driven by lower usage among its customer base. For example, during the quarter, Zip reported 5.6 million transactions in the US. However, it has 6.6 million active customers in the country. This means at least 1 million customers were inactive during the period.

And while transactions per customer are still more than 3x in the ANZ market, transactions fell by almost a quarter during the three months despite customer numbers increasing.

UBS believes this is a sign that there are a lot of soon to be inactive customers among its customer base.

It said: “We see this as further evidence that there is a tail of inactive customers that have not yet fallen out of Zip’s base.”

Credit losses worsen

Another area of concern which has analysts talking, but hasn’t stopped the Zip share price from climbing today, is its worsening credit losses.

Management revealed that due to a combination of both internal and external factors, credit losses increased outside the company’s target range during the quarter.

Zip is now executing on adjustments to its risk settings to drive down credit losses towards target levels, while still maintaining top line growth. It notes that this will be done the rollout of new machine learning models and comprehensive diagnostic analysis.

And while it is already having a positive impact in the US with new customer cohorts, it isn’t quite hitting its target just yet.

One positive, which may be helping the Zip share price today, is management accelerating its path to profitability. It is aiming to achieve this by downsizing its workforce. The company sees potential savings of over $30 million in FY 2023.

Time will tell how these initiatives turn out.

The post Zip share price higher at last: Here are key takeaways from its Q3 update appeared first on The Motley Fool Australia.

More reading

• Here’s why the Brambles share price is soaring 7% today
• Own AGL shares? Experts weigh in on outage fallout
• Why is the Evolution share price sinking 4% today?
• QBE share price riding on these 3 ‘macro tailwinds’, analysts say
• Is Netflix Stock a buy after its spectacular fall from grace?

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. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/SO6p7BI

The S&P/ASX 200 Index (ASX: XJO) is having a pleasant day of mild gains so far this Thursday. At the time of writing, the ASX 200 is up a mild 0.37% at around 7,597 points. So it might come as a nice surprise for investors in Brambles Limited (ASX: BXB) to find their company’s share price is doing far better.

At the time of writing, Brambles shares are up a very pleasing 7.09% at $10.73. This decisive move upwards is almost enough to erase the packaging company’s dreary year-to-date performance.

So what’s behind Brambles’ move to the upside today?

Brambles share price rises after quarterly trading update

Well, it appears to be a response to the company’s quarterly trading update released to investors this morning before the ASX market open. This update covers the first nine months of the 2022 financial year. That’s 1 July 2021 to 31 March 2022. So let’s see what Brambles had to show for these nine months.

To kick things off, the company reported that it has received US$4,067 million in sales revenue for the period. That represents a 7% increase on the prior corresponding period, or 8% at constant foreign exchange rates. According to Brambles, this increase “reflected ongoing strong price realisation to recover cost-to-serve increases in all regions, including sustained high levels of input cost inflation and increased capital cost of pallets”.

The Americas was Brambles’ strongest-performing segment over the nine months, recording a sales revenue increase of 11%. The Europe, Middle East and Africa (EMEA) segment was next with a 6% increase. Asia-Pacific recorded a 5% rise.

But perhaps most pleasingly for investors, Brambles also used these numbers to upgrade its earnings guidance for the full 2022 financial year. For the 12 months to 30 June 2022, Brambles is now expecting sales growth of 8-9% (up from 6-8%). It’s also anticipating underlying profit growth of 6-7% (up from 2-5%). Finally, free cash flow after dividends at a net outflow of US$300-$350 million (down from approximately US$350 million).

CEO upbeat on new numbers

Here’s some of what Brambles CEO Graham Chipcase had to say on these numbers:

Strong sales revenue momentum continued in the third quarter resulting in year-to-date growth of 8%. The sales performance in the third quarter was driven by pricing actions in response to operating cost inflation, pallet scarcity and increased pallet costs driven by extraordinary lumber inflation…

Despite all these headwinds, the success of pricing and business efficiency initiatives supports the upgrade of our FY22 guidance for sales, earnings and Free Cash Flow after dividends. This upgrade reflects our focus on recovering the increased cost-to-serve and generating appropriate returns on the capital investments needed to service our customers and support future growth…

Together with our asset efficiency and sustainability initiatives, we are confident the investments being made to transform our business will deliver a step change in customer value creation, profitability and cash flow generation over the medium term.

Brambles share price recap

Brambles has a market capitalisation of $15.4 billion and a current dividend yield of 2.74%.

The post Here’s why the Brambles share price is soaring 7% today appeared first on The Motley Fool Australia.

More reading

• Own AGL shares? Experts weigh in on outage fallout
• Why is the Evolution share price sinking 4% today?
• QBE share price riding on these 3 ‘macro tailwinds’, analysts say
• Is Netflix Stock a buy after its spectacular fall from grace?
• Here’s why the BHP share price is tumbling lower today

Motley Fool contributor Sebastian Bowen 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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/f2FJc46

The AGL Energy Limited (ASX: AGL) share price is bouncing back on Thursday as experts offer their two cents on the latest failure at Loy Yang A.

The company updated the market on a fault at the coal-fired power station yesterday.

The cause of the issue – said to be an electrical fault – is still under investigation. However, the company has warned it could see Loy Yang A – which supplies 30% of Victoria’s electricity – operating one generator down until August and AGL facing a bill.

Experts also reportedly believe the outage could throw a spanner into the works of the company’s demerger plans.

At the time of writing, the AGL share price is $8.71, 2.23% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is also in the green on Thursday, up 0.28% at the time of writing.

Let’s take a closer look at why experts are particularly worried about the outage at the coal-fired power station.

Experts concerned by Loy Yang A outage

The AGL share price is in the green amid reports experts are concerned about the fallout that might come from Loy Yang A’s second failure in three years.

As long-term market watchers might remember, a unit at Loy Yang A faulted back in 2019.

That fault saw it shut down for seven months and ultimately cost the company $105 million. That expense was later reimbursed through insurance.

However, Morgan Stanley analyst Rob Koh is warning the outage might not have such a silver lining this time around. Koh was quoted by the Australian Financial Review as saying:

AGL recovered those losses from business interruption insurance, however AGL is now self-insured.

We view a repeat of this scenario as a worst case.

Meanwhile, Barrenjoey downgraded the company’s stock to ‘underweight’, slapping it with an $8.02 price target, in the wake of the outage, reports The Australian.

The broker also reportedly believes the outage could bring a $70 million – or $20 million to $30 million per month – hit to AGL’s earnings.

It’s also said to think the outage could see the company being forced to buy energy from the pool. That could cost it between approximately $115 and $138 per megawatt-hour over the coming months.

The publication quoted Barrenjoey analyst Dale Koenders as saying:

We see potential for material recovery of earnings in [financial year 2024/financial year 2025], when current higher electricity prices likely pass through the [one to three year] rolling hedge program – assuming Loy Yang A returns to service.

But Loy Yang adds to uncertainty around demerger (dyssynergies, transfer pricing, funding, guidance, etc), which we think needs to be resolved before investors consider whether to pay for these future earnings.

Owners of AGL shares are expected to get the chance to vote on the demerger in July. If agreed upon, the split should occur shortly after.

AGL share price snapshot

This year has been a good one so far for the AGL share price.

Right now, the energy producer and retailer’s stock is 38% higher than it was at the start of the year. Though, it’s slipped 4% over the last 12 months.

The post Own AGL shares? Experts weigh in on outage fallout appeared first on The Motley Fool Australia.

More reading

• Why AGL, Hub24, Rio Tinto, and Zip shares are dropping
• Faults and financials: Why is the AGL share price getting zapped 6% today?
• ASX 200 midday update: Ramsay rockets and Rio Tinto disappoints
• Why is the AGL share price having such a stellar start to the week?
• AGL share price in the green amid ‘virtual battery’ deal

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/7tmc8PE

Shares in Evolution Mining Ltd (ASX: EVN) are trading down today and are now 4% in the red. At the time of writing, the Evolution Mining share price is resting at $4.40 apiece.

Despite announcing its quarterly results, and in addition, a “thick basement gold intersection” at its Cue joint venture (JV) with Musgrave Minerals Ltd (ASX: MGV), investors are selling off Evolution Mining shares today.

Evolution Mining reduces costs, bumps gold production

Highlights for the quarter include:

• All-in Sustaining Cost (AISC) reduced by 27% from the prior quarter to $990 per ounce (US$717/oz)
• Operating mine cash flow of $268.9 million, up 33% on the prior quarter
• Net mine cash flow increased by 135% to $124.5 million after mine capital investment of $143.6 million
• Gold production of 148,787 ounces
• Returned $54.9 million to shareholders via 18th consecutive dividend
• No change to sector leading AISC guidance ($1,135 – $1,195 per ounce) or capital guidance

What else happened this quarter?

Gold production for the quarter was 148,787 ounces, up from 148,048oz the previous quarter. Production was realised on a “sector leading AISC of $990/oz”, down 27%.

It also printed mine operating cash flow of $268.9 million during the quarter, a record for the company.

Whereas the company had a mine capital investment of $143.6 million, with most of this allocated to the Cowal Underground and Red Lake.

Evolution says it had cash in the bank of $537.8 million and net debt of $1,295 million when exiting the quarter.

The company also affirmed its guidance at Cowal, ensuring that 25% of its workforce were Covid-positive at one point during the quarter.

Production is expected to be around 650,000 ounces, revised down from previous guidance of 670,000oz, due to “the extreme rainfall events and COVID-19 impacts”.

What else did Evolution Mining announce today?

The company reported more assay results from its diamond and aircore drilling programs at the on the Cue JV. The project is located in Western Australia’s Murchison district.

It was started alongside Musgrave Minerals back in 2019, as an exploration agreement to cover large areas of Lake Austin and surrounds.

According to Evolution, it can earn a 75% interest in the JV area, if it were to solely fund $18 million on exploration over a 5 year term.

From its latest assay results, the company has added to its dataset compiled from previous drilling.

“Diamond drilling continues to intersect potential ore grade intersections over wide thicknesses in basement rocks at the West Island Prospect,” the company advised.

“[Whereas] aircore drilling results continue to extend the large regolith gold mineralisation footprint at the West Island Prospect and identify new zones for follow-up basement drill testing,” it added.

In the last 12 months the Evolution mining share price has fallen 7% into the red.

The post Why is the Evolution share price sinking 4% today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• This forgotten battery metal ‘looks like lithium 3 to 5 years ago’: analysts
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Thursday

from The Motley Fool Australia https://ift.tt/NQCUfep

Shares in QBE Insurance Group Ltd (ASX: QBE) are trading at $12.26 apiece, up 1.49% on Thursday.

After some fairly widely-dispersed pricing, QBE stock has managed to thrust itself off a low of $10.08 in March and race higher to its current levels.

Analysts are constructive on the company and reckon it’s well-positioned to benefit from a slew of macro catalysts. Let’s take a look.

QBE share price to benefit from macro tailwinds

Analysts at UBS have chimed in on the investment debate for QBE in a recent note to clients. They note the insurer is benefitting from a number of industry-specific and macroeconomic tailwinds, making it the preferred insurance share for UBS.

Writing to clients, UBS analyst Scott Russell said factors such as stronger crop pricing are feeding additional income to QBE via gross written premiums from crop insurance customers.

Not only that, but rising bond yields have the potential to send QBE shares higher, he says.

Meanwhile, analysts at JP Morgan have tied QBE’s outlook to recent events in the bond markets and a strengthening phase in the insurance cycle.

“As a global commercial insurer, QBE is subject to the vagaries of the insurance cycle and volatile natural catastrophes,” the broker wrote.

“Trends in the cycle are currently improving, and there could be further upside from premium rates, providing a tailwind for earnings growth, with investment yields a headwind.”

UBS and JP Morgan each rate QBE as a buy. They value QBE at a price of $15 and $15.50 per share respectively.

Meanwhile, Bloomberg Intelligence analyst Matt Ingram reckons market sentiment has improved for QBE based on its improved climate-risk outlook and its ‘brilliant basics’ program.

He says this could reflect “consensus fiscal 2023 profit that’s more than double mean earnings for the last decade”.

“The higher earnings reflect underwriting and efficiency improvements thanks to the firm’s “brilliant basics” program and better risk selection in the U.S. and European businesses,” he wrote earlier this month.

“The 1.3x price/book ratio represents a 25% discount to IAG, the tightest it has been since 2011, reflecting IAG’s climate-related costs and QBE’s optimism. It remains more expensive than Suncorp despite the latter’s superior profitability,” he added.

What’s the consensus on QBE?

QBE has a consensus valuation of $14.41 per share, according to Bloomberg data. About 91% of analysts covering it rate it a buy right now.

In the past 12 months, the QBE share price has climbed 26%. It is also 9% higher this past month.

The post QBE share price riding on these 3 ‘macro tailwinds’, analysts say appeared first on The Motley Fool Australia.

More reading

• Top broker tips 14% upside for QBE share price
• The QBE share price has gained 16% in a month. Is it still a ‘relatively inexpensive’ ASX 200 share?
• Broker names 3 of the best ASX 200 shares to buy in April
• Broker names 2 ASX 200 shares to buy with almost 20% upside
• Lucky 13? The QBE Insurance share price is now up 13% in 2 weeks

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow 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 owns and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/Rr5vSmH

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

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

Netflix (NASDAQ: NFLX) stock plunged in dramatic fashion on Wednesday, losing roughly a third of its value overnight. The catalyst that had investors running for the exits was news that the streaming pioneer actually lost subscribers during the first quarter, something that hasn’t happened in more than 10 years.

Factoring in today’s decline, Netflix is down more than 67% since November. Given its spectacular fall from grace, is Netflix stock a buy?

It’s complicated

Like so many things, the answer isn’t the same for every investor, but there are a number of factors that suggest Netflix still has plenty of growth ahead.

Management estimates password-sharing is taking place in more than 100 million households. While Netflix doesn’t mind this within families, it plans to crack down on friends and exes, introducing paid-sharing plans. Additionally, recent supply chain issues have slowed adoption of smart TVs, which is temporarily weighing on subscriber growth.

Netflix plans to continue its focus on quality programming, with recent hits like Squid Game, Bridgerton, Inventing Anna, and The Adam Project as examples, as well as expanding its personalized local-language content to continue growing its international audience.

CFO Spencer Neumann cited several macro factors, including the war in Eastern Europe, inflation, and seasonality, as the biggest contributors to churn, though these issues should abate over time. Furthermore, Netflix shed 700,000 customers when it withdrew its service from Russia. If not for that, it would have added 500,000 subscribers.

One of the biggest revelations is that Netflix is, at long last, considering a lower-cost, ad-supported tier. Co-CEO Reed Hastings has long balked at the idea, but has had a change of heart, as evidenced by his comments during the company’s conference call to discuss the results:

One way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. … I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much I’m a fan of that, I’m a bigger fan of consumer choice.

The bottom line? There’s no question the streaming pioneer will need to make some adjustments to its business and that won’t happen overnight. But given the levers the company can pull to reaccelerate its growth and its success at reinventing itself over the years, I believe Netflix stock is a buy. 

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

The post Is Netflix Stock a buy after its spectacular fall from grace? appeared first on The Motley Fool Australia.

More reading

• Why Netflix stock crashed and burned Wednesday
• Here’s why the Netflix share price is plunging 25% in after-hours trading
• Netflix investors could be in for a shocker this week
• Why Netflix could be a buy in the coming weeks
• 3 reasons to buy Netflix, and 1 reason to sell

Daniel Vena owns Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Netflix. The Motley Fool Australia has recommended Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

from The Motley Fool Australia https://ift.tt/nIQocPx

The BHP Group Ltd (ASX: BHP) share price has come under pressure on Thursday.

At the time of writing, the mining giant’s shares are down almost 3% to $50.86.

Despite this, the BHP share price is still up by a sizeable 20% since the start of the year.

Why is the BHP share price falling today?

Investors have been selling down the BHP share price today in response to the release of the Big Australian’s third quarter operational update.

That update revealed that many of BHP’s operations have been impacted by temporary labour constraints due to COVID-19. This led to the mining giant reporting softer than expected quarterly production and forced a downgrade to its guidance for some commodities.

In case you missed it, BHP reported:

• Iron ore production was flat quarter on quarter at 59.7Mt
• Copper production up 1% to 369.7kt
• Nickel production down 13% to 18.7kt
• Metallurgical coal production up 20% to 10.6Mt
• Energy coal production down 13% to 2.6Mt
• Petroleum production dropped 6% to 24.1 MMboe

How does this compare to expectations?

According to a note out of Goldman Sachs, its analysts were expecting a much better performance from BHP.

It had pencilled iron ore shipments of 67.2Mt, copper production of 413kt, petroleum production of 25.7 MMboe, and metallurgical coal production of 9.4Mt. The latter was beaten comprehensively, which is a positive given the sky high prices the steel making ingredient is commanding.

What else?

Also weighing on the BHP share price was management’s outlook.

Although it has reaffirmed its FY 2022 production guidance for iron ore, metallurgical coal, and energy coal, it has lowered its copper and nickel production guidance.

BHP’s full year total copper production guidance has been lowered to between 1,570 and 1,620 kt, reflecting lowered production guidance for Escondida. Whereas its full year nickel production guidance has been lowered to between 80 and 85 kt due to COVID-19 related labour constraints.

Positively, management reaffirmed its full year unit cost guidance for WAIO, Escondida, and Queensland Coal. And while it has increased its guidance for New South Wales Energy Coal, this reflects a targeted increase in the proportion of higher quality coal. This is so BHP can capture more value from the record high prices for higher quality thermal coal.

The post Here’s why the BHP share price is tumbling lower today appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: BHP, Megaport, and Zip release Q3 updates
• BHP share price on watch following Q3 update
• 5 things to watch on the ASX 200 on Thursday
• Own BHP shares? Here’s why this week’s operations update could disappoint
• How does the Fortescue dividend compare to its sector?

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 Bruce Jackson.

from The Motley Fool Australia https://ift.tt/A0uFyUv