Tag: Motley Fool

The Appen Ltd (ASX: APX) share price rallied even after a leading broker cut its recommendation on its shares.

The artificial intelligence (AI) software developer jumped 5% to $6.97 this morning – making it the top performer on the S&P/ASX 200 Index (ASX: XJO).

And in case you are wondering, the Iluka Resources Limited (ASX: ILU) share price and Paladin Energy Ltd (ASX: PDN) share price are in second and third spot.

Appen share price bucks downgrade news

But the surge in the Appen share price could puzzle some as it comes after JPMorgan lowered its rating on the shares to “neutral” from “overweight”.

The broker made the downgrade following Appen’s disappointing results, which missed JPMorgan’s estimates.

The weakness was driven largely by Appen’s New Markets division. This business failed to live up to growth expectations.

Lofty targets and near-term uncertainty

Investors would have also been put off by management’s decision not to issue any more short-term guidance. If there’s one thing that markets hate, it’s uncertainty.

Management will instead focus on its 2026 targets and that means an increase in reinvestment in the business, noted JPMorgan.

“We believe APX’s 2026 target to double revenue seems very ambitious given mgmt’s recent track record,” said the broker.

“Although the stock has likely oversold in the short term, the lack of visibility on growth and heightened levels of reinvestment means we would prefer to stay on the sidelines until mgmt starts delivering on their guidance.”

Looking past US for support

Appen is counting on growth in non-global customers to contribute meaningfully to its 2026 targets. The number of such customers, which are essentially non-US tech giants, is tipped to grow at a 35% compound annual growth rate (CAGR).

That means this group will be contributing to around a third of Appen’s revenue.

“The guidance also implies mid-single digit growth in APX’s Global Services revenues,” added JPMorgan.

“At this point in time we believe these targets appear to be very ambitious, given revenue growth has slowed from 11% in FY20 to 8% in FY21.”

What is the Appen share price worth?

JPMorgan cut its 12-month price target on the Appen share price to $7 from $13.50 a share.

But given the 59% collapse in the Appen share price over the past year, some shareholders might just be relieved that the downgrade wasn’t more severe.

The post Embattled Appen (ASX:APX) share price bounces despite a top broker downgrade appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• These were the worst performing ASX 200 shares last week
• Why Adbri, Appen, Block, and Life360 shares are storming higher
• Here’s why the Appen (ASX:APX) share price is racing 14% higher today
• Back on the horse! ASX tech shares stage stunning comeback following sell-off

Motley Fool contributor Brendon Lau owns Iluka Resources Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) is having a decent start to the week. The benchmark index is currently up 0.5% to 7,031.4 points.

Here’s what is happening on the ASX 200 today:

Zip to acquire Sezzle for $491 million

The Zip Co Ltd (ASX: Z1P) share price is in a trading halt on Monday while it seeks to raise almost $200 million via a capital raising. This follows news that the buy now pay later (BNPL) provider has signed an agreement to acquire rival Sezzle Inc (ASX: SZL) in an all-scrip deal valued at $491 million. The funds from the capital raising will be used to support their combined growth plans.

Allkem shares fall on half year results

The Allkem Ltd (ASX: AKE) share price is falling on Monday following the release of its half year results. This morning the lithium miner reported first half revenue of US$192.3 million. This was driven by a 142% increase in Olaroz revenue to US$65.6 million and a four-month contribution from the Mt Cattlin business following the Galaxy-Orocobre merger. Management also revealed that it expects lithium prices to be even stronger in the second half.

InvoCare shares rise on full year results

The InvoCare Limited (ASX: IVC) share price is pushing higher today following the release of its full year results. For the 12 months ended 31 December, the funerals company reported an 11% increase in revenue to $532.5 million and a 51% jump in operating earnings per share to 31.6 cents. Management commented: “Recovery in the key value drivers of core operating earnings as well as a robust recovery in the mark-to-market (MTM) valuation of Prepaid Funds Under Management have driven this growth in Reported Profit.”

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the GrainCorp Ltd (ASX: GNC) share price with a 5% gain on no news. Though, with Russia being a major grain exporter, investors may expect GrainCorp to benefit from Russian sanctions. The worst performer has been the Fortescue Metals Group Limited (ASX: FMG) share price with a 4% decline after it went ex-dividend.

The post ASX 200 (ASX:XJO) midday update: Zip to buy Sezzle for $491m, GrainCorp storms higher appeared first on The Motley Fool Australia.

More reading

• Sezzle (ASX:SZL) share price on watch after accepting Zip takeover offer
• Zip (ASX:Z1P) share price halted after announcing results, capital raising, and Sezzle acquisition
• Allkem (ASX:AKE) share price higher amid results and ‘surging demand for lithium’
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro owns Allkem Limited. 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.

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The Suncorp Group Ltd (ASX: SUN) share price is in reverse during late morning trade on Monday. This comes after the company provided an update on the recent severe weather impacting Australia’s east coast.

At the time of writing, the banking and insurance company shares are 3.28% lower to $10.76 apiece.

In comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.39% higher at 7,025.4 points.

What did Suncorp announce?

Investors are dragging the Suncorp share price lower today following the heavy rainfall and flooding in south-east Queensland and northern New South Wales.

According to the release, Suncorp advised it has received more than 5,000 claims across both states as of 28 February.

Of the total claims lodged, around 70% have come from south-east Queensland and the remaining 30% from New South Wales.

Suncorp stated that it has “comprehensive reinsurance arrangements in place including the main catastrophe program, dropdown aggregate protections and Aggregate excess of loss (AXL) treaty all with full limits available.”

In addition, the company also has quota share arrangements in place for its Queensland home insurance portfolio.

Suncorp expects the maximum cost from this event will be approximately $75 million.

Currently, the full-year outlook for natural hazard costs is about $1.075 billion.

Suncorp CEO Steve Johnston touched on the latest developments:

Right now, safety is the number one priority as we continue to face significant and dangerous weather conditions. Many roads, homes and businesses remain flooded so we must wait until it is safe to evaluate the impact.

We are carefully monitoring the situation, and we are ready to help our customers with any resulting claims. Our mobile Customer Support Teams are on alert and ready to be deployed into severely impacted communities once waters recede.

Suncorp share price summary

Over the past 12 months, Suncorp shares have gained 8.3%, however, year to date they are down 2.7%. The company’s share price reached a 52-week high of $13.26 in September, before treading lower in the following months.

Suncorp presides a market capitalisation of roughly $13.59 billion, making it the 36th largest company on the ASX.

The post Here’s why the Suncorp (ASX:SUN) share price is slipping today appeared first on The Motley Fool Australia.

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• The ASX 200 just hit 3-week highs. What’s next?
• Why Flight Centre, Macquarie, Super Retail, and Suncorp shares are racing higher

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 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.

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Earnings season on the ASX is now wrapping up for the vast majority of ASX shares. Last week was the last hurrah, and we heard from some of the biggest names on the S&P/ASX 200 Index (ASX: XJO). One of those was the Woolworths Group Ltd (ASX: WOW) share price. 

Yes, Woolworths reported its half-year earnings last Wednesday, 23 February. And it made for some interesting reading. As we covered at the time, the grocery giant reported an 8% increase in revenues, but an 11% drop in earnings. Net profits after tax (NPAT) also fell, dropping 6.5% to $1.38 billion. 

But for many investors that hold Woolworths shares, the most important metric to watch was Woolworths’ dividends per share. As an ASX 200 blue-chip share in the consumer staples space, Woolies shares undoubtedly have a place in many an ASX income investors’ portfolio. So let’s check out what the company had to say to investors on this front. 

So Woolworths announced an interim dividend of 39 cents per share last week. As is usual for the company, the dividend will come with full franking credits. Woolworths shares will trade ex-dividend for this payment on 3 March, with the date of payment set at 13 April. The company’s dividend reinvestment plan (DRP) is available for investors with no discount.

How does Woolworths shares’ interim dividend measure up?

But how does this interim payment compare to Woolworths’ past dividends? Unfortunately for those investors who value income, this payment represents a meaningful drop from what investors might have been used to in recent years. This 39 cents per share interim payment is a 26.4% drop from the 53 cent interim dividend Woolies paid out last year. The company’s previous final dividend that investors saw distributed in October was 55 cents per share. 

In fact, Woolworths’ latest interim dividend is the lowest the company has forked out in years, since 2017 to be precise. However, there is a caveat to that. This payment is the first interim dividend since Woolworths spun off Endeavour Group Ltd (ASX: EDV) last year. 

Endeavour, which owns Woolworths’ old liquor and bottle shop businesses, was a significant source of earnings for the company. As such, investors can’t be too surprised that its separation has resulted in a lower Woolworths dividend going forward. In its earnings report last week, Woolworths chair Gordon Cairns addressed this. Here’s some of what he said:

The Board has declared an interim dividend of 39c. Excluding the 13c related to Endeavour Group in H21, the dividend is broadly in line with the prior year.

Mr Cairns also highlighted that Woolworths had returned $2 billion to shareholders through share buybacks since the Endeavour demerger. Earlier his month, Endeavour announced an interim dividend of 12.5 cents per share, fully franked, of its own. 

At the current Woolworths share price, this ASX 200 blue chip has a market capitalisation of $42.73 billion, with a dividend yield of 2.67%. 

The post Here’s what you need to know about the Woolworths (ASX:WOW) dividend appeared first on The Motley Fool Australia.

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• These are some of the only ASX shares in the green today. Here’s why

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.

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The Sezzle Inc (ASX: SZL) share price is frozen on Monday morning.

This follows a trading halt request by the buy now pay later (BNPL) provider prior to the market open.

Why is the Sezzle share price halted?

The Sezzle share price has been halted on Monday after signing an agreement to be taken over by rival Zip Co Ltd (ASX: Z1P).

According to an announcement out of the latter, Sezzle has agreed to a deal that will see shareholders receive 0.98 Zip shares for every Sezzle share owned.

Based on the current Zip share price, this implies a price of $2.1658 per Sezzle share, which represents a premium of almost 22% to Sezzle’s last close price and values the company at $491 million.

What is management saying?

Sezzle’s Co-Founder, Executive Chairman, and CEO, Charlie Youakim, has spoken very positively about the agreement.

He said: “We are extremely excited about the opportunity to create a leader in the financial services industry by combining with Zip and its management team led by Larry [Diamond] and Pete [Gray]. Paul [Paradis] and I believe it will be a great cultural fit for both our organisations and we’re excited to be part of Zip’s next chapter. I believe the transaction will position us to win in the U.S. and globally.”

This sentiment was echoed by the team at Zip, which believes the deal will be transformational.

Zip’s Co-Founder and Global CEO, Larry Diamond, said: “We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability. Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market,”

“Pete and I have known Charlie and Paul (cofounders of Sezzle) for some time, and we’ve been impressed by what the Sezzle team has achieved. Their responsible lending, their Sezzle Up credit builder programme, as well as their B Corp certification is to be admired. We’re excited to welcome the entire Sezzle team on our journey, as we continue our mission towards being the first payment choice, everywhere and every day,” he added.

What now?

The Sezzle Board has unanimously determined that the proposed transaction is fair and in the best interests of Sezzle and its shareholders. As a result, it is unanimously recommending that Sezzle shareholders vote in favour of the proposed transaction.

It’s a similar story over at Zip, with its Board unanimously recommending that its shareholders vote in favour of the resolutions necessary to implement the transaction.

If all goes to plan, the deal is expected to complete during the third quarter of calendar year 2022.

In the meantime, the Sezzle share price is expected to remain in a trading halt until Tuesday morning, pending the release of an announcement that day.

The post Sezzle (ASX:SZL) share price on watch after accepting Zip takeover offer appeared first on The Motley Fool Australia.

More reading

• Zip (ASX:Z1P) share price halted after annoucning results, capital raising, and Sezzle acquisition
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• Back on the horse! ASX tech shares stage stunning comeback following sell-off
• 5 ASX 200 shares tumbling to 52-week lows 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. 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.

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The S&P/ASX 200 Pharmaceuticals & Biotechnology index (AXPBKD) is down 2.7% in the past year, but this one ASX biotech share could be a winner.

The share has gained 188% in the past year, and 78% in the past six months.

So which ASX biotech share has one expert recommended?

Which ASX biotech share?

ASX biotech share Neuren Pharmaceuticals Ltd (ASX: NEU) could have “significant upside” from its current levels, one analyst believes. In today’s trade, the shares are swapping hands at $3.81, a 2.06% fall.

Karst Peak Capital healthcare research head Hashan De Silva said Neuren could be worth $2.5 billion, more than five times its current market capitalisation. Writing for Livewire, he said:

Even though Neuren’s share price doubled in Dec 21 following positive Phase 3 data, we believe there is still significant upside from current levels; in fact, in our view the risk/reward of the stock is more attractive today than at any point in the past few years and we added to our position following the Phase 3 readout.

The Neuren share price has surged around 129% since market close on 6 December. On 7 December, the company revealed promising results from a phase three trial into the use of its drug candidate Trofinetide in Rett Syndrome. Project partner Acadia Pharmaceuticals (NASDAQ: ACAD) plans to submit a new drug application to the US Food and Drug Administration (FDA) mid-year.

De Silva said he believes there is likely no competition for trofinetide for many years and he believes FDA approval is “very likely”. He said:

Given the strong results in the Phase 2 and Phase 3 trials, the clean safety profile, strong patient advocacy and the lack of any approved drugs for Rett Syndrome, we believe it is highly likely the FDA will approve trofinetide.

We expect approval by late 2022/early 2023 given Acadia’s plan to submit the drug for approval around mid-year.

On Friday, the company also informed the market it has received FDA approval for a phase two trial of the use of NNZ-2591 in Angelman Syndrome.

Neuren share price snap shot

The Neuren Pharmaceuticals share price has surged 27% in the past month although is down 1.5% in the past week.

In comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) has climbed 2% in the past month and is down 3% in the last week.

Neuren has a market capitalisation of about $478 million based on its current share price.

The post Fundie names underappreciated ASX biotech share with ‘significant upside’ appeared first on The Motley Fool Australia.

More reading

• Why these 2 cryptos are booming in 2022 as the Bitcoin price wallows
• Investing in pharma stocks? Avoid doing these 3 things
• Zip (ASX:Z1P) share price halted after annoucning results, capital raising, and Sezzle acquisition
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• Newcrest (ASX:NCM) shares rise following Pretivm takeover update

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.

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The Bitcoin (CRYPTO: BTC) price is down 4% over the past 24 hours to US$37,749 (AU$53,626).

That brings the losses for the world’s biggest cryptocurrency by market cap to 21% so far in the New Year.

And it’s not just the Bitcoin price that’s come under selling pressure.

The Ethereum (CRYPTO: ETH) price is down a painful 30% since 1 January.

But the story for the wider basket of cryptos is still worse.

The charts at CoinMarketCap tell us that aside from three stable coins (tied to fiat currencies) showing fractional percentage gains in 2022, only two of the biggest 80 cryptos are well into the green.

2 cryptos far outpacing the Bitcoin price in 2022

If you scroll down the list of top cryptos by market cap you eventually get to number 26, FTX Token (CRYPTO: FTT) and number 27, Unus Sed Leo (CRYPTO: LEO).

At the time of writing, FTT is up 4% year to date. While that’s hardly shooting the lights out, remember that the Bitcoin price is down 21% over that time. And the S&P/ASX 200 Index (ASX: XJO) is down 8%.

For a really booming gain, however, there’s Leo. It’s up 57% so far in 2022.

So, what do these tokens do?

According to CoinMarketCap, “FTT is the native cryptocurrency token of the crypto derivatives trading platform FTX”.

And Leo “is a utility token that’s used across the iFinex ecosystem … allowing Bitfinex users to save money on trading fees”.

In other words, they’re both what are known as exchange tokens.

Why are these exchange tokens outperforming?

According to crypto analysts, the outperformance of Leo and FTT over the likes of the Bitcoin price in 2022 is closely tied to the volatility gripping crypto markets in recent months.

Exchange tokens tend to do well when the companies they’re tied to (crypto exchanges) perform well.

According to Clara Medalie, research director of crypto trading data company Kaiko (quoted by Bloomberg), “FTX’s token is strongly correlated to any positive news coverage. FTX has had a better year than most other exchanges that have their own exchange tokens, so it isn’t surprising that FTT is positive.”

Looking at the Bitcoin price performance, Jeff Dorman, CEO of digital asset fund manager Arca, said:

For some reason, people still think Bitcoin is a defensive asset, even though it has absolutely no characteristics of a defensive asset. The things that should be defensive are exchange tokens because there’s real revenues, cash flows and amortizations.

Dorman pointed to the increased volatility and greater trading volume as benefitting tokens like Leo and FTT over Bitcoin and Ethereum:

Fundamentally, who benefits from the volatility? The exchanges. Exchange [tokens] should outperform because their volume and revenues go up. Smart investors are investing in exchange tokens. Certainly, anybody who does any real fundamental analysis and cares about the growth of real business.

How the rest of 2022 plays out remains to be seen.

But so far, exchange tokens like Leo and FTT have left the Bitcoin price wallowing in their wake.

The post Why these 2 cryptos are booming in 2022 as the Bitcoin price wallows appeared first on The Motley Fool Australia.

More reading

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• Sanctions are a good thing? Why Bitcoin, Ethereum, and Dogecoin are recovering nicely today
• Down 14% in a week, where to next for the Bitcoin price?
• Have Bitcoin price falls cemented gold as the best safe-haven asset?
• Ethereum price down again today as founder touts benefits of ‘crypto winter’

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin and Ethereum. 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.

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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.

Pharmaceutical stocks can be great tools for building wealth, provided that you understand how and why to use them — and how not to. Like all investments, it’s entirely possible to get burned by pharma stocks, so you’ll want to minimize the risks.

To help you on your journey, here are three of the biggest mistakes that new pharma investors are prone to making. The road to mastery is long, but if you do your best to avoid these pitfalls, your pharma portfolio could be in much better shape over the years.

1. Disregarding the exclusivity expiration date for key medicines

When a pharmaceutical company gets a new drug approved for sale by a regulatory body, it’s in a race against time to recoup development costs and turn a profit before competitors are legally allowed to copy the drug and sell their own cheaper generic version.

Investors who aren’t aware of looming exclusivity expirations invest in pharma stocks at their own peril. You wouldn’t want to invest in a business that’s already losing revenue from one of its top moneymakers, quickly.

For most drugs developed in the US, exclusivity protections last for five years, and patent protections can last for 20 years. Not all drugs have patent protections, but exclusivity protections are the norm.

In a nutshell, that means five years after a medicine hits the market, there’s a solid chance that the drugmaker’s revenue from it will start to fall as generic competitors enter. For example, one of the biggest questions for investors in AbbVie (NYSE: ABBV) is whether it’ll be able to successfully navigate falling revenue from its blockbuster drug Humira once its exclusivity protections expire next year.

The larger the company, the less the expiration of any individual drug’s protections will impact the stock. Still, the amount of annual revenue from a product matters the most, so be sure to check a company’s latest earnings report to see how much an upcoming exclusivity protection expiration will ding the top line.

2. Ignoring the valuation

As with all stocks, it’s perilous to ignore the valuation of pharma companies. After all, you check the price tag before you buy something to see if it’s a deal worth taking, and pharma stocks should be no different.

What’s an acceptable deal for you depends on your own preferences, but take care to recognize that an overly inexpensive stock should be a red flag, just like an overly expensive one would be. If you see that the price-to-earnings multiple of AbbVie is around half that of its similarly sized competitors like Eli Lilly, try to figure out why the market is valuing it that way.

With AbbVie, the answer almost certainly relates to its looming expiring exclusivity for one of its biggest-earning medicines, so the cheap valuation is a signal that the market is expecting lower future earnings. If you buy the shares and the market is correct, you might be disappointed by languid growth. Worse yet, if you buy an overpriced stock and an economic event causes investors to flee to grounded valuations, you could be looking at substantial losses.

However, you don’t need to obsess over valuations, especially not when your investing thesis for a business is strong. A stock that’s on the expensive side might be that way because of anticipated fast growth that pans out. Alternatively, shares that are priced cheaply might be the result of the market judging a stock’s growth potential incorrectly.

You’re more likely to avoid investor’s regret if you factor valuation analysis into your research process.

3. Selling too soon

Perhaps the largest mistake that new investors make when purchasing pharma stocks is selling them too soon.

The drug development cycle takes quite a while to bear fruit, with the median successful project lasting around 7.2 years from the preclinical stage through the terminal regulatory approval for commercialization. Therefore, future revenue growth needs to be planned for far ahead of time. And because only 13.8% of medicines make it through the clinical trials process, increasing income over time is far from guaranteed.

This is why many companies develop many different medicines in parallel. As a result, major players tend to have at least a couple of programs that are scheduled to launch each year. When certain programs fail, it causes an immediate and negative impact on the share price. But once approved, medicines often take a year or more from their launch to see widespread adoption, and peak sales can sometimes occur only several years after launch.

So the positive impacts on shareholder value are partially registered over time, which is one of the reasons it’s so important to keep holding even when there’s been a setback with an important program.

In other words, if you buy a pharma stock only to hold it for a year before selling, you probably didn’t get much of the benefit of the slow march of the development process. Especially when a drug stock pays a dividend, holding it for at least three years is highly recommended. And if you commit to a multi-year holding period, you’ll be better prepared to stomach the inevitable downward volatility.

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

The post Investing in pharma stocks? Avoid doing these 3 things appeared first on The Motley Fool Australia.

More reading

• Why these 2 cryptos are booming in 2022 as the Bitcoin price wallows
• Zip (ASX:Z1P) share price halted after annoucning results, capital raising, and Sezzle acquisition
• ‘We are accountable’: Macquarie (ASX:MQG) weighs in on the future of green hydrogen
• Newcrest (ASX:NCM) shares rise following Pretivm takeover update
• ‘Impressive and consistent’: Sandfire Resources (ASX:SFR) share price gains on half-year earnings

Alex Carchidi 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.

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

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The Zip Co Ltd (ASX: Z1P) share price won’t be going anywhere today.

This morning the buy now pay later (BNPL) provider released its half year results and requested a trading halt.

Zip share price halted amid capital raising

• Transaction volumes up 92% over the prior corresponding period to a record $4.5 billion
• Transaction numbers up 147% to a record of 36.3 million
• Revenue up 89% to $302.2 million
• Cost of sales up 192.5% to $242.2 million
• Gross profit down 23.2% to $59.1 million
• Loss before tax of $214.2 million

What happened during the first half?

In line with its pre-released half year results, Zip delivered a 92% increase in transaction volume to $4.5 billion and an 89% lift in revenue to $302.2 million.

Management revealed that this was driven by growth across all geographies, underpinned by customers continuing to benefit from products such as Tap and Zip, and deepening engagement through initiatives such as Zip’s personalised rewards offering.

As per its previous update, things were not quite as positive for its earnings. Due to a significant jump in its cost of sales, Zip reported a 23% decline in gross profit to $59.1 million and a loss after tax of $214.3 million.

Zip share price halted

Given that Zip’s results have been pre-released, the main focus for investors is likely to be the Zip share price being a trading halt.

This morning the company requested a halt so it could undertake a $198.7 million capital raising. This comprises a fully underwritten institutional placement to raise $148.7 million and a $50 million share purchase plan.

Zip is raising the funds at $1.90 per share, which represents a 14% discount to the Zip share price at the close of play on Friday.

Why is it raising funds?

Zip has launched its capital raising after announcing an agreement to acquire rival BNPL provider Sezzle Inc (ASX: SZL).

And while the funds won’t be used to acquire Sezzle, management intends to use the additional capital to support its growth and execute on the potential synergies from the transaction.

Sezzle acquisition

Zip has signed an agreement to acquire Sezzle for a consideration of 0.98 Zip shares for every share Sezzle share.

Based on the current Zip share price of $2.21, this implies a price of $2.1658 per Sezzle share, which represents a premium of almost 22%. It also values Sezzle at approximately $491 million.

Zip’s Co-Founder and Global CEO, Larry Diamond, commented: “We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability. Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market,”

“Pete and I have known Charlie [Youakim] and Paul [Lahiff] (cofounders of Sezzle) for some time, and we’ve been impressed by what the Sezzle team has achieved. Their responsible lending, their Sezzle Up credit builder programme, as well as their B Corp certification is to be admired. We’re excited to welcome the entire Sezzle team on our journey, as we continue our mission towards being the first payment choice, everywhere and every day,” he added.

Subject to approvals, Zip expects the transaction to complete by the end of the third quarter of calendar year 2022.

The post Zip (ASX:Z1P) share price halted after annoucning results, capital raising, and Sezzle acquisition appeared first on The Motley Fool Australia.

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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.

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The CEO of Macquarie Group Ltd (ASX: MQG) has said that green hydrogen is “part of the solution” to solving the problem of emissions and climate change.

Macquarie is one of the larger investors in green investments with its Green Investment Group (GIG).

There are a number of different ways that emissions can be reduced.

After talking with her teenage children, Macquarie Boss Shemara Wikramanayake acknowledged that her generation are accountable to the younger generation who can only help with awareness and start fixing the problems, according to reporting by The Australian.

She was quoted as saying:

And what our generation has to do is not carry on saying ‘Oh there’s a problem’…we have to get on with the solution.

Macquarie now has 300 renewable energy projects around the world. This is having a growing presence on Macquarie’s earnings and balance sheet, which could mean a bigger influence on the Macquarie share price.

Green hydrogen

Green hydrogen is hailed as one of the main ways that the world can decarbonise. Renewable energy and batteries are one part of the strategy. But there are also some areas and industries that are harder to decarbonise like heavy industry.

Hydrogen could be a key fuel. One of the main ways to make emission-free hydrogen is to split hydrogen from water using an electrolyser and renewable energy.

Ms Wikramanayake said that both ‘blue’ and green hydrogen may be required during the energy transition, according to reporting by The Australian. She said:

Each jurisdiction will have to, depending on its economic drivers, determine which is best

Frankly, blue hydrogen in the early stages will probably become cost competitive sooner than green…for blue hydrogen, there’s existing infrastructure that you can actually use already.

Ultimately it’s not a choice, I think we have to run both in parallel.

Meanwhile, Andrew Forrest and Fortescue Metals Group Limited (ASX: FMG) are heavily pursuing green hydrogen. Mr Forrest says that blue hydrogen and carbon capture are not effective enough at reducing emissions.

Macquarie is reportedly working with BP, the oil giant, to conduct feasibility studies on creating green hydrogen hubs for both domestic and exporting opportunities.

What else is Macquarie working on?

The Australian also reported that Macquarie is also working on the feasibility of the first batch of offshore wind projects on Australia’s coastline.

The global investment bank is working on a 1GW offshore wind project off Victoria’s Bass Coast and perhaps others. These are being supported by the Victorian government. Ms Wikramanayake thinks offshore wind will get traction, who said:

It’s a new technology for Australia, offshore wind, but internationally it’s really well established. It’s proven to be clean and cost competitive etc, so we’re hoping we can bring offshore wind into the mix of renewable sources here for Australia’s transition.

Macquarie share price snapshot

Whilst the Macquarie share price has fallen 14% since the start of 2022, it’s up around 25% over the last 12 months.

The post ‘We are accountable’: Macquarie (ASX:MQG) weighs in on the future of green hydrogen appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Fortescue Metals Group Limited. 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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