Tag: Motley Fool

There have been some painful declines in the S&P/ASX 200 Index (ASX: XJO). Some ASX 200 shares have seen declines of at least 50%.

Sometimes declines of share prices can be due to overall market declines where investors punish most businesses indiscriminately at the same time. However, over the past year the ASX 200 has risen by 9%, so it has been a decent time for the overall market.

Other times, it’s a company going through business-specific problems which is causing investors to lose faith.

After heavy declines, are these three ASX 200 shares turn around opportunities?

Magellan Financial Group Ltd (ASX: MFG)

Magellan is a fund manager which predominately invests in international shares for investors. But it also has a sizeable amount of funds under management (FUM) allocated to infrastructure and Australian shares too.

Over the past 12 months, the Magellan share price has fallen 60%. Its investment fund performance from mid-2020 has underwhelmed investors. Magellan recently lost the investment mandate from St James’ Place which represented approximately 12% of the current annual revenue.

Some analysts think that Magellan’s FUM and net flows could be challenged for years, with UBS suggesting that the fund manager may need to cut its management fees or lose even more FUM. That’s why UBS rates it as a sell with a price target of $17.

Even Morgans, which has been positive on the ASX 200 share, currently rates Magellan as a ‘hold’ with a price target of $24.73. It wants to see that the Magellan fees and FUM situation stabilises.

Afterpay Ltd (ASX: APT)

The Afterpay share price has halved over the past year. Indeed, many of the ASX’s buy now, pay later (BNPL) companies have suffered in recent months including Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL).

Whilst Afterpay continues to see its volumes and customer numbers grow, that growth has been slowing.

Brokers are seeing some of the headwinds for Afterpay, such as no surcharges on the buy now, pay later (BNPL) rules being changed as suggested by the Payments Systems Board.

Morgans currently rates the Afterpay as a hold, noting that that market isn’t a fan of the BNPL industry at the moment. The Morgan price target is $92, suggesting a rise of more than 30%. At the moment, the Afterpay share price is heavily influenced by the Block share price due to the upcoming planned merger which will be paid in Block shares.

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price dropped by around 48% over the past year.

It has suffered with lower demand, lower revenue and sinking profit. The ASX 200 share’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin is now much lower than it was before 2021. However, management think the margin can improve over time.

Overall demand from Chinese customers and daigou is now lower than it used to be. Local Chinese infant formula brands have been taking market share from international players like A2 Milk.

Citi thinks A2 Milk can turn things around as the inventory is now fresh and in an improved position. It also notes A2 Milk is doing a number of initiatives to make things better. Citi rates A2 Milk as a buy with e price target of $7.30.

However, not every broker is confident on the turnaround. Macquarie rates A2 Milk as a sell, with a price target of just $5.20 with growth looking unsure and the profit margin not looking as though it will be strong.

The post Are the worst-performing ASX 200 shares turnaround opportunities? appeared first on The Motley Fool Australia.

More reading

• Could Brainchip (ASX:BRN) crack into the ASX 200? Here’s what it takes
• ASX 200 (ASX:XJO) midday update: BHP’s update, Megaport sinks, HUB24 impresses
• Nick Molnar and Anthony Eisen will say goodbye to their Afterpay (ASX:APT) shares tomorrow. What will they be left with?
• ASX retail shares on watch amid potential cuts to COVID-19 isolation requirements
• 2 ASX shares that now have 80% upside: analysts

Motley Fool contributor Tristan Harrison owns Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Afterpay Limited. The Motley Fool Australia has recommended A2 Milk and Macquarie 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/3FCACrT

Key points

• This ASX gaming ETF has only been listed for less than two years
• Microsoft is acquiring gaming giant Activision Blizzard for US$68.7 billion
• This could result in a big shakeup for this ETF

---

The VanEck Video Gaming and Esports ETF (ASX: ESPO) is one of the newer exchange-traded funds (ETFs) on the ASX. Since its debut back in September 2020, this ASX share has been a rather ho-hum investment thus far. It’s up 10.15% since its inception around 18 months ago. But it’s also down 5.11% over the past year, including a 13.8% drop from where it was just back in mid-November.

But with some big news in the gaming space overnight, ESPO could be set for one of its largest shakeups since it first graced the ASX boards.

Microsoft to acquire gaming giant Activision Blizzard

Why? Well, overnight (our time), we got wind of some big news. The US tech titan Microsoft Corporation (NASDAQ: MSFT), the no-introduction-needed company behind the Office software suite and the Windows operating system, intends to acquire the gaming giant Activision Blizzard Inc (NASDAQ: ATVI).

Activision Blizzard is one of the largest gaming companies in the world. It owns valuable intellectual property such as Call of Duty, Starcraft, Diablo, and World of Warcraft franchises. As well as some popular mobile games like Candy Crush.

So according to our Fool colleagues in the US, Microsoft is putting forward an all-cash offer worth US$68.7 billion. That equates to around US$95 a share. Activision Blizzard shares closed at US$65.39 a share last week, but opened at US$86.55 a share last night when the deal was public knowledge. It closed at U$82.31 a share this morning, up 25.88%.

It’s not hard to see why Microsoft might be pursuing the deal. The company is already a gaming powerhouse with its Xbox series of video game consoles as well as ownership of several popular franchises, such as Halo and Gears of War.

But my colleague estimates that, if the deal goes through, it “would make Microsoft the third-largest video game company in the world by revenue, trailing only Chinese tech giant Tencent Holdings and Sony“. It would also result in the addition of “nearly 400 million monthly active users to Microsoft’s gaming business”.

What does this mean for ESPO?

So why is all of this relevant to the VanEck Video Gaming and Esports ETF? Well, as it stands today, Activision Blizzard is the fifth-largest holding in ESPO’s portfolio. This ETF currently holds 25 companies that are selected to give investors exposure to “a diversified portfolio of the largest and most liquid companies involved in video game development, eSports and related hardware and software globally”.

At its fifth spot in the ETF, Activision Blizzard currently commands a near 6% weighting. Microsoft doesn’t even make the cut for ESPO at present. But that of course could change if this deal goes through. So while the deal isn’t expected to be closed until 2023 if all goes to plan, it still heralds a dramatic change for this ASX ETF.

The VanEck Video Gaming and Esports ETF charges a management fee of 0.55% per annum.

The post The VanEck Video Gaming and Esports ETF (ASX:ESPO) looks set for a major shakeup. Here’s why appeared first on The Motley Fool Australia.

More reading

• Here are 2 ASX tech ETFs to buy after recent weakness
• 2 exciting ASX tech shares that could be buys
• 3 high quality ETFs for ASX investors in January
• 2 exciting tech ETFs for ASX investors in 2022
• 3 ETFs for smart ASX investors in 2022

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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. owns and has recommended Microsoft. The Motley Fool Australia has recommended Activision Blizzard and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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/3IbQ6EW

One of the hottest areas of the market right now is the lithium sector.

The good news is that although strong gains have been recorded in the sector, analysts believe the lithium shares listed below still have the potential to rise further.

Here’s why analysts have put buy ratings on these ASX lithium shares:

Allkem Ltd (ASX: AKE)

Allkem is the lithium giant that was formed following the merger of Galaxy Resources and Orocobre. It has a collection of world class operations and projects across Western Australia, Argentina, and Canada. The team at Citi is positive on Allkem. It expects the company to benefit greatly from sky high lithium prices in 2022. As a result, this morning the broker retained its buy rating and lifted its price target on the company’s shares to $13.40. This compares to the current Allkem share price of $11.09.

Lake Resources N.L. (ASX: LKE)

Another ASX lithium share that is rated as a buy is Lake Resources. It is the company developing the Kachi lithium brine project in north-western Argentina. This morning Lake revealed that its base case production plan is now 50,000 tonnes of lithium carbonate per annum. This was almost double previous plans and was driven by insatiable demand for the clean energy material. Bell Potter is a fan of the company and has a speculative buy rating and $1.37 price target on its shares. This compares favourably to the latest Lake share price of 99 cents.

Mineral Resources Limited (ASX: MIN)

A final ASX lithium share that could be in the buy zone is Mineral Resources. It has exposure to lithium through its Mt Marion Lithium and Wodgina Lithium projects. The latter is one of the largest known hard rock lithium deposits in the world with a production life of over 30 years. Macquarie is bullish on Mineral Resources due to its belief that lithium prices will remain at record levels for a number of years. It has an outperform rating and $79.00 price target on its shares, which compares nicely to the current Mineral Resources share price of $64.43.

The post Analysts name 3 hot ASX lithium shares to buy now appeared first on The Motley Fool Australia.

More reading

• Is the Allkem (ASX:AKE) share price going to keep charging higher?
• Here’s why the Lake Resources (ASX:LKE) share price is charging 5% higher today
• Where this fundie sees ASX lithium shares heading from here
• Why Allkem, BrainChip, Data#3, and JB Hi-Fi shares are charging higher
• Why ASX lithium shares could send heads spinning this earnings season

Motley Fool contributor James Mickleboro owns Allkem. 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/33OPvtP

Key points

• ASX-listed Brainchip is flying higher again today after announcing another granted patent
• The company now holds a significant market capitalisation of over $3.5 billion
• Based on eligibility criteria, Brainchip could soon be in with a chance to make the ASX 200

---

The Brainchip Holdings Ltd (ASX: BRN) share price continues to defy gravity as it sets yet another all-time high today.

It was only yesterday when we covered the artificial technology company eclipsing a $3 billion market capitalisation. This achievement was solidified with a 20% share price jump after Brainchip announced it had begun taking orders for the commercialised Akida product.

Twenty-four hours later and another United States granted patent, ASX-listed Brainchip is now eyeing off a $4 billion market cap. Following today’s news, shares in the company are up another 18% to $2.20 — giving it a valuation of $3.77 billion.

In turn, investors might be wondering: can Brainchip make its way into the S&P/ASX 200 Index (ASX: XJO)?

What is the criteria to break into the top 200 index?

The ASX 200 is one of the most popular indexes for investors to track the broader market — making it an appealing low-cost passive investment option.

For this reason, vast sums of money rely on the index being reflective of the Australian share market. As such, the index is weighted based on the float-adjusted market cap of the ASX shares included.

To be included in the index there’s are a few pieces of criteria that a company must meet before being selected. These being:

• Must be listed on the ASX
• Hold an average daily float-adjusted market cap above what is considered ‘institutionally investable’ for the past six months
• Show adequate liquidity for investors to be able to buy and sell shares relatively easily

So, how does Brainchip stack up against the criteria? It is definitely listed on the ASX. Secondly, trading volume has lately been rivalling some of the largest companies already included in the ASX 200.

Lastly, the artificial intelligence company’s market cap is now floating around what would typically be considered ‘institutionally investable’. However, this has only been the case since around November, when ASX investors began ferociously bidding up Brainchip shares. In October 2021, the company’s market cap was closer to $700 million.

At present, the company with the smallest market cap in the ASX 200 is Pendal Group Ltd (ASX: PDL), at $2.07 billion. Based on this, if Brainchip can sustain its valuation for several months it might be in with a chance.

Does Brainchip’s lack of meaningful revenue exclude it from ASX 200?

Some investors might think that Brainchip’s ASX 200 hopes would be nullified by its lack of meaningful revenue. However, the index does not have eligibility criteria based on revenue.

In fact, there are currently numerous companies included in the ASX 200 index that are yet to produce meaningful revenue. For example, Liontown Resources Limited (ASX: LTR), Paladin Energy Ltd (ASX: PDN), and Telix Pharmaceuticals Ltd (ASX: TLX) are all index included companies that fit into this category.

Ultimately, S&P Global will have the call on whether to include Brainchip in the ASX 200 in the future. The next rebalance will occur on the third Friday of March.

The post Could Brainchip (ASX:BRN) crack into the ASX 200? Here’s what it takes appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: BHP’s update, Megaport sinks, HUB24 impresses
• BrainChip (ASX:BRN) share price leaps to all-time high. Here’s why
• ASX retail shares on watch amid potential cuts to COVID-19 isolation requirements
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today

Motley Fool contributor Mitchell Lawler 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/3rzhJBn

Key Points

• EcoGraf share price acelerates 9.23% to 71 cents
• It comes amid a business update on the company’s new battery anode material facility
• Strong South Korean demand could lead to a bumper revenue stream

---

The EcoGraf Ltd (ASX: EGR) share price is pushing higher on Wednesday. This comes after the company announced a business update on its lithium-ion battery anode material (BAM) facility in Western Australia.

During early afternoon trade, the graphite producer’s shares are up 9.23% to 71 cents apiece.

What did EcoGraf update the ASX with?

Investors are buying up EcoGraf shares following the company snapshot of its progress at the new BAM facility.

According to its release, EcoGraf advised that it has completed the vendor equipment test work. This will see the use of specific equipment for stage 1 development activities at the site. 

In addition, regulatory permits and approvals studies covering noise, air, and bushfire management have been finalised.

A procurement process for key overseas long lead equipment has commenced. This includes battery supply chain-related equipment such as mechanical shaping equipment.

Lastly, the company expanded its project delivery team to manage key supply contracts, site services, utilities, and operational readiness aspects.

Engineering is continuing to optimise and incorporate new product lines for EcoGraf’s expanded 20,000 tonnes per annum facility.

Once online, the company will employ its HFfree processing technology to create battery anode material products. This will be used to supply purified spherical graphite for the lithium-ion battery market.

EcoGraf noted that it is well-positioned to cater for battery minerals demand in the South Korean market. Outside of China, South Korea is the largest electric vehicle market.

Three major battery manufacturers, LG Chem, Samsung SDIm and SK Innovation, plan to invest US$35.3 billion over the next decade.

EcoGraf share price summary

Over the last 12 months, the EcoGraf share price has soared 124% higher, with year-to-date up 4.4% so far. The company’s shares reached a 52-week high of $1.10 in February before moving in a sideways channel.

Based on today’s price, EcoGraf presides a market capitalisation of roughly $317 million, with approximately 450 million shares on its registry.

The post EcoGraf (ASX:EGR) share price powers ahead 9% following lithium update appeared first on The Motley Fool Australia.

More reading

• Could Brainchip (ASX:BRN) crack into the ASX 200? Here’s what it takes
• ASX 200 (ASX:XJO) midday update: BHP’s update, Megaport sinks, HUB24 impresses
• Why the Pilbara Minerals (ASX:PLS) share price surged 35% in a month
• Here’s what you need to know before Netflix’s Q4 earnings
• Nick Molnar and Anthony Eisen will say goodbye to their Afterpay (ASX:APT) shares tomorrow. What will they be left with?

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.

from The Motley Fool Australia https://ift.tt/3FEkzd1

At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is out of form and tumbling lower. The benchmark index is currently down 0.6% to 7,365.9 points.

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

BHP’s Q2 update

The BHP Group Ltd (ASX: BHP) share price is trading slightly lower on Wednesday following the release of its second quarter update. According to the release, BHP’s iron ore production grew 4% quarter on quarter to a near record of 66.1Mt. This brought its half year production to 129.1Mt. Looking ahead, the majority of its production and cost guidance for FY 2022 remains unchanged.

Megaport shares sink

The Megaport Ltd (ASX: MP1) share price is sinking today following the release of its second quarter update. Investors have been selling the leading elastic interconnection services provider’s shares after it reported only modest growth during the quarter. Megaport posted a quarter on quarter increase of just $0.6 million or 7% in its monthly recurring revenue (MRR) to $9.2 million. This led to an 8% increase in second quarter revenue to $26.6 million.

HUB24’s strong update

The HUB24 Ltd (ASX: HUB) share price is pushing higher today after reporting record second quarter platform net inflows of $3.6 billion. This led to an increase in its total funds under administration (FUA) to $68.3 billion, which is up 118% compared to the prior corresponding period. This was driven by a combination of organic growth and flows from the Xplore acquisition.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Harvey Norman Holdings Limited (ASX: HVN) share price with a 3.5% gain. This morning Credit Suisse upgraded the retailer’s shares to an outperform rating with a $5.62 price target. The worst performer has been the Megaport share price with a 12% decline following its update.

The post ASX 200 (ASX:XJO) midday update: BHP’s update, Megaport sinks, HUB24 impresses appeared first on The Motley Fool Australia.

More reading

• HUB24 (ASX:HUB) share price gains attention on record platform net inflows
• Why the Megaport (ASX:MP1) share price is crashing 12% today
• ASX retail shares on watch amid potential cuts to COVID-19 isolation requirements
• BHP (ASX:BHP) share price on watch following second quarter update
• 2 high yield ASX dividend shares named as buys

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 Hub24 Ltd and MEGAPORT FPO. The Motley Fool Australia owns and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended Hub24 Ltd and MEGAPORT FPO. 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/3fE9xKh

Key points

• The Pilbara Minerals share price has soared 35% in a month
• Demand for lithium has increased the price of the commodity
• Brokers remain positive about the outlook for lithium

---

The Pilbara Minerals Ltd (ASX: PLS) share price is exploding this month.

The explorer’s shares have increased 35% from $2.76 to the current share price of $3.73. However, today the company’s share price is down 3.24% at the time of writing. For perspective, the S&P/ASX 200 Index (ASX: XJO) has gained about 1% in the last month.

Let’s take a look at what may be driving investor confidence in the company.

What’s happening at Pilbara Minerals?

The Pilbara Minerals share price has been on a steady curve upwards in the past month. Investors have been seeing consistent returns for a year, with the share price gaining 223% since this time a year ago.

Investors are reacting positively to rising lithium prices and global demand for the battery mineral used in electric vehicles.

Lithium carbonate prices in China have surged from 235,500 yuan per tonne to 327,500 yuan in the past month, a 39% boost.

Pilbara Minerals explores, develops, and operates its wholly-owned Pilgangoora Lithium Tantalum Project in the Pilbara region of Western Australia. It’s regarded as one of the biggest hard-rock lithium-tantalum deposits in the world.

A positive note out of Citi stating the Pilbara Minerals share is “too early to sell” also weighed positively on the company’s share price last week. The broker predicted demand for lithium will remain strong and supply will stay mild in the next six months.

Meanwhile, as my Foolish colleague Mitchell reported yesterday, the team at Credit Suisse is predicting ASX lithium shares will enjoy “unprecedented margins”.

Macquarie retained its outperform rating on the share in late December and increased its price target by 32%.

The only price-sensitive news out of the lithium miner in the past month was released on 21 December. The miner downgraded its December quarter and FY 2022 annual concentrate production and shipping guidance. Pilbara Minerals also stated border closures had impacted its access to staff for construction, production, and maintenance roles in Western Australia.

Pilbara Minerals is due to release its quarterly results on Thursday 27 January.

What’s going on with the Pilbara Minerals share price?

The Pilbara Minerals share price is up 6.7% in a week and 17.3% year to date.

In contrast, the benchmark ASX index is down about 1% since the start of the year.

The company has a market capitalisation of nearly 11.1 billion based on its current share price.

The post Why the Pilbara Minerals (ASX:PLS) share price surged 35% in a month appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares this Tuesday
• Why ASX lithium shares could send heads spinning this earnings season
• These 3 ASX 200 shares are topping the volume charts on Monday
• Here are the 3 most heavily traded ASX 200 shares this Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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.

from The Motley Fool Australia https://ift.tt/33MFk9t

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) reports 2021 fourth-quarter financial results on Thursday, Jan. 20, after the market close, and there’s a lot that investors will need to pay attention to. After a remarkable 2020 when people spent more time than ever at home and increasingly turned to streaming video for entertainment, 2021 hasn’t been that exciting thanks to a post-pandemic breather. And the stock performance shows this, rising just 11% during the year, trailing the S&P 500‘s 27% gain. 

Investors will get some key information about the company that will reveal important metrics and should help determine whether the stock is worth owning or not. Additionally, we’ll have a better idea of what 2022 has in store for this leading streaming business. 

Here are three things to look out for when Netflix reports earnings. 

Subscriber additions 

Management expects Netflix to add 8.5 million new subscribers in Q4. This would be the highest total of any quarter in 2021, and it would be on par with the fourth quarter of 2020. If the company can hit this target, it would be the second straight quarter of accelerating membership growth, and it would bring Netflix’s customer count to 222 million. The fourth-quarter projection “is essentially in line with the past few years, even pre-COVID, where we’re kind of in that 8 million to 8.8 million-ish range,” CFO Spence Neumann mentioned on the Q3 earnings call. 

The pandemic undoubtedly pulled forward the demand for Netflix services. And 2021’s muted customer growth demonstrated this fact. With productions largely up and running across the globe, coupled with a more normalized content slate, Netflix should return to its pre-pandemic growth rate of 25 million to 30 million subscriber additions per year. Look for any commentary about this during the upcoming earnings call. 

In the first nine months of 2021, essentially all new members came from outside the mature markets of U.S. and Canada. I fully expect this trend to continue as Netflix aggressively penetrates overseas markets. But streaming plans in developing markets, like India and countries in Africa, cost much less than they do domestically. This will certainly pressure the company’s average revenue per user, which was $11.68 in Q3. 

Margin profile 

Thanks to economies of scale, Netflix has been improving its operating margin over recent years. While management forecasts the Q4 figure to come in at 6.5%, they expect a 20% operating margin for the entirety of 2021. This is in line with the three-percentage-point annual increase that the leadership team looks for over the long term. 

The margin will be significantly lower in the fourth quarter than in prior quarters because of the huge content slate, including returning series such as Money Heist and new movies like Red Notice and Don’t Look Up, which will result in greater expenses for Netflix during the given period. But as the content release schedule levels out in 2022, the operating margin should show less quarter-to-quarter variability. 

Because Netflix operates primarily with a fixed-cost structure (since serving additional subscribers really doesn’t cost the business anything), as it continues gaining more customers, profitability is poised to soar. As a result, look for the operating margin to show expansion as sales expand in 2022. 

Financial position 

Followers of Netflix know that the biggest bear case against the company is that it has been burning cash year in and year out. But things are about to change. The business expects to break even in terms of free cash flow for 2021. And starting in 2022, Netflix should start producing positive cash flows. This is what proponents of the stock have been waiting for, and it could mark the start of a new and (financially) improved Netflix. 

The company no longer needs to raise external financing to run daily operations, demonstrating the leadership team’s confidence in Netflix’s financial position. During Q2 and Q3 of 2021, the business repurchased shares worth a total of $600 million. Keep an eye on continued progress towards the goal of being a sustainable cash-generating business, as well as any updates on share buybacks. Also, with Netflix showing a penchant for acquisitions in the gaming space, it’ll be interesting to see how cash is deployed to further penetrate that industry. 

By now, shareholders should be well-equipped to dissect Netflix’s fresh financial results on Jan. 20. 

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

The post Here’s what you need to know before Netflix’s Q4 earnings appeared first on The Motley Fool Australia.

More reading

• Netflix earnings preview: The most important metric to watch
• 835 reasons to invest in Netflix stock right now
• Why investors will be tuning in for Netflix’s earnings report this week

Neil Patel owns Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends 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/3KgHizs

Key points

• Today is the last day on the ASX for Afterpay shares
• Tomorrow, Square CDI shares will take their place
• But what will happen to the Afterpay founders’ 19.9 million shares?

---

If Nick Molnar and Anthony Eisen weren’t feeling at least a little bit sentimental today, they wouldn’t be human. That’s because today, 19 January, is the last day that shares of the company they founded together back in 2014 will trade on the ASX share market. It’s also the last day these two gentlemen will technically own Afterpay Ltd (ASX: APT) shares.

That’s because the ‘scheme of arrangement’ that these two founders helped design, which will enable Afterpay to be acquired by US payments giant Block Inc (NYSE: SQ), comes into effect tomorrow. Block was formerly known as Square Inc until a name change late last year.

Block shares set to join the ASX boards tomorrow

Afterpay first announced the Block merger back in August last year. But it only overcame its final regulatory hurdle earlier this month. That was when the deal got the green light from the Bank of Spain.

Now that the scheme is going ahead full steam, Afterpay shares are scheduled to leave to the ASX tomorrow. In their place, a secondary CHESS depository interest (CDI) listing of Block will join the ASX (ticker code to be SQ2). In the process, Block will become one of the ASX’s largest holdings. These will only trade on a ‘deferred settlement’ basis, at least until the scheme is formally implemented on 1 February.

Afterpay is celebrating its last day on the ASX in a rather disappointing manner. The company has lost 1.09% so far today (at the time of writing) and is trading at $67.21 a share. That’s more than 57% off of the company’s all-time high of $160.05 that we saw back in early 2021.

According to a November ASX release, Molnar and Eisen hold approximately 19.9 million shares of Afterpay each. So what is going to happen to this substantial number of Afterpay shares now that the company is disappearing into the ether?

What will happen to Eisen and Molnar’s Afterpay shares?

Well, under the terms of the Afterpay-Block marriage, Afterpay shareholders are set to receive a fixed ratio of 0.375 shares of Block for every share of Afterpay owned. And that includes Messrs Eisen and Molnar. And that means when the deal is finalised, the two Afterpay co-CEOs will instead own roughly 7.46 million shares of Block.

But what now for these two gentlemen? After all, some might think it a shame if arguably two of the most successful ASX entrepreneurs of the 21st century so far were to ride off into the sunset.

Well, that won’t be the case, if Afterpay’s initial announcement of the merger is to be believed. Back in August, the company had this to say regarding Eisen and Molnar’s future plans once the marriage is complete:

Afterpay’s Co-Founders and Co-CEOs will join Square [Block] upon completion of the transaction and help lead Afterpay’s respective merchant and consumer businesses, as part of Square’s Seller and Cash App ecosystems. Square will appoint one Afterpay director as a member of the Square Board following closing.

So there you have it. If you’re an Afterpay shareholder that is set to receive Block shares tomorrow, you can be rest assured that Eisen and Molnar will still be pulling some strings behind the scenes at Block.

The post Nick Molnar and Anthony Eisen will say goodbye to their Afterpay (ASX:APT) shares tomorrow. What will they be left with? appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares that now have 80% upside: analysts
• 5 things to watch on the ASX 200 on Wednesday
• How did ASX 200 tech shares perform on the market today?
• Own AMP (ASX:AMP) shares? Here’s why this expert downgraded some of its funds
• Zip (ASX:Z1P) will become the largest pureplay BNPL on the ASX this week. What might this mean for shareholders?

Motley Fool contributor Sebastian Bowen owns Block, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Afterpay Limited and Block, Inc. The Motley Fool Australia owns and has recommended Afterpay 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/33tkn3i

Key points

• Appen is the worst performing ASX 200 info tech share of the last 12 months
• It has fallen 57% since this time last year, spurred by a few key announcements
• Right now, the Appen share price is $9.88

---

The Appen Ltd (ASX: APX) share price has fallen 57% over the last 12 months, making it the worst performing stock on the S&P/ASX 200 Info Tech Index (ASX: XIJ).

This time last year, stock in the company providing data systems for artificial intelligence was trading at $23.08 apiece. At the time of writing, the Appen share price is $9.88.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 8% in that time, while the ASX 200 information technology sector has slumped 14%.

Let’s take a look at what’s been dragging on the Appen share price over the last 12 months.

What’s weighed on the Appen share price lately?

There hasn’t been much news from Appen lately, but most of what has hit the market has been detrimental to its share price.

The first price-sensitive release of the last 12 months from the company dropped in February and detailed its results for the year ended 31 December 2020. Despite the company’s earnings and outlook appearing strong, the market bid the Appen share price down 12%.

The release of a presentation in May also saw its stock tumble. It fell 21% on the back of comments about COVID-19‘s impact on the company’s business and customers.

However, the Appen share price rebounded 17% after a positive trading update later that month. Then, the company announced it was to restructure its business and was on track to reach its previously provided financial year 2021 guidance.

Finally, the most recent price-sensitive news from Appen came in August when the company released its earnings for the first half of 2021 and news of an acquisition.

Appen’s net profit after tax slumped 55.1% compared to the previous first half, reaching US$6.7 million. Though, its group revenue was down just 2% and its annual contract value grew 16%.

Additionally, it announced it was spending US$25 million to acquire location data provider, Quadrant.

Readers might be sensing a pattern here and, indeed, the company’s share price slipped 21% that day.

How Appen’s performance stacks up against its ASX 200 tech peers’

Appen is leading the ASX 200 info tech index’s slump.

However, the Afterpay Ltd (ASX: APT) share price isn’t too far behind it.

The soon-to-be-delisted buy now, pay later giant’s stock has fallen 49% over the last 12 months.

Meanwhile, that of Codan Limited (ASX: CDA) has slipped 23%.

Conversely, the WiseTech Global Ltd (ASX: WTC) share price is buoying the index, having gained 75% since this time last year.

The post Why is the Appen (ASX:APX) share price underperforming its ASX 200 tech peers? appeared first on The Motley Fool Australia.

More reading

• Here are the tech shares leading the ASX 200 on Tuesday
• Is no news good news for the Appen (ASX:APX) share price?
• These are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday

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. owns and has recommended Afterpay Limited, Appen Ltd, and WiseTech Global. The Motley Fool Australia owns and has recommended Afterpay Limited, Appen Ltd, and WiseTech Global. 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/3rwkseM