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Some S&P/ASX 200 Index (ASX: XJO) shares are expected to pay a high dividend yield to investors in 2021.

A few ASX 200 dividend shares are still struggling in this COVID-19 environment such as Sydney Airport Holdings Pty Ltd (ASX: SYD).

But there are others that are paying solid payments that equate to a pretty high yield such as:

Waypoint REIT Ltd (ASX: WPR)

As the name suggests, Waypoint is a real estate investment trust (REIT) that owns a portfolio of service stations across Australia. The vast majority of them are leased as Coles Group Ltd (ASX: COL) Express convenience stores.

It has 470 properties with a weighted average lease expiry (WALE) of 10.8 years, with 72% of them in metro locations and the other 28% in regional locations.

The aim of the ASX 200 share is to steadily increase its distributable earnings per security (EPS). It has successfully done this in each of the year’s since it listed on the ASX. In FY20 its distributable EPS grew another 4.25% with minimal impact from COVID-19 (99.9% of rent was collected).

It has an annual management expense ratio of 0.30%, which is one of the lowest in the REIT sector.

Waypoint is expecting to grow its distributable EPS by another 3.75% in FY21 to 15.72 cents. That would equate to a distribution yield of 6.3%.

The business is looking to offload non-core assets at a premium. It has sold three metro assets through public auction for a combined price of $8.1 million, which was a 22.1% premium to the prevailing book value.

Waypoint is rated as a buy by the broker Morgans, with a price target of $2.92. The broker points out that almost all of the leases have a fixed 3% or higher annual rental increase which helps distributable profit growth. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is one of the ASX 200 shares that is seeing elevated levels of demand after the onset of the COVID-19 pandemic.

Earlier on during COVID-19, there was strong demand for products that enabled customers to work, learn and be entertained at home.

But the strong retail environment has continued for many months beyond the initial lockdowns with government stimulus, low interest rates and redirected household expenditure.

Credit Suisse rates the JB Hi-Fi share price as a buy, with a price target of $57.39. The broker was impressed by the high level of sales in the third quarter of FY21. Credit Suisse believes there’s a lot of demand still in the economy.

The broker is expecting the ASX 200 share to pay a FY21 dividend yield of 8% thanks to the strong earnings growth.

JB Hi-Fi said that in the third quarter of FY21, it saw total sales growth of 10.4% for JB Hi-fi Australia, 16% total sales growth for JB-Hi New Zealand and 5.8% sales growth for The Good Guys.

It said trading in April was also pleasing. However, it did acknowledge that it’s now cycling against elevated sales growth from last year, though it’s continuing to see elevated customer demand and strong sales growth rates over a two-year period.

More reading

• AGL share price hits lowest level since 2004 as dividend tops 10%
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%
• Data shows millennials love investing in ASX ETFs
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises, Nuix jumps, James Hardie drops

Motley Fool contributor Tristan Harrison 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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With the market sinking on Wednesday, a good number of shares are tumbling lower. However, few are performing as poorly as the EML Payments Ltd (ASX: EML) share price.

In afternoon trade, the payments company’s shares are down 42% to $2.99.

It may be hard to believe, but this is actually a big improvement from earlier in the day. Shortly after the market open, the EML Payments share price crashed 52% lower to $2.47.

Why is the EML Payments share price under pressure?

Investors have been heading to the exits in their droves on Wednesday after EML Payments provided the market with an update on its European operations.

According to the release, the Central Bank of Ireland has concerns over the company’s PFS Card Services (Ireland) business in relation to Anti-Money Laundering/Counter Terrorism Financing compliance.

This is a particularly big deal as EML Payments’ Prepaid Financial Services subsidiary has been running its European operations through this business since December after moving them from the UK following Brexit. In light of this, its ability to operate throughout the European Union is thanks entirely to authorisation by the Central Bank of Ireland.

And this certainly is a major part of the overall EML Payments business. For example, during the third quarter of FY 2021, the company estimates that 27% of its total revenue was generated through the PFS Card Services (Ireland) business.

What’s next?

Today’s release has arguably generated more questions than answers, which is potentially why the EML Payments share price has fallen so heavily.

But what we do know, is that the Central Bank of Ireland is inclined to issue directions pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013.

Management has warned that the direction could materially impact the European operations of the Prepaid Financial Services business should they be made. This includes potentially restricting activities under the Irish authorisation. It also warned that it is unclear what impact this will have on costs and its results.

EML said: “Given the timing and early stages of discussion with the CBI, EML is presently unable to estimate the potential direct and consequential costs (including but not limited to legal costs) and impacts of the Correspondence on the Group’s consolidated FY21 results.”

Anything else?

This is particularly bad timing for EML Payments as it has recently entered into a binding agreement to acquire Sentenial Limited and its open banking product, Nuapay. This is for an upfront enterprise value of 70 million euros (A$108.6 million) and an earn-out component of up to 40 million euros (A$62.1 million).

Sentenial is a leading European Open Banking and Account-to- Account (A2A) payments provider, utilising a cloud-native, API-first, full stack enterprise grade payment platform.

This acquisition remains subject to regulatory approval. And given what has occurred today, the market may be concerned that this development could impact its approval.

More reading

• AGL share price hits lowest level since 2004 as dividend tops 10%
• Why BHP, EML Payments, Laybuy, & St Barbara are sinking today
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%
• Why the EML Payments (ASX:EML) share price is crashing 52% lower
• 5 things to watch on the ASX 200 on Wednesday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. 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 Tesla Inc (NASDAQ: TSLA) share price is “ridiculous”, and its lithium batteries are “inferior“.

That’s what Michael Burry – the investor who’s profited millions from betting against overhyped companies and market speculation – has been saying about the world’s most valuable car manufacturer.

He’s put his money where his mouth is: betting US$534 million against Tesla’s share price through ‘put options’.

Since it was founded 17 years ago, Tesla has become one of the most famous brands on earth and made its CEO, Elon Musk, the world’s richest man. He’s since dropped back to third as Tesla shares have faltered lately and fallen in value.

The rapid rise of the lithium battery-powered electric vehicle pioneer is largely based on the global race towards renewable energy sources. But it’s also involved an incredible amount of market fervour, as investors and consumers alike scramble towards “future tech”.

Burry’s runs on the board

Burry, the former Scion Capital hedge fund manager, has always been sceptical of market fervour.

The 49-year-old became one of the world’s most famous investors when he and his fund profited nearly $800 million by shorting subprime mortgages before the 2006 US house market crash.

He later drew mainstream attention after Christian Bale portrayed him in 2015’s smash-hit film The Big Short.

But Burry had successfully doubted periods of inflated market speculation since pre-1999 when he made a fortune shorting tech stocks before the dot-com bubble. More recently, he helped kick-start the GameStop frenzy by taking a stake in the video game retailer.

The investor and physician held put options on more than 800,000 Tesla shares at the end of last month, worth around $534 million. The strike price that Burry is shorting the Tesla shares for is unclear. But if the clean-energy car maker’s price does fall below Burry’s valuation, he’ll make an immense profit off potentially thousands of Tesla shareholders.

The longest put options tend to expire within three years, so Burry may be banking on some time before he sees his short positions come to fruition. But he’s clearly drawing parallels between Tesla, the ’90s tech market crash, and the 2000s global financial crisis.

Burry deleted his Twitter account after US federal regulators visited him about his tweets – the source of these claims. Still, in a tweet that’s since been deleted, he called the current Tesla share price and valuation “remarkably similar to 1999 and 2006”.

“I live in the land of $TSLA,” Burry continued. “I know what a Tesla car is. I talk to the mechanics and dealers. But being short is so much more than that.”

What’s wrong with Tesla?

Burry isn’t the first to doubt Tesla’s valuation. Elon Musk himself wrote that the “Tesla stock price is too high” back in May last year when the price was only $150 per share.

It’s now worth $576 per share, but that’s already accounting for a 20% wipeout so far in 2021. In January, it rose as far as $880.

Critics have pointed out that despite Tesla’s valuation dwarfing other car makers – Tesla’s market cap is roughly 5 times that of the world’s largest auto manufacturer, Volkswagen – the company relies on regulatory credits for profitability. 

During Tesla’s share price highs in January this year, the company boasted a fully diluted market cap of nearly $1 trillion. Many analysts noted the company’s earnings could have risen tenfold and still could not justify that valuation. 

Tesla aims to sell more than 20 million electric vehicles (EVs) per year, and its revenue has been rapidly rising in recent years. But its car sales remain minuscule compared to the world’s largest automotive companies, with total sales figures in the hundreds of thousands and production capacities as low as 4% of Toyota’s.

The world’s largest automotive manufacturers, such as Volkswagen and Toyota, are now storming into an increasingly competitive electric vehicle market, many with much cheaper offerings to match their global factory output.

It’s in the mass market that Tesla may struggle most. The company’s cheapest offering, the Model 3, retails for around $60,000 in Australia, significantly more expensive than its rival cut-price EV offerings from MG, Nissan, Renault and Hyundai.

It’s also double the price of comparable hybrids on the market from the likes of Toyota and Subaru, which benefit from entering the market years earlier.

Tesla has long been promising a budget-priced Model 3 that would retail around the $45,000 mark, but it’s never eventuated. This is becoming a habit of sorts, just one of the many public timeframes that Musk has failed to reach.

Tesla’s major strength is its up-market offerings, and the company has a stranglehold on the US EV market, where it accounts for around 80% of electric vehicle sales in the country.

This is partly thanks to a generous tax credit system the US government handed Tesla buyers, which has now ended, making foreign EV manufacturers much more competitive.

In Europe and Asia, the EV market is a very different story, with Tesla market share around the 20% mark and rapidly declining.

Tesla’s tech battle

Tesla’s major advantage in expansive nations like the US and Australia has been the traditionally unparalleled range that its EVs offer. But now it seems its pioneering electric batteries may also be losing ground.

Toyota is scheduled to release its new solid-state electric battery this year, which could charge in as quick as 10 minutes due to the high density of its electrolyte cells. Tesla is reportedly yet to develop the technology.

Meanwhile, at the upper end of the market, Tesla’s flagship Model S’s 600-kilometre range is reportedly set to be outgunned by a new EV disruptor: the energy-dense battery manufacturing start-up Lucid Motors.

The Lucid Air range of luxury EVs, which boasts battery ranges exceeding 800 kilometres and batteries that charge “in minutes”, retail for a similar price to the Model S. Lucid began accepting Australian orders in November last year.

Analysts fear that new challenges directly to the heart of Tesla’s market may come thick and fast over the coming years.

There have also been question marks over the safety of Tesla vehicles. The company has drawn significant criticism over electric door handles that fail to extend during fires (a susceptibility of all-electric vehicles), which have previously resulted in gruesome road fatalities.

There are also doubts from some quarters about the long-term future of lithium batteries.

Proponents of hydrogen fuel cells believe the renewable energy source will one day replace lithium batteries entirely due to hydrogen’s superior potential power delivery, portability and manufactural simplicity.

Musk, however, has been famously derisive of hydrogen, calling it “fool cells”. 

Tesla speculation

Many of the justifications around Tesla’s share price rely on intense speculation, both from outside investors and company figures like Musk himself.

Musk recently proposed to shareholders that the company could earn “$50 billion of incremental profit annually” from unleashing self-driving Teslas onto the streets, which would herald a shift towards greater gross profit margins for the company as a potential software manufacturer.

However, analysts have again disputed the claims, saying Tesla’s bullish expectations have the potential to be vastly undercut by increasing competition, not to mention a regulatory market that doesn’t yet exist. 

It’s all far from doom and gloom. Tesla expects to increase its vehicle sales by an average of 50% annually over the next few years, while diversification opportunities in solar and its home battery business present significant room for growth.

The real question mark on Tesla’s future might be whether Musk’s pioneers can keep pace with the electric car industry behemoth they helped create.

More reading

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• Here are the US shares ASX investors were buying last week
• If Bitcoin investing isn’t risky enough for you, try this
• 3 explosive shares that defy PE ratios
• Bitcoin’s next step forward aims to address adoption hurdles

Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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.

The post Technology, Toyota and The Big Short: The myriad problems with Tesla appeared first on The Motley Fool Australia.

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The Strike Energy Ltd (ASX: STX) share price has been a poor performer today. This follows the energy company’s update on the West Erregulla Appraisal Campaign on behalf of its EP469 Joint Venture.

Strike Energy and Warrego Energy Ltd (ASX: WGO) both hold a 50% joint venture interest in EP469. The gas project is located about 230 kilometres north-east of Perth in the North Perth Basin in Western Australia.

At the time of writing, Strike Energy shares are selling for 35 cents a pop, down 7.8%.

What did Strike Energy announce?

Investors are heading for the hills, dumping Strike Energy shares after digesting the company’s latest release.

In a statement to the ASX, Strike Energy advised its WE5 drilling is continuing to perform to expectations. So far, a depth of approximately 3,356 metres measured depth (MD) has been drilled and is currently in the Woodada formation.

Strike Energy is aiming to drill the intermediate hole section down to a nominal depth of 3,750 metres MD. At that point, the company will have received wireline logs for WE5. Running of the casing and cementing in place is expected to follow afterwards.

In regards to WE4, the clean-up of the well has been paused due to sand being found in the production stream. Strike Energy noted that the source of the sand was identified as the Kingia Sandstone, but was unsure of what caused its presence.

The company said that while some reservoirs produce sand initially on test, the test surface equipment for WE4 is not suited to high-velocity sand. As a result, Strike Energy has put on order additional equipment to support the remaining clean-up and production test.

It is expected that the equipment will take an estimated 2 weeks to procure. In the meantime, the company will assess if it’s viable to combine the flow testing of WE4 and WE5.

Strike Energy share price review

Over the past 12 months, Strike Energy shares have jumped close to 90%, and are up over 20% year-to-date. The company’s shares reached an all-time high of 41 cents on Monday before being hit hard today.

Based on valuation grounds, Strike Energy commands a market capitalisation of roughly $703 million, with 2 billion shares on issue.

More reading

• Why the Strike Energy (ASX:STX) share price is charging higher
• Strike (ASX:STX) share price lifts after 2030 net-zero pledge
• Why the Strike Energy (ASX:STX) share price finished 5% higher
• The Strike Energy (ASX:STX) share price is on watch today. Here’s why
• What’s causing the Strike Energy (ASX:STX) share price surge?

Motley Fool contributor Aaron Teboneras 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 AGL Energy Limited (ASX: AGL) share price is not having a great day today, to put it mildly. AGL shares are currently the second-worst performer of the S&P/ASX 200 Index (ASX: XJO) today, down a hefty 4.5% at the time of writing to $7.99 a share. That’s not quite as disappointing as the EML Payments Ltd (ASX: EML) share price today, which is topping the ASX 200 losses with a ~40% loss today. But it’s probably still not something AGL shareholders would like to see.

AGL shares have gone as low as $7.96 a share during trading so far today. That puts AGL at the lowest levels the company has traded at since July 2004, a 17-year low. Ouch. For some context, back then, John Howard was about to face off against Mark Latham for Prime Minister. At the same time, George W. Bush was about to seek re-election as US President. Also, Mean Girls, Shrek 2 and Harry Potter and the Prisoner of Azkaban had just come out in cinemas.

AGL shares are now more than 71% off of their all-time high of ~$27.70 that the company hit back in 2017. As a result, AGL’s trailing dividend yield has hit a whopping 10.21%, which the market is clearly not viewing as sustainable. So what on earth has happened to what used to be the largest energy generator and retailer in the country?

Multi-decade lows

Well, AGL has been suffering for a while now due to conditions in the national electricity market. Low and unstable electricity prices and the looming closure of the Liddell coal-fired power plant are doing the company no favours. Investors also didn’t respond well to the AGL CEO’s sudden exit last month.

Also seemingly working against the company is AGL’s planned restructuring, which it announced back in March. AGL told the markets it plans on splitting into two companies. One, the ‘New AGL’, will house its electricity retailing business. The other, ‘PrimeCo’, will hold AGL’s electricity generation business. After an initial positive share price reaction, investors have seemed to decide that this new look for AGL won’t live up to its promise. That’s going off how AGL shares have slid another ~20% since the announcement.

Are AGL shares a bargain-basement buy?

Given the extent of AGL’s slide, I’m sure many value-tilting investors out there are wondering if these multi-year lows we are seeing are a buying opportunity. Well, one broker who does see some value in the AGL share price at these levels is the investment bank, Goldman Sachs. According to CommSec, Goldman maintained a 12-month price target of $10.45 for the AGL share price following its restructuring announcement. although Goldman remains ‘neutral’ on AGL, it sees the company’s Portland smelter agreement, the near-term outlook for its existing business structure, and higher oil prices as reasons to justify a $10.45 per share valuation.

I’m sure AGL investors will be hoping Goldman’s predictions prove accurate.

More reading

• Why BHP, EML Payments, Laybuy, & St Barbara are sinking today
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%
• Why the EML Payments (ASX:EML) share price is crashing 52% lower
• Data shows millennials love investing in ASX ETFs
• 5 things to watch on the ASX 200 on Wednesday

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. 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 Island Pharmaceuticals Ltd (ASX: ILA) share price opened 14% higher at 39 cents this morning after the company was granted a key patent for its lead asset, ILA-101.

Its shares have retreated since that high and are trading at 35 cents at the time of writing, up 3%. 

Island Pharma is a drug research company that develops preventative or therapeutic drugs for viral infections. The company is currently advancing its lead drug candidate “ISLA-101” towards a Phase 2 clinical trial in dengue infected subjects. ISLA-101 has the potential to be used to prevent or treat a number of viruses including dengue, Zika and chikungunya, and other diseases rife in tropical climates. 

Grant of US patent drives the Island Pharma share price 

In today’s release, Island Pharma advised that a key patent for its lead asset, ISLA-101 was granted by the United States Patent & Trademark Office. The patent will underpin Island Pharma’s drug repurposing strategy to rapidly and efficiently develop antiviral therapies with a focus on mosquito-borne viral diseases. 

Pharma Island executive chair Dr Paul MacLeman welcomed the progress, saying: 

The grant of the US patent is a significant development for Island Pharmaceuticals. Mosquito borne viruses, such as dengue, Zika and others represent major unmet medical needs throughout the world and about 3 billion people – or 40% of the world’s population – live in areas with a risk of dengue.

Having an allowed patent that protects Island’s lead program in this large market provides protection for the development of ISLA-101 and further underpins our ability to advance the program in the US – a key target market.

The Island Pharma share price so far 

It is becoming increasingly common for initial public offerings on the ASX to surge on the first day of listing before grinding lower in the coming weeks and months. Some notable recent examples include 4DMedical Ltd (ASX: 4DX), Credit Clear Ltd (ASX: CCR) and DC Two Ltd (ASX: DC2). 

The Island Pharma share price has met with a similar fate, at a listing price of 25 cents, its shares surged as high as 67 cents on its first day of listing on April 13. A neat return 268% return for those that managed to participate in the IPO and sell at highs. Despite the intraday surge, its shares closed at 50 cents on the first day.

Its shares have steadily pushed lower, closing at a record low of 34 cents on Tuesday.

What’s next for Island Pharma 

The key milestones for the company to achieve revenues and profitability as stated in its prospectus are obtaining FDA approval and commencing sales for ISLA-101. 

Its prospectus advises that the timeframe to meet the approval and sales milestones are contingent on a number of factors. These include the timeframe to enrol and conduct clinical trials, preparation and submission of regulatory documents, regulatory review and launch of sales efforts.

The company is currently advancing ISLA-101 towards a Phase 2 clinical trial which will then require a Phase 3 clinical trial and drug registration.

More reading

• The 4DMedical (ASX:4DX) share price is down 38% in 2021
• The Credit Clear (ASX:CCR) share price lower on third quarter update
• 4DMedical (ASX:4DX) share price wobbles on quarterly report

Motley Fool contributor Kerry Sun 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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Investors of the ASX banking shares might be in for a treat in 2021. The ASX banks have proven to be great shares to own so far this year.

My, how the times change. Sure banks recovered nicely last year from the COVID-induced lows we saw back in March. But they were somewhat left in the dust by other ASX growth shares, especially those like Xero Limited (ASX: XRO) and Afterpay Ltd (ASX: APT) in the tech space. But 2021 has proven to be not such a great year for ASX tech shares. And that has opened the door for the ASX banks to come roaring back.

Just this week, Commonwealth Bank of Australia (ASX: CBA) hit a new all-time high of $98.84 a share. CBA shares are up close to 15% year to date and more than 60% over the past 12 months.

The other major ASX banks aren’t quite at their all-time highs. But all 3 have given investors solid performances so far in 2021. National Australia Bank Ltd. (ASX: NAB) shares are up 13% year to date. Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) are up 18.5% and 28% year to date respectively.

Investors can largely thank the ASX banking shares for the new all-time high that the S&P/ASX 200 Index (ASX: XJO) hit last week. With some help from the miners like BHP Group Ltd (ASX: BHP) of course. Credit where credit’s due.

Bank share prices have recovered, are dividends next?

But could things get even better for ASX bank shareholders? Whilst bank shares have more or less got back to the pricing they were at just before the COVID crash last year, investors are still waiting for bank dividends to follow suit.

Well, according to reporting in the Australian Financial Review (AFR) this morning, indeed they can.

The AFR quotes Daniel Moore, co-portfolio manager of the Investors Mutual Australian Share Fund on the matter. Mr Moore reckons 2021 is shaping up to be  a great year for banking dividends:

We now have a strong platform going forward for economic activity and company earnings. All this indicates that the outlook for dividends in 2021 and beyond is strong, and payout ratios are likely to improve.

The AFR also spoke to Nathan Zaia, banking analyst at Morningstar. Mr Zaia expects bank investors might be able to enjoy some special dividends or share buybacks in the back half of 2021. That’s because the banks are still holding more capital than what the regulator APRA is demanding right now, as a result of the economic uncertainties of last year. He added the following:

I think the ordinary dividend payout ratios will be lifted across all the banks. For ANZ probably to around 65 per cent and 70 per cent, to 75 per cent for National Australia Bank and Westpac… The Commonwealth Bank could kick-start things in, but it isn’t a sure bet.

Foolish takeaway

ASX bank shareholders will no doubt be hoping that the predictions of these gentlemen come to pass. 2020 was a very sparse year for bank dividends (Westpac ended up cancelling its interim dividend entirely). It seems 2021 might just make up some of that shortfall if these predictions are to be believed.

More reading

• CSL (ASX:CSL) share price backtracks despite renewed optimism
• 2 top ASX dividend shares rated as buys
• Here are the US shares ASX investors were buying last week
• Australians are opening their wallets, says CBA report
• Exec jailed for ASX share market manipulation

Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Xero. 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 market may be a sea of red on Wednesday but that hasn’t stopped the Appen Ltd (ASX: APX) share price from rocketing higher.

In afternoon trade, the artificial intelligence (AI) data services company’s shares are up a sizeable 16% to $13.07.

However, despite this strong gain, the Appen share price is still down a massive 70% from its 52-week high.

Why is the Appen share price rocketing higher today?

The catalyst for the rise in the Appen share price today was the release of a business and trading update this morning.

In respect to the former, Appen is restructuring its business to align to its product-led growth strategy and distinct customer propositions.

This will see the company operate with four customer-facing business units – Global, Enterprise, China, and Government.

Management believes the changes will provide greater visibility of the drivers and performance of the business. Furthermore, it notes that the changes reflect Appen’s evolution from being the leading provider of AI data annotation services to a provider of a broad range of AI data annotation products and solutions that unlock growth in new markets.

What else?

While the above is a positive move, the main driver of the Appen share price performance today is likely to have been its trading update.

Analysts were very disappointed recently when the company neglected to provide an update on its performance while presenting at the Macquarie Group Ltd (ASX: MQG) conference. Particularly given comments about changing behaviour from its customers and fears over increasing competition.

Positively, this morning the company provided the market with what it wanted and, as you might have guessed from the Appen share price, the news was positive.

According to the release, Appen is on track to achieve underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$83 million to US$90 million in FY 2021.

This is in line with its previous guidance of A$120 million to A$130 million (based on constant currency of 1 AUD = US$0.6904) and adjusted into US dollars to reflect a change in its reporting currency. It also represents growth of 18% to 28% year on year.

Shareholders will no doubt be hoping it is onwards and upwards for the Appen share price now things are becoming a little less uncertain.

More reading

• Why Appen, ELMO, Nuix, & Paradigm shares are pushing higher
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%
• Appen (ASX:APX) share price on watch with restructuring
• These ASX tech shares are down 50% from their 52-week highs
• The Appen (ASX:APX) share price is 75% lower than its 52-week high

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia owns shares of and 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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Shares in BPM Minerals Ltd (ASX: BPM) have rocketed upwards on news of an acquisition and placement. At the time of writing the BPM share price is up an incredible 145.24%, with shares in the company swapping hands for 51.5 cents apiece.

BPM announced this morning it has entered into a binding heads of agreement to purchase all shares in Recharge Resources Pty Ltd, which holds 3 projects on the boundary of the Earaheedy Basin.

Market watchers might remember the announcement of a major lead and zinc discovery at the Earaheedy Basin by Rumble Resources Ltd (ASX: RTR) last month.

The BPM acquisition will be supported by a proposed $1.5 million private placement.

Let’s take a closer look at today’s news from mineral explorer.

Acquisition and placement

From its acquisition of Recharge Resources, BPM will gain the Hawkins, Ivan Well, and Rhodes projects.

Mining licenses for Hawkins and Rhodes are yet to be granted by the Western Australian Government.

The Hawkins project is just 40 kilometres from Rumble Resources’ Chinook Discovery.

According to BPM, Recharge’s Earaheedy Basin projects, together, cover 280 square kilometres of the same stratigraphic target zone as the Chinook Discovery.

Previous to the recent discovery of lead and zinc at Chinook, the Earaheedy Basin was known for its potential for iron ore and base metals.

Most previous drilling and soil sampling done at the Hawkins Project’s Pinnacles prospect hasn’t been assayed for iron or zinc. Meanwhile, drilling and soil sampling previously done at Ivan Well and Rhodes hasn’t been assayed for base metals. Though, surface sampling at Rhodes has found areas of high-grade iron.

Recharge also holds a single project in southern Western Australia.

BPM states it’s fully funded to complete 15,000 metres of drilling across the 3 Earaheedy Basin projects and 2 of its existing projects – an estimated cost of $5.2 million. It plans to conduct the drilling during the second half of 2021.

It’s also planning a $1.5 million private placement to support the acquisition and its future ventures. The placement will involve 7.5 million shares sold at 20 cents apiece, each with one free option with an exercise price of 25 cents. The options must be exercised by September 2025.

Cost of the acquisition

For the acquisition of Recharge Resources, BPM will provide its current holder, Borg Geoscience Pty Ltd, with 1.875 million shares in BMP at a deemed issue price of 20 cents apiece. It will also provide the same number of options with an exercise price of 25 cents, expiring in September 2025.

Borg Geoscience will also receive 2 million performance shares in BPM, subject to various vesting conditions, and 1% of the net smelter return on all products of Recharge’s tenements.

There will also be deferred payments given to Borg Geoscience 6 months after settlement or when Hawkins and Rhodes are granted exploration licenses, whichever is later. Upon those milestones, BPM will issue Borg Geoscience with the same amount of shares and options, with the same conditions, as before.

BPM Minerals share price snapshot

BPM executed its initial public offering (IPO) on 30 December 2020 and, before today, the company had not had a great start on the ASX.

Its shares were down 16% year to date when they entered a trading halt before the market opened on Monday.

Now, thanks to today’s rally, the BPM share price has gained around 108% since the start of the year. 

The company has a market capitalisation of around $12 million, with approximately 24 million shares outstanding.

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Motley Fool contributor Brooke Cooper 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.

The post The BPM Minerals (ASX:BPM) share price is up 145% today. Here’s why appeared first on The Motley Fool Australia.

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The CSL Limited (ASX: CSL) share price is wobbling today despite picking up steam over the past few months. This follows the global biotech giant’s steady recovery in plasma collections, particularly in the United States.

At the time of writing, CSL shares are swapping hands for $272.86, down 1.57%. It’s worth noting that, regardless of today’s drop, CSL shares have continued to gain ground when looking at its performance from early March.

Plasma collections normalising

A possible catalyst pushing the CSL share price higher more recently is investor confidence in the company’s plasma levels.

CSL’s efforts to restore its critical ingredient for producing life-saving therapies has taken a positive turn. The company believes that plasma collections are beginning to normalise due to its increased marketing spend on incentivising new and lapsed donors.

Particularly, centres across the United States and Mexico border have seen a good response rate, nearing pre-COVID plasma collection numbers.

However, university donation centres have slowed to a standstill. This is due to the shift in remote online studying. CSL predicts that these levels will return when COVID-19 vaccinations become more available to mass populations.

The company has undertaken a range of initiatives to entice people to donate blood. This includes using social media influencers, speeding up the donation sign-up and check-in process, and paying donors more for blood. The latter has increased from US$825 to US$1,100 for each new donors first 8 blood donations. Existing donors are also receiving higher payments to attract people coming back.

Local vaccine production opportunity

In other news also helping support CSL shares, the company has signalled its interest in producing next-generation vaccines in Australia.

As COVID-19 has highlighted, Australia is vulnerable to international companies producing mRNA vaccines and delivering them here onshore.

As a result, the federal government is in discussions with CSL about how to establish local mRNA manufacturing capacity.

Currently, the company is producing 1 million doses of the AstraZeneca vaccine per week. So far, 3.2 million Australians have been vaccinated from COVID-19, with CSL noting that 5.5 million vials have been released as of last week.

This comes in the backdrop of the Australian government signing a deal with Moderna Inc (NASDAQ: MRNA) for its COVID-19 vaccine.

CSL share price performance review

Since hitting a 52-week low of $242 in March this year, CSL shares have rebounded over the last few months. Interestingly, the company’s share price is at the same level the day it released its half-year results for FY21.

On valuation grounds, CSL is the third-largest company listed on the ASX, with a market capitalisation of $126 billion. That puts it just behind Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd(ASX: BHP).

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Aaron Teboneras owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Moderna Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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