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The Pilbara Minerals Ltd (ASX: PLS) share price is pushing higher again on Tuesday following an announcement.

In afternoon trade the lithium miner’s shares are up over 2.5% to 73 cents.

What did Pilbara Minerals announce?

This afternoon Pilbara Minerals announced that it has entered into a share sale agreement with the receivers and managers of Altura Mining.

This agreement is for the acquisition of the shares in Altura Lithium Operations, which owns Altura’s Pilgangoora Lithium Project. The two parties have agreed a fee of US$175 million.

In addition to this, Pilbara Minerals has proposed a deed of company arrangement, under which it will now contribute A$6 million to a fund which is principally in support of the entitlements owing to Altura employees who have been made redundant. This follows the project being placed into care and maintenance to mitigate operational cash losses.

What now?

Management notes that the pathway to complete the acquisition requires an approval of the deed of company arrangement proposal at a meeting of creditors during December and the completion thereafter of a proposed A$240 million equity raising by Pilbara Minerals.

These final steps will enable the completion of the share sale agreement, at which point Pilbara Minerals would acquire the Pilgangoora Lithium Project on an unencumbered basis.

According to the release, the second creditors’ meeting, where creditors will vote on the proposal, is expected to occur on or before 11 December. Pleasingly for Pilbara Minerals, the senior secured loan noteholders of Altura have agreed to vote in favour of it.

Once the proposal is approved, Pilbara Minerals will complete a A$119 million cornerstone placement to AustralianSuper and Resource Capital Fund. After which, it will launch a A$121 million accelerated non-renounceable entitlement offer, which is to be fully underwritten by Macquarie Group Ltd (ASX: MQG).

The company is unlikely to struggle to raise these funds, given that it has agreed to raise them at a fixed price of A$0.36 per share. While this was an 11.4% discount at the time of its first announcement at the end of October, a significant jump in the Pilbara Minerals share price means it is now a 50% discount to where its shares are trading today.

More reading

• The 13 ASX shares that could have doubled your money in 2020
• Are ASX lithium shares making a comeback?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The IOOF Holdings Limited (ASX: IFL) share price has risen by 3.5% to $3.85, following the company’s virtual investor briefing this morning.

Although the briefing was light on financial metrics, the company emphasised its long term strategy of delivering wealth management advice to an ageing Australian population with complex needs.

What was said in the investor briefing

In the meeting, IOOF focused on its transformational strategy, which is to simplify its offerings into a single leading proprietary platform across different clients by 2021. The company says the next phase would then be to deliver the lowest cost to its customers via integrating the operations of its recent acquisitions. 

The company also emphasised it is focused on continuing its growth through acquisitions, and on client coaching through its Evolve platform. 

Recent acquisitions

IOOF has participated in the ongoing consolidation of the Australian wealth management industry, as seen by its acquisitions in OnePath P&I and ANZ ADG.

More recently, the company has been in hot water over the handling of its MLC Wealth acquisition from National Australia Bank (ASX: NAB). IOOF faced a furious annual general meeting (AGM) last week, having been accused by shareholders of overpaying for the $1.44 billion acquisition. The shareholders claimed that the company has “butchered the share price” as a result of that purchase.

The IOOF share price has fallen by around 10% since the announcement of that deal on 31 August.

More about IOOF

IOOF is an Australian financial services and wealth management adviser. IOOF advisers recommend investments on third-party platforms due to the firm’s open architecture model.

The company has become the largest platform provider in Australia after it acquired MLC Wealth, competing with major financial institutions such as AMP Limited (ASX: AMP), and also with specialty platform providers such as HUB24 Ltd (ASX: HUB).

IOOF’s reputation was hurt after the 2018 Royal Commission revealed the firm had poor corporate governance. The commission recommended that the company focus on improving the quality and education of its advisers. 

In the aftermath of the commission, IOOF says its immediate priorities were to set a higher bar for advice quality, and to enforce compliance and education requirements for its advisers. The company also said that its long-term plan was to increase the proportion of salaried advisers within its network, as this would help the company extract higher gross margins.

How has the IOOF share price performed in 2020?

The IOOF share price has lost close to 50% of its value this year. The share price started the year at $7.26 before free-falling to $2.72 at the height of the pandemic in March, its 52-week low.

The IOOF share price has since recovered from that low, and the company commands a market value of $2.45 billion on current valuations. 

More reading

• 3 ASX shares growing the dividend rapidly
• Meet the latest ASX stock to come under the takeover spotlight
• Are near-zero interest rates the reason the ASX 200 is surging in 2020?
• HUB24 (ASX:HUB) share price edges lower following AGM update
• IOOF (ASX:IFL) accused of butchering its share price

Eddy Sunarto owns shares of AMP Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Douugh Ltd (ASX: DOU) share price is rocketing higher today. This comes after the company signed a non-binding memorandum of understanding (MoU) with Humm Group Limited (ASX: HUM). At the time of writing, the Douugh share price is up 15.38% to 30 cents.

What’s driving the Douugh share price higher?

The Douugh share price is soaring higher today after signing an MoU with Humm (formerly known as Flexigroup).

According to the release, a $600 million joint venture agreement will see the launch of a Douugh branded ‘buy now, pay later’ (BNPL) feature in the United States. The platform is expected to be available some time in the first half of the 2021 financial year.

Available through the Douugh app, the BNPL offering will provide customers an interest-free credit feature, helping them to consolidate credit card debt. It is anticipated that this will drive new customers into the business’ ecosystem.

Douugh advised that it proposes to offer up to $1,000 to eligible customers through its Credit Jar product and virtual MasterCard. The repayment period will be over 6 automatic weekly instalments.

To support the development and launch, Douugh announced it has received commitments from institutional and sophisticated investors for a $12 million placement. In return, Douugh will allot 54.5 million shares to the investors at an issue price of 22 cents per share.

Humm will spend $2.5 million to subscribe to the placement, through its newly formed partnership subsidiary, Humm Ventures.

Of the $12 million received, Douugh will use over $3 million to invest in research and development. Another $7.2 million will be allocated to marketing and growth activities. The remaining amount will be distributed to additional working capital and administration expenses, and the cost of the placement.

The joint venture agreement is based on a number of conditions to be met, which include responsibilities, the term, fees and commencement date. Exact details are yet to be finalised by both parties.

Management commentary

Douugh founder and CEO, Andy Taylor, spoke about the company’s partnership with Humm, saying:

In Humm, we believe we have found a partner who not only invented the BNPL category, but has ambition to further innovate and build the future of consumer credit on the international stage.

Adding to Mr Taylor’s comments, Humm CEO, Ms Rebecca James, said:

Through our proposed joint venture with Douugh, we are taking our first steps into the United States as a company. At the same time, we are demonstrating how Humm Ventures can create innovative and novel ways to take Humm’s world class technology and capabilities to expand its relevance and distribution.

As Australasia’s bigger buy now pay later partners with America’s newest neobank, we are proving that we can take what we have learned locally and apply it on the global stage, disrupting the payments industry and providing better customer experiences across the world.

About the Douugh share price

The Douugh share price has had an extraordinary ride since its initial public offering (IPO) in early October. Listing at just 3 cents a share, investors who picked up Douugh shares would be sitting on gains of over 1000%. Not a bad return for less than two months of holding the neobank’s shares.

Based on the current Douugh share price, the company has a market capitalisation of around $80 million and actively trades with an average of over 15 million shares swapping hands daily.

More reading

• Flexigroup rebrands to Humm (ASX:HUM) on the ASX today
• Why Afterpay, Bega Cheese, Humm, & Telix shares are storming higher
• Why is the Douugh (ASX:DOU) share price in trading halt today?
• ASX 200 rises on mixed Thursday
• Why ALS, BlueScope, FlexiGroup, & Perpetual shares are charging higher

Aaron Teboneras 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 Mastercard. The Motley Fool Australia has recommended Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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While economic, social, governance (ESG) investing is nothing new, the rapid growth of this once niche sector certainly is.

Back in the 1950s, ESG went by the acronym SRI, which stands for socially responsible investing. It was born from investors’ desires not to support so-called sin shares. Mainly companies involved in alcohol, tobacco, gambling, or…gasp…adult entertainment.

In more recent years, as concerns have mounted over global pollution and large-scale environmental damage, the environmental angle has played a growing role, with energy shares increasingly finding themselves on the ESG blacklist.

But despite a sizeable basket of shares that are off limits, inflows into ESG themed exchange-traded funds (ETFs) are at record levels. According to data from Bloomberg, inflows in 2020 by late October had hit US$22 billion (A$30 billion). That’s already 3 times the total inflows for 2019.

Finance issues

Not only is money pouring into ESG shares, companies that are seen to be doing the wrong thing are finding it increasingly difficult to secure financing.

Bank of America Corp (NYSE: BAC), under pressure from activist groups, had made it clear it won’t be financing any oil and gas exploration projects in the Arctic.

As Bloomberg reports:

Bank of America has said it aims to position itself as a leader in environmental, social and governance matters in the financial industry through underwriting green bonds, reducing carbon emissions and supporting global climate initiatives. It has a goal of achieving net-zero emissions by 2050.

Aussie energy giant, Santos Ltd (ASX: STO), has no plans to drill in the Arctic. But the company is putting itself at the forefront of carbon reduction battle.

This morning Santos announced ambitious new emissions reduction targets.

Kevin Gallagher, Santos managing director, says the company is already on track to exceed its 2025 emission targets and will achieve net-zero emissions by 2040. Gallagher notes that, “The world still relies on hydrocarbon fuels for 80 per cent of its primary energy, the same as 45 years ago.”

With that caveat in mind he adds:

Our focus over the last three years on step change technologies such as carbon capture and storage has enabled a pathway that allows us to go further faster when it comes to emissions reduction…

Carbon-neutral LNG cargoes are already in demand in Asia and customer countries such as China, Japan and Korea are aspiring to net-zero emissions around the middle of the century.

This will require increased use of natural gas to replace coal as well as new clean fuels such as hydrogen, already being used to reduce emissions from coal-fired power generation in Asia.

Our existing LNG customer base in Asia will be the hydrogen customers of the future, and as technology evolves and they transition to new clean fuels, Santos will transition with them.

Show me the money

Now many ESG investors remain motivated by the concept that they’re doing the right thing. And they sleep better knowing that their money is invested in supposedly responsible shares.

(I say ‘supposedly’ here because there’s the issue of greenwashing. That’s where a company paints itself as far more responsible than it is. An issue that’s exacerbated by the fact many ESG ratings still depend on a company’s own sustainability reports. But that’s a story for another day.)

But ever more investors are turning to ESG shares not to soothe their own conscience but to chase bigger gains. In fact, Nuveen’s Fifth Annual Responsible Investing Survey, revealed that 53% of investors said they opted for responsible investments for better performance. That’s the first time a majority of investors named performance as their main motivator in the survey’s history.

Commenting on the results, Amy O’Brien, global head of responsible investing at Nuveen said, “Investors increasingly understand that promoting positive outcomes on important ESG issues, not only minimizes portfolio risks, it actually leads to improved performance overall.”

Nuveen’s survey results support the latest research from Mercer, a global leader in responsible investment advice and solutions, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC).

According to Mercer, the best sustainable investment strategies in Australian shares returned 10.4% annually over the last 3 years through to June 2020. Over that same time, the median actively managed Aussie equities fund returned 5.3%, while the S&P/ASX 300 (INDEXASX: XKO) returned 5.2%.

Paul Xiradis, Ausbil’s chief investment officer, agrees that shares with a strong ESG focus can improve overall risk-adjusted returns. In a research report published by investment manager Ausbil yesterday, Paul said:

One positive thing that has come out of the pandemic is a sharper focus and demand for ESG and sustainable investment approaches. COVID-19 has accelerated changes in work-from-home, transport, travel, education and shopping behaviours that have significant implications and potential for sustainable approaches to investing, and the integration of ESG, as we do, across all investment strategies.

Sectors and companies with high proprietary ESG ratings based on Ausbil’s extensive modelling, and demonstrating strong forward ESG momentum across any thematic, offer returns with a broader consideration of risks, improving overall risk-adjusted returns. This includes sectors such as technology, healthcare, renewable energy, electric vehicle and battery-linked metals, select leaders in consumer staples and consumer discretionary, high-quality industrials, and transition energy, amongst others.

This ASX share is riding the ESG growth trend

One ASX share that’s captured the rapid growth in ESG investing is Australian Ethical Investment Limited (ASX: AEF).

Australian Ethical is an Australian wealth management company that invests according to its own strict ethical charter.

Despite getting smashed by the pandemic-fuelled market selloff earlier this year, with the share price plummeting 60%, Australian Ethical’s share price is up 29% year-to-date.

The Motley Fool’s own Scott Phillips recommended Australian Ethical to his members of Share Advisor on 24 October 2019.

Scott listed Australian Ethical’s strong growth in funds under management, the fact that it had successfully launched into superannuation, and its highly scalable business as reasons to buy.

He also noted that he’s previously questioned elements of ethical investing and is “largely neutral on the efficacy of the underlying idea”. However, Scott wrote:

Whatever your thoughts are on the concept of ‘ethical investing’, there is no question that it is an increasingly popular trend; and with more than twenty years’ experience, Australian Ethical is arguably the king of the hill.

The Australian Ethical share price is up 82% since Scott’s recommendation. And in case you’re wondering, Scott maintains a ‘buy’ rating on the shares.

More reading

• Santos (ASX:STO) share price on watch after guidance upgrade
• Why the Myer Foundation aims to achieve 100% ESG investments in 2 years
• 5 things to watch on the ASX 200 on Monday
• Why investors should look beyond ASX shares for outsized gains
• ASX 200 down 0.35%: Bega Cheese jumps, Flight Centre & Webjet tumble lower

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Kogan.com Ltd (ASX: KGN) shares are falling lower today after the company announced it has issued 6 million retention options worth $98.4 million to its two top executives. This follows shareholders’ approval of the grant on 20 November. At the time of writing, the Kogan share price has fallen 1.22% to $16.21.

Quick background on these options

The Kogan board had been proposing to grant 3.6 million share options to chief executive, Ruslan Kogan, and 2.4 million share options to his chief financial officer, David Shafer.

The board said the share options are meant to be an incentive for the two executives to stay at the company for the next three years. Options are a type of derivative, giving holders the right but not the obligation to buy the underlying shares at a pre-determined ‘exercise price’. 

The compensation was challenged by Australia’s biggest proxy advisers who said the options grants are “overly generous”, and encouraged shareholders to vote down the proposal. 

At the company’s annual general meeting (AGM) on 20 November however, shareholders voted in favour of the options grant.  According to the AGM release, 56.35% of votes were in favour of granting options to Mr Kogan and 56.3% of votes were in favour of granting options to Mr Shafer.

However, it is worth noting that a total of 43.74% votes were against the remuneration, constituting a sizeable protest vote well above the 25% threshold required to hand a first strike for the board. If it receives a second strike next year, the Kogan board could be voted out of office.

The options were issued at an exercise price of $5.29 per share. The Kogan share price is now more than three times that value, however the deal was originally struck in May when the share price was close to $8.

How has the Kogan share price performed in 2020?

Kogan, like other technology-based retailers, has had a fantastic year after the pandemic shifted more people’s buying habits to online. The Kogan share price started the year at $7.47 before slumping to $3.79 at the height of market panic in March.

On a year-to-date basis, the Kogan share price has gained 117%. The company commands a market capitalisation of $1.7 billion.

More reading

• 3 ASX shares growing the dividend rapidly
• 4 ASX growth shares to buy in December
• Why these All Ords shares have been smashed this month
• The NAB (ASX:NAB) share price is up 25% in November
• 4 great ASX growth shares to buy

Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the month in stunning fashion. At the time of writing, the benchmark index is up over 1.1% to 6,592.4 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Adore Beauty Group Ltd (ASX: ABY)

The Adore Beauty share price is down almost 2% to $6.39. This is despite the release of a positive trading update this morning by the online beauty retailer. That update revealed that trading has been stronger than expected, leading to an upgrade to its guidance. Management is now expecting first half revenue to come in at approximately $95.2 million. This exceeds its prospectus forecast of $89 million by 7%.

Bank of Queensland Limited (ASX: BOQ)

The Bank of Queensland share price is down 1.5% to $7.54. On Monday the regional bank announced the completion of its Capital Notes 2 offer. It raised $260 million through the issue of 2.6 million capital notes for $100 each. In other news, late last week analysts at Macquarie slapped an underperform rating and $6.50 price target on its shares.

Bega Cheese Ltd (ASX: BGA)

The Bega Cheese share price has run out of steam and is down 2% to $5.35. This may be down to profit taking after some strong gains in recent days following its acquisition of Lion Dairy & Drinks. In fact, the diversified food company’s shares hit a 52-week high on Monday. When its shares hit that level, it meant they were up 13% in the space of a week.

McPherson’s Ltd (ASX: MCP)

The McPherson’s share price has crashed 35% lower to $1.20 following the release of a very disappointing trading update. According to the release, McPherson’s key China joint venture partner, Access Brands Management, has provided feedback that its key 11/11 event was below expectations. This has led to management downgrading its underlying profit before tax forecast of $10.2 million to $11.1 million to a range of just $6.5 million to $7.5 million. It has also withdrawn its full year guidance.

More reading

• Why is the McPherson’s (ASX:MCP) share price dropping 35% today?
• Adore Beauty (ASX:ABY) share price lower despite upgrading guidance
• 2 quality mid cap ASX shares to buy in December
• Bank of Queensland (ASX:BOQ) issues Capital Notes 2 as bank shares fall
• Why the Bega Cheese (ASX:BGA) share price is rising again today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Fund managers are buying ASX financial stocks at a record clip in October and they are likely to remain keen buyers going into the year end.

These insights are based on JPMorgan’s Fund Manager Radar survey with the broker coining the phrase “Fear of Financials Outperforming” (FOFO) to explain the movement.

Financials have been lagging in 2020 as the sector heavyweights, the big banks, have been out of favour with professional investors.

Tide turning for ASX bank stocks

The Westpac Banking Corp (ASX: WBC) share price crashed by 17%, while the National Australia Bank Ltd. (ASX: NAB) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price lost around 8% each since the start of the year.

Only the Commonwealth Bank of Australia (ASX: CBA) share price is on par with the S&P/ASX 200 Index (Index:^AXJO) with both at breakeven.

Fund managers still underweight on ASX financials

But the tide may be turning. JPMorgan noted that fund managers have increased their weighting to the sector by 67 basis points (bp) in October, the largest one-month increase in the survey’s history.

Despite the recent buying, funds are still severely underweight (UW) on financial stocks.

“However, the sector remains at a deep UW of -450bp – still the deepest UW,” said the broker.

“We see parallels emerging between the narrowing of the REITS UW from Oct-16 to what we are witnessing today in Financials. Through this period REITS outperformed the Banks by 2300bp.”

Financials Vs. Real Estate Investment Trusts (REITs) Average Weighting

Most loved ASX big bank stock

Around 60% of funds that JPMorgan tracked have increased their holdings of financial stocks in October. The ASX financial stock that was most sort after was the NAB share price, which became the third most widely held stock by funds in the survey.

The top two are the BHP Group Ltd (ASX: BHP) share price and CSL Limited (ASX: CSL) share price, respectively.

ASX stock rotation underfoot?

However, if fund managers were to keep buying financial shares, they probably will need to sell other stocks to fund the trade.

“Cash was drawn down again in October. Average holdings are now 10bp from the lowest point on our FMR records of 2.9%,” added JPMorgan.

“Of the managers we track, 65% reduced holdings, with four funds cutting holdings by over 200bp.”

If these investors continue to upweight on financials, it could potentially put outperforming tech stocks at risk, in my view.

Tech darlings like the surging Afterpay Ltd (ASX: APT) share price may make an ideal funding source as they rotate into beaten down financials.

More reading

• ASX 200 up 1%: Domino’s rockets, Collins Foods delivers strong result, GPT offloads asset
• 2 ASX 200 healthcare shares that outperformed in November 
• CBA (ASX:CBA) hauled to court over rip-off accusations
• ASX shares looking awesome for next year: economist
• These were the worst performing ASX 200 shares in November

Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Commonwealth Bank of Australia, CSL Ltd., National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to start the month on a positive note. The benchmark index is currently up 1% to 6,583.6 points.

Here’s what has been happening on the market today:

Collins Foods’ strong half year result.

The Collins Foods Ltd (ASX: CKF) share price is pushing higher today after the release of its half year results. Thanks largely to the strong performance of its KFC Australia business, Collins Foods delivered solid revenue and earnings growth in the first half of FY 2021. For the six months ended 30 September, the company reported 11.3% increase in revenue compared to the prior corresponding period to $499.6 million. And on the bottom line, underlying net profit after tax came in 15.1% higher at $27.5 million.

Domino’s share price rockets higher.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is rocketing higher on Tuesday after being upgraded by a leading broker. According to a note out of Goldman Sachs, its analysts have upgraded Domino’s shares to a conviction buy rating with an $88.00 price target. The broker believes the company has the potential to deliver double-digit operating earnings growth over the medium term.

GPT sells 1 Farrer Place stake.

The GPT Group (ASX: GPT) share price is trading lower today after announcing a binding agreement with the Lendlease Group (ASX: LLC) managed Australian Prime Property Fund Commercial to sell its 25% stake in 1 Farrer Place, Sydney. The two parties have agreed a price in line with its June 2020 book value of $584.6 million. Management notes that the asset has delivered a return in excess of 12% per annum over the past five years. The transaction is expected to settle by mid-December.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Tuesday has been the Domino’s share price with a 10% gain. This follows the release of a bullish broker note out of Goldman Sachs this morning. The worst performer has been the IDP Education Ltd (ASX: IEL) share price with a 2.5% decline. This is despite there being no news out of the student placement and language testing company.

More reading

• Why Collins Foods, Domino’s, Macquarie Telecom, & PolyNovo shares are charging higher
• ASX shares looking awesome for next year: economist
• Collins Foods (ASX:CKF) share price jumps 7% on strong half year result
• Leading broker upgrades Domino’s (ASX:DMP) share price to conviction buy rating
• These were the worst performing ASX 200 shares in November

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has recommended Collins Foods Limited and Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Microsoft Corporation (NASDAQ: MSFT) recently dropped its 40-minute time limit on video chats for Teams’ free users, and will allow them to stay connected for 24 hours with up to 300 participants “in the coming months.”

That decision, which will last “until further specified,” indicates Microsoft wants to pull users away from Zoom Video Communications Inc (NASDAQ: ZM), which has become synonymous with video chats during the pandemic. At the time of Microsoft’s announcement, Zoom capped its free meetings at 40 minutes for up to 100 participants.

But shortly afterward, Zoom announced it would temporarily remove its time limit for free users on Nov. 26 and Nov. 27. Does Microsoft’s challenge spell trouble for Zoom, or is it too late for the tech giant to catch up?

Moving on from Slack to Zoom

Microsoft initially launched Teams as a competitor to Slack Technologies Inc (NYSE: WORK) in the unified enterprise communications space three years ago. Microsoft subsequently bundled Teams into Office 365 as a free service, with sparked antitrust complaints from Slack.

In October, Microsoft revealed that Teams had 115 million daily active users (DAUs), up over 50% from 75 million just six months earlier. Slack only had about 12 million DAUs last September, and it hasn’t updated that figure since.

Slack’s revenue continued to rise, but it remained unprofitable and is now reportedly willing to be acquired by Salesforce.com Inc (NYSE: CRM). Slack’s antitrust complaints and retreat indicate Microsoft’s free strategies are paying off. After all, Microsoft can easily afford to run Teams at a loss for years to drive smaller players out of the market.

That’s why Microsoft is now setting its sights on Zoom. Zoom became a household name because it was free, easy to use, and hosted more users than traditional video conferencing services. But it also struggled with privacy and security problems as hundreds of millions of new users joined its platform.

Those missteps encouraged bigger tech companies with more robust security frameworks — including Microsoft, Cisco Systems Inc (NASDAQ: CSCO), and Alphabet Inc‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google — to promote their own alternatives to Zoom. Cisco’s Webex currently has a free time limit of 50 minutes, and Google Meet has an official time limit of 60 minutes — but it’s offering unlimited meetings until next spring.

Therefore, it wasn’t surprising to see Microsoft remove Teams’ time limit. It’s also allowing users who don’t have Microsoft accounts or the Teams app to freely join meetings through a web browser — which mirrors Zoom’s streamlined browser-based meetings.

Is it too late to catch up to Zoom?

Zoom’s number of daily active meeting participants rose from 10 million at the end of 2019 to over 300 million in April. But that doesn’t mean Zoom has 300 million DAUs since each individual user can be counted as multiple participants if they join more than one Zoom meeting per day. Microsoft also stated it had 200 million daily active participants in a single day back in April.

Zoom and Teams still can’t be considered direct competitors, since Zoom is built on video calls while Teams is a unified communications platform for enterprise users. Microsoft’s brand also doesn’t seem to be strongly associated with video calls anymore, as seen with the tepid market response to its other Zoom competitor, Skype Meet Now, earlier this year.

That’s why Microsoft is now leveraging the strength of Teams in the enterprise market to enter the consumer-facing market. It launched Teams for consumers earlier this year, which targets friends and families instead of co-workers, and removing time limits and login barriers might convince more people to try out the service.

Unfortunately, I think it will still be tough for Microsoft to pivot Teams from the enterprise to mainstream users. Microsoft expanded Teams in the enterprise market with aggressive bundling strategies, but it lacks that advantage in the consumer market, where Zoom enjoys a first-mover’s advantage.

Teams will also face stiff competition from free alternatives like Facebook Inc‘s (NASDAQ: FB) Messenger Rooms and its own neglected Skype platform — which still attracted 40 million DAUs back in March. In other words, offering free all-day calls probably won’t stop most people from using Zoom as a verb for video calls in general.

The bottom line

Microsoft is leveraging Teams to expand Office 365, a core component of the commercial cloud business that generated over $50 billion in revenue (more than a third of its top line) in fiscal 2020. On its own, Teams won’t generate significant revenue for Microsoft. But it’s still a valuable tool for locking users into its Office ecosystem and keeping disruptive challengers like Slack and Zoom at bay.

Therefore, Microsoft will continue challenging Zoom in the video conferencing market with Teams, even though it could be a futile effort. Meanwhile, Zoom’s investors should be more concerned about the stock’s frothy valuations and a potential slowdown after the pandemic ends instead of Microsoft’s latest moves.

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

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Leo Sun owns shares of Cisco Systems and Facebook. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, Microsoft, Salesforce.com, Slack Technologies, and Zoom Video Communications and recommends the following options: short January 2021 $115 calls on Microsoft and long January 2021 $85 calls on Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Facebook, Slack Technologies, and Zoom Video Communications. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Microsoft comes after Zoom with all-day free video calls appeared first on Motley Fool Australia.

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to start the month on a positive note. At the time of writing, the benchmark index is up 0.7% to 6,565.3 points.

Four shares that are climbing more than most today are listed below. Here’s why they are charging higher:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price is up 2.5% to $9.58. Investors have been buying the quick service restaurant operator’s shares after the release of its half year results. For the six months ended 30 September, Collins Foods delivered a 11.3% increase in revenue compared to the prior corresponding period to $499.6 million. And on the bottom line, underlying net profit after tax came in 15.1% higher to $27.5 million.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price has jumped 10% higher to $81.54. The catalyst for this appears to be a broker note out of Goldman Sachs this morning. Its analysts have upgraded Domino’s shares to a conviction buy rating with an $88.00 price target. The broker believes the company has the “potential to maintain double digit EBITDA CAGR in the medium term despite various levels of COVID impacts in each of their markets.”

Macquarie Telecom Group Ltd (ASX: MAQ)

The Macquarie Telecom share price is up 2% to $49.93 following the release of its investor day update. That update reveals that management is expecting further earnings before interest, tax, depreciation, and amortisation (EBITDA) growth in FY 2021. It has provided first half EBITDA guidance of $36 million to $37 million. This will be a 13.9% to 17.1% increase on the $31.6 million it achieved in the prior corresponding period.

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price has jumped 6% to $3.41. Investors have been buying the medical device company’s shares after it announced that it would bring its Breast device development program in-house effective immediately. Chairman David Williams advised that “the new product development and extension opportunities in front of us dictate that we need to build our research and development team and efforts.”

More reading

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• Leading broker upgrades Domino’s (ASX:DMP) share price to conviction buy rating
• These were the worst performing ASX 200 shares in November
• 5 things to watch on the ASX 200 on Tuesday

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has recommended Collins Foods Limited and Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Collins Foods, Domino’s, Macquarie Telecom, & PolyNovo shares are charging higher appeared first on Motley Fool Australia.

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