Tag: Motley Fool

On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and $28.25 price target on this payments company’s shares. This follows the announcement of a partnership with Westpac Banking Corp (ASX: WBC) that will see Afterpay offer savings accounts and cash flow tools. While the broker expects this to support customer retention and transaction frequency, it doesn’t believe the impact on its earnings to be overly material. In light of this, it retains its sell rating and lowly price target. The Afterpay share price is trading at $100.71 this afternoon.

DEXUS Property Group (ASX: DXS)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $8.15 price target on this property company’s shares following its first quarter update. Although the update revealed distribution guidance ahead of the broker’s expectations, it hasn’t been enough for its to change its rating. It continues to see tough times ahead of DEXUS due to rising unemployment, lower occupancy rates, and potential rental declines. The DEXUS share price is changing hands for $9.35 on Thursday.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Citi have retained their sell rating but lifted their price target on this pizza chain operator’s shares to $67.40. According to the note, the broker believes Domino’s is well-placed for growth in the current environment. It also suspects that a new geographic expansion could be coming. Possibly into South Korea or Poland. However, it feels this is more than priced into its current share price. As a result, it stays firm with its sell rating. The Domino’s share price is fetching $87.57 today.

More reading

• Why you should pay attention when management buy (or sell) ASX shares
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• Broker updates are mixed on these 6 high profile ASX 200 shares
• 3 super reasons to buy ASX 200 shares today
• The best ASX shares to buy during a market crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended 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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I think that it’s important that investors pay close attention to when management of a business decide to buy or sell their ASX shares. 

Why it matters

The leadership of a business are the ones that should be most committed to the cause. At least, that’s how I think it should be.

If people decide that they want to sell their shares, that can raise some questions.

But if the management want to buy shares, then that could be a really good indicator of the positive outlook for the company. The idea is that management only buy shares for one reason: they think the share price represents good long-term value.

I like to see management buy shares a similar price to what regular investors can buy shares at on the market.

Insiders have the best knowledge of a company’s operations. They are the management of the company. Or perhaps it’s directors buying who have excellent knowledge of the business and know the management closely.

I’d actually prefer to see more management buy shares more often. It would be a fair defence to say they shouldn’t have all of their financial eggs in one basket, but I think management should show a commitment to the business they’re leading. Putting your own money on the line is one of the best ways to align yourselves with the people that you’re supposedly running the company for.

Here are some recent positive management movements:

I’ve been pleased to see pretty hefty purchases of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares by the Millners.

Geoff Wilson has been buying up shares of WAM Global Limited (ASX: WGB) and Wam Alternative Assets Ltd (ASX: WMA).

There have been some insider buys of Transurban Group (ASX: TCL) shares and Nanosonics Ltd (ASX: NAN) shares.

Sales can be a worry

There are lots of different reasons why management apparently choose to sell their shares.

Selling to pay tax is a common reason. Diversifying their portfolio could be a reason. Maybe they need the money to buy a property. Divorce can be a reason.

An ASX share sale can worry investors because it could mean management are deciding to cash out before some bad news is coming.

There have sadly been plenty of examples where management sell and then, a few months later, some bad news is announced. It’s not necessarily illegal, it’s just not a good look and shareholders may lose confidence in management. A company will sometimes go through tough times, that’s understandable, but management shouldn’t be bailing out just before the bad news.

But a sale doesn’t always mean poor performance

There have been some sales by ‘insiders’ in recent times in businesses that have gone on to keep growing profit and the share price. A share sale may simply be an honest attempt to diversify.

The leadership of Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) have previously sold a portion of their shares at a much lower price than today’s share prices.

There was a big selldown of Pushpay Holdings Ltd (ASX: PPH) shares not too long ago, but now the Pushpay share price is close to trading at its all-time high.

With the above sales, investors didn’t need to worry long-term, partly due to COVID-19 bringing forward digital adoption. 

Foolish takeaway

If you’re invested in ASX shares, you want to see that management have skin in the game. Either with a large existing holding or they are purchasing new shares on the market.

Be wary of sales. A sell won’t always mean bad news is coming, but I wouldn’t exactly call it a positive. However, if a business does drop then it could be good value to buy – that’s why I think about the A2 Milk share price. I reckon A2 Milk is a good long-term buy today.

More reading

• Why it makes sense to invest in ASX shares
• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• Broker updates are mixed on these 6 high profile ASX 200 shares
• ASX 200 shares hit by multiple takeovers
• 3 super reasons to buy ASX 200 shares today

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd, Nanosonics Limited, and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. The Motley Fool Australia has recommended Kogan.com ltd, Nanosonics Limited, and PUSHPAY FPO NZX. 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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After agreeing to sell 50% of its stake in the world’s largest mining services provider, Theiss, Cimic Group Ltd (ASX: CIM) has been warned it may see its credit rating downgraded. As is common in large merger and acquisition (M&A) transactions, Standard & Poor’s (S&P) is analysing the impact of the transaction and has placed Cimic’s credit rating on ‘CreditWatch negative’. This means it may lower.

S&P believes the disposal could reduce the business scale and diversity of the Cimic Group parent shareholder, Actividades de Construccion y Servicios SA (ACS). In addition, the ratings agency believes it may add complexity to the group structure and governance.

Rationale of the Cimic Group decision

Thiess delivers open cut and underground mining services in Australia, Asia and Africa. The company delivered an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 34%. This is is well above the group’s adjusted EBITDA margin of 8.3%. Hence, S&P have the view that Theiss’ mining activities have supported the group’s business diversification and profitability margin, and they complement Cimic’s civil engineering and construction business. 

ACS group is using most of its available rating headroom in coping with the effects of the pandemic. S&P anticipates a drop in the ratio of funds from operations (FFO) to debt. It sees this metric  declining to 28%-31% from 32.3% in 2019, and then recovering to above 30% in 2021. To maintain the ‘BBB’ credit rating, S&P expects to see this at around 30% to 40%. 

The ratings agency is also questioning Cimic Group’s operational and strategic direction. This includes understanding the future role of Thiess in Cimic’s future operations and growth strategy. Moreover, it expressed concern over the operating constraints inherent within a joint-venture structure. Accordingly, S&P expects the company’s credit metrics will weaken, regardless of how it applies the proceeds from the sale.

Company trading

Cimic saw its share price rise by almost 5% on the day it announced the 50% sale of Theiss. However, signs that accounts may not be reliable surfaced yesterday. The company was forced to reveal that it will not get the $1.1 billion of revenue it booked from the Gorgon project. During FY20, the company also had to write off $1.8 billion after being unable to recover debts owed for projects built during the Dubai property bubble.

The Cimic Group share price remains down by 33% in year-to-date trading. However, it has a trailing 12 month dividend yield of 7.14%.

More reading

• Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower
• CSL (ASX:CSL) share price and 2 other ASX stocks among latest broker “buy” ideas
• ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale
• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher
• CIMIC (ASX:CIM) share price 5% higher after agreeing to sell 50% of Thiess

Motley Fool contributor Daryl Mather 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.

The post S&P places Cimic Group (ASX:CIM) on negative credit watch appeared first on Motley Fool Australia.

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The Esports Mogul Ltd (ASX: ESH) share price was rocketing up this morning as the company announced a partnership with a Nasdaq Composite (INDEXNASDAQ: .IXIC) listed gaming company. Consequently, the company was issued a speeding ticket by the ASX and put in a trading halt.

The Esports Mogul share price was trading 39.29% higher in early trade, smashing its previous 52-week high as it reached a price of 2.3 cents. Trade has since resumed, with the share price now storming up 57%.

What Esports Mogul does

Esports Mogul is an Australian esports business that aims to lead the innovation of competitive gaming online. Unlike traditional Esports companies, Mogul seeks to benefit from the industry by providing an online platform for esports player matchmaking and tournaments. 

The company’s platform is used for some of the world’s most popular esports titles. Esports Mogul has been listed on the ASX since 2011.

US partnership

This morning, the Esports Mogul share price went ballistic on news of a strategic partnership with Nasdaq-listed Super League Gaming, Inc. The deal gives Esports Mogul the right to use Super League Gaming’s AI-powered streaming technology. The patented technology is most famous for its automated AI-powered “camera character” game view.

Furthermore, Mogul and Super League Gaming will also partner on revenue generating opportunities. This will be done by providing openings for branding and rights holders through esports tournament streaming.

This is not the first time the two gaming entities have worked together. Mogul and Super League Gaming have previously started business development activities in multiple regions across the world.

What now for the Esports Mogul share price?

With Esports Mogul shares storming higher, its CEO, Michael Rubinelli stated:

Esports is a fast-growing gateway between brands and everyday gamers. We want to scale a best-in-class and industry leading proposition for brands and rights holders and Super League Gaming brings highly complementary technology to our ambitions. This partnership was the perfect fit for us and we can’t wait to get started.

Esports is a rapidly growing industry. The new focused ETF, VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO) being added in early September is evidence of this.

More reading

• S&P places Cimic Group (ASX:CIM) on negative credit watch
• Why Ardent Leisure’s (ASX:ALG) share price is up 46% from 28 September
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• The Rhipe (ASX:RHP) share price has jumped 8% today. Here’s why.
• Why it makes sense to invest in ASX shares

Motley Fool contributor Daniel Ewing 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.

The post The Esports Mogul (ASX:ESH) share price has surged up 57%. Here’s why appeared first on Motley Fool Australia.

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The Ardent Leisure Group Ltd (ASX: ALG) share price is falling today, down 5.1% in early afternoon trading.

The broader market is under pressure as well, with the S&P/ASX 200 Index (ASX: XJO) down 0.6%. Ardent Leisure’s losses likely reflect investor concerns over COVID-19 and when the company’s theme parks will be able to reopen at full capacity.

These same concerns, magnified many-fold, saw Ardent’s share price smashed by 92% from 21 February through to 25 March. The share price has gained 470% from that low, though it’s still down 44% year-to-date.

Despite today’s selloff, Ardent’s share price remains up 46% since 28 September. We’ll look at why in a tick. But first…

What does Ardent Leisure do?

Ardent Leisure is an Australian leisure and entertainment group. The company owns and operates premium leisure assets which include Dreamworld, WhiteWater World and SkyPoint theme parks.

Its Main Event portfolio also includes a growing number of family entertainment assets in the United States.

Why has the share price soared 46% since 28 September?

The Ardent Leisure share price hasn’t suffered just because of the pandemic. It has also remained under pressure from ongoing litigation related to the tragic deaths of 4 people on one of its Dreamworld water rides in October 2016.

But on 28 September, Ardent announced that the legal prosecution was finalised, and that the company accepted the court’s decision to impose a $3.6 million for breaches of the Work Health and Safety Act.

In a written statement, Ardent chair Gary Weiss said:

Ardent apologises, unreservedly, for the past circumstances and failures at Dreamworld that resulted in the tragic loss of four lives…

Ardent accepts responsibility for this tragedy without qualification or reservation. Following the first public hearing in June 2018, Ardent indicated that it would implement all of the coroner’s recommendations, and more recently it pleaded guilty at the first opportunity to all three charges brought by the Work Health and Safety prosecutor…

There has been considerable change at Dreamworld over the last few years… driven by the new and experienced leadership team, has resulted in a complete overhaul of Dreamworld’s safety systems which has led to enhancements to existing systems and practices and the adoption of new ones.

More reading

• ASX 200 down 0.75%: Big four banks drop, Healius hits record high, Zip slides lower
• Why the OZ Minerals (ASX:OZL) share price hit a 10-year high today
• 3 super reasons to buy ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday
• The best ASX shares to buy during a market crash

Motley Fool contributor Bernd Struben 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.

The post Why Ardent Leisure’s (ASX:ALG) share price is up 46% from 28 September appeared first on Motley Fool Australia.

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It has been a tough day of trade for the S&P/ASX 200 Index (ASX: XJO) amid U.S. stimulus concerns. In early afternoon trade the benchmark index is down 0.65% to 6,151.1 points.

Four shares that are falling more than most today are listed below. Here’s why they are dropping lower:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s Pizza share price is down 4% to $88.41 despite there being no news out of the pizza chain operator. However, with its shares up materially since the start of the year, some investors may be taking a bit of profit off the table today. Even after this decline, the Domino’s share price is up 64% since the beginning of 2020.

Oil Search Limited (ASX: OSH)

The Oil Search share price is down over 4% to $2.82. Investors have been selling Oil Search’s shares today following a sizeable pullback in oil prices overnight due to low gasoline demand in the US. One broker that remains positive on the company is Citi. This morning it retained its buy rating but trimmed its price target ever so slightly to $3.80.

Resolute Mining Limited (ASX: RSG)

The Resolute Mining share price has sunk 7.5% lower to 86.5 cents. The gold miner’s shares have come under pressure today following the release of a disappointing third quarter update. Resolute’s production was down notably quarter on quarter, leading to a jump in costs. In light of this, its full year production is expected to be at the low end of its guidance range and its costs will be at the high end.

Zip Co Ltd (ASX: Z1P)

The Zip Co share price is down 4% to $6.78. The catalyst for this was news that Westpac Banking Corp (ASX: WBC) has sold its 10.7% stake in the buy now pay later provider to institutional investors. The banking giant was able to fetch $6.65 per share for its 55.46 million Zip shares. This valued them at approximately $368.8 million and was a 6% discount to its last close price. The two companies intend to keep working together in the future.

More reading

• Broker updates are mixed on these 6 high profile ASX 200 shares
• ASX 200 down 0.75%: Big four banks drop, Healius hits record high, Zip slides lower
• Why the Resolute Mining (ASX:RSG) share price is the worst performer on the ASX 200 today
• ASX 200 shares hit by multiple takeovers
• Why the Laybuy Holdings Ltd (ASX:LBY) share price is on watch today

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 ZIPCOLTD FPO. The Motley Fool Australia has recommended 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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The Rhipe Ltd (ASX: RHP) share price has jumped 8.59% to $1.96 after its first quarter FY21 market update today. Here are the key highlights from its update. 

First quarter market update 

The cloud channel group experienced solid Q1 revenue growth, up 16% to $14.7 million on the prior corresponding period. Despite COVID-19 pandemic-related challenges across Rhipe’s main market in the Asia Pacific region, it continued to deliver solid revenue growth driven by continued growth in the Microsoft public cloud products including Office365 and Azure. In addition, it continues to see strong growth in its solutions and services business. 

Rhipe’s operating profit increased 40% to $4.2 million due to solid revenue growth alongside strong cost management. Its operating profit including Japan is $3.9 million, up 39%. 

It maintains a strong balance sheet with $53.8 million cash as at 30 September 2020. This follows the payment of $3.2 million in dividends and $4.25 million in acquisition costs. Its cash position is significant given its market capitalisation of just $300 million. 

Japan joint venture 

In late 2019, Rhipe announced a joint venture (JV) with Japan Business Systems Inc (JBS) to establish Rhipe Japan. JBS would provide local personnel, office space, local market knowledge and support the operational launch. While Rhipe will be responsible for all other aspects including its appointment as Microsoft Indirect Cloud Solutions Provider, which was granted at the end of October 2019. 

The Group’s Microsoft Office 365 seats at 30 September 2020 were in excess of 680,000 including more than 6,000 seats in Japan, up 50,000 since 30 June 2020. The business will continue to invest in its Japan JV. 

Parallo acquisition

In September, Rhipe acquired New Zealand-based IT services provider, Parallo. The initial purchase price for Parallo was NZ$4.25 million plus additional performance related payouts. Parallo delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$650,000 in the 12 months prior to acquisition and Rhipe aims to leverage both the cost and revenue synergies from its acquisition.

In the Q1 business update, Rhipe noted its continued investment into Parallo and support for its expansion into the Australian market. 

More reading

• Why it makes sense to invest in ASX shares
• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• Why is the Tinybeans (ASX:TNY) share price edging higher today?
• Broker updates are mixed on these 6 high profile ASX 200 shares
• Why the Centuria Capital (ASX:CNI) share price is in a trading halt

Motley Fool contributor Lina Lim 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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I think it makes a lot of sense to invest in ASX shares right now and for the long-term.

It gives us the opportunity to buy plenty of quality Australia and New Zealand businesses. There are also numerous businesses that are headquartered overseas, but we can buy their shares on the ASX.

Here are some great reasons why it makes sense to invest in ASX shares right now:

Long-term benefits

The ASX share market has been one of the best performers over the past century, largely thanks to the strength of the Australian economy and the underlying businesses.

Australian shares have returned an average of around 10% per annum over the long-term. That’s a solid number and compounds wealth at a very nice pace when you re-invest the dividends.

ASX shares that are part of the Australian taxation system and pay dividends also offer the potential benefit of franking credits, which is a refundable tax credit to ensure that taxpayers don’t pay tax twice (once at the company level and again in the hands of individuals).

So, Australian shares have offered good returns in the past and continue to offer tax-advantaged income.  

I don’t see the benefit of investing in bonds at the moment when asset prices are so high and interest rates are so low.

Strong COVID-19 and economic position

Australia is in a good position, both with COVID-19 and economically with a pretty robust GDP compared to other countries.

Economies don’t exactly match the performance of business profits or share prices, but a good economy is undoubtedly a good thing for the ASX share market. A good COVID-19 position will also allow most businesses to be open and operate normally, and consumers will feel more comfortable too.

Many ASX retail-related shares have seen strong performance over the past six months such as JB Hi-Fi Limited (ASX: JBH), Eagers Automotive Ltd (ASX: APE), Wesfarmers Ltd (ASX: WES), Adairs Ltd (ASX: ADH) and Harvey Norman Holdings Limited (ASX: HVN).

Overseas investors may also see ASX shares as a safe haven compared to what’s happening in Europe and the US. Particularly if the US election stirs things up.

Great investment options

I think there are a number of great ways to invest in ASX shares.

Exchange-traded funds (ETFs) aren’t a bad option. There are ETFs you can buy for ASX share exposure like Vanguard Australian Shares Index ETF (ASX: VAS).

But there is too much focus on big ASX banks and resource businesses with ASX index ETFs in my opinion. Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO) make up around half of the index. That’s not great diversification in my opinion.

There are better ways to invest in ASX shares in my opinion. For starters, there are quality managers who invest in ASX shares which can provide exposure such as WAM Microcap Limited (ASX: WMI), Future Generation Investment Company Ltd (ASX: FGX) and Ophir High Conviction Fund (ASX: OPH).

I also think there are a number of individual ASX shares that can deliver attractive long-term returns like Pushpay Holdings Ltd (ASX: PPH), Brickworks Limited (ASX: BKW), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), A2 Milk Company Ltd (ASX: A2M), Bubs Australia Ltd (ASX: BUB), Temple & Webster Group Ltd (ASX: TPW) and Redbubble Ltd (ASX: RBL).

More reading

• MyDeal (ASX:MYD) share price rockets 120% higher following IPO
• Why Aerometrex, Healius, Megaport, & Temple & Webster shares are pushing higher
• Here’s where I would spend $10,000 on ASX shares today
• ASX 200 shares hit by multiple takeovers
• 3 super reasons to buy ASX 200 shares today

Tristan Harrison owns shares of FUTURE GEN FPO, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk, Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended ADAIRS FPO, PUSHPAY FPO NZX, and Temple & Webster Group 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 MyDeal.com.au Limited (ASX: MYD) share price has had a sensational start to life on the Australian share market.

The online retail marketplace provider’s shares rocketed 120% higher than its IPO price of $1.00 to $2.20 this morning.

The MyDeal share price has since pulled back a touch but is still up 83% for the day to $1.83.

The MyDeal IPO.

MyDeal hit the ASX boards this morning after successfully completing its initial public offering that raised $40 million at $1.00 per share.

The $40 million comprises $35 million for the company and $5 million for certain existing shareholders.

Based on this and its existing shares, this gave the company a market capitalisation of $258.8 million. Though, with its shares now changing hands for $1.83, MyDeal has a market capitalisation of $475 million.

What will it spend the proceeds on?

According to the release, the company intends to use the proceeds from the IPO to drive future growth.

This includes growing MyDeal’s private label business, investing in its proprietary technology (the development and launching of mobile apps for iOS and Android devices), and investing in advertising to grow its customer base and brand.

MyDeal’s CEO and Managing Director, Sean Senvirtne, commented: “This is a very exciting day for MyDeal, and I am delighted with the strong support that we received from both institutional and retail investors. Today is an important milestone for MyDeal, however, this is still the beginning of our journey. I would like to thank our long-term shareholders for their ongoing support, and welcome new shareholders to be part of the exciting journey ahead of us.”

Trading update.

As with fellow ecommerce companies Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW), MyDeal has started FY 2021 strongly.

Gross sales for the first quarter came in at $56.67 million, up 317% on the prior corresponding period.

Also growing strongly was its active customers. MyDeal now has 669,897 active customers, which is an increase of 268% since this time last year.

More reading

• Why it makes sense to invest in ASX shares
• Why Aerometrex, Healius, Megaport, & Temple & Webster shares are pushing higher
• Is the Kogan.com (ASX:KGN) share price a strong buy?
• The ASX 200 finished 0.1% higher today
• Temple & Webster (ASX:TPW) share price sinks 15% lower: Is this a buying opportunity?

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 Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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 Tinybeans Group Ltd (ASX: TNY) share price is edging higher today following the company’s release of its Q1 FY21 update. In early morning trade, shares in the tech company reached an intra-day high of $1.35. However, the Tinybeans share price has since retreated to $1.24 at the time of writing, up 0.82%.

What’s moving the Tinybeans share price?

The Tinybeans share price bounced higher this morning after the company reported a robust result backed by an acceleration in user engagement for the period ending 30 September.

Revenue jumped to $2.5 million, a 123% increase on the prior corresponding period, and 6% on the previous quarter. The record result was achieved by Tinybeans’ premium subscription base growing above 21,800 members.

Earnings before interest, tax, depreciation and amortisation (EBITDA) improved, operating at a loss of $331,000. This represented a 50% reduction on the past three months. With high operating margins, the company noted that revenue is closing the gap as the business grows.

Operating cash burn for Q1 FY21 was $815,000, driven by recruitment costs to support new and existing larger advertising partners. Advertising wins included Walmart Inc (NYSE: WMT), Apple Inc (NASDAQ: AAPL), Cooper Companies Inc‘s (NYSE: COO) CooperVision, Spin Master Corp, Aphabet Inc‘s (NASDAQ: GOOGL) Google and Moose Toys.

Tinybeans recorded a cash balance of $4.55 million at the end of the quarter.

What did the CEO say?

Tinybeans CEO, Mr Eddie Geller, commented on the positive result. He said:

I’m pleased to report another quarter of strong growth despite COVID disruptions to our operations and to our brand partners…

Historically, Q1 is seasonally a slower quarter in the U.S. advertising market, however, a 15% revenue growth in USD terms during difficult economic times is very promising…

We have plans to significantly grow this offering as more and more content gets integrated across the app. E-commerce is a complementary addition to the platform and a total addressable market in the baby/kids category in the U.S. of over 1 trillion dollars.

FY21 priorities

Tinybeans said it continues to perform well with the COVID-19 backdrop and is focused on executing its growth strategies.

New partnership agreements are being worked on and are expected to be released to the market in due course.

The company is anticipating exponential user growth to begin in FY22, with revenues from its consumer segment to eclipse adverting by FY23. This is due to its ever-growing sales team pushing subscription and e-commerce products and services.

About the Tinybeans share price

The Tinybeans share price has been an impressive performer since the beginning of August, reflecting a gain of more than 50% for shareholders. On today’s price, the company has a market capitalisation of just under $58 million.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet (A shares) and Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tinybeans Group Ltd. The Motley Fool Australia has recommended Alphabet (A shares), Apple, and Tinybeans Group 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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