Tag: Motley Fool

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.

Without question, COVID-19 has made an impact across the economy, particularly with retailing. The contagion appeared to benefit companies like Amazon (NASDAQ: AMZN), simply because it allows for shopping while greatly reducing the risks associated with going to crowded stores.

Conversely, this might also create investor fears that a coronavirus vaccine could hurt the consumer discretionary stock as it could result in pre-pandemic buying patterns returning.

Such an occurrence may create questions about Amazon sales (and the potential effect it might have on the company’s stock price) in the near term, but prospective buyers have three good reasons to ignore those worries and buy Amazon stock despite the concerns. 

1. Amazon’s sales history

Indeed, consumer reaction to COVID-19 gave Amazon’s retail sales a significant bump. In the second quarter of 2020, sales increased by almost 42% from the same quarter last year. This compares to the second quarter of 2019 when sales rose by around 18% from year-ago levels.

Investors should notice though that sales likely still increased without the help of a pandemic. The one benefit to these pandemic sales is that they have given Amazon a reprieve from potential sales growth slowdowns that could have occurred had the pandemic not happened. In 2019, the sales growth of its retail operations rose by 18.5% from year-ago levels. That was actually a slowdown from the yearly increases of approximately 29% in 2018 and 30% in 2017.

Hence, COVID-19 looks to have given Amazon’s retail sales a temporary bump. And although sales growth rates may again fall below 20%, investors need to remember that double-digit sales increases will probably continue for a long time to come.

2. The power of Amazon Web Services

The retail sales figures referenced above are not directly related to activity from Amazon Web Services (AWS), its cloud computing unit. AWS is still a relatively small portion of the company’s overall revenue, but AWS accounts for most of Amazon’s profits.

At just over $10.8 billion in sales in the most recent quarter, AWS made up only about 12% of overall sales. However, thanks to high gross margins, its almost $3.4 billion in operating income accounted for more than 57% of the company’s operating income.

Despite all of the talk about remote work moving tasks to the cloud, earnings growth dropped slightly. In the most recent quarter, revenue increased by about 29% over year-ago levels, a decline from the 37% year-over-year increase reported for AWS in the second quarter of 2019.

Nonetheless, investors should probably take the slightly slower growth in stride. According to the hosting platform Kinsta, AWS leads the infrastructure segment of the cloud computing industry. Also, Grand View Research forecasts that the cloud industry will grow at a compound annual growth rate of about 15% through 2027. AWS’s growth far exceeds that rate, strongly positioning the company both now and after the pandemic ends.

3. Amazon is reasonably valued

Admittedly, calling Amazon “inexpensive” may seem outrageous, given its forward price to earnings (P/E) ratio of around 64. However, net income increased by 97% in the most recent quarter. Also, analysts project 38% profit growth for this year. In 2021, when most analysts expect the pandemic to have receded, they are forecasting a profit increase of 40%.

At $1.7 trillion, Amazon’s market cap only lags behind that of Apple at the time of this writing. Normally, companies that size would struggle to produce high-percentage earnings increases.

However, as mentioned before, the relatively small percentage of revenue earned by AWS generates the majority of the company’s profits. As long as this part of the company can maintain its high growth rate, Amazon stock should continue to benefit. Knowing this, it is little wonder why some analysts see a “massive upside” in Amazon.

Amazon has shown it can generate significant growth regardless of how coronavirus affects the company. Hence, those wanting to buy Amazon stock before a vaccine comes out have no reason to wait.

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

More reading

• Amazon Earnings: What to Watch on Thursday, Oct. 29
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• Is Apple (NASDAQ:AAPL) stock overvalued?
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• Where will Facebook (NASDAQ:FB) be in 5 years?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy 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 Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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.

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The Clover Corporation Limited (ASX: CLV) share price is having a day to forget on Wednesday.

At one stage today the specialist ingredients company’s shares were down as much as 20% to $1.63.

The Clover share price has recovered slightly in afternoon trade but is still down a disappointing 14.5% to $1.75 at the time of writing.

Why is the Clover share price crashing lower?

Investors have been selling the company’s shares today following the release of a trading update after the market close on Tuesday.

That update reveals that Clover has experienced reduced demand since the release of its full year results in September. This has been driven by lower than originally forecast orders from infant formula manufacturers during the first quarter.

Management believes this is the result of the market’s recalibration following a significant increase in fourth quarter FY 2020 orders in China due to re-filling after stockpiling by consumers at the height of the pandemic.

Outlook.

In light of its soft start to the new financial year, management is forecasting a decline in sales for the first half.

It commented: “As a consequence of this continuing uncertainty, Clover now expects revenue for the first half of FY2021 to be down 15% to 25% on the first half FY2020.”

No guidance has been provided beyond the first half. Though, a further update will be given at its annual general meeting in late November.

In the meantime, the company revealed that its market position remains strong and that it will continue to pursue a number of growth projects.

This news also appears to be weighing on the shares of A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB) today. The infant formula producers’ shares are both trading approximately 2% lower on Wednesday afternoon.

More reading

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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 Clover Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and BUBS AUST 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.

The post Here’s why the Clover (ASX:CLV) share price crashed 20% lower today appeared first on Motley Fool Australia.

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Wax on.

Wax off.

These were Mr Miyagi’s daily instructions to his martial arts pupil Daniel in the 1984 film, The Karate Kid as he applied, removed, and reapplied wax to an antique car.

The exercise in discipline was as tedious for Daniel as parts of the film were for many viewers. (Apologies if you’re a Karate Kid fan.)

But it came to mind this morning when an all too familiar pattern from the past weeks repeated once again. And like the Hollywood movie, this one also stems from the United States.

Stimulus on.

Stimulus off.

With each positive signal on a new multi-trillion-dollar US stimulus package, traders drive US share markets higher. And the share prices of ASX 200 companies tend to follow.

Then it all goes into reverse when negotiations hit a new snag and rumours spread that the stimulus is off.

Yesterday, overnight Aussie time, it was once again ‘stimulus on’.

US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi hinted they hope to reach an agreement next Tuesday. While any agreement still needs to pass the more fiscally conservative Republican dominated Senate, President Donald Trump now says he’ll support a spending package in excess of US$2.2 trillion (AU$3.1 trillion).

As we’ve come to expect, this news saw all the major US indices close in the green, with the S&P 500 Index (INDEXSP: .INX) gaining 0.5%.

As we’ve also come to expect, this morning we were greeted by headlines like this one from the Sydney Morning Herald, ‘ASX set for gains as Wall Street jumps on stimulus deal’.

And indeed, the S&P/ASX 200 Index (ASX: XJO) is up 0.1% in late morning trading.

But here’s the important takeaway.

In my opinion, it doesn’t matter.

Ignore this noise

Sure it’s nice when shares on the ASX 200 move higher on any given day.

But as I’ve written before, and will surely write again, unless you’re a trader hoping to make gains from daily share price swings, you’re better off keeping your eyes on the horizon rather than these sorts of daily market moving news bites.

In the case of the next major round of US stimulus spending, it will come. The only question is when.

Personally, I believe it will still come before the 3 November election. Not because the Democrats are eager to throw Trump a bone. But because if Trump loses, I believe he might stonewall any new stimulus package, preferring to hand over an ailing economy to Joe Biden and team.

So both sides have an incentive to get new spending measures passed.

But that’s just my forecast. I could very well be wrong. And that’s just fine.

As a long-term investor it doesn’t much matter if a $3 trillion US stimulus package gets passed tomorrow, or mid-November, or not until next February.

Whenever it does get the green light, US and Australian share markets will benefit.

It’s the same the world over

The Australian Government’s own massive fiscal stimulus spending alongside the Reserve Bank of Australia’s (RBA) accommodative monetary policies effectively lifted consumer and business confidence in the wake of the coronavirus pandemic. Investors’ revived animal spirits have seen the ASX 200 rocket 37% higher since the 23 March trough.

The same is true for most major European indexes.

The EURO STOXX 50 (INDEXSTOXX: SX5E) reached its low on 18 March. Fuelled by unprecedented actions from the European Central Bank (ECB) and government stimulus packages, it’s up 35% since then.

And with a heavy second wave of infections sweeping the European continent, more stimulus is almost certainly coming. (Just don’t worry about when!)

Addressing France’s Le Monde earlier this week, ECB President Christine Lagarde said, “The options in our toolbox have not been exhausted. If more has to be done, we will do more.”

That sentiment isn’t lost on Aaron Barnfather, European equities portfolio manager at Lazard Asset Management in London.

As reported by the Australian Financial Review (AFR) Barnfather said:

Effectively the worse that COVID gets, the more that monetary policy is stepped up and the more fiscal policy is also ramped up as well. That is clearly good for equity markets. When you see lockdowns, you should effectively face into it rather than run away from it.

Scott Haslem, the chief investment officer at Crestone Wealth Management, also points to additional monetary and fiscal stimulus as one of the reasons ASX shares can outperform.

Writing in the AFR, Haslem points out:

Australia has just unleashed another wave of fiscal support, with tax cuts hitting peoples’ bank accounts over coming weeks, and various stimulus packages promoting capex and housing incentives… The additional 4 per cent growth stimulus over the next couple of years takes our total fiscal stimulus to 17 per cent, one of the highest in the world.

Just like the US Federal Reserve, it seems that the RBA is of the view that the risks of policy intervention are asymmetric, with the risks of doing nothing outweighing the risks of doing what little remains.

The RBA meets in less than 2 weeks, on 3 November.

The US presidential election and Melbourne Cup Day, both on the same day, may garner more headlines. But the RBA’s decisions on a slender 0.15% rate cut and, more importantly, on expanding its quantitative easing QE program will be eagerly watched by ASX share investors.

I’ll be watching as well. But as a long-term investor, I’ll keep focused on where I believe ASX 200 share prices will be in 2023, rather than next month.

More reading

• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• 3 ASX shares I’d buy for summer 2021
• Warning: Here’s why keeping your savings in the bank is hurting your financial future
• 5 ASX 200 events to watch for this week
• 5 things to watch on the ASX 200 on Wednesday

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 The bullish outlook for ASX 200 shares appeared first on Motley Fool Australia.

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It’s no secret that the ASX shares to actually benefit from the coronavirus pandemic of 2020 include the supermarket giants. I’m sure we all remember, in the first months of COVID-19, the stripped-bare shelves of our local Coles and Woolies. It was a scary and unprecedented thing to see of course, like something from the war years of days gone by.

But the reality was that, with most retail stores shut around the country throughout March and April, Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) were experiencing record sales.

2020: The year of home cooking

Now, a report from BusinessInsider shows us just how much these companies benefited – and are still benefiting. According to the report, which was commissioned by Coles and Woolworths’ arch-rival Aldi, 75.4% of Australians are spending more on groceries in 2020.

Perhaps surprisingly, Tasmania led the charge with an 81% increase. Tassie was followed by Western Australia and the Northern Territory at 80% apiece.

The lowest 2 states/territories were South Australia with 66% and the Australian Capital Territory with 65%.

Contrary to some popular belief, however, this spike in grocery consumption was not just driven by ‘panic buying’. The report quotes Queensland University of Technology Business School Professor Gary Mortimer, a researcher in retail marketing and consumer behaviour:

Certainly from March onwards, some of that lift was underpinned by panic buying during times of uncertainty… We saw shoppers flock to supermarkets and stock up and stockpile.

However, he added:

We’ve seen consumers what we refer to as ‘cocooning’ or staying home [and] avoiding the crowds… we still see restaurants and bistros and pubs restricted to their numbers… So even if you want to go out to your favourite restaurant or bistro, you may find it difficult to get in and hence, we’re still cooking at home.

What does this mean for Coles and Woolworths shares?

What conclusions can we draw form this report? Well, it looks as though grocers like Coles and Woolworths are sitting in a semi-permanent tailwind. And this tailwind looks likely to last until at least the coronavirus is consigned to history.

And who knows, changing trends like these have more chance of becoming permanent the longer they are forced upon us. Perhaps Australians will be permanently cooking at home more often from now on. That spending is being directly transferred from restaurants and pubs to supermarkets. And that can only be a good thing for Coles and Woolworths (and their shareholders).

However, a final caveat: the research also found that 72.5% of Aussies are looking to cut down on how much they spend on groceries so that they can stick to their budget. I guess its not all sunshine and rainbows for the ‘big 2’.

More reading

• 3 ASX shares I’d buy for summer 2021
• Buy Coles (ASX:COL) and this dividend share before the next RBA meeting
• 5 ASX 200 shares that just received share price upgrades
• 3 things to tell someone who has never invested in ASX shares
• Brokers believe these record high ASX stocks can run higher

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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 Here’s how much Coles (ASX:COL) and Woolworths (ASX:WOW) are benefiting from COVID-19 appeared first on Motley Fool Australia.

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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. The benchmark index is currently up a fraction to 6,185 points. 

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

Big four banks push higher.

The big four banks are on form on Wednesday and are doing a lot of the heavy lifting on the ASX 200. While all four banks are recording gains, the best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a 1.5% gain. Hopes that a U.S. stimulus package will soon be signed appears to be lifting the sector.

Tech shares out of form.

It has been a rare off-day for the technology sector. At lunch, the S&P/ASX All Technology Index (ASX: XTX) is down a disappointing 1.1%. The likes of Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) are weighing on the index with declines of approximately 2%. After U.S. markets closed, Netflix released a quarterly result which fell well short of analysts’ expectations.

Megaport Q1 update disappoints.

Another tech share which is falling heavily today is Megaport Ltd (ASX: MP1). Investors have been selling the elastic interconnection services provider’s share following the release of its first quarter update this morning. Although Megaport delivered further growth in customer and recurring revenues, it was much slower than the market is used to. One positive was a strong rise in port numbers during the quarter. This is a leading indicator for growth, which could mean Megaport bounces back in the second quarter.

Best and worst ASX 200 shares.

The best performer on the ASX 200 on Wednesday has been the Orora Ltd (ASX: ORA) share price with a 6.5% gain. This follows the release of a positive trading update at the packaging company’s annual general meeting. The worst performer on the index has been the Megaport share price with a disappointing 10% decline following its Q1 update.

More reading

• Why Lynas, Orora, Praemium, & Tabcorp shares are racing higher today
• Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower
• Why the Megaport (ASX:MP1) share price is dropping lower today
• 3 ASX shares I’d buy for summer 2021
• Warning: Here’s why keeping your savings in the bank is hurting your financial future

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 MEGAPORT FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended MEGAPORT 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

Netflix Inc (NASDAQ: NFLX) has been one of the best-performing stocks of the last decade, returning 2,400% as the company has successfully transitioned from DVDs by mail to a streaming giant. Nonetheless, it’s had its fair share of detractors along the way, and their complaints are familiar at this point.

Bears have long argued that Netflix’s streaming advantage will eventually be eroded by new competition, which will steal market share as they make streaming a priority. In the same line of reasoning, they tend to believe that most of Netflix’s original content is mediocre, implying that the leading streamer isn’t even particularly good at what it does and that it would easily be surpassed by a dedicated competitor.

Netflix has faced a wave of new streaming competition in the U.S. as services like Walt Disney Co‘s (NYSE: DIS) Disney+, Apple Inc‘s (NASDAQ: AAPL) Apple+, Comcast Corporation‘s (NASDAQ: CMCSA) Peacock, and AT&T Inc‘s (NYSE: T) HBOMax have all come on the market in the past year. There are signs that Netflix has ceded market share as it encounters new competition, though it’s still the biggest piece in what is an ever-growing pie.

But the biggest thing Netflix bears seem to be missing with these arguments is that they are almost all focused on the U.S. market, which now accounts for only about one-third of Netflix’s total subscribers. The company’s business is maturing in its home market, where more than half of all households in the country subscribe to the service, and it’s already reached its target range of 60 million to 90 million subscribers. Its biggest growth opportunities are abroad, and that’s also where Netflix has its greatest advantage.

Signs of strength abroad

Netflix recently showed its confidence in Canada by raising monthly subscription prices for the first time in two years, boosting the price by a Canadian dollar to CA$14.99 ($11.38) on standard plans and by CA$2 on premium plans to CA$18.99.

Netflix dominates the Canadian market since the company has historically faced less competition north of the border, though content tastes are nearly the same as in the U.S. For example, Disney’s Hulu is over a decade old now, but never made the trip north, and is still only available in the U.S. 

According to eMarketer, 52% of Canadian households subscribe to Netflix, making it the clear leader over No. 2 Amazon.com Inc‘s (NASDAQ: AMZN) Prime at 25% and No. 3 Disney+ at 17%. The research firm also sees the number of Canadian Netflix viewers rising from 14.6 million in 2019 to 18.4 million in 2024.

In Australia, meanwhile, Netflix said it would raise prices by a similar amount on its two lowest tiers. Canada and Australia are among the markets most similar to the U.S., and they attest to the company’s belief that it has added value to warrant the price increase. The price hikes also seem to indicate that subscriber growth has continued to be brisk despite tamped-down expectations for the third quarter.

The international advantage

While competitors may be leveling the playing field in the U.S., Netflix has a huge head start over competitors in the international market. Hulu, HBOMax, and Peacock aren’t even available outside the U.S. right now.

While Amazon Prime Video is offered all over the world, the Prime package that Americans are familiar with, which is best known for free two-day delivery, is only available in about 20 countries. So the primary incentive to join the service doesn’t exist in much of the world.

And Disney+ has expanded rapidly into Europe and elsewhere, but the company has currently staked its business almost entirely on legacy content since The Mandalorian has been its only original series to get much attention.

On the other hand, Netflix regularly releases new local-language content at a pace that its competitors simply aren’t equipped to match, and has generated foreign-language hits like Money Heist and Roma.

Despite setbacks from the coronavirus pandemic, Netflix had restarted production on 22 shows in 11 countries in Europe by July, and the company never stopped in countries like South Korea. That puts Netflix in a better position than rivals to emerge from the crisis with a steady pipeline of content, and it also isn’t facing the challenges of not being able to release movies in theaters.

But most importantly, Netflix’s robust growth abroad and the content production infrastructure it’s built outside the U.S. give the company a significant advantage over its new competitors, which are only just starting to expand into foreign markets. Overvaluing the domestic market and ignoring its international potential is a mistake. That edge is unlikely to go away anytime soon and will drive the company’s growth over the coming years. 

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

More reading

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• 3 ASX tech shares that pay dividends
• 3 things you’ll want to know when Netflix announces earnings

Jeremy Bowman owns shares of Amazon, Netflix, and Walt Disney. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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 Amazon, Apple, Netflix, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney, long January 2022 $1920 calls on Amazon, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, Netflix, and Walt Disney. 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.

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The Whispir Ltd (ASX: WSP) share price may surprise shareholders today following the release of its first quarter update.

At the time of writing, shares in the software-as-a-service (SaaS) provider are down 9.33% to $3.79. During market open, Whispir shares fell to as low as $3.73.

So how did Whispir perform for the start of FY21?

Strong Q1 growth

For the period ending September 30, Whispir reported its strongest start to a financial year on record.

Cash receipts totalled $10.5 million for the quarter, an increase of 35% over the prior corresponding period (pcp). This was underpinned by a surge platform usage by existing customers in the Australia, New Zealand and Asia region, up 41.3%.

Annualised recurring revenue (ARR) also grew to $43.7 million, representing a 26.7% lift on Q1 FY20, and 3.6% in the June quarter. Customer revenue retention is tracking to achieve 120% for FY21.

New customer growth saw its biggest performance to date, with the onboarding of 35 net new customers. This brings the total of customer numbers for the company to 665.

Whispir advised it was continuing to provide support to its customers during this uncertain climate. The company noted its ability to integrate with existing IT systems has enabled many customers to use its platform within days.

In addition, Whispir is continuing to invest in development activities to increase and enhance functionality as part of its five-year roadmap. The SaaS provider is well-funded to achieve its strategic objectives.

The company recorded a cash balance of $12 million at the end of the quarter.

Commenting on the result, Whispir CEO Jeromy Wells said:

While Q1 is traditionally the quietest period in our annual sales cycle, September was our strongest ever monthly revenue. Our strong growth in ARR and record net new customers over the past quarter reflects ongoing demand for multi-purpose communications software to improve productivity and stakeholder engagement as our customers navigate ‘the new normal’.

Sales and channels

Throughout the quarter, the company increased its market presence in Asia with new customers acquired in Sri Lanka and the Philippines. Established channel partners in the region, such as Deloitte, are helping Whispir achieve new customers and sales.

Most notably, Whispir strengthened its relationship with Amazon Web Services, becoming the first Australian business to do so. In recognition, the company was awarded the newly launched AWS Digital Workplace Competency status.

The award acknowledges Whispir’s proficiency in facilitating digital workplaces.

Outlook for the Whispir share price

Whispir performance over the quarter was ahead of expectations, and remains on track to meet its FY21 guidance.

Mr Wells spoke about the company’s progress and short-term challenges. He added:

We continue to build momentum within the business, increasing use cases with our existing customers and onboarding new customers. Many of those onboarded in Q3 FY20 are now increasing their platform usage in line with our land and expand strategy and we expect these customers will have a positive impact on revenues later in FY21.

While Whispir has had its strongest Q1 on record, we are still seeing suppressed transaction activity from some customers in some industries, such as aviation, due to COVID-19. As restrictions ease, we anticipate these customers will return to normal volumes.

More reading

• Looking for the next big thing? Check out these exciting ASX tech shares
• Are these the best small cap ASX shares to buy for FY 2021?
• 3 small cap ASX shares to put on your watchlist right now
• Why have ASX tech founders been unloading shares?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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 Amazon and Whispir Ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon and Whispir 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 S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is pushing higher in late morning trade. At the time of writing the benchmark index is up 0.3% to 6,203.6 points.

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

Lynas Corporation Ltd (ASX: LYC)

The Lynas share price is up 4.5% to $3.00 following the release of its quarterly update. During the first quarter, the rare earths producer reported a strong quarter on quarter rise in both production and revenue. Total Rare Earth Oxide production came in at 4,110 tonnes, up from 2,579 tonnes during the fourth quarter. Invoiced quarterly sales revenue lifted to $87 million, more than double the fourth quarter invoiced sales revenue of $38 million.

Orora Ltd (ASX: ORA)

The Orora share price has jumped over 7% to $2.69 following the release of its annual general meeting update. That update revealed that the packaging company has started FY 2021 in a relatively positive fashion despite challenging market conditions. Earnings in its Australasian Beverage business are flat year on year, but its North American businesses have delivered earnings growth during the first quarter. This follows the successful implementation of a number of improvement initiatives.

Praemium Ltd (ASX: PPS)

The Praemium share price is racing 9% higher to 61 cents. Investors have been buying the investment platform provider’s shares following the release of its first quarter update. According to the release, at the end of the first quarter, Praemium’s Global funds under administration reached $31.2 billion. This was a 54% increase on the end of FY 2020. And while this was driven predominantly by the acquisition of Powerwrap, the company also reported strong net inflows.

Tabcorp Holdings Limited (ASX: TAH)

The Tabcorp share price is up 5.5% to $3.63. This gain appears to have been driven by a broker note out of Credit Suisse this morning. According to the note, the broker has retained its outperform rating and lifted the price target on the gambling company’s shares to $4.40. This follows the release of its first quarter update yesterday.

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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 Praemium Limited. The Motley Fool Australia has recommended Praemium 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) has bounced back from yesterday’s decline and is pushing higher. At the time of writing, the benchmark index is up 0.2% to 6,196.6 points.

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

CIMIC Group Ltd (ASX: CIM)

The CIMIC share price is down 2% to $22.04. Investors have been selling the engineering company’s shares after it advised that it will write-off a further $1 billion after losing a court battle with Chevron. This relates to cost blowouts on a jetty for the Gorgon natural gas project in Western Australia.

Megaport Ltd (ASX: MP1)

The Megaport share price has sunk almost 8% lower to $15.48. This follows the release of its first quarter update this morning. Although the elastic interconnection services provider delivered further growth in customer and recurring revenues, it was slower than the market has become accustomed to. However, a strong rise in port numbers during the quarter means that management expects its growth to accelerate again in the second quarter.

Mesoblast limited (ASX: MSB)

The Mesoblast share price has fallen 3.5% to $3.28. The catalyst for this appears to news that the biotech company is being sued by shareholders in the United States. Bronstein, Gewirtz & Grossman has launched a class action alleging that Mesoblast made materially false and misleading statements. This includes comparative analyses between its Phase 3 trial and three historical studies that did not support the effectiveness of remestemcel-L for steroid refractory acute graft versus host disease (aGVHD).

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has crashed 15% lower to $11.94. Investors have been selling the online homewares and furniture retailer’s shares after the release of a trading update. Although that update revealed further explosive growth, it appears as though some investors were expecting even better. Though, it is worth noting that the company’s revenue and earnings growth were well ahead of Goldman Sachs’ estimates. It is forecasting first half revenue growth of 70.3% and EBITDA of $7.3 million. Temple & Webster’s financial year to date revenue growth is 138% and first quarter EBITDA is $8.6 million.

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• ASX 200 rises 1%, Cimic (ASX:CIM) up 8% on sale
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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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended MEGAPORT FPO 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 Lynas Corporation Ltd (ASX: LYC) share price hit a 16-month high this week and is up more than 15% in October.

Lynas is regarded as the world’s second largest producer of rare earth materials and the only significant producer outside China. The geopolitical tensions about rare earth supply has positioned Lynas as a serious global player. 

Quarterly report

Following temporary shutdowns in both Malaysia and its flagship mine, Mt Weld in Western Australia, production has resumed at 75% production rates during the quarter. Total NdPr production during the quarter was 1,342 tonnes, up from 775 tonnes in the previous quarter.

Total rare earth oxide production was 4,110 tonnes, compared to 2,579 tonnes in the previous quarter. Sales revenue was A$87 million in the September quarter, up from A$38 million in the previous quarter. The company remained cash flow positive during the quarter. 

Growth initiatives for 2025

Lynas has outlined a number of key projects to secure the runway for future growth and to meet increasing rare earths demand. These initiatives include ramping up production to meet forecast demand growth at Mt Weld and building a new rare earths processing facility in Kalgoorlie. Lynas will also invest in increasing downstream processes at its Malaysia plant and is progressing the planning and design work for its heavy rare earths separation facility in the US. 

The company has signed a sub-lease with the City of Kalgoorlie Boulder for the industrial zoned site selected for its Kalgoorlie facility and obtained a general purpose lease under the mining act. 

The Phase 1 work on the US-based heavy rare earths separation facility is expected to be completed in the 2021 financial year. Lynas signed a contract for the work on 27 July with the US Department of Defense. 

Heighted political focus on rare earths supply

Late in the quarter, US President Donald Trump announced an executive order to build reliable and resilient critical minerals supply chains for the US economy. The European Union also identified the need for a diversified and sustainable supply chain, launching a new strategy to secure access to rare earths and other critical minerals.

In addition, the Australian Government released its Modern Manufacturing Strategy, with resources technology and critical minerals processing identified as one of the six national manufacturing priorities. 

Looking ahead for the Lynas share price

The average selling price for NdPr for Q1 FY21 was A$19.4/kg, down from A$20.2/kg in Q4FY20 and A$23.7/kg in Q1FY20. During the September quarter, rare earth prices were volatile. Global demand for magnets appear to still be affected by the COVID-19 situation.

However, positive news continued to support the magnet market as the EU decided to accelerate the decarbonisation of its economy, now targeting a 60% reduction of emissions by 2030, instead of the 40% previously targeted. The acceleration of renewables and electric and hybrid vehicles is likely to increase rare earths demand in the medium to long term. 

The Lynas share price is up 2.44% at $2.94 in opening trade today.

More reading

• ASX 200 up 1%: Crown sinks on AUSTRAC news, South32 & CIMIC storm higher
• Why rare earth miners could be the next ASX shares to boom 
• ASX 200 rises 1%, Reliance Worldwide (ASX:RWC) climbs 11%
• Lynas (ASX: LYC) share price boosted 5% by PM’s budget plan
• Potential ASX winners from government’s $1.5bn manufacturing blueprint

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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