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The S&P/ASX 200 Index (ASX: XJO) is taking a tumble today, down 1.81% at the time of writing.

Aussie markets were closed yesterday as part of the national holiday in honour of the Queen’s passing.

That means ASX 200 shares are playing some catchup with their global peers following Wednesday night’s 0.75% interest rate hike by the US Federal Reserve.

While that move was widely expected, Fed chair Jerome Powell’s decidedly hawkish words sent US markets sharply lower over the past two trading days.

How did the Fed spook ASX 200 investors?

Stock markets had widely priced in the US Fed’s 0.75% rate rise. This brings the benchmark rate in the world’s largest economy to a range of 3.00% to 3.25%.

In fact, you may have even expected somewhat of a relief rally, as an increasing number of economists had forecast the Fed might raise by a full 1.00%.

But then markets tend to be forward-looking. And US stocks, and the ASX 200 today, appear to be selling off on what Powell indicated may lie ahead.

Here’s what Powell told journalists after the announcement (courtesy of Bloomberg):

We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t. Higher interest rates, slower growth and a softening labour market are all painful for the public that we serve. But they’re not as painful as failing to restore price stability and having to come back and do it down the road again.

Also, roiling global markets and the ASX 200 is the higher rate expectations expressed by members of the Federal Open Market Committee. The majority of FOMC have upped their forecasts and believe rates in the US will top out above the 4.5% that markets have priced in.

Bloomberg Economics reported its team expects the terminal rate will ultimately be 5%.

Is the Fed targeting stock markets?

After a strong run in 2021, the ASX 200 is now down 13.2% in 2022 amid the new dawn of rate rises from the US Fed, the RBA, and a host of central banks the world over.

In the US, the S&P 500 Index (SP: .INX) is doing it even tougher, down 21.7% year-to-date, officially in bear market territory.

As for tech shares, the NASDAQ is down a painful 30.1%, while here in Australia the S&P/ASX All Technology Index (ASX: XTX) has crashed 34.5%.

And with the Fed boosting aggressively, the RBA and other leading central banks may be more inclined to do the same to get their own nations’ rocketing inflation under control, which could continue to throw up some tailwinds for ASX 200 shares in the months ahead.

Speaking to CNBC, Oanda senior market analyst Ed Moya said, “The Fed’s paved the way for much of the world to continue with aggressive rate hikes, and that’s going to lead to a global recession. And how severe it is will be determined on how long it takes inflation to come down.”

Art Hogan, chief market strategist at B. Riley, said equity markets, which would include the ASX 200, are in for some disinflation as higher rates stem demand.

According to Hogan (quoted by Bloomberg):

If there are more aggressive sellers and less aggressive buyers, that supply-demand imbalance is going to cause some disinflation in equity prices for sure. And to the extent that that’s what we’re going through now, it’s similar to demand being diminished for other things.

Bespoke Investment Group global macro strategist George Pearkes says investors are having a difficult time gauging the market bottom following the Fed’s latest message.

“The message from the Fed is that ‘We’re going to keep hiking until something goes wrong,’” he said. “The fact that nothing’s broken yet tells us we’re not done. If the Fed is in that mood, how are markets supposed to bottom?”

Kim Forrest, chief investment officer at Bokeh Capital Partners is still looking to buy shares. But she echoed Pearkes’ uncertainty, shared by many ASX 200 investors today, about where the market may turn around:

The Fed has laid out this strategy for killing inflation and it looks like it’s going to kill the economy too. And that is why we have a buyer’s strike. The whole thing is I sat there this morning looking over things I want to buy and my big question is this: are they going to be cheaper next month? And the answer is maybe. Maybe.

By 2052, ASX 200 shares today may look like an unbelievable bargain

We’ll leave off with a word from The Motley Fool’s own chief investment officer, Scott Phillips.

When it comes to buying ASX 200 shares, Phillips isn’t trying to time the market. With a long-term investment horizon, he points to the historic 9% annual compound gains as the norm.

As for the current retrace, he said, “I expect that in 2052, we’ll look back at 2022 and wish we’d all invested more money today.”

The post The ASX 200 is tumbling today. Could the US Fed be targeting stock markets? appeared first on The Motley Fool Australia.

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More reading

• Up 14% in a month, could the Paladin Energy share price go higher?
• Following this streaming strategy could pay off big for Microsoft
• Goldman Sachs gives its verdict on the Coles share price
• Why has the Lake Resources share price been so volatile lately?
• Broker tips major upside for the Westpac share price

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by 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) has its hands in many different businesses. Most investors think immediately of the company’s Windows computer software or Azure, its public cloud segment. But gaming has long been a part of the company, starting with personal computers and the Xbox gaming console that first launched in 2001.

Gaming remains a rapidly growing business today, and Microsoft is arguably more dedicated to the industry than ever before. Here is how Microsoft is battling for market share in the gaming sector and why it could benefit shareholders over the long-term.

Gaming may be more significant than you realize

Most celebrities rise to fame through the film and music industries, long considered the pillars of entertainment. But you might not have known that the gaming industry’s $180 billion revenue in 2021 was more than that of film and music combined.

What’s more, the industry is still growing; research from Mordor Intelligence estimates that global gaming could grow to $340 billion in value by 2027, driven by increased accessibility through emerging gaming methods like mobile and cloud-based gaming.

Microsoft’s broad exposure to gaming makes it a logical sector for the company to invest in further. For example, PC gaming is in Microsoft’s wheelhouse, given that Windows has roughly 76% market share of the global desktop computer operating system market. Additionally, the company has built up its Xbox ecosystem, consisting of multiple console products and a subscription service for gaming content, including cloud-based gaming for phones, tablets, and laptops.

Borrowing a strategy from the streaming wars

Microsoft’s subscription service, called Game Pass, is where it has put its financial muscle in recent years. Content has become king in the ongoing video streaming wars. Netflix, Inc.(NASDAQ: NFLX) was the first streaming platform to market, but a company like The Walt Disney Company (NYSE: DIS) has quickly built a rival service because its rich library of intellectual content draws eyeballs. Netflix initially licensed content from third parties but was forced to spend heavily to develop its own after these third parties figured out the importance of that content and launched their own streaming services.

It can work similarly in video games. Many people don’t buy an Xbox or a Playstation console because they love the hardware itself; you buy whatever will give you access to your favorite gaming content. That’s probably why gaming companies fight and spend to keep key game franchises exclusive to their consoles. You’ll probably never see a game franchise like Mario, the second-highest-grossing game franchise of all time, on any hardware other than a Nintendo system.

Microsoft seems to be buying into this content strategy — literally. It spent $7.5 billion in 2021 to acquire ZeniMax, the parent company of Bethesda Studios, which owns trendy game franchises like Elder Scrolls, Fallout, and Doom. More recently, it has a pending acquisition of Activision Blizzard, Inc.(NASDAQ: ATVI) for $68.7 billion, a deal still undergoing regulatory review. Closing that deal would give Microsoft ownership of some of the most popular gaming franchises in history, including World of Warcraft and Call of Duty.

Recurring revenue is the long-term goal

Microsoft wants Game Pass to be such a good value that it would be silly not to subscribe. The service currently costs $14.99 per month, includes instant access to nearly 500 games, and includes free access to cloud gaming and day-one access to virtually every game released by one of the 32 game studios that Microsoft will own if the Activision Blizzard deal closes (23 without the merger).

Microsoft revealed that Game Pass hit 25 million subscribers when it announced its deal with Activision Blizzard. There is a ton of room for growth — 5G is helping bring the connectivity required for gaming to more areas of the world, including an estimated 3.24 billion gamers.

Microsoft is spending to acquire top-notch gaming content because Game Pass could eventually become a free cash flow geyser for the company. Getting Game Pass to 100 million subscribers paying $14.99 monthly would total $18 billion in annual recurring revenue, which would be far more profitable than selling gaming consoles alone. Gaming is a vast business, and Microsoft wants to be king of that hill.

There are plenty of reasons to like Microsoft as a long-term investment, but gaming might be its next big thing. 

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

The post Following this streaming strategy could pay off big for Microsoft appeared first on The Motley Fool Australia.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, Microsoft, Netflix, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Activision Blizzard, Netflix, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Coles Group Ltd (ASX: COL) share price has been dragged lower with the market on Friday.

In early afternoon trade, the supermarket giant’s shares are down almost 2.5% to $16.22.

Why is the Coles share price falling?

Investors have been selling down the Coles share price on Friday amid broad market weakness.

This has been driven by a selloff on Wall Street over the last couple of trading sessions following the US Federal Reserve’s latest interest rate hike.

This hike and the central bank’s plan to continue raising rates in the coming months have sparked fears of an unavoidable recession and sent many investors to the exits.

Anything else?

Also potentially weighing on the Coles share price today has been a broker note out of Goldman Sachs this morning in response to the company’s divestment of Coles Express.

According to the note, the broker has retained its sell rating and $15.60 price target on the company’s shares. This implies potential downside of approximately 4% from current levels.

Goldman continues to believe that Coles will be left behind by rival Woolworths Group Ltd (ASX: WOW) due to its slower digital transformation. It also notes that the Coles Express sale is immaterial to its forecasts given its minor impact on earnings and its valuation.

The broker explained:

We view the potential divestment as ROC positive for COL given the FY22 EBIT contribution of 4mn (post lease interest) implies a low single digit ROC as opposed to GSe for COL at 24.3% in FY23E. Supply of goods has been noted as offering a positive contribution to business profits, but immaterial in scale to the group on the conference call. Overall, Coles Express accounts for c. 1.1% of our SOTP valuation on Coles.

Our Sell rating on COL is based on our view that COL remains a laggard in digital transformation which could result in market share losses and the ongoing high investment cycle as they catch up will put further pressure on group margins and ROC. We do not view this transaction as material to impact our view on the core supermarkets business given the relative size of the segment compared to the group’s business.

The post Goldman Sachs gives its verdict on the Coles share price appeared first on The Motley Fool Australia.

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• Here are 2 ASX 200 blue chip shares that experts rate as buys
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• Viva Energy share price leaps 5% on Coles acquisition
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• Coles shares on watch after massive $300 million selloff to Viva Energy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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 Lake Resources N.L. (ASX: LKE) share price has been on a volatile journey in 2022, with shareholders holding on tight across the year.

Prices have traded in a wide range reaching as high as $2.45 on 4 April, before trading as low as 60.5 cents on 14 July.

At the time of writing, the Lake Resources share price is fetching $1.04 apiece, less than 2% down on the day.

What’s up with Lake Resources?

It’s been a busy past few months for the company. Whilst the price of lithium carbonate has surged back above its all-time highs, shares in the lithium miner haven’t been so fortunate.

In particular, broad selling pressure across the wider market has been a factor this year for Lake, as investors seek to position against names turning a profit or with high cash flows.

With various systemic risks now at play, “selling has been strongest in higher risk assets such as lithium shares,” The Motley Fool wrote last week.

The lithium share had also attracted a high amount of short interest from short sellers over the past week, with one particular short-biased research firm raising questions on the company’s direct lithium extraction (DLE) technology.

Nevertheless, Lake shares still managed to catch a bid in recent times after further updates at its Kachi Lithium project, located in Argentina.

After an initial step-back involving a dispute over milestone payments at the site, Lake reassured investors last week by noting that it expects to complete onsite processing of Kachi brines in October, should all go according to plan.

This, whilst the price of lithium carbonate ratcheted up past its all-time highs, as the asymmetry in demand and supply for battery materials continues to widen.

Despite the wave of constructive updates out of Lake’s camp of late, it hasn’t been enough for the share to recover back above its previous highs.

Nevertheless, if the price of lithium carbonate is anything to go by, this forms a solid bedrock for the company to prevent an all-out collapse.

After a strong year, it now trades just 3% in the green this year to date and has held an 80% gain for the past 12 months.

The post Why has the Lake Resources share price been so volatile lately? appeared first on The Motley Fool Australia.

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• Which ASX lithium shares are performing best in 2022?
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Westpac Banking Corp (ASX: WBC) share price is trading lower with the market on Friday.

In late morning trade, the banking giant’s shares are down 1.5% to $21.39.

Is the Westpac share price in the buy zone?

While Australia’s oldest bank isn’t getting a lot of love from investors at the moment, one leading broker believes now could be the time to pounce.

According to a recent note out of Goldman Sachs, its analysts have put a conviction buy rating and $26.55 price target on the bank’s shares.

Based on the current Westpac share price, this implies potential upside of 24% for investors over the next 12 months.

This stretches to approximately 30% if you include the 5.7% fully franked dividend yield the broker is expecting in FY 2022.

Why is Westpac a buy?

Goldman believes that the Westpac share price offers the best risk/reward for investors at present. Particularly given its strong exposure to rising interest rates and its cost reduction plans.

The broker commented:

We continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) while we think its A$8 bn FY24 cost target will now be unachievable, we still forecast a 7% reduction in underlying expenses, iii) its recent market update highlighted that the business is still investing effectively in its franchise, and iv) our 12-mo TP implies a 23% [now ~30%] TSR, and we note the stock is trading at a 20% discount to peers, versus the historic average discount of 2%.

All in all, this could make Westpac one to consider if you’re looking for exposure to the banking sector as interest rates rise.

The post Broker tips major upside for the Westpac share price appeared first on The Motley Fool Australia.

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• Looking for juicy ASX dividends? This expert says Westpac shares are a buy
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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 Magellan Financial Group Ltd (ASX: MFG) share price is having a tough time. It’s down 3.1% today and down 7.4% for the week. That compares to the S&P/ASX 200 Index (ASX: XJO) which is down 1.6% today and 3.65% for the week.

Obviously, share prices change all the time, but things have been tough for Magellan in particular.

Since 11 August, the Magellan share price has declined by 24.4%.

What’s going on with the Magellan share price?

For starters, it’s worth noting that Magellan is a funds management business. Its revenue is largely dependent on funds under management (FUM). While FUM can change when investors put money into, or take money out of, the fund manager, it’s also what happens with its investment funds.

A falling share market can hurt Magellan’s FUM, revenue and subsequently the net profit after tax (NPAT). Investors often like to use the NPAT to value the Magellan share price.

The last FUM update we’ve heard from the business was another drop of FUM – August 2022 saw a decline from $60.2 billion to $57.6 billion, with net outflows of $1.3 billion.

Magellan is working on turning things around. It recently sent out a communication to investors talking about changes and efforts by the business.

Non-executive director Karen Phin has informed Magellan that she intends to retire from the board at the annual general meeting (AGM) in October 2022.

Also, in response to stakeholder feedback, the company gave more details about Hamish Douglass’ consultancy role where he will provide “valuable investment insights to the business”.

He will be paid at a rate of $400,000 per annum. Douglass will commence consulting services on 1 October 2022, but he will begin earning consulting fees from 7 February 2022. These fees are “commensurate” with the fees paid to other consultants engaged by the group.

Core funds management business

After a challenging FY22, Magellan has been focused on its core funds management business.

Magellan Chair Hamish McLennan said:

We recognise that our global equities strategy has underperformed relative to the market over the past 18 months and we are taking proactive steps to address this matter and deliver the strong investment performance for which we have been known over the past 16 years. Whilst markets may fluctuate in the short term, we remain committed to our investment philosophies and disciplined investment approach, which are designed to protect investor capital and generate wealth over the long term.

McLennan also pointed out that it has launched a number of staff retention initiatives, including a retention bonus plan. The chair said that the staff retention initiatives have allowed employees to remain focused on our clients and the business during a period of change and uncertainty.

Capital management

Magellan has also been trying to add value for shareholders in a few different ways.

One initiative was a share buyback of up to 10 million shares. And this continues to be in operation.

The second was a bonus issue of options to shareholders on a 1-for-8 basis, with an exercise price of $35 per option and a five-year term.

Finally, McLennan talked about how the company sold its holding of Guzman y Gomez for $140 million, which was 36.3% higher than its entry price in January 2021. He confirmed Magellan wouldn’t be making any further investments in private businesses through Magellan Capital Partners.

Magellan share price snapshot

Since the start of 2022 the Magellan share price has fallen almost 40%. Magellan shares are down 65% in the last 12 months.

The post Why is the Magellan share price underperforming the ASX 200 this week? appeared first on The Motley Fool Australia.

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More reading

• Why is the Magellan share price higher on Tuesday?
• 3 blue-chip ASX 200 shares touting the highest dividend yield in September
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• The Magellan share price has fallen over 10% in a month: Is it time to buy the dip?
• Steady compounders: 3 ASX 200 shares that have delivered over a decade

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Link Administration Holdings Ltd (ASX: LNK) share price won’t be going anywhere on Friday.

This comes as the company requested that its shares be placed in a trading halt.

Currently, the administration services company’s shares are frozen at $3.20 apiece.

It’s worth noting that Link shares have fallen more than 24% over the past month.

Why is the Link share price halted?

Prior to the market opening, the company requested that the Link share price be halted while it prepares an announcement.

According to the release, the company is planning to make an announcement in relation to an update on the scheme of arrangement with Dye & Durham Corporation.

Link has requested that the trading halt remains in place until 26 September or following the release of the announcement, whichever comes first.

More on the Link deal

After deliberations and revised offers, Canadian-listed Dye & Durham is finally set to acquire Link for $4.81 per share.

Link shareholders accepted the takeover offer with a 98% majority in favour during late August.

And just two weeks ago, the Australian Competition and Consumer Commission (ACCC) gave the green light for Dye & Durham to buy out Link.

Link shareholders will also receive a net consideration of up to 13 cents per share from the sale of its Banking and Credit Management (BCM) business. However, this is provided that the business is sold and proceeds are received up to 12 months after the implementation of the revised scheme.

About the Link share price

Since this time last year, Link shares are down 23%, with year-to-date recording even heavier losses, down 40%.

In contrast, the S&P/ASX All Technology Index (ASX: XTX) has fallen 33% in 2022.

Link commands a market capitalisation of approximately $1.7 billion.

The post Why is the Link share price frozen on Friday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The gold price has been on a one-way ticket south in 2022, having collapsed off 52-week highs of US$2,052/ounce back in May this year.

In what would traditionally be seen as gold’s optimum environment – high inflation, volatile markets, geopolitical tensions – the yellow metal has failed to deliver.

The question then becomes of what impact this has on the investment prospects of ASX-listed gold miners, seeing as their share price fluctuates with volatility in the underlying gold markets.

What could this mean for gold players?

Gold has continued lower this past month whilst Treasury yields and the U.S. Dollar have made a glorious comeback from their former depths.

Sparking the comeback – inflation, primarily. Just last week U.S. inflation numbers came in far hotter than anticipated for September, adding to a ‘risk-off’ sentiment.

Meanwhile, central banks around the world have committed to raising policy interest rates in order to curb inflation.

At the time of writing, the US Treasury 10-year note has a yield of 3.71%, its highest mark since 2009.

This is important to know, as higher bond yields and surging interest rates increase the opportunity cost of holding gold, seeing as the precious metal pays no yield/interest.

The strong U.S. Dollar is also a concern for gold, seeing as both are considered to be ‘safe haven‘ assets in times of risk and uncertainty.

With gold’s demise, the U.S. Dollar has simultaneously surged back to multi-year highs, as seen on the chart below with the path of the 10-year yield described above.

The question then becomes of what this means for large gold players such as Northern Star Resources Ltd (ASX: NST).

Looking at its price chart, 2022 hasn’t been the best year for Northern Star. Like the gold it mines and produces, it has faltered and now trades around its yearly lows.

This hasn’t changed the opinion of brokers covering the share, however. Even after gold’s plummet, 100% of brokers still recommend to buy Northern Star shares, according to Refinitiv Eikon data.

This has been unchanged since June at least, and the consensus price target is now $10.70 per share, indicating roughly 30% upside potential at the time of writing.

Nevertheless, pressure continues on the Northern Star share price, and it remains deeply compressed in 2022, needing a large percentage gain to reverse the damage.

Shares are down 19% this year to date and now trade at $7.63, well off former highs of $11.48 on 19 April.

The post Gold just hit a 2 year low. What could this mean for the Northern Star share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by 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.

Recessionary concerns, a few lackluster quarters, overpromised and underdelivered projections, and a tech crash have absolutely crushed payment processing giant PayPal Holdings, Inc. (NASDAQ: PYPL) this year. Shares are trading 67% lower than last year.

A drop like this is understandably concerning for investors, but there are several reasons it could also be a tremendous buying opportunity. Here’s a closer look at why investing at today’s rock-bottom prices is a genius move right now.

Making the right moves

The second quarter of 2022 was PayPal’s first non-profitable quarter since its spinoff from eBay Inc.(NASDAQ: EBAY) in 2015. Its earnings per share (EPS) fell to a loss of $0.29 per share from a gain of $1.01 last year, and its operating margin dropped by around 7%.

This loss wasn’t because the company did less business — in fact, revenue was 9% higher than last year. It was related to higher costs of borrowing and increased operational costs, as well as one-time charges from new products in PayPal’s investment portfolio.

On the positive side, free cash flow was up 22% year over year. Payment transactions rose 16%, boosting total payment volume (TPV) by 9%. And PayPal is directly addressing the increased cost of borrowing and operating with targeted cost-saving measures. The company plans a $900 million cost-saving initiative that should help improve its bottom line.

The fintech company also has $15.6 billion in cash and cash equivalents, and only $13.6 billion in debt, including its latest round of issuance.

Recent upgrades mean prices are likely to rise

PayPal’s focused moves to improve its operational costs have given analysts a fresh outlook on the stock, prompting those from Bank of America Corporation (NYSE:BAC) and Raymond James to upgrade their ratings on PayPal over the past few weeks. Share prices haven’t jumped much in response, up just 1.5% from before the upgrades, but the analyst moves are a positive sign that investor confidence may also be returning. During that same time, the S&P 500 index was down 1.5%.

Cost savings alone are not going to be enough to rally PayPal’s share price back to previous highs. That will take time. Short-term headwinds will likely impact the company if a recession unfolds, as many experts are predicting. But if we think long-term, its growth prospects still look promising.

PayPal was the first payment processing company in the world. Reinventing the services it offers its customers so it can adapt to new technologies and grow is nothing new. It has sufficient cash on hand to help it withstand a downturn, and today’s pricing means that investors are in an excellent position to profit if the company does make strides toward recovery.

As a long-term, patient investor, I personally believe PayPal is a genius buy right now.

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

The post Why buying PayPal is a genius move right now appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Liz Brumer-Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal Holdings. The Motley Fool recommends eBay and recommends the following options: short October 2022 $50 calls on eBay. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended eBay and has recommended the following options: short October 2022 $50 calls on eBay. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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It has been another day to forget for the Block Inc (ASX: SQ2) share price on Friday.

In morning trade, the payments company’s shares have dropped 10% to $83.52.

This means the Block share price is now down over 50% since commencing trade on the ASX in mid-January.

Why is the Block share price falling?

As many readers will be aware, the locally listed Block shares are inextricably linked to the company’s shares on Wall Street.

So, when the Block share price tumbles in the United States, its ASX listed shares follow suit the following session.

And how the Block share price has tumbled on Wall Street in recent sessions!

After closing at US$61.50 on Tuesday night, the company’s shares have dropped over 9% to US$55.93 at last night’s close.

This follows a selloff of tech stocks amid news that the US Federal Reserve has made another major increase to interest rates and plans more aggressive hikes in the coming months.

Not only have rising interest rates put pressure on tech valuations, but they have also sparked fears that a recession could be just around the corner.

This has rubbed off on locally listed tech shares. The likes of Xero Limited (ASX: XRO) and Zip Co Ltd (ASX: ZIP) have both fallen heavily this morning. This has led to the S&P ASX All Technology index sinking a disappointing 3.5% on Friday.

The post Here’s why the Block share price is being smashed today appeared first on The Motley Fool Australia.

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More reading

• Why is the Block share price slumping 4% today?
• Here are the 10 most shorted ASX shares
• Look who just landed more than $2 million worth of Zip shares
• Smashed! Why is the Block share price down 4% today?
• Why are ASX 200 tech shares being hit the hardest on Wednesday?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., Xero, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. 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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