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ArvinIG

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  1. ArvinIG
    As 2022 heads towards a seemingly inevitable recession, some of the larger US tech stocks are becoming ever more reasonably priced.

    Source: Bloomberg   Like the 2020 covid-19 pandemic crash, and the financial crisis of 2008 preceding it, 2022 is gearing up to be a financial bloodbath.
    The Nasdaq Composite fell 4.73% yesterday alone, and is down nearly 28% year-to-date.
    Of course, this is a very different crisis; one of supply chain shocks, sky-high inflation and labour shortages.
    And while the UK’s oil and bank heavy FTSE 100 is perfectly positioned to take advantage of record commodity highs and rising interest rates, the opposite is true of the US’s Nasdaq Composite. The high-growth index is packed with technology stocks that rely on being watered with the nectar of loose monetary policy.
    But those days are gone. The US Federal Reserve, in common with many western central banks, is moving to clip its $9 trillion balance sheet and increase interest rates to potentially as high as 2.9% says the Economist Intelligence Unit.
    Meanwhile, former Goldman Sachs CEO Lloyd Blankfein has warned the risk of recession is ‘very, very high.’
    This leaves NASDAQ stocks with high debt, or in the early stages of growth, in peril. The likes of Peloton, Zoom and DocuSign have already collapsed from their share price highs. Of course, they could deliver exceptional returns if they successfully weather the oncoming storm, but this is by no means guaranteed.
    On the other hand, the NASDAQ Composite also includes market titans that have been hit by the shotgun spread of negative market sentiment, despite boasting strong balance sheets, defensive qualities, and continued growth in the face of the 2022 recession.
    2022 recession: 5 top NASDAQ sell-off stocks to watch
    1) Amazon (NASDAQ: AMZN)
    Amazon, the largest e-commerce stock in the world, saw net sales rise by 22% to $469.8 billion in 2021. And it still delivered growth in Q1 2022, despite online sales dropping slightly.
    Further growth potential can be found in its AWS cloud computing platform, which has grown 34% annually over the past two years. AWS is now the cloud market leader, with 33% of global market share according to Finbold, more than Microsoft’s Azure and Google’s Cloud offerings combined.
    And with new CEO Andy Jassy spearheading a $10 billion share buyback scheme and 20-for-1 stock split, Amazon’s share price remains down 37% year-to-date.
    2) Alphabet (NASDAQ: GOOGL)
    The Google and YouTube owner saw revenue grow by an impressive 23% year-over-year to $68 billion in Q1. Despite representing ten times the Q1 revenue of 2010, it’s still a slowdown compared to pandemic breakthroughs.
    However, Google search revenue grew by $8 billion to $39 billion, demonstrating its stranglehold in the search arena. And Insider Intelligence data indicates that Google will capture a colossal 29% of total global online ad spend in 2022.
    While YouTube is seeing revenue increases slow as TikTok steals market share, Google Cloud’s 43% growth was highlighted as ‘strong’ by CEO Sundar Pichai.
    Like Amazon, it’s proposing a 20-for-1 stock split in the summer and has its own share buyback scheme of $70 billion. While ad spending could decrease in the 2022 recession, the giant’s dominant market position makes it defensively resilient, despite being down 23% year-to-date.
    3) Microsoft (NASDAQ: MSFT)
    Microsoft is the computer company that changed the world. When David Letterman asked Bill Gates what the internet was back in 1995, the audience laughed, and Gates replied ‘the new big thing.’ Early investors who were watching have been handsomely rewarded.
    In Q3 results, revenue rose 18% to $49.4 billion, representing exceptional growth and demonstrating the company’s market grip. Chairman and CEO Satya Nadella enthused that ‘digital technology will be the key input that powers the world’s economic output.’
    Like and Amazon and Alphabet, its executive vice chair and CFO Amy Hood lauds its cloud platform as key to continued growth, saying ‘continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% year over year.’
    Microsoft increased its share buybacks by 25% to $12.4 billion in the quarter yet remains down 24% year-to-date. Moreover, its proposed purchase of Activision could see further growth as the metaverse develops.
    4) PayPal (NASDAQ: PYPL)
    PayPal, one of the first forays of serial inventor Elon Musk, is like Microsoft in that it benefits from first-mover advantage, but in the FinTech space.
    2021 revenue soared by 18.4% year-over-year to $25.4 billion. And the company is projecting growth of between 11% and 12% in 2022; impressive, yet slower than the previous pandemic-charged two years.
    However, PayPal has indicated it expects to reach 750 million active accounts by 2025, a compound annual growth rate of 20%.
    And it expects to hit $1.4 trillion in payment volume in 2022, up from $1.25 trillion last year.
    With its share price down 60% year-to-date, the FinTech has a price-to-earnings ratio of 25, less than a third of pandemic levels.
    And despite increased competitors, PayPal’s current $90 billion market cap is whalelike compared to direct rivals like Payoneer, and almost twice that of Shopify.
    Further growth could come from its consumer-focused digital wallet, Venmo, which is already accepted by Amazon as a payment choice.
    5) Meta Platforms (NASDAQ: FB)
    Meta, the owner of Facebook, WhatsApp, and Instagram, is the largest social media company in the world. With just shy 2 billion daily active users on Facebook alone, the social media giant is used 24/7 by more than a quarter of the world’s population.
    The NASDAQ-listed company has been hit hard by a series of headwinds in 2022; the rise of TikTok, falling active users earlier in the year, political scrutiny, Apple’s privacy changes, and investor dissatisfaction with its Metaverse focus.
    However, in Q1 results CEO Mark Zuckerberg enthused ‘we remain confident in the long-term opportunities and growth that our product roadmap will unlock…more people use our services today than ever before.’
    Revenue rose by 7% year-over-year to $27.9 billion, and the company expects Q2 revenue to grow further to between $28 to $20 billion. The social media company also repurchased $9.39 billion of stock, with a further $29.41 billion authorized for further repurchases.
    Moreover, its headcount is up 28% on the year to 77,805 as it expands its Metaverse vision. Down 43% year-to-date, Meta is a NASDAQ market titan that may be oversold as the 2022 recession progresses.
    *Based on revenue excluding FX (published financial statements, June 2020).

    Charles Archer | Financial Writer, London
    19 May 2022
  2. ArvinIG

    3 green ETFs to buy in Q3

    By ArvinIG,


    Analyst Article
    Which environmentally-friendly and renewable ETFs could be worth looking at now?

    Source: Bloomberg   Indices Shares ETF Renewable energy Fuel S&P 500   Looking to put your money into sustainable and environmentally-friendly industries, such as electric vehicles, clean energy and technology or actively avoid investing in fossil fuel companies? According to research by Allied Market Research, the global green technology and sustainability market size was valued at $10.32 billion in 2020. It is forecast to hit $74.64 billion by 2030, growing at a compound annual growth rate of 21.9% from 2021 to 2030.
    Investing in exchange-traded funds (ETFs) can be a good way of doing this affordably and spreading risk. They work by automatically tracking an index, such as the S&P 500 Fossil Fuel Free Index, or a specific sector, like technology, media and telecoms.
    It’s possible to purchase ETFs in a number of different types of investments, including equities and bonds. Like actively managed funds, they invest in a wide basket of investments, spreading the risk, but without the cost of human fund managers.
    As they passively track an index or sector, their charges tend to be lower. Click here to read IG’s handy guide to investing in ETFs and how they work.
    Here are three green ETFs we think might be a good option to invest in.
    iShares Clean Energy UCITS ETF
    The iShares Clean Energy ETF is one of the biggest funds of its kind on the market. Valued at $6.7 billion, it tracks the S&P Global Clean Energy Index, investing in major corporations producing solar, wind and hydro-powered energy. Its benchmark index tracks the performance of around 30 of the biggest global clean energy corporations that meet its investment criteria.
    Launched in 2007 and run by Blackrock, the fund has an expense ratio of 0.65%, which is slightly more expensive than other exchange-traded funds.
    Its top ten holdings include US company Enphase Energy Inc, which produces solar panels and solar storage solutions, Israeli firm Solaredge Technologies, which makes solar inverters for photovoltaic arrays, Danish firm Vestas Wind Systems, which produces and services wind turbines, Consolidated Edison, which has invested $3 billion in clean energy and Orsted, another Danish energy giant, which runs some of the biggest offshore wind farms in the world.
    Over five years the fund has delivered an annualised return of 21.2%, according to iShares, 28.5% over three years and -0.93% over one year.
    SPDR S&P 500 Fossil Fuel Reserves Free ETF
    Would you like to invest in major US companies but avoid putting your money in companies associated with fossil fuels? The SPDR S&P 500 Fossil Fuel Reserves Free ETF, run by State Street Global Advisors, seeks to emulate the performance of the S&P 500 Fossil Fuel Free Index. Its benchmark aims to enable green investors to invest in large cap US companies but filter out those exposed to fossil fuel industries. As such, it avoids investing in any firms in the oil and gas, coal and chemical sectors.
    The ETF, which boasts $1.2 billion in assets under management, has a gross expense ratio of 0.2%. Launched in 2015, it has 488 holdings. Among its top 10 are Apple, Microsoft, Amazon, Berkshire Hathaway, Alphabet, UnitedHealth, Johnson & Johnson and Tesla.
    The fund’s recent performance is mixed, however, growing NAV by 11% over five years, 10% over three years and -12% over one year.

    Source: Bloomberg Global X Autonomous and Electrical Vehicles ETF
    Electric vehicles are a major part of the greenification of global transport going forward. The European Union will outlaw the sale of new petrol and diesel vehicles by 2035, while California has just brought in a similar ban.
    The Global X Autonomous and Electric Vehicles ETF tracks the Solactive Autonomous and Electric Vehicles Index, seeking to replicate its performance. At the end of August, the fund, which launched in 2018, had just under $1 billion in funds under management and is in the technology, media and telecoms sector.
    Its benchmark index invests in companies involved in different aspects of autonomous and EV software and hardware, including EV producers, makers of lithium batteries and producers of lithium and cobalt. According to the fund, global EV sales rose 40% in 2020 but still only account for 5% of vehicle sales.
    The ETF currently invests in 75 stocks and among its top ten holdings are Tesla, Nvidia, which makes specialist chips, Apple, Microsoft, Alphabet – Google’s parent company – and Qualcomm, as well as traditional car makers Toyota and Ford. It has an expense ratio of 0.68% and delivered an NAV return of 22.2% over three years but is currently down 20.8% over one year.
    You can find out more about investing in renewable shares here.

    Piper Terrett | Financial writer, London
    01 September 2022
    Take your position on 17,000+ shares with the UK’s No.1 platform.* Learn more about trading or investing in shares with us, or open an account to get started today.
    * Best trading platform as awarded at the ADVFN International Financial Awards 2022
  3. ArvinIG

    3 recovery shares for May

    By ArvinIG,


    Analyst article
    These shares could be worth investing in on recovery hopes

    Source: Bloomberg   Shares Vodafone Investor Inflation Satya Nadella Microsoft   Worldwide markets have been hit by fears of a recession this month, as global inflation remains high and the cost of energy rises. The Nasdaq has fallen by 30% this year as investors have fled from growth and tech stocks to the safer haven of more defensive stocks amid the stock market turmoil and war in the Ukraine.

    However, in these difficult times value can emerge. Here are three stocks we think could be a buy on recovery hopes.

    Microsoft shares have resilient qualities
    Microsoft Corp (All Sessions) shares have been hit by the recent tech sell-off fuelled by inflationary concerns. However, recent results showed that the software giant is in rude health. Third-quarter revenues at the company rose 18% to $49.4bn, while operating income rose 19% to $20bn.

    What’s more, its cloud computing Azure division delivered its best performance for two years, pushing results above analysts’ expectations. And, despite concerns about the economy, Satya Nadella, Microsoft’s chairman and chief executive officer, thinks it will be business as usual for the software giant.

    “Going forward, digital technology will be the key input that powers the world’s economic output,” Nadella told investors. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience and do more with less.”

    Indeed, Nadella relieved shareholders concerns about slowing worldwide economic growth, saying that he expects customers to try to beat inflation by investing in systems that automate tasks. “In an inflationary environment, the only deflationary thing is software,” he said, forecasting that tech spending should remain resilient.

    At $259.62, the shares are down 25% on their highs of $345 seen last September and are worth buying.
    Could a recovery be due at Vodafone?
    Vodafone shares have disappointed for some time since the heyday of its acquisition of Mannesmann in the early noughties. However, with interest taken in the mobile phone giant lately by activist investors, things could be looking up for shareholders.

    First, Carl Icahn’s Swedish based investment group Cevian took a stake in the company earlier this year. It is pushing for a shakeup of the business and for Vodafone to lead consolidation in the European telecoms sector.

    More recently, Emirates Telecom, based in the United Arab Emirates, has purchased a majority shareholding in the company worth 10%. The company says it is supportive of Vodafone’s current strategy.

    Vodafone’s chief executive Nick Read says he is busy looking for takeover targets in the European telecoms markets. The company is currently in discussions with CK Hutchinson, Hong Kong-based owner of Three, about the possibility of combining its respective UK businesses.

    However, talks with Masmovil in Spain earlier this year came to nothing, while Vodafone turned down a bid from Iliad for its Italian business.

    There is always the risk that an ill-judged acquisition spree doesn’t pay off. And the German business is underperforming. Read recently warned investors at the recent results that Vodafone will also be hit by inflationary pressures. Full-year figures are likely to be lower than expected.

    However, the shares are worth buying at 130p for the long-term on activist investor interest.

    Intercontinental Hotels Group seeing increased pricing power
    With the hotel industry emerging from the Covid-19 pandemic, shares in Intercontinental Hotels Group could be worth looking at. Despite the difficulties of Covid-19, the hotel industry has been more insulated from the ravages of the pandemic compared to the airline and cruise line industries.

    This is because customers have continued to make staycation bookings. Plus, while the sector faces inflationary cost pressures, it does not have to contend with the huge hikes in jet fuel the airline industry is facing.

    Indeed, recent first-quarter figures from IHG were encouraging with RevPAR up 61% vs 2021 and attaining 82% of 2019’s level. Its hotels in the Americas and Europe and the Middle East also saw improved trading after a tough January.

    “We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world,” said IHG CEO Keith Barr at the recent first-quarter results earlier this month.

    “The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.”

    Barr says the company’s hotels are seeing increased pricing power, with leisure rates in its US hotels up by more than 10% on levels seen in 2019. However, its hotels in China are being hit by Covid lockdowns and restrictions currently in place.

    At 4,735p, shares in the hotelier are down 12% on their highs of 5358p seen in November last year and have oscillated this year. However, with trading conditions at the group improving, the shares could be worth buying.

    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020).
    Piper Terrett | Financial writer, London
    26 May 2022
  4. ArvinIG
    As the Bank of England predicts inflation will hit 10.2% later this year, the FTSE 100 offers an excellent selection of defensive stocks.

    Source: Bloomberg   Shares Recession Inflation FTSE 100 United Kingdom Stock   Last week, the Bank of England set in stone that which investors have been afraid to hear. Whilst increasing the base rate to 1%, it predicted that double-digit inflation will see the UK’s economy contract by 0.25% in 2023.
    While the country should avoid a technical recession (two consecutive quarters of falling GDP), Governor Andrew Bailey admitted that ‘it is a very obviously sharp slowdown in activity.’
    But MPC member Huw Pill has rejected the notion that the UK is headed for stagflation, saying ‘we are not headed in that direction.’
    However, Capital Economics expects the base rate to strike 3% next year, arguing that the ‘weakening economy won’t do the MPC’s job.’ And given the Bank’s inflationary track record, investors are understandably nervous about the economy’s future trajectory.
    Meanwhile, Chancellor Rishi Sunak is resisting calls to increase financial support for the economy despite poor local elections results.
    And as equities fall, the pound drops, and growth stalls, many investors are recalibrating their portfolios in favour of defensive stocks to combat the spectre of recession.
    FTSE 100 Defensive Stocks
    The widespread appeal of defensive stocks is that they usually outperform the market during recessions. Regardless of external events, their dividends, earnings and share prices usually remain comparatively stable, because they offer a product or service for which there is consistent demand. This could be because they hold a dominant market position, hold a reputation for value for money, or even provide the bare necessities.
    In investor vernacular, the best stocks within defensive sectors benefit from ‘inelasticity of demand,’ making them ‘safe havens.’ If they raise prices to tackle inflation, consumers will almost always still buy the product or service.
    And with UK growth grinding to a halt, increased investment in defensive stocks grants investors the ability to protect their wealth from inflation whilst minimizing their stock market risk.

    Source: Bloomberg Best FTSE 100 defensive sectors
    Happily, for UK investors, the FTSE 100 is packed with some of the best defensive sector stocks.
    First and foremost is Consumer Staples, which is the sector with companies that sells essential products and services. FTSE 100 examples include stalwarts like AB Foods, Tesco, Unilever, and British American Tobacco. Consumers will always purchase food, household products, and tobacco, regardless of financial means or the wider economic picture.
    Second is the Healthcare sector. There is consistent demand for medical treatments every year, as well as financial incentives to develop new drugs. And as a consequence of the covid-19 pandemic, there is strong political consensus that FTSE 100 healthcare companies are to be backed for future preparedness. Giants GlaxoSmithKline and AstraZeneca are excellent examples.
    Third is the Utilities sector. The risk-reward ratio is currently elevated as the global transition towards renewables amid climate goals and the rejection of Russian fossil fuels. But the need for electricity, gas, and water will never subside. FTSE 100 exemplars include National Grid and Centrica.
    Finally, telecommunication is an excellent defensive sector, as consumer demand for mobile phones and broadband services remains consistent. While some growth may now be found from the expansion into 5G and superfast internet, demand for connectivity means that titans like BT and Vodafone are unlikely to see weakened demand, even if recession strikes.
    Of course, there’s a strong argument that growth stocks, having taken a hammering so far in 2022, are now at excellent buy-in points. For example, the tech-heavy NASDAQ Composite is down 23% year-to-date. Both ARK Innovation ETF and Scottish Mortgage are in the doldrums despite previous years of outperformance. And there’s no knowing where the bottom might be.
    Moreover, FTSE 100 stocks like the oil majors BP and Shell, or mining giants Rio Tinto and Anglo American, currently offer far better returns than those in the defensive sectors. However, the cyclical nature of commodities does leave investors at the mercy of demand volatility.
    And as rising inflation and interest rates continue to increase the risk of a full-blown recession, the hallmark consistency of FTSE 100 defensive stocks becomes ever more appealing.

    Charles Archer | Financial Writer, London
    09 May 2022
  5. ArvinIG

    4D Pharma shares receive trial data boost

    By ArvinIG,


    Analyst article
    4D Pharma shares have jumped following positive clinical trial results. Where next for the biotech?

    Source: Bloomberg   Pharmaceutical industry Clinical trial Cancer Drug Biotechnology Renal cell carcinoma   Shares in 4D Pharma received a welcome boost this week after the company posted positive results from a clinical trial of its early-stage cancer drug. In Phase I/II trials the product hit its end point early in treating patients with kidney cancer. The drug was administered in combination with Merck’s drug Keytruda. 4D Pharma has a research partnership in place with the drug giant.

    Shares in the biotech jumped 29% to 58p following the encouraging test results, although they have since fallen back to 48p.

    "Today's results in renal cell carcinoma, meeting the predefined primary efficacy endpoint early in this difficult to treat population, marks another important step forward for MRx0518 and the increasing importance of the microbiome in cancer treatment," said the company’s chief scientific officer, Dr Alex Stevenson.
    Chief executive Duncan Peyton told IGTV that the data was "really meaningful... in proving [4D Pharma's] thesis."

    4D Pharma’s ‘drugs from bugs’

    The biotech company is developing a stable of drugs to treat cancer, Parkinson’s disease, irritable bowel syndrome and asthma. Its pipeline of five products is based on bacteria found in the human gut - what it terms ‘live biotherapeutics’ from the human microbiome.
    4D Pharma is dual-listed on AIM and Nasdaq and has a market capitalisation of just £91m. Two of its Parkinson’s disease products also recently received the go ahead from the US regulator to enter clinical trials.

    Trading at just 48p, the shares have lost two-thirds of their value since reaching a high of 156p in September 2020 - 56% in the past year.
    4D Pharma burning through cash
    Developing drugs is an expensive business. The biotech burned through £56m last year and only has £20m in funding left, making it likely that a cash call will be required later this year. Certainly, management said at its recent half-year results that it has enough funds to take it through to the fourth-quarter of 2022.

    4D Pharma also has a $30m cash facility lined up with Oxford Finance. The company recently signalled it may list up to $150m of shares on Nasdaq as American depository shares, following a filing with the US Security and Exchange Commission.

    Investing in biotech companies is high risk and Phase III clinical trials can prove costly. It can take more than a $1bn to bring a new drug to market. Failure rates are high and it is common for even late-stage products to fail in the clinic. The bulk of 4D Pharma’s drugs are still relatively early-stage, with two at the Phase II stage.

    The company’s technology is promising but it will need to raise further cash this year. However, securing a licensing deal or other positive trial-related news flow could provide a further boost for the shares. Its partnership with Merck is also a plus point.

    Go short and long with spread bets, CFDs and share dealing on 16,000+ shares with the UK’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
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    Piper Terrett | Financial writer, London
    29 March 2022
  6. ArvinIG
    Traders with a strong understanding of technical indicators are usually better equipped to navigate the financial markets than those that lack this knowledge. While personal investing goals, risk appetite and trading style will help to determine a strategy and trading plan, knowing what technical indicators to use in your approach can help to determine possible entry and exit points.
    Hundreds of technical indicators exist, and clear signals can be identified using effective indicators as part of a strategy. This article will cover six of the most popular technical indicators for stock trading.
    BEST TECHNICAL INDICATORS FOR STOCK TRADING
    For traders looking for the most effective technical indicators, it is important to consider the objectives of the trading strategy as well as the current market condition. For individuals trading individual stocks, it is often beneficial to apply indicators to the stock index in which that share belongs to get a holistic view of the larger market as a whole.
    Below are six of the most popular technical indicators to use when analyzing stocks:
    INDICATOR NAME
    TYPE OF INDICATOR
    CHARACTERISTICS
    Client Sentiment
    Contrarian Indicator
    Shows client positioning of the market Indicates when markets are nearing extremes Leading indicator Useful in trending markets Relative Strength Index (RSI)
    Momentum Oscillator
    Plotted between 0 – 100 Indicates when the market is overbought or oversold Leading indicator Useful in trending markets Stochastic
    Momentum Oscillator
    Plotted between 0 – 100 Consists of two lines, %K and %D line Indicates when the market is overbought or oversold Leading indicator Useful in rangebound markets Simple Moving Average (SMA)
    Trend following indicator
    The SMA represents the average price of a security over a specified period of time Equal weighting is given to all points in the data set Used to confirm the direction of the current trend Lagging indicator Useful in trending markets Exponential Moving Average (EMA)
    Trend following indicator
    The EMA represents the average price of a security over a specified period of time with a greater emphasis on recent prices Higher weighting is given to recent points in the data set Lagging indicator Useful in trending markets Moving Average Convergence Divergence (MACD)
    Momentum oscillator
    The MACD measures both momentum and the trend Overbought and oversold signals occur above and below the zero-line Lagging indicator Useful in trending markets CLIENT SENTIMENT
    Client sentiment data is derived from a brokerage’s execution desk data, measuring live retail client trades to determine possible directional biases in the market. When sentiment is approaching extreme levels, stock traders may begin to see a reversal as more likely which is why it is seen as both a contrarian indicator as well as potentially having a leading component.
    Below is an example of the IG Client Sentiment Index, IG’s sentiment gauge derived from execution desk data, for the Dow Jones index (Ticker: Wall Street). Based on the data below, 64% of traders have short positions which means that majority of traders expect the price of Wall Street to drop. However, sentiment is seen to be bullish, meaning that based on this data the price of Wall Street may be expected to increase. Although it is not advisable to trade-off sentiment (or any individual indicator) alone, an individual who is trading a constituent of the DJIA could use this data as an informative tool before applying additional indicators.
    DailyFX provides client sentiment data which isderived from live IG retail client trades for forex, commodities, cryptocurrencies and major stock indices. Stock sentiment analysis is also available for individual shares on the IG platform where applicable or available.

    RELATIVE STRENGTH INDEX (RSI)
      The relative strength index (RSI) is a momentum oscillator that measures the magnitude of price movements to determine whether a market is overbought or oversold. A market is seen to be oversold when the RSI is below 30 and is overbought when the RSI is above 70. These are key levels could indicate a potential reversal, classifying the RSI as a leading indicator. The chart below shows the RSI being applied to the daily chart for Uber Technologies (Ticker: UBER). The RSI trades between 30 and 70 for some time before falling below the 30 level. Below the 30 level, the first signal is a false signal because although it looks like the trend is going to reverse to the upside, the price continues to fall. However, the second signal is present when the RSI is below 30 and turns towards the upside. However, the RSI only confirms the reversal by crossing above the 30 line the next day.
    STOCHASTIC
    The stochastic oscillator is another momentum indicator which is used to determine overbought and oversold conditions when trading stocks. Unlike the RSI which measures the speed of price movements, the stochastic measures current price in relation to its price range over a period of time.
    The %K line (the black line) is calculated by using the latest closing price relative to the lowest low and highest high over a specified period of time and the %D line represents the simple moving average of the %K (three period Simple Moving Average is the most common).With stochastics, a bullish crossover occurs when the %K line (the black line) crosses over and above the %D line (the red dotted line). Likewise, a bearish signal occurs when the %K line crosses under and below the %D line. The strongest signals will often occur when there is a bullish cross-coupled with a move above 20 from below and a bearish signal coupled with a move below 80.
    In the image below, the stochastic indicator is applied to the S&P 500 price chart (Ticker: US 500). As indicated on the chart, a bearish crossover occurs from above the 80 line, indicating that the trend may reverse to the downside. The reversal is then confirmed once the lines cross 80. Likewise, the bullish crossover occurs below 20 and the reversal is confirmed once the 20 line is crossed.
    SIMPLEMOVING AVERAGE (SMA)
    A simple moving average (SMA) is a lagging indicator which represents the average price of a security over a specified period of time. In a trending market, the moving average modulates short-term price fluctuations and allows stock traders to identify the trend in a simplistic way.
    As depicted in the chart below, in a rangebound market, it is also possible to use a moving average to identify support and resistance levels. By applying the 50 day MA to the Boeing price chart, it is clear that the 50-day SMA can also be seen as potential support even as Boeing is trading in a ranging environment.
    EXPONENTIAL MOVING AVERAGE (EMA)
    As with the SMA discussed above, the exponential moving average (EMA) is a lagging indicator which represents the average price of a security over a specified period of time. However, unlike the SMA which gives equal weighting to all data points in the series, the EMA gives more weight to recent prices, removing some of the lag found with a traditional SMA. This makes the EMA an optimal candidate for trend trading as it allows traders to get a holistic view of the market without missing out on opportunities with may be due to the lag of a simple moving average.
    MACD
    The MACD (moving average convergence/divergence) is a technical indicator that can be used to measure both momentum and the strength of the trend. The MACD displays a MACD line (blue), signal line (red) and a histogram (green) which shows the difference between the MACD line and the signal line.
    The MACD line is the difference between two exponential moving averages (the 12 and 26 period moving averages using common default settings), whilst the signal line is generally a 9-period exponentially average of the MACD line. These lines waver in and around the zero line, giving the MACD the characteristics of an oscillator with overbought and oversold signals occurring above and below the zero-line respectively.
    With reference to the chart below, featuring Apple, Inc. (Ticker: AAPL):
    A bullish signal is present when the MACD line crosses ABOVE the signal line from BELOW the zero line. A bearish signal is present when the MACD line crosses BELOW the signal line from ABOVE the zero line. TECHNICAL INDICATORS FAQ’S
    What is the difference between a leading and a lagging indicator?
    Although leading and lagging indicators are both derived from historic price data, a leading indicator is used to indicate expected price movements in the market while lagging indicators are used to provide entry and exit signals once the trend has been identified.
    Although similarities and differences exist between the two, both are equally important and it is often beneficial for traders to use both leading and lagging indicators simultaneously.
    FURTHER READING ON STOCK TRADING
    Learn how to apply stock market sentiment analysis Explore the differences between stock trading and investing Bookmark our guide to stock market trading hours DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
    DISCLOSURES

    Tammy Da Costa , Markets Writer
    16 July 2021
     
     
     
     
  7. ArvinIG
    The Affirm share price fell on Tuesday (US time) as rumours emerged that Apple was planning on entering the BNPL market.

    Source: Bloomberg   Shares Apple Inc. Apple Pay Bloomberg L.P. Credit Fee  
    It was a relatively uneventful day for Affirm Holdings – a leading US-based Buy Now Pay Later (BNPL) company – during the first couple of hours of trade on Tuesday.
    The stock was flat, if not somewhat up on its intraday low before news broke that Apple – the $2.43 trillion tech behemoth, would be crashing the BNPL party with its own installments product.
    Trade stocks US-listed stocks like Affirm long and short with IG today. Create an IG account or log in to your existing account to get started now.
    Affirm share price in focus
    At 2:01 PM on Tuesday, Bloomberg ran a story titled Apple, Goldman Plan ‘Buy Now, Pay Later’ Service to Rival Affirm.
    The stock crashed almost immediately: falling over 10% in about 30 minutes. As traders and investors skirmished to find a bottom, the market was digesting reports that tech giant apple would be entering the BNPL space itself.
    Affirm closed out the session at $58.21 per share, down 10.45% for the session and well off its 52-week high of $146.90 per share. At those price levels, Affirm has an implied market capitalisation of just over USD$15.43 billion.
    Citing inside sources, Bloomberg reported that Apple was developing a BNPL product – tentatively titled Apple Pay Later – which would allow consumers to make purchases and pay off such purchase across a number of instalments. Goldman Sachs would apparently act as ‘the lender’ for this installments product.
    Importantly, no date was given on the potential rollout of such a product and Goldman Sachs or Apple representatives did not provide a comment when queried by Bloomberg.
    Goldman stock finished out yesterday’s session lower, while Apple eked out a gain to close above $145 per share.
    Expanding on how the service would work and citing sources close to the matter, Bloomberg reported that Apple’s BNPL product would be accessible to customers via Apple Pay on Apple devices. More specifically, the Apple Pay Later product looks to have two distinct ‘spin-offs’ for customers to take advantage of, with ‘Apple Pay in 4’ focused on short-term repayment terms. while a ‘Apple Pay Monthly Instalments’ product would focus on longer repayment terms.
    ‘At least some of the Apple Pay Later plans will also exclude late fees and processing fees, only costing users interest for longer-term plans,’ Bloomberg wrote.
    This service is expected to be available for purchases made online and in physical stores, and will apparently not require credit checks.
    Apple: a quiet payments play
    While Apple itself doesn’t provide granular data on the performance of Apple Pay, in 2020 Bernstein analysts estimated that Apple Pay accounted for some 5% of global credit card transaction volumes.
    ‘There are indeed plenty of reasons to worry that Apple may attempt to disrupt the payments ecosystem,’ said Berstein analysts at the time. A statement, which in retrospect, appears highly prescient.
    These events in the US flowed into Australian markets on Wednesday, with a number of ASX-listed BNPL companies witnessing steep declines at the open.

    Shane Walton | Financial Writer, Australia
    14 July 2021 
  8. ArvinIG
    Afterpay shares are surging this morning, after Jack Dorsey’s Square and the company announced an acquisition of the buy-now-pay-later company.

    Source: Bloomberg   Indices Shares Stock Price Day trading Valuation  
    As stated in the joint press release by the two firms, “the transaction has an implied value of approximately US$29 billion (A$39 billion) based on the closing price of Square common stock on July 30, 2021, and is expected to be paid in all stock”. The Afterpay Holdings Limited board has unanimously endorsed the acquisition.
    In any takeover, especially between one very large company and another rapidly growing one, the first question to ask is what synergies might each or either company see created by the acquisition. It’s likely that, given increased growth and competition in the payments space, Square Inc is looking to find a market leader, with a proven history of growth, ample data, strong brand to leverage its broader service offering, and ample network effects.
    For Afterpay, it appears the company’s management sees this as an ideal time to sell the business, with an increasingly competitive buy-now-pay-later space (PayPal Holdings Inc (All Sessions) and Apple Inc have recently flagged their intentions to launch similar services) meaning growing market share and revenues independently will be more difficult in the future.
    The deal won't be finalized until early 2022
    However, the company’s share price has already rocketed this morning. The implied valuation by square for Afterpay stock is around $126 per share. That puts the price at a roughly 30% premium to where it closed on Friday the 30th of June, at around $96. Already in early ASX trade, the stock has traded at an intraday high of $125, before sliding slightly as the morning has unfolded.
    Want to trade Afterpay?
    Create an IG trading account or log in to your existing account to get started now.

    Source: IG charts Kyle Rodda | Market Analyst, Australia | Publication date: Monday 02 August 2021 11:06
      Prices above are subject to our website terms and agreements. All share prices are delayed by at least 20 
  9. ArvinIG
    We examine how three of Australia’s top brokers reacted to Afterpay’s full-year earnings report.

    Source: Bloomberg   Shares Afterpay Price Share price Earnings before interest, taxes, depreciation and amortization UBS   When the Square-Afterpay acquisition was announced in early August, Afterpay (ASX: APT) provided the market with a relatively comprehensive FY21 trading update. That update, had most, though not all of the ingredients investors and traders would’ve likely been eyeing from an operational perspective.
    Indeed, many of these pre-released metrics were reiterated as part of Afterpay’s full-year FY21 results, handed down to the market on Wednesday, August 25.
    The Afterpay share price finished Wednesday’s session down 1.18% to $133.50 per share.
    FY21 results
    On the top-line, Afterpay reported full-year underlying sales of $21.2 billion, implying a year-on-year increase of 90%.
    All of this drove revenue higher, with the company generating total income of $924.7 million in FY21, up 78% from a year ago.
    Overall, the business maintained its margins from the year prior, registering a merchant margin of 3.9%, while net margins came in at +2%.
    These operational feats were underscored by a solid increase in customers and users. During FY21 active Afterpay customers rose 63% to hit 16.2 million. That impressive figure was matched by even more rapid growth in the company's merchant base, with total active merchants hitting 98.2 thousand, implying a year-on-year growth rate of 77%.
    Yet all this growth came at a cost: EBITDA was $38.7 million, down 13% from the year prior, while losses continued to snowball, coming in at $159.4 million – equivalent to a 597% increase year-on-year.
    Click here to read our beginners’ guide to fundamental analysis.
    Analyst perspectives
    Below we look at how three key Australian brokers responded to Afterpay’s latest round of FY21 results.
    Wilsons
    Analysts from Wilson’s – who have a $151.05 per share price target on Afterpay – honed in on the Square-Afterpay deal, saying:
    ‘Much of the focus will remain on the SQ share price and the SQ/APT share ratio of 0.375. Not with standing this, until deal closure we’ll remain observant of the core underlying trends.’
    The broker went on to say:
    ‘With Q4’21 trading announced prior to today’s results, we noted that Underlying Sales trends, Margins, and operating conditions were continuing as expected with few (if any) surprises.’
    UBS
    The bear amongst the bulls – UBS reacted with little enthusiasm to Afterpay’s full-year report. Here the investment bank reiterated its $42.00 price target, while saying:
    ‘Top-line pre-reported, net transaction margin slightly below consensus. Focus remains on Square’s proposed acquisition.’
    RBC
    Finally, analysts from RBC took a more granular view, turning their attention to the results that Afterpay had yet to report before today’s release. Here the broker said:
    ‘With most of the customer and topline metrics pre-reported, the focus of today’s result was on the gross losses, transaction metrics, and EBITDA. All of the key metrics are heading north, and data points which stood out were earlier customer cohorts transacting 34x per year.’
    RBC has a $127.00 per share price target on Afterpay.
    Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Shane Walton | Financial Writer, Australia
    Wednesday 25 August 2021
  10. ArvinIG
    ‘Afterpay has always stood apart in the way it connects with customers around common core values of simplicity, transparency and trust.’
     

    Source: Bloomberg   Shares Money Bank Westpac Customer Morgan Stanley On Tuesday, 20 July, we received greater clarity on what Afterpay’s ‘Money by Afterpay’ product would look like and when it would likely be rolled out in Australia.
    Hype around this product, which was being rolled out with the help of Westpac’s white-label banking as a service product, has been building for some time.
    The sell-side has been particularly keen, with Morgan Stanley analysts – who have been consistently bullish on the name – in June making the rather bold claim that the service could help Afterpay double its Australian revenue.
    Quantifying that impact: by 2025, the investment bank thinks Afterpay Money could contribute as much as $589 million in revenue to the group.
    And as one final point, as we wrote previously, ‘Beyond its potential positive impact on the top-line, [Morgan Stanley thinks] Afterpay Money could also help the company boost engagement, reduce processing costs, and provide the company with more granular data on its customers.
    New insights
    These bold estimates were tempered by some concrete details courtesy of Afterpay on Tuesday, 20 July.
    Described as a money and lifestyle app – ‘Money by Afterpay’ – is aimed at helping individuals ‘trust themselves with money management’ and will initially give its users access to:
    A 1% per annum interest account A daily account with an attached, physical debt card, digital wallet, as well as the ability to send and receive payments It was noted that it is currently proposed that the Afterpay Money daily account would not charge its customers fees, which according to the company, would make it ideal for daily and commonplace transactions. To access the Afterpay Money App, users would need an existing Afterpay account.
    Management said they intended to rollout Afterpay Money in October after trailing the service amongst employees in July.
    Elsewhere, the company announced that it had been granted an Australian Financial Services License (AFLS), which would enable Afterpay to provide general financial advice to its customer-base.
    Management commentary
    According to co-CEOs, Anthony Eisen and Nick Molnar:
    'Afterpay has always stood apart in the way it connects with customers around common core values of simplicity, transparency and trust. Ultimately, with Money by Afterpay, our goal is to make managing your money simple, frictionless and stress-free.'
    ‘The money app, which will be rolled out through the company's banking as a service collaboration with Westpac, demonstrates that Afterpay ‘can quickly move at pace to get well ahead of customer expectations and bring both cutting-edge features and true 'surprise and delight' to the experience,’ the co-CEOs added.
    The Afterpay share price finished out Tuesday's session 1.64% higher at $106.62 per share. The stock continued to rise on Wednesday.
    Do you have a view on the markets? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.
    For example, to buy (long) or sell (short) a variety of local and international stocks using CFDs, follow these easy steps:
    Create an IG Trading Account or log in to your existing account Enter <Company name> in the search bar and select it Choose your position size Click on ‘buy’ or ‘sell’ in the deal ticket Confirm the trade For investors not looking to trade stocks, you can invest in shares directly through our share trading service.
    Shane Walton | Financial Writer, Australia
    21 July 2021
  11. ArvinIG
    As US payments giant Square moves to acquire Afterpay, we take a closer look at the most important implications of this proposed deal.

    Source: Bloomberg   Shares Takeover Price United States Cash Investor
        It looks as if we’re at the end of an era.
    On Monday, 2 August, the US-listed payments giant Square (SQ) revealed that it had entered into an agreement to acquire Afterpay (APT) in a deal valued at US$29 billion or AUD$39 billion.
    Afterpay share price in focus
    The Afterpay share price skyrocketed in response, opening a shade below the takeover price, at $124.00 per share. The stock would drift lower as the session wore on as investors mulled the deal, closing Monday up 18.77% at $114.80 per share.
    Square investors appeared equally enthusiastic about the prospect of the combined company, with the stock closing out Monday's US session up 10.16% to US$272.38 per share.
    Commenting on the deal, IG Market Analyst, Kyle Rodda, yesterday said:
    ‘In any takeover, especially between one very large company and another rapidly growing one, the first question to ask is what synergies might each or either company see created by the acquisition.'
    ‘Given increased growth and competition in the payments space, Square Inc is looking to find a market leader, with a proven history of growth, ample data, strong brand to leverage its broader service offering, and ample network effects,’ Mr Rodda added.
    Implications of the deal
    The primarily all scrip deal will see Afterpay shareholders receive a fixed exchange of 0.375 Square shares – which at the time of the announcement sat at US$247.26 per share – for every Afterpay share currently held. At the time of Square’s initial offer, such a swap implies a takeover value of approximately $126 per share – or AUD$39 billion.
    Importantly however, with the Square share price surging overnight off the back of this announcement, the takeover bid for Afterpay just got a little juicier. This is counter to the share price weakness the market seems to have been expecting on Monday, when Afterpay traded at a moderate discount to the offer price.
    The agreement specifies that Square has the option to pay for 1% of the acquisition in cash.
    Elsewhere, Square said that it has agreed to establish a secondary listing on the ASX. Once listed, Square, inclusive of Afterpay, would surely be a force to be reckoned with, given the payments company’s market capitalisation stands at over US$120 billion and the initial takeover offer valued Afterpay at US$29 billion.
    Against FY20 revenue levels, the initial takeover bid implies a transaction sales multiple ~40x.
    Does history favour the bold?
    The deal – which would ultimately see close to 20% of Square owned by Afterpay investors – is a bold play by any step.
    Yet Square’s rationale seems to have as much to do with business synergies as it does with values alignment.
    Indeed, while Afterpay is expected to help boost Square’s 'gross profit growth', it is also likely to negatively impact the company’s Adjusted EBITDA margins, during the early stages of the acquisitions, management said.
    Such short-term considerations appear less important to both company's management teams than providing better outcomes for consumers, with it being noted that the combined group will be well placed for both companies 'to better deliver compelling financial products and services that expand across to more consumers and drive incremental revenue for merchants of all sizes.'
    But beyond building better financial products and growing the company at a faster rate, Jack Dorsey – Square’s CEO and co-founder – stressed the importance of the value alignment between both companies.
    'Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.'
    Mr Dorsey added that 'Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.
    From a Board-level, it was noted that Square would appoint one member of Afterpay’s team to the Square Board.
     
    FY21 results in focus
    Beyond the acquisition announcement, on Monday, 2 August, Afterpay simultaneously released its FY21 full-year results.
    On the top-line, fiscal 2021 proved to be a blockbuster result for the company, with Afterpay reporting total underlying sales of $21.1 billion (+90%) and $22.4 billion (+102%), on a constant currency basis. Management had previously set a target for $20 billion in annual sales by the close of FY22 – with today’s results representing an early beat on those lofty ambitions.
    Volumes were driven primarily by growth in Afterpay’s US business, with underlying sales surging 177%, to come in at $9.8 billion.
    By comparison, the company's Australian operations slowed considerably, growing 44% year-on-year to come in at $9.4 billion. Clearpay rounded out those results, booking underlying sales of $1.8 billion.
    This translated into strong revenues of $925 million (+78%) or $978 million (+88%) on a constant currency basis, while gross profits hit $675 million.
    Elsewhere, the strength of Afterpay's flywheel remains intact: active customers tipped over the 16 million mark by the close of the year, while active merchants were onboarded at an even more accelerated pace, rising 77% to come in at 98.2 thousand by year's end.
    Finally, speaking to the strength of the Afterpay ecosystem, the company proudly reported that over the last 12-months the top 10% of its customer-base, on average, transacted with Afterpay around 32 times. Region-by-region, the economics remain most impressive in Australia & New Zealand, with the top 10% of customers on average transacting with Afterpay ~62 times annually, compared to North America: ~25 times annually, and the UK: ~34 times, annually.
    Management did not provide FY22 guidance or an outlook as part of the full-year update.
    What's your view on the BNPL sector? Whatever you think, you can use CFDs to trade both rising and falling markets, through IG’s world-class trading platform now.
    For example, to buy (long) or sell (short) a stock using CFDs, follow these easy steps:
    Create an IG Account or log in to your existing account Enter <company name> in the search bar and select it Choose your position size Click on ‘buy’ or ‘sell’ in the deal ticket Confirm the trade Alternatively, you can invest in shares directly through our share trading service.
    Rumours & speculation?
    The fact that Afterpay wasn’t bid closer to the $126 level on Monday does raise some questions.
    Will there be opposition on the deal, from either shareholders or regulators? Or are investors not happy with the all-scrip, ‘no’ cash deal? It should be noted that with Square surging 10% on Monday (US time), the implied deal value has changed moderately
    Or, could there be another company keen to acquire Afterpay? As is typical, it was noted that Afterpay’s Board unanimously endorses the offer – save for the appearance of a better offer or the conclusion from an independent auditor that the transaction is not in the best interest of shareholders.
    Analysts from RBC argue that such a counter-bid is unlikely to emerge, saying:
    ‘Given the nature of the SQ business and their Merchant and Consumer ecosystem, we see few realistic competing suitors beyond the major technology giants, given Klarna, Affirm, and PayPal’s native interests in BNPL would effectively see them purchasing customers, should they lob a competing bid.’
    Other analysts, such as those at Citi, described Square’s offer as both low and surprising.
    ‘Given we are still early in the BNPL penetration story, we see the timing as surprising and also see the offer price as low.’
    Despite that, the investment bank acknowledged the relative strength of the combined Square-Afterpay entity, saying:
    ‘We see the strategic value in Afterpay combining with Square’s Cash App and Seller ecosystem and see the combined business as being in a much stronger position to succeed, especially in the US.’
    The transaction, if it faces no roadblocks, is expected to be completed during the first quarter of 2022.
    Shane Walton | Financial Writer, Australia
    03 August 2021
  12. ArvinIG
    Airbnb reports its earnings aftermarket on Thursday (EST).

    Source: Bloomberg   Shares Airbnb Price Revenue Bloomberg L.P. Technical analysis   What to watch for
    Airbnb Inc is expected to show modest revenue and earnings growth for the quarter, but convey an optimism about the prospects of growth for the company in the periods ahead.
    Consensus estimates is for EPS of -0.35c for the quarter, with revenue tipped in at $1.26 billion. The company’s growth since listing last year has been hamstrung by the lockdowns and travel restrictions associated with the Covid-19 pandemic. However, with vaccine rollouts in the US and Europe proving successful, and pent-up demand for travel tipped to be released as a result, Airbnb management is expected to paint a positive outlook for future growth and earnings.
    The key data going into Airbnb Q2 results
    Financial metrics
    EPS
    Revenue
    EPS growth Y/Y
    Trailing P/E
    -0.35c $1.26 billion N/A N/A  
    Source: Bloomberg
    Analyst recommendations
    Buy
    Hold
    Sell
    Consensus price target
    19 15 2 $170.59  
    Source: Bloomberg
    Airbnb IG client sentiment

    Source: IG charts Airbnb technical analysis: price shows signs of bottoming as momentum lifts
    Price data for Airbnb shares is relatively limited given the company only floated in late 2020.
    Nevertheless, the charts clearly show price in a primary downtrend. Despite this, there are signs of burgeoning upside for the stock, after recently testing its historical lows. Price is showing signs of bottoming, with a double looking to have taken shape around price support at $US130.00 per share, while momentum is picking up with the daily RSI at 60 and trending higher.
    Key resistance currently sits just above $157 per share, which also coincides with its 100-day MA. If broken, price may be drawn towards analyst consensus price target, which is at about $170 presently.
    Want to trade Airbnb?
    Create an IG trading account or log in to your existing account to get started now.

    Source: IG charts
      Kyle Rodda | Market Analyst, Australia
    10 August 2021
  13. ArvinIG
    Airline stocks are on the rise after months of downside. With air traffic expected to benefit from strong vaccination rates, could this represent a good buying opportunity?

    Source: Bloomberg   Shares Airline Air traffic control Europe United Kingdom EasyJet   UK listed airlines in focus as vaccinations lessen restrictions
    Airlines are on the rise today, following a period of weakness that has seen the sector on the back foot in recent months. However, with much of the sector still well below its pre-crisis levels, it is worthwhile considering whether we are due another push higher before long.
    Firstly, let's look at vaccination levels in some of the main tourist hotspots in Europe. Notably, it is Greece that is lagging behind some of the other dominant tourist destinations, while the wider European average is also lower to reflect weaker protection in some of lesser visited nations.
    Nonetheless, with many of the top nations enjoying a high level of coverage, the continent does have a strong base of protection that should help stave off any further lockdowns or classification as high risk regions.

    Source: Our World in Data  
    Notably, we have seen cases rise sharply in the UK despite strong vaccination protection, although deaths remain low which should hold off any fresh domestic restrictions.
    For now, the fact that cases in the UK are well above some of these other key nations should help ensure that the government refrains from implementing tighter regulations on travelling throughout much of Europe.

    Source: Our World in Data European-focused airlines appear more predictable
    While risks remain over cross-continental travel, the level of vaccinations throughout Europe should ensure that airlines enjoy increased business for the months ahead. Interestingly, the chart below highlights how the UK does appear to be lagging behind some of the major European travel hubs.
    However, as a whole we are seeing many nations close in on their pre-pandemic levels. Notably, Greece is the one nation that has more international arrivals and departures than in 2019. That gap between the UK and European travel could be a reason to see value in UK-focused stocks, but could also highlight a reason for outperformance in stocks such as Wizz Air.

    Source: Eurocontrol Wizz air and easyJet lead the way
    Looking at the price action over this crisis, we can see that the two outperformers come in the form of Wizz Air and easyJet. Concerns over global travel figures and the lack of business demand does provide some grounds for pessimism over the likes of IAG, which is reflected in its lackluster recovery.
    However, there is a strong chance we will see the likes of Ryanair, Jet2, and TUI will start to regain ground as air traffic picks up in the months ahead.

    Source: Trading View   Joshua Mahony | Senior Market Analyst, London 
    09 September 2021
  14. ArvinIG
    China’s top tech giant Alibaba experienced one of its worst days in US share market. Its share price (NYSE: BABA) dropped harshly by 11% from $161, the day before, to $143 when market closed on Thursday.


    So urce: Blo omberg   Forex Shares Alibaba Group Renminbi E-commerce Investor   Even through a 4.07% drop before the report day showing Alibaba Group Holding Ltd (All Sessions) investors had little expectation for the Chinese ecommerce giant given all the bumpy hurdles that it had gone through, the disappointing Q2 earnings still dragged the BABA’s share price down much further.
    What does the Q2 earnings show?
    Based on Alibaba’s Q2 earnings, the ecommerce giant reported non-GAAP earnings per share (EPS) of $1.74, missing the estimate of $1.93, representing a shocking 37.7% decline compared to the same period last year. Revenue was also reported as a miss, totalling $31.15 billion as opposed to the estimated $32.05 billion.
    Annual active consumer globally is the only beat that has reached approximately 1.24 billion, more than four-times the size of Amazon (300 million), with a quarterly net increase of 62 million consumers.
    Alibaba earnings results
    Metric
    Beat/miss/match
    Reported value
    Analysts prediction
    Adjusted EPS Miss RMB 11.20 RMB 12.11 Revenue Miss RMB 200.7B RMB 205.7B Annual active consumers in China Beat 953 M 846.6 M Source: VisibleAlpha
    Quarterly earnings surprise amoune
    Fiscal quarter end
    Date reported
    Earnings per share
    Consensus EPS forecast
    % Surprise
    September 2021
    18/11/2021
    1.75
    1.93
    -9.3
    June 2021
    8/03/2021
    2.16
    1.74
    24.1
    March 2021
    05/13/2021
    1.1
    1.41
    -22.0
    December 2020
    2/02/2021
    2.98
    2.78
    7.2
    September 2020
    11/05/2020
    1.32
    1.65
    -20.0
    Source: Nasdaq.com
     
    Why is the market disappointing?
    Fundamentally, investors are concerned about the company’s long-term profitability. Although the group’s revenue still grew by 29% year-over-year, its adjusted EBITA margin for the most profitable sector ‘commerce’ decreased from 35% in the quarter ending 30 September 2020 to 19% a year after, shrinking by a worrying 45%. Alibaba didn’t deny thinner margin in the report, stating “we expect that our commerce adjusted EBITA margin will continue to be affected by the pace of our investment in key strategic areas”.
    Actually, Alibaba's operating margin has been declining for some time. In 2014, the company’s margin sat at around 45% when their active user size was only one-fourth of what it is today. This means the ecommerce giant’s margin has been reducing by an average of 12% every year.
    Adjusted EBITA and adjusted EBITA margin by segments (in millions, except percentages)
     
     
    2020
     
    2021
     
    RMB
    Margin
    RMB
    US$
    Margin
    Commerce
    45,958
    35%
    33,270
    5,163
    19%
    Cloud computing(1)
    -567
    -4%
    396
    61
    2%
    Digital media and entertainment
    -710
    -9%
    -931
    -144
    -12%
    Innovation initiatives and others(1)
    -1,970
    -189%
    -2,882
    -447
    -201%
    Source: Alibaba
    On the other hand, Alibaba’s challenge is not just a matter of fundamental valuation, but a matter of risks. As the open window into the impact of Beijing’s regulatory curbs, Alibaba coincided other Chinese stocks listed in the U.S. are reporting similar troubling results this quarter. For example, Tencent last week reported its slowest revenue growth since 2004, fuelled with the growing concern over the company’s long-term picture under the environment that was walloped by macroeconomic and regulatory turmoil.
    Alibaba technical analysis
    Over the past twelve months, Alibaba's shares have provided a total return of -37.1%, well below the US 500's total return of 29.9%.
    From a technical standpoint, the freefall from this week has left a big gap between $146 to $160, which became the critical resistance level if the price is seeking higher in the near term. The candlestick is now sitting in the previous gap from October, with the support level at $139. If the bearish momentum stays, a further down to two-year-low at $130 may be in view.

    Source: TradingView Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Hebe Chen | Market Analyst, Australia
    22 November 2021
  15. ArvinIG
    As Chinese tech stocks face pronounced selling pressure, analysts continue to view Alibaba favourably.

    Source: Bloomberg   Shares Alibaba Group Sell side China Stock United States   Despite the Alibaba (NYSE: BABA) share price collapsing 30% in the last 6-months, the sell-side continues to see upside potential from the tech behemoth.
    According to Market Beat, the consensus price target for Alibaba last stood at $301.78 per share, a level which implies upside potential of 91.17% from where the stock last traded at.
    Alibaba share price
    Alibaba closed out Wednesday's US session at US$157.86 per share, giving the conglomerate an market capitalisation of US$429.09 billion. At those price levels, the stock trades on an 18.93x earnings multiple, a significant pullback from where it stood just a year ago and well behind the comps of many of its US big-tech counterparts.
    With a mind to curb monopolistic power, the Chinese government has come down hard on some of its country’s most important sectors, from education to technology. Aliababa, ByteDance, Didi, and Tencent have faced the brunt of this scrutiny, with their share prices facing equally fervent declines in response.
    Such concerns seem broader than regulatory intervention though, with Tencent and Alibaba both recently reporting that they have made ‘social aid donations’ running into the billions. Such donation, as the narrative goes, is aimed at tacking wealth inequality in the country.
    IG Market Analyst Kyle Rodda recently elaborated on that point, noting that:
    ‘Every major company is in the cross hairs at the moment from Chinese authorities, as the CCP pushes its “common prosperity” drive. Tech and finance are definite targets, and you throw in the mix the out of favour Jack Ma, and perhaps it was inevitable that Alibaba and Alipay would come under some sort of scrutiny.’
    As Mr Rodda further notes:
    ‘Monopolies are bad for consumers and the interests of broader society. China is looking to rebalance the power and wealth away from “capitalists”, and arguably nip in the bud the state of affairs that have emerged in Western market economies, and restructure massive and sometimes too big to fail corporations, who’ve too much in the eyes of the CCP served the interests of shareholders, but perhaps not society at large.’
    These issues haven’t dissuaded the sell-side, mind you. Alibaba’s consensus rating of Buy is made up of 1 Strong Buy rating, 24 Buy ratings, 2 Hold ratings and 2 Sell ratings. That’s little changed from how analaysts viewed the stock just a year ago. (In fact, the consensus price target is higher now than it was then.)
    While that view remains stable, everything else about Alibaba – and perhaps Chinese equities more broadly – appears in a state of flux. The contrast between the sharp price declines and the unpredictable regulatory environment also creates a number of important questions that investors and traders must grapple with.
    Is this simply a case of the sell-side not ‘catching up’ to the current events; which are inherently difficult to, or potentially impossible to model for?
    Or, according to the analyst consensus, is Alibaba actually ‘cheap’ at current price levels, based off historical growth levels and when looking at US big-tech comps?
    Thinking of trading BABA shares?
    Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Shane Walton | Financial Writer, Australia
    16 September 2021
  16. ArvinIG

    Alibaba shares: Is now a good time to buy?

    By ArvinIG,


    Analyst article
    Although Alibaba shares have pared last week’s losses, the stock still remains undervalued.

    Source: Bloomberg   Indices Shares Alibaba Group Stock Price United States   Alibaba (NYSE: BABA) shares closed 1.5% higher on Tuesday (31 August 2021) The e-commerce stock has retraced nearly all of last week’s sell-off Last week, the stock fell nearly 8% amid ongoing regulatory concerns and new workplace controversies IG analyst Yeap Jun Rong says Alibaba’s current lower valuation suggests ‘markets are still having doubts in its ability to weather regulatory reforms’ Keen to trade Alibaba shares? Open an account with us to start trading the stock. Alibaba stock price analysis: what’s the latest?
    Alibaba shares closed higher for a second straight day on Tuesday, as new investors bought into the shares after last week’s massive sell-off.
    The e-commerce stock has recovered 7% so far this week, with its Hong Kong listing trading at HK$167 as at 12:30 HKT on Wednesday (01 September).
    Meanwhile, its American Depositary Shares ended Tuesday’s session 1.5% higher at US$167 each.
    Alibaba shares are down by nearly 25% in the last three months, as regulatory crackdowns continued to impact the business. The stock continues to trade nearly 50% below its historic peak price of US$310, recorded in October 2020.
    IG Asia market strategist Yeap Jun Rong says that Alibaba's current lower valuation and weaker price performance as compared to its peers, such as JD and Pinduoduo, ‘seem to suggest that markets are still having some doubts in its ability to weather regulatory reforms’.
    ‘This will only be able to draw greater clarity over time,’ he adds.
    Alibaba’s current price-to-earnings ratio of 19.25 is also well under its 2020 peak of 42.85. While this shows that the company is now undervalued, other investors might view this as an opportunity to stock up shares.
    Despite the stock price’s downward trend, analysts have given Alibaba’s NYSE shares a consensus price target of US$304, which equates to a potential 82% upside.
    Out of 28 analysts polled, 24 have also rated the stock a ‘buy’, based on the latest MarketBeat data.
    Keen to take a chance on Alibaba?
    Learn how you can buy, sell and short Alibaba shares with IG.
    Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
    *Based on revenue excluding FX (published financial statements, June 2020)
    Why is Alibaba’s share price falling again?
    Last week, Alibaba shares plunged nearly 8% to a two-year low of US$158 a share, as going regulatory concerns were compounded by reports of sexual assault against a female employee.
    On Friday (27 Aug), the city of Tianjin instructed municipally governed companies to migrate their data from private cloud solutions providers like Alibaba and Tencent to a state-backed cloud platform by next year.
    Such moves are expected to take place nationwide, as the Chinese government continues its push for data security. This will undoubtedly hit Alibaba’s cloud services revenue in the long run.
    Then on Monday (30 Aug), the group fired 10 employees for sharing screenshots of the said female staff’s 11-page post on a public forum. The original post was shared on the company’s intranet.
    Kelvin Ong | Financial writer, Singapore
    01 September 2021
  17. ArvinIG
    Alphabet has made huge gains over the past year, and has found a new lease on life as money flows back into growth names. But will earnings meet already-high expectations?

    Source: Bloomberg   Revenue Price Dividend Valuation Dividend yield Moving average  
    When does Alphabet report earnings?
    Alphabet publishes its most recent earnings on 27 July.
    Alphabet earnings – what to expect
    Revenue is expected to rise 46% to $56 billion, while earnings per share (EPS) are forecast to rise 90% to $19.26.
    Advertising revenue continues to be the main slab of revenue for Apple, allowing it to fund loss-making expansion in areas such as cloud-computing, in which it competes with Amazon and Microsoft. For Alphabet, regulatory scrutiny continues to loom large, and will continue to be a major headache in coming quarters. But while fines may keep coming, they still amount to a drop in the ocean in terms of Alphabet’s revenue, and if not accompanied with real regulatory action, will represent only a passing trouble in the longer term, an excuse for regular selloffs but not a fundamental change in direction.
    Alphabet – valuation and broker ratings
    Like others in the growth/tech space, Alphabet continues to trade on a relatively high price-to-earnings (P/E) ratio, at 32.11, with no dividend yield at present. Brokers rate Alphabet highly, with 16 ‘strong buys’ and 28 ‘buys’, and just two ‘hold’ recommendations.
    Alphabet share price
    Alphabet seems unstoppable, having enjoyed a tremendous rally since September. Dips have been bought repeatedly, and since May a steady and quiet rally has provided very little chance for dip buyers to get involved. The price sits close to a new record high, having bounced in early May from the 50-day simple moving average (SMA), currently $2470. It is unlikely that this quiet rally will go on forever, so some caution might be warranted now, but with a clear eye on the steady trend.

    Source: ProRealTime Alphabet strides ahead
    Fundamentals and technicals continue to back Alphabet, with the ad business powering expansion elsewhere. Growth stocks are still in high demand, and the recent inflow back into tech stocks since May seems to suggest a return to growth stocks after the ‘value’ mania of the early part of 2021.
    Chris Beauchamp | Chief Market Analyst, London
    20 July 2021
  18. ArvinIG
    Alphabet will report its Q2 earnings on 26 July after the market closes. The focus will be on Google’s advertising revenue which is suffering strong headwinds as the economy slows down.

    Source: Bloomberg   Shares Google Advertising Revenue Recession Risk   When is Alphabet’s earnings date?
    Alphabet will report its second quarter (Q2) earnings on July 26th, after the market closes. The report will be for the fiscal quarter ending June 2022.
    Alphabet earnings: what to expect?
    Earnings per share at $1.3, 5% decline year-on-year but marginally up from the previous quarter
    Revenue of $70.25 billion, up 13% YoY and from the 68.01 billion in Q1.
    Alphabet fundamental and valuation
    To many people’s surprise, the search engine giant missed the expectation in its opening quarter of the year despite total revenue surging 23% year-on-year to $68 billion. The market believed the business would regain its growth path in the third quarter, implying thar second quarter earnings are more than likely to be lacklustre.

    Source: Nasdaq Nevertheless, Alphabet's fundamental goal remains solid as the search engine king continues to pursue growth in diverse segments like cloud, subscriptions, advertising, and hardware. The Google Cloud department performed well in all business segments as Q1 revenue rocketed 43.8% to $5.8 billion year-on-year.
    In terms of margin, its gross and operating profit margin remained steady year-over-year at 43.5% and 29.5%, respectively. These are encouraging growth rates and impressive metrics for a company of Alphabet's size.
    At this stage, Alphabet's latest twelve months p/e ratio is 20.2x, well below its five-year average ending December 2017 to 2021 of 32.4x.
    Alphabet faces challenges ahead
    Google recently confirmed it is slowing down its hiring process. The move has sparked fear that the tech giant is facing challenges stemming from a decelerating economy and is in turn, preparing for a tough time.

    Source: SeekingAlpha In the scenario of a recession, the advertising segment would be the first sector to feel the pain. In the first quarter of 2022, 80% of Google’s total revenue came from Google advertising, including revenue from Google search, ads on YouTube, and the Google network. Although the Q1 advertising revenue has shown a 22% robust growth from the previous year, the pace is expected to slow from the second quarter as the global economy loses steam without the pandemic support.

    Source: eMarketer AlphabetAlphabet Inc - C (All Sessions)Alphabet Inc - A (All Sessions)It must be said that even in an economy brimming with uncertainty and risks, shareholders should still keep good faith with Alphabet’s capability to navigate through the tough time's thanks to its exceptional balance sheet.
    According to the Q1 financial report, the search engine operator boasted $20.9 billion in cash and cash equivalents and an enviable free cash flow (FCF) of $69 billion over the past 12 months. Therefore, even under pressure, an economic slowdown and soaring interest rates, the company’s first-class balance sheet and cash-generating capability will undoubtedly provide a safety net for the business to overcome economic changes.
    Alphabet share price: technical analysis
    Alphabet's shares price has hit a roadblock by falling 23% since the start of the year. Last week, shares of companies dependent on online advertising fell sharply after Snap reported disappointing second-quarter results. Alphabet’s stock also suffered a hit by falling more than 5%.

    Based on its daily chart, the price of Alphabet has been moving along with the ascending tunnel connected with higher lows. However, the price looks to be at risk of breaking through the tunnel's lower boundary which could spark a new round of decline.

    The next support can be found from the level of $105 which represents the lowest level in two months. On the flip side, the next pressure level should look at the 20-day moving average, around $113.
    Alphabet daily chart

    Source: TradingView Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Hebe Chen | Market Analyst, Melbourne
    25 July 2022
  19. ArvinIG
    We look at the highlights from the software company’s unaudited FY21 results.

    Source: Bloomberg   Shares Revenue Altium United States Stock Earnings before interest, taxes, depreciation and amortization   Popular ASX-listed software company Altium (ASX: ALU) saw its share price crash on Monday after releasing its unaudited FY21 results to the market.
    Altium closed out the session down 14.36% to $29.81 per share. At those levels, the stock is down around 12.30% year-to-date, as investors remain uncertain on the name.
    Below we will look at some of the highlights from the company’s FY21 release. Importantly, these results are ‘unaudited’ as a result of covid-19 related delays. As the company noted in its results release:
    'Due to unforeseen delays in the finalisation of the annual audit process amplified by the impact of the COVID-19 pandemic in NSW, the release of Altium’s audited accounts has been delayed.'
    Management said they expected to have an audited copy of the FY21 results released within a week and that the expectation is for there to be no 'material difference between today's release of unaudited financial statements and the audited financial statements to be released shortly.'
    FY21 results
    On the topline, Altium delivered what was described by management as strong growth, with FY21 revenue coming in at US$191.1 million. That strong growth was likely commentary on the second half of FY21 not the full-year. Indeed, full-year revenue grew a mere 1%, while second-half revenue did accelerate, gaining 16% on a half-on-half basis.
    Beyond that, there were other pockets of growth among Altium’s different business segments: Octopart revenue, for example, was up 42% for the full-year, and Altium's China revenue gained 11%.
    The picture gets less rosy as we move down the income statement. Earnings (EBITDA) fell 3% to come in at US$60.0 million, earnings margins fell and/or were broadly flat on an underlying basis; but positively, post-tax profits surged 78%, coming in at US$35.3 million.
    Management also declared a final dividend of AUD 21 cents per share, taking the company’s full-year payout to AUD 40 cents per share. The business had US$191.5 million in cash on hand at the close of the year.
    Click here to read our beginners’ guide to fundamental analysis.
    FY22 outlook
    Maybe most importantly, Altium’s management team said they remained confident that they could hit the FY25 US$500 million revenue target they set in 2019.
    But before we get there – Altium’s CFO, Margin Ive – said 'We have a confident and positive outlook for fiscal 2022.’ That positive outlook was quantified as follows:
    FY22 revenue of between US$209 million to US$217 million FY22 earnings (EBITDA) margin of between 34% to 36% Annual recurring revenue growth of between 23% to 27%. That is a shade down from the 29% figure of FY21. Do you have a view on Altium? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.
    For example, to buy (long) or sell (short) a variety of local and international stocks using CFDs, follow these easy steps:
    Create an IG Trading Account or log in to your existing account Enter <Company name> in the search bar and select it Choose your position size Click on ‘buy’ or ‘sell’ in the deal ticket Confirm the trade For investors not looking to trade stocks, you can invest in shares directly through our share trading service.
    Shane Walton | Financial Writer, Australia
    30 August 2021
  20. ArvinIG
    Amazon will post Q3 results this week, with analysts tipping a drop in profits on fading online shopping boom and supply chain bottlenecks.

    source: Bloomberg   Shares Market trend Amazon Investment Stock Online shopping   Amazon earnings – what to expect
    It’s tipped to be a relatively disappointing quarter for Amazon.com Inc (All Sessions), compared to the last year of results. According to numbers from Zack’s Investment Research published via NASDAQ.com, EPS ought to fall to $8.72, almost half of what they were in the previous two quarters, and down approximately 30% on annualised basis. Despite this, analysts are tipping fairly robust revenue growth across the business for the quarter, with sales remaining relatively strong, driven in large part by growth in the cloud services business. However, sales estimates have been downgraded recently by analysts, with the fall in EPS for the quarter attributable the re-shift in consumer behaviour away from online spending in the US, along with margin erosion due to the impacts of supply chain bottlenecks across the globe.

    Source: NASDAQ, Zack's Investment Research Amazon earnings – valuation, broker views and sentiment
    Despite the expectation of weaker profits for Amazon this quarter and the risk of sustain headwinds in the future, the broker community remains very bullish on the company’s stock. Of the 52 brokers surveyed by Refinitiv, 50 hold either a “buy” or “strong buy” rating, while only 2 rate it a hold. Sentiment amongst IG’s client bases remains similarly bullish, with 97% of clients currently long, and only 3% short.

    Source: Refinitiv
    Source: IG Amazon stock – technical analysis
    Price action for Amazon shares is arguably reflecting the growing anxiety about the company’s profits and growth outlook. Though the long-term trend remains to the upside, price momentum is trending to the downwards, with the weekly RSI currently only just above the 50-level. Further to that, price is carving out a bearish descending triangle pattern right now, suggesting further downside to come if technical support at $3180 breaks. Such a move would open up a fall to key support around $3000 per share. On the other hand, a break out to the topside off this pattern would negate the bearish view on the stock, with resistance at $3560 the level to watch on the upside.

    Source: IG charts
    Kyle Rodda | Market Analyst, Australia
    27 October 2021
  21. ArvinIG
    AMAZON, APPLE, EARNINGS, NASDAQ – TALKING POINTS
    Amazon stock falls after-hours on earnings miss, disappointing guidance Apple misses on revenue, stock price sinks after the New York closing bell AMAZON THIRD-QUARTER EARNINGS
    Amazon’s stock price dropped in after-hours trading following a disappointing third-quarter earnings release. The e-commerce company reported earnings per share of $6.12 versus an expected $8.92. Revenue also came in under expectations at $110.81 billion. That was Slightly less than the $111.6 billion Wall Street expected.
    Traders sold the stock on the disappointing numbers, as well as less than rosy fourth-quarter guidance. Amazon stock traded as low as 4% shortly following the earnings data. The downbeat Q4 guidance is a result of higher forecasted labor costs, supply chain issues, and higher shipping costs. The headwinds are a result of Covid-induced issues as global supply struggles to keep up with demand. One bright spot is a 39% year-over-year increase in Amazon Web services revenue. That follows a 37% y/y gain in the prior quarter.
    AMAZON 5-MINUTE CHART
    Chart created with TradingView
    APPLE FOURTH-QUARTER EARNINGS
    Apple reported its fourth-quarter figures shortly after Amazon, but the iPhone company also reported lackluster numbers. Q4 earnings per share crossed the wires at $1.24, which was in line with Wall Street expectations. However, revenue missed the expected $84.69 billion mark at $83.36 billion. The stock traded down by nearly 5% in after-hours trading.
    However, sales from the new iPhone 13 started just days before Apple’s quarter-end cutoff. Investors will be keen to hear any commentary during the company’s conference call, where executives are likely to be pressed over supply chain issues. Apple hasn’t offered guidance since the pandemic started, which leaves analysts to come up with their own predictions.
    APPLE 5-MINUTE CHART
    Chart created with TradingView
    Thomas Westwater, Analyst for DailyFX.com
    29 October 2021
    DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
    DISCLOSURES
  22. ArvinIG
    AMC shares popped up 10% yesterday to close at $12.90 apiece. The indebted, but much-loved, cinema company experienced the covid-19 pandemic as a double-edged sword.

    Source: Bloomberg   Shares AMC Theatres Debt Investment Interest Interest rates   AMC (NYSE: AMC) shares have varied between $2 and $73 over the past couple of years, with huge volatility in every swing. On one hand, repeated lockdowns saw its cinemas shuttered for months at a time, sending revenue down 77% in 2020 and current debt north of $5 billion.
    On the other, ultra-loose monetary policy saw Reddit traders bestow upon it cultlike ‘meme stock’ status, seeing AMC’s share price soar far beyond fundamentals. This allowed the company to create millions of new shares, providing both the liquidity and creditor goodwill needed for recovery.
    But at $12.90, it’s now priced where it was before the short squeeze of May 2021.
    AMC share price: Q1 results
    Q1 results were better than expected. Revenue grew by 430% year-over-year to $785.7 million, beating the Refinitiv average analyst consensus for $743 million. Meanwhile, its net loss narrowed to $337.4 million or 65 cents a share, down from $567.2 million or $1.42 a share in the same quarter last year.
    Accordingly, adjusted EDITBA improved significantly, with a loss of $61.7 million compared to $294.7 million in Q1 2021.
    Chairman and CEO Adam Aron posited that Q1 results ‘represent AMC’s strongest first quarter in two full years. We continue on our pandemic recovery trajectory, more than quintupling revenues and improving adjusted EBITDA by nearly eighty percent compared to a year ago.’
    Detracting from the threat posed by streaming, the CEO lauded recent successes of hits like ‘Spiderman: No Way Home’ and ‘The Batman’ as evidence of ‘the enduring appeal of theatrical exhibition.’ The CEO enthused that ‘when Hollywood releases films that moviegoers want to see, people flock to cinemas in huge numbers.’
    And with Marvel, Jurassic World, Toy Story, Top Gun and Avatar franchise films yet to be released, he told investors ‘the theatrical box office during the remainder of 2022 is very exciting.’

    Source: Bloomberg Where next for AMC shares?
    At its core, AMC has to increase revenue or profitability, and it has to do this by selling more cinema tickets. And the chain only sold 39.1 million in Q1, half that of pre-pandemic levels, and worryingly, down on the 59.7 million sold in Q4 2021.
    And with a brutal cost-of-living crisis exacerbated by sky-high inflation in AMC’s key markets, it’s having to struggle against the threat posed by streamers who arguably offer better value for money as consumers cut back on discretionary spending.
    But the big challenge for AMC is its $5.52 billion debt mountain. Even accounting for cash and equivalents, net debt stands at a whopping $3.84 billion. The cinema operator spent $82 million on interest payments in Q1 alone, and interest rates are only going to keep rising in the near term. However, Aron raised $950 million in Q1 to refinance first-lien debt and has made clear that none matures until 2023.
    To take advantage of its meme stock status, AMC has launched ‘multiple NFT programs’ and has started accepting cryptocurrency payments. It’s also spent $28 million on an 11% stake in NASDAQ-listed Hycroft Mining.
    Aron is also planning further outside-the-box investments, saying ‘I'd like to think there will be more third-party external M&A announcements going forward…our shareholder base has given us capital to deploy with the clear expectation that we are going to do exciting things.’
    But most analysts remain sceptical of AMC stock.
    Wedbush analyst Alicia Reese has assigned it an underperform rating, with a price target of $4, citing its crypto launch, ongoing volatility, and unstable plans. Meanwhile, MKM Partners analysts have cut their rating to a sell with a 12-month price target of $1, noting that achieving ‘solvency came at a steep price.’
    However, the Swiss National Bank recently increased its investment in AMC to 2.2 million shares, despite having made a heavy loss on its original investment. And Ray Dalio’s Bridgewater Associates disclosed it had bought up 27,100 AMC shares in its latest portfolio update.
    But AMC now has 516 million weighted-averaged shares outstanding, up from 104 million at the end of 2019. Moreover, Aron has sold $40 million worth of AMC shares since November 2021. This level of insider selling is hardly confidence-inspiring.
    For now, AMC’s share price is in the hands of emotion-driven retail traders. Only volatility can be predictably guaranteed.
    Charles Archer | Financial Writer, London
    19 May 2022
  23. ArvinIG
    American Airlines Q3 earnings expected to improve, but the road back to profitability appears to be a slow one.

    Source: Bloomberg   Shares Airline United States American Airlines Technical analysis Revenue   When will American Airlines report their latest earnings?
    American Airlines report their earnings for the third quarter (Q3) pre-market open on Friday 22 October 2021.
    American Airlines recovery under the microscope
    American Airlines have been hit hard over the course of the past two years, with global lockdowns serving to ground their entire fleet for the first time in the history of the company. The global Covid-19 pandemic has hit few sectors harder than the travel sector, yet there is optimism that things are on the mend. Unfortunately, American Airlines are one of the hardest-hit US carriers, with few signs that their crucial business class revenue stream is about to rebound swiftly.
    Nonetheless, the White House decision to allow travel for all fully vaccinated visitors from 8 November does provide hopes that we will soon see the company’s international service resume. The relative reliability of domestic travel has helped their competitors stage a relatively stable recovery, yet international and business travel will need to improve markedly before American Airlines investors can look ahead with confidence. Unfortunately, rising fuel costs will provide another major hurdle to overcome, with investors keeping a close eye out for projections of how much this energy crisis could cost the firm.
    American Airlines earnings – what to expect
    Markets expect to see revenues continue their upward trajectory in Q3, with forecasts of $8.9 billion representing the best performance since first quarter (Q1) 2020. Primarily that improvement (from $7.5 billion) comes from rising passenger business as cargo revenues are expected to decline.
    Despite expectations of higher revenues, the company is still expected to post a loss for the quarter. Coming off the back of a second quarter (Q2) loss of $1.4 billion, we are expecting to see a loss of $890 million. That helps drive expectations of a loss per share of $1.07. However, that does represent an improvement from the $1.69 loss per share seen in the second quarter.
    American Airlines earnings – valuation and broker ratings
    The uncertain outlook for American Airlines translates into a mixed set of forecasts from analysts. Out of 21 analysts, there are just five ‘buy’ recommendations, eight ‘holds’ and eight ‘sell’ recommendations.
    American Airlines shares – technical analysis
    Shares in American Airlines have been on the back foot over the course of the past fortnight, with the price falling back into the 76.4% Fibonacci support level of $19.48. Given the wider 76.4% Fibonacci retracement into the $18.46 level, there is a good chance we could be on the cusp of a bullish turn from here. A break below the $18.64 level would raise a warning that the price could break lower once again. However, until that happens there is a good chance we see the bulls come back into play in the near future.

    Source: ProRealTime

      Joshua Mahony | Senior Market Analyst, London
    19 October 2021
  24. ArvinIG
    We look at the highlights from Ampol’s recent interim results release.

    Source: Bloomberg   Shares Ampol Z Energy Share price New Zealand News   It’s all in the earnings.
    Despite posting solid earnings growth for the first-half of FY21, the Ampol (ASX: ALD) share price fell on Monday, finishing out the session down 4.76% to $26.22 per share.
    The company also took the interim results as a chance to reveal its proposed acquisition of Z Energy (NZX: ZEL) – a New Zealand based and listed fuel distributor.
    Below we look at the highlights from Ampol’s interim results as well as the details from the proposed acquisition of Z Energy.
    Interim results in focus
    At a group level, Ampol reported replacement cost operating profit (RCOP) earnings (EBIT) of $340 million up from $221 million in the prior corresponding period.
    Broken down by segment, that result was driven primarily by Ampol's fuels & infrastructure segment, which booked $208 million in earnings (EBIT) in the period, while convenience retail brought in $149 million in EBIT, and Corporate had negative EBIT of $18 million.
    That fuels & infrastructure profit performance was itself driven by a swing in Ampol’s Lytton refinery earnings – which went from negative $59 million in H1FY20 to positive $49 million in H1FY21.
    From a capital management perspective, the company made two important points:
    One, Ampol management declared an interim dividend of 52 cents per share (fully franked), equivalent to a 61% payout ratio. Two, the company reported that it had completed a $300 million off market share buy-back program during the half.
    Click here to read our beginners’ guide to fundamental analysis.
    The Z deal
    As part of an adjacent announcement, Ampol revealed that it had made a NZ$3.78 per share, all cash acquisition bid for Z Energy – in a deal which values the New Zealand-based company at ~NZD$2 billion.
    That deal represents an approximate 35% premium to where the stock traded at before the takeover announcement was made.
    RBC analysts, who have a sector perform rating and $28.00 price target on Ampol, commented positively on the deal, saying:
    ‘Ampol knows the New Zealand market well and we think this is all about applying the Ampol model to Z Energy and expanding Ampol’s existing experience and presence in New Zealand through the Gull network.’
    ‘Our preliminary view is the Z Energy bid fits well into Ampol’s business model and through Ampol’s experience in Australia this has potential to add value, particularly to Ampol’s F&I International and Trading and Shipping business,’ RBC added.
    As present, Ampol’s management team is currently undertaking further due diligence on the potential deal.
    Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.
    Shane Walton | Financial Writer, Australia
    23 August 2021
  25. ArvinIG
    Apple looking to rely on services revenues, as the production and delivery of physical products come under the spotlight thanks to logistical and supply chain issues

    Source: Bloomberg   Shares Apple Inc. Supply chain Revenue Market trend Market   When will Apple report their latest earnings?
    Apple report their earnings for their fiscal third-quarter (Q3) post-market on Thursday 28 July, 2022.
    What should traders look out for?
    Apple shares have been hit hard over the course of 2022, with fears over higher interest rates damaging many of the big US tech names. Expectations of an impending recession do ask questions over demand over the course of this year, while expectations of rising interest rates will provide questions around market valuations.
    The chart below highlights how iPhone sales dominate despite attempts to diversify over the years. However, it also points towards the undeniable growth of their services business, which provides optimism for future revenues aside from the need to constantly innovate new market leading products.

    Source: Macrumours
    There are undoubtedly significant headwinds facing the firm, with a high risk of underperformance or slowing growth as a result. Supply chain issues have been prominent over the course of the first half of 2022, and that is likely to represent one key area of concern for investors.
    The chart below from Schroders highlights how supply chain problems remain the primary concern for many firms, although we are seeing a sharp rise in mentions of “recession” and “inflation” in recent months. This highlights some of the key issues traders should be looking out for when they attempt to weigh up ongoing and future risks for the firm.

    Source: Schroders
    With regards to Apple, they certainly have had supply chain issues to overcome across the business. Their operations in China will be particularly in focus as the Chinese ‘zero Covid-19’ policies provide questions around production and demand levels for the quarter. Meanwhile, the Russian sales figure should also be followed to see the impact caused by the recent pause in sales.
    Things should look more positive on the services side of the business, with double-digit year-over-year (YoY) growth expected for the fiscal Q3. This is an increasingly important and growing segment of the business that optimists will be watching closely. Services represented 21% of total revenues in Q3 2021, while that figure is forecast to rise to 24% this time around. Thankfully, this is a particularly high margin segment of the business (72.6%).
    It is worthwhile noting that the numerous factors impacting Apple from both a demand and supply perspective should provide the grounds for significant volatility away from market expectations come 28 July. The wide spread of analyst estimates does highlight the unpredictability of earnings for the quarter, with the lowest revenue prediction of $78 billion coming well below the $88 billion forecast from the optimistic Elazar Advisors.
    For long-term investors, it will be prudent to look towards the company breakdown of why the numbers look a certain way. After-all, there will no doubt be factors in play that will be temporary in nature rather than indicative of long-term concerns.
    The latest information coming from Apple ahead of this earnings report points towards a slowing in hiring at the firm, with specific departments seeing lower investment in the face of growing economic headwinds. Thus, traders should look out for any clarity on the size and reasoning behind that decision.
    Apple earnings – what to expect
    Revenue – $82.53 billion vs $81.43 billion (Q3 2021), and $97.28 billion (Q2 2022).
    Earnings per share (EPS) – $1.16 vs $1.30 (Q3 2021) and $1.52 (Q2 2022).
    Apple earnings – valuation and broker ratings
    Analysts are overwhelmingly positive for Apple stock, with none rating it a ‘sell’ recommendation. Instead, out of 47 analysts, there are 39 ‘strong buy’ or ‘buy’ recommendations, and eight ‘hold’ recommendations.

    Source:Eikon Apple shares – technical analysis
    The weekly Apple chart highlights the declines seen over the course of the second quarter of 2022, with the June low of $129.07 representing a 30% decline from the January high. Whether that represents the sum total of this selloff remains to be seen, but the stock has certainly gathered steam in the weeks leading into this earnings release.

    Source: ProRealTime
    The daily chart highlights how price has managed to rally into the crucial swing-high of $151.71. A push up through that level would bring an end to the bearish trend, pointing towards an extension of this rebound. Watch out for a potential breakdown on the stochastic oscillator through the 80 mark to signal a potential return of the bearish sentiment that has been evident in February and April.
    Nonetheless, the fact that we have managed to move out of the pattern of lower highs does instill greater confidence going forward.

    Source: ProRealTime

    Joshua Mahony | Senior Market Analyst, London
    21 July 2022

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