Markets Defused aims to give an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Boeing CFO spooks investors with cash-burn comments
- Ethereum boosted by SEC approval
- Nvidia now the top stock for ‘the average investor’
- Live Nation stock falls as Ticketmaster break-up threat looms
- NatWest’s Govt share-sale expected to stall for the election
- Did Royal Mail’s missing results go under the radar?
Boeing CFO spooks investors with cash-burn comments
Boeing Co (NYSE:BA, ETR:BCO) stock closed sharply lower after it conceded it will not generate positive cash flow in 2024.
Moreover, it expects significant cash outflows during its second quarter.
It comes as the aerospace engineer grapples with multiple production issues and delays in aircraft deliveries, notably the 737 Max.
Chief financial officer Brian West, at a conference, commented that Boeing Co (NYSE:BA, ETR:BCO)uld ‘burn’ as much cash as the $4 billion spent in its first quarter.
"We have frustrated and disappointed our customers because of some of the production supply chain issues that we’re up against," said West.
In New York, Boeing shares fell $14.07 or 7.55% changing hands at $172.21.
Ethereum boosted by SEC approval
Ethereum stayed steady, holding onto recent gains, after the Securities and Exchange Commission (SEC) approved rule changes that will enable the creation of exchange-traded funds (ETFs) holding spot Ether (ETH).
The decision is expected to bring ETH ETFs to market soon, which would make the digital asset more accessible to financial advisors and institutional investors.
The SEC approved 19b-4 filings from major exchanges including the New York Stock Exchange and Nasdaq, allowing them to list ether ETFs.
Now, issuers including VanEck, BlackRock, Fidelity, and Invesco are among those now preparing to launch these new financial products.
But, the SEC must still approve the registration documents, or S-1s, of each ETF. Such filings outline the operational details and fees of the ETFs.
It could take several weeks to complete, so traders interested in ETH ETFs have a short while longer to wait.
Ethereum stood at $3,807, down 0.4% today and retaining most of its 30% gain over the past seven trading days.
Nvidia now the top stock for ‘the average investor’
NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is making its shares more appealing to retail investors, not that this is something the chipmaker has much trouble with.
In fact, it is now the number 1 stock for ‘the average retail portfolio’ ahead of previous favourite’s Tesla and Apple, that’s according to a survey.
Nvidia is now largest holding in the average portfolio, thanks to its meteoric AI-driven ascent to over $1,000.
The stock is up some 1,700% since 2020, and is up around $750 or 243% over the past year.
Changing hands at $1,054 on Thursday, it gained another 11% following last night’s latest impressive set of financial results - which showed revenue and earnings well ahead of market forecasts.
Vanda Research, the firm that’s compiled data on ‘the most widely held stocks and ETFs’, claimed the average retail investor portfolio has a 9% weighting in Nvidia – leading the likes of Apple, Tesla and Meta.
The increased weighting was no doubt influenced by Nvidia’s phenomenal phase of growth has left the shares out of reach of some investors.
AI-driven growth has propelled Nvidia’s price to $1,039, valuing the chipmaking business at $2.56 trillion.
Perhaps it is easy to see why the company is now planning a 10-for-1 stock split which (all other things being equal) will bring the price into a much more affordable level of around $100 per share.
The chipmaker said it was making the change ‘to make stock ownership more accessible to employees and investors.’
At the same time, Nvidia also said it would reward existing shareholders with a 150% increase in its quarterly dividend.
Live Nation stock falls as Ticketmaster break-up threat looms
Live Nation Entertainment Inc (NYSE:LYV), the company that owns Ticketmaster and also runs live events, saw its stock falling on Thursday as it is being threatened with a break-up.
A lawsuit is being launched by the US Department of Justice (DOJ) which aims to dismantle the company for alleged monopolistic practices.
“It is time to break up Live Nation-Ticketmaster,” Attorney General Merrick Garland said, whilst announcing the lawsuit
“Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators.”
It follows years of scrutiny over the company’s dominance in the ticketing industry after it was formed through the merger with Ticketmaster, in 2010.
The firm controls a significant share of the market, the suit claims, with the DoJ alleging that it uses exclusive long-term contracts and other practices to maintain a monopoly over events.
In New York, Live Nation stock was down $7.69, or 7.5% changing hands at $93.73.
NatWest’s Govt share-sale expected to stall for the election
NatWest Group PLC (LSE:NWG) full return to public ownership may end up in the ‘deep freeze’ now that the UK is in election mode, that’s according to reports.
The British government had been scheduled to sell off the 26.25% of NatWest that it still owns following the bail-outs following the 2008 financial crisis.
As recently as March, Chancellor of the Exchequer Jeremy Hunt said that the UK was on-track to complete the planned share sales before the end of 2024.
Those plans will now apparently be disrupted by the election campaigns and potential changes to government.
The UK government’s remaining shareholding is presently worth around £7.3 billion.
Did Royal Mail’s missing results go under the radar?
It might’ve slipped by all but the eagle-eyed market watchers, but, today Royal Mail owner International Distributions Services PLC (LSE:IDS) missed its own schedule for the release of its final results.
The delay in reporting comes after the company became the subject of a takeover offer, whilst could lead to the once-national mail company being owned by Daniel Kretinsky, the billionaire often referred to as “the Czech Sphinx'.
Stalling was said to be caused by auditor KPMG requesting more time to complete its work, whilst Royal Mail’s owner described it as “usual standard procedures.”
Meanwhile, in a statement, the postal company said it still expected to show adjusted operating profit “broadly in line” with prior guidance.
And it plans to report the numbers as soon as reasonably practicable.
In London this morning, in Royal Mail’s absence, the spotlight was on engineer Rolls-Royce, insurer Aviva and the takeover bid for Hargreaves Lansdown.
Hargreaves Lansdown is fending off a low-ball takeover
UK Stockbroker Hargreaves Lansdown PLC (LSE:HL.) is fighting off takeover interest on multiple sides after an apparent low-ball offer put the firm ‘in play’.
Hargreaves on Thursday revealed it had batted away two private equity bids, also backed by Abu Dhabi’s sovereign wealth fund, with the most recent pitched at 985p, or £4.7 billion, which marked a very slender premium (less than 1%) to the broker’s market value.
It was resoundingly dismissed across the City as “too cheap”, albeit some market commentators note it was potentially just an opening ‘placeholder’ offer, designed to start a negotiation.
Indeed, the broker’s founder and largest shareholder Peter Hargreaves, who owns just shy of 20%, is reportedly open to supporting such a take-private deal, only at a higher valuation.
How much higher? … well, listening to the market commentators, “significantly higher”.
“Hargreaves’ board has, quite rightly, rejected the most recent offer from a private equity consortium of 985p per share,” Panmure Gordon analyst Rae Maile said in a note.
“Our own view is that the company is worth 1,500p (per share).
“A premium to that should be demanded by shareholders to give up the opportunity to remain exposed to the market leader in a growing market.”
A driver of a recent spate of consolidation in the wealth management sector, according to Panmure, is a desire to position for an anticipated cyclical recovery in the UK market.
At current levels, most wealth managers are valued too cheaply following a tough couple of years.
The analyst highlighted that ratings have fallen too far and the opportunity set has increased, and, multiple firms are now “trading at levels which do not reflect their intrinsic value”.