The Markets Defused weekly recap aims to give an easy-to-understand and straightforward recap of the week’s most engaging business and stock market news.
- GameStop raises close to $1bn of new funds
- Royal Mail faces new OFCOM fine
- Apple’s AI could add $40 per share
- Live Nation threatened with Ticketmaster break-up
- NatWest’s Govt share-sale stalled by UK election
- Nvidia smashed forecasts, lifts dividend by 150%
- Anti-woke campaigner builds Buzzfeed stake
- Peloton refi sees stock lower
- AstraZeneca sets $80bn revenue target
- Hims & Hers rockets on weight loss launch
- AMC needs to ‘right size’ debt, analyst says
GameStop share sale raises close to $1bn of new funds
GameStop Corp (NYSE:GME) sold close to $1 billion in new stock this past week, tapping into the fresh demand stirred up amid this month’s ‘memestock frenzy’.
Having more than doubled in value, and then pulled back more recently, since a series of social media posts by ‘Roaring Kitty’ – aka Keith Gill – sparked a fresh round of retail investor share buying, the likes of which was last seen in the 2021 ‘memestock’ phenomena.
GameStop’s bankers were then sent to market to sell new shares to help the games retailer raise funds to pay down debt and boost its financial position.
It has now been announced that some $933.4 million worth of new shares have been sold, that’s 45 million new shares priced “at-the-market”.
This was the maximum number of shares that could be sold.
Some of the proceeds could also be used for potential acquisitions and investments, according to a GameStop statement.
In New York, news that the share sale (which had been scooping up excess demand for existing shares in the market) had now completed helped GameStop to rally.
In regular trading, it was up 3.7% to $19.00 before stepping up significantly in ‘afterhours’ dealing where it gained a further 12.9% to finish at $21.45 per share.
Earlier this week, Wedbush Securities analyst Michael Pachter described the company’s plan to sell 45 million new shares “at market” prices as prudent, as he said it will boost cash reserves whilst GameStop is struggling to re-focus its business and reverse its operating losses.
Previously, GameStop told investors it expects its first-quarter net sales to range between $872 million and $892 million, down from $1.24 billion in the same period last year.
The company, which largely relies on brick-and-mortar stores, has been grappling with the shift of customers towards e-commerce platforms for purchasing video games and collectibles.
Royal Mail faces new OFCOM fine over missed delivery targets
OFCOM, Britain’s communications regulator, has launched a new investigation into Royal Mail ‘failure to meet its delivery targets’.
It comes as the UK government – which with an election six weeks away, is now influx – is to scrutinise takeover interest from a foreign bidder, Czech billionaire Daniel Křetínský, who’s bid values Royal Mail parent company International Distributions Services PLC (LSE:IDS) at £3.5 billion.
Royal Mail has admitted to OFCOM that it had not achieved its mandated delivery targets.
These delivery mandates form part of the public service obligations that the privatised national mail company has been seeking to renegotiate, and will likely be a consideration in the government’s review of the company’s sale.
According to OFCOM rules, Royal Mail is required to deliver 93% of all first class mail within one working day from collection, and it must deliver 98.5% of second class mail within three working days.
Instead, Royal Mail confirmed to OFCOM that during its 2023/24 operating period it had delivered only 74.5% of first class mail within the allowed time, and had delivered 92.4% of second class mail within the time limit.
OFCOM said it consider if there were any exceptional events – beyond the company’s control – that may have explained why it missed its targets.
The regulator can choose to impose a financial penalty and, indeed, last year it fined Royal Mail £5.6 million for failing to meet 2022/23 obligations.
IDS shares were 0.6% lower for the week, ending Friday’s session in London at 319.8p.
Apple’s AI could add $40 per share - analyst
Apple Inc (NASDAQ:AAPL, ETR:APC) is reinvigorating its investment appeal thanks to its latest AI announcements, and, as iPhone sales appear to be picking up again, that’s the view of stock market analysts at Wedbush.
The California-headquartered stockbroker lifted its price target for Apple, to $275 from $250 per share, and repeated a ‘Buy’ recommendation.
Wedbush eyes more stabile in iPhone demand, in Asia particularly, and it believes that newly discussed AI integrations will significantly enhance both Apple's services and hardware for an installed user base in excess of 2.2 billion devices.
AI integrations can add between $30 and $40 per share, according to Wedbush.
Wedbush reckons Apple can follow Microsoft in delivering an AI-centric developers conference in which it can showcase new developments.
“We believe AI technology being introduced into the Apple ecosystem will bring ample monetization opportunities on both the services as well as iPhone/hardware front,” Wedbush analyst Daniel Ives said in a note.
The conference in June promises to “kick off a new frontier”, the analyst highlighted.
“Lets be clear we believe June 10 marks Apple's most important event in a decade for Cook & Co,” Ives added.
“Introducing AI to its all-important developer community and laying the foundation for bringing generative AI to the consumer starts with Apple in our view.”
Apple closed an unremarkable trading week at $189.98, up just 0.4%.
Live Nation threatened with Ticketmaster break-up
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 closed out a volatile week of trading at $95.99 at the end of Friday’s session, which was only 0.6% lower than where the stock began the week.
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.
Natwest shares finished Friday at 307.5p, down 4% for the week.
Nvidia smashed forecasts, lifts dividend by 150%
On Wednesday, NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) smashed through Wall Street forecasts.
Besides impressive financials, Nvidia promised returns to shareholders with a 150% increase in its quarterly dividend, to 10 cents from 4 cents.
Nvidia also intends to re-organise its share capital with a 10-for-1 stock split which it says will make owning the stock, presently priced above $1,000 per share, more accessible to investors and employees as they should be closer to $100 each.
Nvidia reported first-quarter revenue of $26 billion, up 262% from the same period a year ago, and comfortably above market expectations pitched at $24.6 billion.
The emphatic performance continues to be driven by growth in its data-center division, which is being superpowered by the demand for AI computing. The business unit marked 427% year-on-year revenue growth, rising to $22.6 billion (beating forecasts for $21.3 billion).
First quarter earnings were reported at $6.12 per share, versus $1.09 a year ago and beating market forecasts of $5.60.
Moreover, Nvidia also impressed the market with its latest guidance for its second quarter which foresees $28 billion of revenue which is ahead of the $26.7 billion that Wall Street analysts had pencilled in.
Chief executive Jensen Huang told investors that Nvidia is “poised for the next wave of growth”, which is quite a claim for a company that’s been growing at a rate that it has over the past year.
At $1,064 at the end of Friday’s session, Nvidia stock was up 13.5% for the week.
Anti-woke campaigner builds Buzzfeed stake
Buzzfeed Inc (NASDAQ:BZFD) shares soared over 45% in Wednesday’s dealing, trading as high as $4.56 at one point, as it emerged that ‘anti-woke’ crusader and Republican Vivek Ramaswamy had built a 7.7% stake in the business.
It comes as Buzzfeed finds itself in the doldrums with the media group now significantly smaller than it used to be following the closure of its news division last April.
Indeed, according to a stock market filing, Roivant founder Ramaswamy paid just $3.95 million for 2.72 million Buzzfeed shares to take his interest to 7.7%.
It is a far cry from the $400 million that Comcast (via NBC) invested in the business a decade ago, when it bought into a third-stake that valued the clickbait-pioneering online publisher at around $1.7 billion.
Buzzfeed closed Friday’s trading at $2.80, up 22% for the week.
Peloton refi sees stock lower
Peloton Interactive Inc (NASDAQ:PTON) shares tumbled in Tuesday’s trading after the exercise technology firm announced a refinancing.
It is selling $275 million of convertible loan notes, due in 2029, in a private deal and also secured a new $1 billion loan over 5 years, plus $100 million revolving credit facility.
Proceeds will repay $800 million of existing notes due in 2016, along with other debt repayment.
It comes after Peloton earlier this month announced a key management change, with chief executive Barry McCarthy exiting the business.
At the same time, it reported a plan to cut $200 million of costs, including job cuts, and reported a net loss of $167 million for its third quarter.
That was Peloton’s 13th consecutive quarterly loss.
More recently, Peloton shares were last week boosted by reports of “private equity takeover interest”.
Peloton shares ended the week at $3.15, down 18.4% over the five trading days.
AstraZeneca targets $80bn revenues by 2030
Britain’s second-largest company AstraZeneca PLC (LSE:AZN) on Wednesday told investors it is aiming to increase revenue by three-quarters to $80 billion a year by the end of this decade.
It plans to do so by expanding its range of products across key medicinal portfolios including oncology, biopharmaceuticals, and rare disease.
The projection came as chief executive Pascal Soriot hosted AstraZeneca’s ‘investor day’ event
"The breadth of our portfolio together with continued investment in innovation supports sustained growth well past the end of the decade," Soriot said in a statement.
AstraZeneca intends to launch up to 20 new drugs, and, City analysts noted that the latest investor coms would be in-line with the company’s signaling that its growth would ramp-up in from 2025 onwards, though they await more detail from the drug-maker before updating the broker’s forecasting.
In London, AstraZeneca share ended Friday’s session at 12,296p up 1.57% for the trading week.
Hims & Hers rockets on weight loss launch
Shares in Hims & Hers Health (NYSE:HIMS) rocketed higher on Monday after it announced it will sell lower-priced GLP-1 weight loss injectables and oral weight loss medication.
The online consumer healthcare brand made its name selling anti-hair loss and erectile dysfunction products and later branched out to selling birth control and ‘anti-aging’ product verticals, and evidently, it has found its new niche. Its weight loss injections will contain the same active ingredients as Ozempic and Wegovy, which are made and sold by Novo Nordisk (NYSE:NVO) (Novo Nordisk (NYSE:NVO)).
The company added that it current weight loss product range is ‘tracking to eclipse’ $100 million in revenue by the end of 2025, before these GLP-1 products are rolled out.
It will price the weight loss medication from $79 per month, for the oral kits, whilst the GLP-1 injections will price at $199 per month.
Hims & Hers stock ended Friday’s trading at $16.88, up just over 6% for the week.
AMC needs to ‘right size’ debt, analyst says
AMC Entertainment Holdings (NYSE:AMC) has the opportunity to continue growing revenue, especially in Europe, but the cinema operator is unlikely to do so until it ‘right sizes’ its balance sheet, that’s the view of Wedbush Securities analyst Alicia Reese.
Reese reckons AMC’s heavy debt and lack of shareholder returns overshadow the cinema operator’s growth prospects.
With $4.4 billion of debt outstanding, the company has a track record of selling stock to cover debt when market demand tips its valuation higher – with last week’s stock sale the latest example.
Immediately preceding last week’s viral stock rally, the company’s bankers closed a share sale that brought in some $250 million, with the funds earmarked mostly to pay down debt.
“AMC must cover its interest payments and conserve cash while it posts losses,” the analyst said in a note on Monday.
“Shares of AMC recently received a boost from its retail shareholders, only to fall again after issuing shares.” She added: “AMC is trading roughly in line with its pre-meme historical multiple, albeit still at a premium to its competitors.”
Wedbush has a ‘neutral’ rating for the so-called ‘meme stock’, with a price target of $3.50.
According to Wedbush, AMC has had repeated success renegotiating its debt to extend maturity, and, the broker reckons it can do so again before its next deadline in 2026, when the bulk of the current debt falls due.
AMC finished the week at $4.84 per share, up 8.04% for the five trading days.