Markets Defused provides an easy-to-understand and straightforward recap of the week’s most engaging business and stock market news.
- Raspberry Pi made a soaring start to life on LSE
- Tesla ends pivotal week intact
- Royal Mail: Labour threatens takeover with governance and scrutiny
- Adobe soared on AI-boosted financials
- Mickey Mouse to ratcatcher: Peltz built Rentokil stake
- Chinese EVs to be hit by EU tariffs
- Golden Goose eyes $2bn stock market float
- Apple finally flexes AI strategy
- OpenAI will power Apple’s AI
- Nvidia shares rose 10% after a week at the new price
Raspberry Pi made a soaring start to life on LSE
Raspberry Pi (LSE:RPI) shares were in high demand and made a soaring start to its London stock market debut on Friday, trading up to 500p at one point.
The shares tempered somewhat by the sessions close, ending its first trading day 2.7% higher at 423.12p.
It represents substantial upside to the IPO, which had priced at 280p earlier this week.
At 280p, the IPO had priced ‘at the top end’ of the range pitched by the company and its brokers.
The IPO generated £166.00 million, including £31.00 million of new capital, and valued the company at £541.00 million. The success of the float is seen as a positive sign for the London market, which has recently struggled for new listings.
"The quality of the interactions during the marketing process has underlined our belief that London has the right calibre and sophistication of investor to support growing, ambitious technology businesses such as Raspberry Pi," chief executive Eben Upton said earlier this week.
"The reaction that we have received is a reflection of the world-class team that we have assembled and the strength of the loyal community with whom we have grown."
Tesla ends pivotal week intact
Tesla Inc (NASDAQ:TSLA) shares ended the week with a whimper, and, closing Friday at $178, were more or less flat for the week.
But that belies what had been a critical and dramatic week for the electric vehicle pioneer.
At Thursday’s AGM, it was confirmed that shareholders voted in favour of reinstating Elon Musk’s $56 billion pay package – with 72% of votes cast in favour.
At the same time, shareholders approved Tesla’s proposed relocation from Delaware to Texas.
“… hot damn, I love you guys,” was the message from Musk at the AGM, whilst Tesla chair Robyn Denholm described it as “a matter of fundamental fairness and respect”.
“No other shareholder base understands the company as you do. You are the owners of the company,” she told shareholders.
Daniel Ives, analyst at West Coast stockbroker Wedbush, echoed these comments as he reacted to the vote and looked ahead to the future for Tesla.
“Tesla is Musk and Musk is Tesla....shareholders spoke loudly,” Ives said in a note.
He added: “In a nutshell, if this proposal went south a lot of bad things and scenarios could have happened including Musk beginning a path to not being CEO of Tesla.
“Instead it's roses and rainbows in Austin although demand challenges remain and this is pivotal period for Tesla and Musk to navigate this turbulent period to see improved demand, FSD success, and new model rollouts over the coming year.”
According to Ives, the resolution removes a $20-$25 overhang on the stock, which the broker reckons has weighed on shares.
Royal Mail: Labour threatens takeover with governance and scrutiny
Kier Starmer’s Labour government, if elected, plans to ‘robustly scrutinise’ the proposed takeover of Royal Mail.
Moreover, Starmer’s manifesto claims a Labour government would seek additional governance for the national post service.
“Royal Mail remains a key part of the UK’s infrastructure. Labour will ensure that any proposed takeover is robustly scrutinised and that appropriate guarantees are forthcoming that protect the interests of the workforce, customers and the United Kingdom, including the need to maintain a comprehensive universal service obligation,” the manifesto reads.
“Labour will also explore new business and governance models for Royal Mail so that workers and customers who rely on Royal Mail services can have a stronger voice in the governance and strategic direction of the company.”
The share price of Royal Mail parent International Distributions Services PLC (LSE:IDS) remains at a substantial discount to the 360p per share takeover offer pitched by Czech billionaire Daniel Křetínský.
Royal Mail owner IDS closed Friday at 326p, down 2.57% for the week.
Adobe soared on AI-boosted financials
Adobe Inc (NASDAQ:ADBE) shares marked a 15.45% gain for the week, after Thursday saw it report strong quarterly revenue and income, thanks to AI-driven demand.
“Our highly differentiated approach to AI and innovative product delivery are attracting an expanding universe of customers and providing more value to existing users,” chief executive Shantanu Narayen said in a statement.
Revenue increased to $5.31 billion for the quarter, from $4.82 billion in the same period last year, and higher than the $5.29 billion estimated by Wall Street analysts.
Net income for the quarter, meanwhile, came in at $1.57 billion equating to $3.49 per share.
Earnings (adjusted) per share was reported at $4.48, ahead of consensus analyst forecasts pitched at $4.39.
Adobe's digital media segment, which includes Creative Cloud and Document Cloud, saw an 11% increase in revenue to $3.91 billion, versus analysts' projections of $3.89 billion, whilst the digital experience segment's revenue grew 9%, to $1.33 billion versus an estimate of $1.32 billion.
Looking ahead, Adobe expects full fiscal year revenue to be between $21.40 billion and $21.50 billion, in line with the current market consensus forecast of $21.47 billion, whilst it guides for earnings per share between $18.00 to $18.20.
"Our market-leading products, strong execution and world-class financial discipline position us well for the second half of 2024 and beyond," Adobe chief financial officer Dan Durn added.
Mickey Mouse to ratcatcher: Peltz built Rentokil stake
It was revealed on Wednesday that activist investor Nelson Peltz had taken a ‘significant’ position in pest-control firm Rentokil Initial PLC (LSE:RTO).
Through his vehicle Trian Partners, he now ranks among Rentokil’s ‘top ten’ shareholders albeit the precise amount of shares or percentage stake in the company has yet to be disclosed.
The activist, that earlier this year ended his tilt to exert some control over Disney, said it had “reached out” to Rentokil to “discuss ideas and initiatives to improve shareholder value”.
Rentokil shares finished Friday’s session at 458p, up close to 11% for the week.
Even after the rally, the share is down over 28% for the past 12 months amid uncertainties over its North American business.
Chinese EVs to be hit by EU tariffs
A clutch of electric vehicle firms are caught in the crosshairs, as Europe and China ratchet up trade tensions.
The European Union this week announced new import tariffs designed to protect incumbent European car makers from cheaper, subsidised, Chinese EVs.
BYD, and NIO were among those seeing their shares lower during Wednesday’s trading, reacting to the announcement.
Tesla, which makes a proportion of its vehicles in Shanghai, could also be affected by the European move – albeit, it also has a factory in Germany, so the actual impact is not yet clear.
The EU claims Chinese vehicles benefited from unfair subsidies that distort competition.
It now intends to impose a 38% tax on non-cooperative companies and a 21% fee on other Chinese car makers. Meanwhile other EV firms will be given specified rates with BYD due to incur 17%, Geely’s will be 20%, and for SAIC it would be 38%.
Initial reaction from market analysts suggests Chinese EV firms can still sell profitably in Europe even with a 30% tariff, through they would squeeze margins and drive prices higher.
Europe isn’t acting alone. Turkey is imposing a 40% tariff, whilst US President Joe Biden last month took an aggressive stance proposing a tariff on Chinese car imports of 100% (and, currently, no Chinese-branded vehicles are currently sold in the US).
Golden Goose eyes $2bn stock market float
Golden Goose, a luxury shoe company that sells trainers for several hundred dollars a pair, is aiming for a valuation of $2 billion in a planned stock market IPO later this month, that’s according to reports on Tuesday.
The company, favoured by celebrities including Taylor Swift, is slated to list on the Euronext Milan stock exchange on June 21.
It would be Italy’s largest since digital gaming firm Lottomatica, which floated with a $3 billion listing in 2023.
Golden Goose IPO pricing range has been set between €9.50 and €10.50, which implies a market capitalization of €1.69 billion to €1.86 billion.
Through the IPO, Golden Goose would seek to raise up to €558 million, selling a 30% stake.
The Venice-based company is owned by British private equity firm Permira, which acquired it for €1.28 billion in 2020. Prior to that another private equity firm, Carlyle, had bought Golden Goose for €400 million in 2017.
Apple finally flexes AI strategy
The front-end of the week was owned by Apple Inc (NASDAQ:AAPL, ETR:APC) as its chief executive, Tim Cook, delivered what one analyst described as a “flex the muscles moment" with the company kicking off its AI-dominated Worldwide Developers Conference (WWDC) in California.
Cook, with his keynote speech, ushered in what the company is calling “Apple Intelligence” – a packaged, wrapped-up, and branded version of ‘regular’ AI, but with an Apple logo slapped on it and ringfenced to ‘universe’ of Apple products.
Apple Intelligence essentially comprises a range of AI tools and capabilities that’s being rolled into the Mac, iPhone, and iPad, plus the Siri personal assistant tech as well as Apple’s other devices.
It will be supported by new in-house AI microchips.
Also, central to the proposition appears to be the new partnership with ChatGPT creator OpenAI, which was formally confirmed amidst the conference.
Having traded up to a high of $220 mid-week, Apple closed Friday’s trading at around $212.40 which marks a 7.7% gain for the week.
“Apple unveiled multiple new software enhancements in another ‘flex the muscles moment’ for Cook & Co. heading into a robust product cycle into the next 6-9 months led by the iPhone 16 launch later this Fall into its massive installed base,” Wedbush analyst Dan Ives said in a note.
OpenAI will power Apple’s AI
OpenAI is set to power Apple Inc (NASDAQ:AAPL, ETR:APC) new suite of AI services, integrating ChatGPT across iPhones, iPads and Macs.
On Monday, at Apple’s Worldwide Developer Conference 2024 (WWDC24), the much-speculated new partnership was confirmed.
It is intended that the integration will allow users to access ChatGPT’s capabilities, including image and document understanding, without needing to switch between tools.
Siri, Apple’s voice-interacting ‘personal assistant’, will soon be enhanced using ChatGPT AI models.
"We're excited to partner with Apple to bring ChatGPT to their users in a new way,” OpenAI chief executive Sam Altman said in a statement.
“Apple shares our commitment to safety and innovation, and this partnership aligns with OpenAI's mission to make advanced AI accessible to everyone.
“Together with Apple, we're making it easier for people to benefit from what AI can offer."
Nvidia shares rose 10% after a week at the new price
No,NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) shares are not down 90% this week.
On Monday, the chipmaker’s shares began trading for the first time in New York following Friday’s 10-for-1 stock split.
The capital reorganisation was designed to make the stock, previously priced above $1,200 per share, more accessible, not just for retail investors but also for Nvidia’s employees.
Nvidia's rapid growth had previously made its shares too expensive for some investors.
The stock split was announced last month when Nvidia reported a remarkable 262% increase in quarterly revenue compared to the same period last year, generating around $26 billion in three months.
Investors bought up the newly repriced shares to close Friday at $131.88, up around 9.5% for the week.