Markets Defused gives an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Microsoft is set for “tidal wave of AI monetization”
- Polestar surged as it set out ambitious growth plan
- BYD shares traded up despite Buffett share sale
- Adidas stock shook by Chinese investigation
- Disney’s Inside Out boosted cinema operators
- AMC Network plummeted on new bond financing
Microsoft is set for “tidal wave of AI monetization” – analyst says
Microsoft Corp's (NASDAQ:MSFT) coffers are set to benefit from a “tidal wave” of AI monetization, generated by its Copilot and Azure businesses, that’s according to analysts at West Coast stockbroker Wedbush.
Wedbush today repeated an ‘outperform’ rating and lifted its price target by 10% to $550 per share – which sees some 23% upside to Microsoft’s current price of around $447.
“We have seen deal conversions for broader enterprise scale AI deployments "accelerating" in the field as the AI Revolution takes,” Wedbush analyst Daniel Ives said in a note.
According to Ives, Microsoft’s ‘true inflection point’ will come next year, and, importantly, the market is not keeping pace with events in AI.
“We believe the stock still has yet to price in what we view as the next wave of cloud and AI growth coming to the Redmond story,” he said.
“Over the last few weeks in our numerous conversations with Microsoft customers, partners, and field checks it has become crystal clear to us that the monetization opportunities around deploying AI and ChatGPT in the cloud is a transformational opportunity across the industry with Redmond in the drivers seat.”
Wedbush reckons it is “9pm in the AI party” which it sees going on “til 4am”.
Spending on AI at enterprise and consumer level is only just starting to take hold, the broker added.
In New York, Microsoft stock was up $4.88 or 1.1% changing hands at $447.68.
Polestar surged as it sets out ambitious growth plan
Polestar (Nasdaq: PSNY) stock surged around 23% higher in Monday’s dealing after unveiling its plan to expand its commercial footprint – to launch in seven new markets in 2025.
The electric vehicle company is targeting France, Czech Republic, Slovakia, Hungary, Poland, Thailand, and Brazil.
It is part of Polestar’s shift to a “non-genuine” agency sales model across Europe.
To those unfamiliar with the term “non-genuine”, it means that Polestar vehicles can be sold by third-party car dealerships that do not have a direct, official relationship with the manufacturer.
So, rather than using primary branded dealerships, Polestar will distribute to a wider range of sales channels. Also, it means that in such territories pricing strategies are more flexible.
“Expanding our retail operations with new and existing partners will enable us to reach more customers,” Polestar chief executive Thomas Ingenlath said.
“Through these partnerships and expansion, we will capitalise on our strong brand and growing model line-up.”
Customers can configure and order their Polestar vehicles online, and through an expanding network of dealerships, the company added.
Polestar, the EV sister brand to Volvo, noted that in Sweden and Norway it has already adopted this new sales model, with other key markets set to follow in the second half of the year.
The company also announced a number of senior commercial appointments include a managing director for the UK, and a new ‘head of North America’.
BYD shares traded up despite Buffett share sale
Chinese electric vehicle firm BYD Co (HKG:1211, LSE:0HKY, OTCQX:BYDDY) saw its shares trade higher on Monday, despite reports that Warren Buffett’s Berkshire Hathaway had sold more shares.
Berkshire Hathaway reduced its holding by 1.3 million of the Hong Kong (primary) listed shares, for $39.8 million.
It results in Buffett’s stake reducing to 6.9%, from the 7%, and it’s the latest in a number of divestments by the American group – it has been selling shares since 2022.
Previously, Berkshire Hathaway in 2008 bought around 225 million shares of the EV firm for some $230 million.
Since then BYD has achieved significant market penetration first in China, and more recently with exports into Europe and North America.
BYD initially manufactured batteries for mobile phones in the 1990s, before pivoting into the electric vehicle market in the early 2000s. As well as selling cars, BYD is also a supplier of battery technologies to other EV brands.
Trading in $59.15 in America’s OTC market the share was up around 1.6%.
Adidas stock shook by reports of Chinese investigation
adidas AG (OTCQX:ADDYY) shares shook 4% lower after reports that it had launched an investigation into corruption allegations in China.
The German sportswear giant on Monday received a letter from an anonymous whistleblower, which was briefly posted on a Chinese social media platform, according to a report by the FT
The letter, purportedly written by "employees from Adidas China," accuses senior staff of embezzling millions of euros.
The whistleblower's allegations include claims that staff received kickbacks from external service providers and that one senior manager received millions in cash and real estate.
Adidas is said to be ‘intensively’ investigating the matter together with external legal counsel.
Reuters, in its reporting, published comments from Adidas stating: “[it] takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate.”
In Germany, Adidas shares were down 2.85% closing at €218.50, having traded as low as €215 earlier today.
Disney’s Inside Out boosted to cinema operators
Walt Disney's (NYSE:DIS, ETR:WDP) new family animation has marked a return to form for the massive media conglomerate, with Pixar film ‘Inside Out 2’ setting a new box office record in its first weekend.
The movie took $295 million globally over its first three days of screenings, with $155 million banked in the US alone.
According to Disney, it is the best global debut for an animated film ever.
It comes after a series of recent Disney cinema releases – such as Wish and The Marvels - disappointed at the box office.
Not only is it a welcome boost for Disney’s cinematic division, its also good news for cinema operators ahead of the key summer holiday season.
AMC Entertainment shares traded close to 1% in Monday’s dealing, changing hands at $5.04 each.
AMC Networks (NASDAQ:AMCX) plummeted on new bond financing
AMC Networks (NASDAQ:AMCX), the other AMC company (the one that makes massive TV shows about zombies) announced a new bond sale that aims to raise $125 million of new capital.
The stock fell more than 30% in reaction to the news, falling to $10.70 in Monday’s dealing.
It intends to issue a series of five-year convertible senior notes.
“AMC Networks expects to use the net proceeds from the offering for general corporate purposes, which may include the repayment of indebtedness,” the company said in a stock market statement.
In last month’s first quarter earnings report AMC boasted that it had strengthened its balance by completing a series of financing transactions that meaningfully extended its debt maturities.
Through March and April it undertook multiple refinancing of senior debt securities.
“[the refinancings] create substantial flexibility for us as we continue to leverage our core strengths and reorient our business around the consumer-driven changes that are happening across the industry,” chief executive Kristin Dolan said in May.
Dolan added: “creates substantial flexibility for us as we continue to leverage our core strengths and reorient our business around the consumer-driven changes that are happening across the industry."
It comes as AMC Networks has been rolling out the first phase of its spin-off shows in the Walking Dead ‘universe’ – which included “The Walking Dead: The Ones Who Live”, “The Walking Dead: Dead City”, and “The Walking Dead: Daryl Dixon”.