Lloyds Bank, Rivian, Webtoons, London Tunnels, DJT, Kering, H&M, SpaceX – Markets Defused

Proactive Published 27/06/2024

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Markets Defused aims to give an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.

Rivian giddiness cools as production target held steady

The giddiness in the trading of Rivian Automotive Inc (NASDAQ:RIVN), the Amazon-backed electric vehicle firm, cooled somewhat on Thursday after the company’s investor day was decidedly pedestrian compared to Tuesday’s investment news.

Rivian shares shot up more than 50% earlier this week with the news that German carmaker Volkswagen was investing up to $5 billion in a new joint venture.

In today’s ‘investor day’, meanwhile, Rivian told the market that it expects to produce 9,100 to 9,300 EVs in its second quarter (which ends this month), plus it will make 13,000 to 13,000 EV deliveries.

Market commentary described these levels as being “roughly” in line with consensus.

Rivian added that it still expects to deliver a total of 57,000 units for the year.

Spending will meanwhile be kept ‘flat’, with the company previously announcing it would cut its capex by $2.5 billion by the end of 2025.

It comes as Rivian targets ‘positive earnings’ by 2027.

This week’s deal with VW is intended to expedited Rivian’s development of new EV models, including a much anticipated SUV. For VW, meanwhile, the big investment is expected to deliver a technology transfer that moves the historic German firm into an era of ‘software-defined vehicles’ (SDVs).

In New York, Rivian shares were down 2% changing hands at $14.45, though they remain some 40% higher over recent days.

Webtoons IPO priced at ‘top end’, valued at $2.7 billion

Webtoons has priced its New York IPO at the top end of the range, setting a valuation of $2.7 billion.

At $21 per share, the new stock market float will raise $315 million for the spin-out from South Korean tech giant Naver.

Described as a “storytech” company, Webtoons has 170 million monthly active users who engage with the Japanese and Korean webcomics, novels and animations it hosts.

Blackrock is expected to cornerstone the IPO, with reports claiming it will take around $50 million worth of shares.

The IPO is being run by Goldman Sachs, Morgan Stanley, JP Morgan Securities and Evercore.

London Tunnels makes premium-priced debut in Amsterdam

London Tunnels, a tourist attraction firm floating on the Amsterdam stock exchange, today made a premium-priced market debut.

Rising to 214p on the Euronext exchange, the shares were up around 7% from the IPO price of 200p.

The placing of existing shares, had valued the company at £130 million.

It may have snubbed the London Stock Exchange, in favour of Amsterdam, but the company will still need the backing of London planning authorities as it advances its project – which would see a network of wartime subterranean tunnel shelters converted into museum, heritage and cultural spaces.

Part of the project has been given the green light by the City of London planning, though further approval would be needed in the future, including permission from Camden authorities.

Chief executive Angus Murray, meanwhile, commented that the company "will seek to raise capital over the coming years to realise our vision of creating an unparalleled tourist attraction”.

Trump stock rises ahead of Biden TV debate

Trump Media & Technology Group Corp (NASDAQ:DJT), the 45th American president’s ‘meme-stock’, was on the move ahead of tonight’s debate versus Joe Biden.

Priced at $37.66, DJT shares traded down 4% for the day but remained some 37% higher over the past five trading sessions.

DJT began trading in New York as the result of a SPAC-deal, with the company effectively acquiring an already listed cash-shell in March 2024.

Stock in the company, which owns Trump’s ‘Truth Social’ social media platform, is seen by commentators as a proxy of Donald Trump’s underlying popularity as much as it is a share based on the business fundamentals of the technology company it owns.

Tonight, Trump and Biden will participate in the first presidential debate of their respective new election campaigns.

It will be the first time that the 45th and the 46th US presidents have shared a debating stage since the acrimonious 2020 campaign.

Each presidential candidate’s microphone will be muted when it is not their turn to speak, and, a ‘coin toss’ decided that Trump would get the ‘final words’ – winning the toss meant Biden could choose the podium on the right-hand side of the stage as well as allowing him the choice to speak first.

The debate kicks off at 9:00pm ET. It will be broadcast live on CNN and ABC.

Gucci’s Taylor Swift bump, is it real?

Kering SA (EPA:KER), the French luxury conglomerate that owns Gucci, has supposedly benefitted from what some people call “Swiftonomics”, aka the Taylor Swift effect.

Shares in the Gucci-owner were up for six straight days, after Swift and NFL-player boyfriend Travis Kelce were photographed wearing Gucci on a night out in London last weekend.

A coincidence? ... Does a photo of Taylor Swift using your brand equal immediate stock market success?

Well, the cancellation of Golden Goose from the IPO slate probably says things aren’t so simple – the singer is heavily associated with the ‘destressed-by-design’ brand, which sells trainers for around $500 per pair.

Golden Goose bailed on its stock market IPO last week blaming the impact of political turmoil on European stock markets, after previously going to investors with a valuation pitched at around $2 billion.

For Kering, which as well as Gucci owns Balenciaga and other brands, the team at Bank of America had a more traditional analysis.

BoA today issued a ‘double upgrade’, flipping its rating from ‘underperform’, past ‘neutral’, to a ‘buy’.

Analysts at the bank reckoned Kering will begin to see ‘green shoots’ of its turnaround plan come through.

It claimed Kering’s bottom is now done, whilst pointing to forecasts of growing sales.

It noted that the company’s turnaround plan included engagement with what it referred to as trend setter – which, perhaps, does mean its about Taylor Swift after all.

Read the full story here

H&M slumps as trading was tougher than expected

H&M Hennes & Mauritz (HM-B.ST, OTC:HNNMY), described as the world’s second-largest ‘fast fashion’ retailer, saw its shares slump around 13% in Thursday’s trade after reporting lower-than-expected profits.

The Sweden headquartered retailer also gave investors a less-than-reassuring sales outlook predicting a 6% decline in the month of June, blaming poor weather in Europe.

Sales for its second quarter, up to the end of May, were up 3% year-on-year at 59.6 billion Swedish Krona (SEK), which equates to around $5.6 billion.

Operating profit for the quarter meanwhile amounted to 7.1 billion SEK or $672 million, which was below the forecasted 7.37 billion SEK.

The retailer also raised doubts about its ability to meet a full-year profit margin target of 10% - with the metric reported at 8.1% over the first half of year.

Chief executive Daniel Ervér acknowledged a need for sales growth to be “further strengthened”.

Meanwhile, referencing the 10% margin target, he commented: “the conditions for achieving that level this year have become more challenging as it is assessed that external factors that influence our purchasing costs and sales revenues, including materials and foreign currency, will have a more negative impact than we expected in the second half of the year.”

He added: “The situation in the world around us remains uncertain and households continue to have high living costs.

“As always, our top priority is to ensure the best value for money in each market.

“With a focus on our customers, committed colleagues and a faster pace of investment in the second half of the year we see good conditions for continued profitable, long-term and sustainable growth in a large and growing market.

In Stockholm, H&M shares closed down 12.97% at 169.40 SEK.

SpaceX was valued at $210bn in latest share sale

Elon Musk’s SpaceX has set a new high-bar for its valuation, at around $210 billion according to reports.

The new valuation was set by ‘insider’ share sales priced at $112 per share, as reported by Bloomberg.

It is a boost for London-listed investment group, Scottish Mortgage Trust, as the space company represents around 4.4% of its portfolio.

The share sale comes as SpaceX has been handed a $843 million contract to drag the International Space Station (ISS) out of the Earth’s orbit and to its destruction.

This price excludes any launch services which will be the subject of a future procurement process.

A consortium of spacefaring nations responsible for the ISS have only agreed to cover the maintenance of the station until 2030, and have now hired Elon Musk to engineer a towing vehicle to pull it out of orbit.

The ISS will "destructively break up" as it moves through the Earth’s atmosphere, NASA said,

SpaceX will build the ‘deorbit’ spacecraft, but NASA will take over the mission and manage the destruction and re-entry process.

NASA, in a statement, meanwhile, hinted that the future potential for commercially operated space stations, as replacements to the government-funded multi-national stations such as the ISS.

“This decision also supports NASA’s plans for future commercial destinations and allows for the continued use of space near Earth,” NASA administrator Ken Bowersox said.

Lloyds CEO warns homeowners “ultra low” rates aren’t coming back

Whilst it is widely expected that UK interest rates will finally be reduced in the coming months, Lloyds Banking Group PLC (LSE:LLOY) chief executive Charlie Nunn is not expecting a return to the “ultra low” levels seen in recent times.

The new normal for UK mortgages will more likely be between 3% and 4%, Nunn said earlier on Thursday in comments to Sky News.

After a decade where mortgages have been in the 1.5-2.5% range, he noted that the market doesn't expect the Bank Rate to fall below 3.5%.

Nunn reckoned that once the Bank of England cuts interest rates the initial relief will be felt first by government and businesses, as their borrowing costs ease, but for households it may take longer for the benefits “to feed through”.

Meanwhile, with the British election looming, he added that the next UK government will be extremely limited in how much they can invest in the economy, due to increased levels of government debt in recent years.

The government won’t be able to ‘pay its way out of this next stage’, he noted.