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Alibaba’s Looking for Black Swan Opportunities

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Alibaba Stock News

Alibaba Group Holding (NYSE:BABA) earnings for the period ended Dec. 31. have topped expectations but coronavirus is having a ‘negative impact’ on the business with packages not getting delivered on time, and this uncertainty has caused its stock to fall on Thursday. But on a brighter note, the China e-commerce giant also says coronavirus outbreak, the so-called Black Swan event, is helping to accelerate digital transformation with more online grocery orders and work-from-home experiences.

Fiscal third quarter

Revenue for the quarter increased 36% to $23.2 billion (161.5 billion RMB, up from 117.3 RMB) billion a year earlier. According to FactSet, Wall Street expected earnings of $2.28 on revenue of $22.8 billion (RMB159.7 billion). But for the very first time, the Chinese e-commerce giant’s cloud business topped RMB10 billion. Net income achieved amounted to 52.3 billion RMB ($7.5 billion). Adjusted earnings of $2.61 a share went up 47% from a year earlier. But most importantly, active consumers on Alibaba’s China retail marketplaces reached 711 million, an increase of 18 million which equals to 2.5%, from the previous quarter. As for mobile devices, active users on mobile devices reached 824 million, an increase of 39 million equaling to 5%. Revenue from its cloud operation jumped 62% to $1.4 million.

Coronavirus the Black Swan

The company is continuing to experience challenges stemming from the outbreak as there’s been a delay in employees’ return to work after the Lunar New Year holiday, with this celebration also greatly contributing to the pandemia. As a consequence, there is a negative impact on the ability for merchants and logistics companies to resume business as usual.

And management disclosed that the overall revenue growth rate is expected to be negatively impacted in the following quarter.

Revenue from local services expanded 47% before the impact of the virus could be felt. The fact that Alibaba anticipates that there could be negative revenue growth in these categories this quarter “shows the impact of the virus,” However, the issues seem to be largely supply-based, which is encouraging for Alibaba’s long-term prospects as there are also new opportunities on the consumer end.

Competitors

Meanwhile, its Amazon (NASDAQ:AMZN) managed to pause Microsoft’s (NASDAQ: MSFT) $10 billion Pentagon contract. A judge has issued a temporary injunction preventing the contract from moving forward until a lawsuit from Amazon is resolved. Amazon’s case is President Donald Trump’s personal animosity toward Amazon CEO Jeff Bezos and The Washington Post, which Bezos owns. Overall, it finds the contract to have “clear deficiencies, errors and unmistakable bias.” Its other competitor is also doing well, as Shopify Inc’s (NYSE:SHOP) stock has gained 222% over the last year and its price rose after a strong earnings report on Thursday, showing the company’s strong determination to hit the international front. Meanwhile, Walmart (NYSE:WMT) has a few clouds on its relatively blue skies as it is shutting down its personal shopping service that allowed New Yorkers to text message orders for home delivery. Jet black will be down on February 21 due to inability to find adoption or additional investment. So, there is no lack of headwinds in the global industry, but these e-commerce giants are still coping well. For now.

New possibilities

Management hinted that the challenges brought on by the outbreak could prompt long-term behavioral changes from Chinese consumers and businesses alike. More consumers are ordering groceries from their homes and more employees are choosing to work from home, two trends that Alibaba plans to account for in its various service offerings. But globally, there is the inevitable trend that more and more businesses and more and more customers are opting for a digital life and a digital working style. Black swan and Tchaikovsky aside, Alibaba is trying to balance investment spending with operational improvements in its core-commerce segment.

Outlook

Alibaba’s shares have dropped nearly 5% over the past month, but they did before climb 20% if we look at the past three months. And its revenue did rise 38% year-over-year during a strong quarter. In the release, it showed an increased user engagement and rapid growth in the cloud computing services. Not to forget that shortly after the outbreak, the company fiercely began procuring medical supplies from all around the globe, donating over 40 million units to affected cities. It is tentatively monitoring how is the situation evolving and also using the opportunity to identify new opportunities to provide support and value that  can be incorporated in its business model. And helping customers through difficult times during this one-off pandemic is also expected to contribute to sustainable long-term growth. And let’s not forget that the definition of a Black Swan event also psychologically entails that its definition depends upon the observer. And Alibaba can surely make it work to its own favour by finding new ways to provide value added services to its current and potential customers- and become a White Swan in this scenario.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Target Hits The Bull’s Eye With Yet Another Quarter

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Some of its biggest peers such as Macy’s Inc (NYSE: M) and Best Buy Co.Inc (NYSE: BBY) came out with improving fourth quarter sales and profit outlook as a tiny bit of normalcy begins to return to consumer spending, but now it’s Target’s (NYSE: TGT) turn in the spotlight. Earnings topped estimates as sales rose 21%, boosted by a surge of post-holiday shoppers that cashed in stimulus checks during an unusually strong period for the industry as a government report revealed sales increased 5.3% in January. As of Monday’s close, Target shares have risen nearly 81% over the past year, bringing the company’s market value to $93.19 billion.

Q4

For the fiscal fourth quarter ended on January 30th, revenue rose 21% to $28.34 billion from $23.4 billion last year, higher than analysts’ expectations of $27.48 billion. Comparable sales, a key metric that tracks sales at stores open at least 13 months and online, went up 20.5% compared to the prior year as digital comparable sales rose by 118% YoY. After strong holiday sales, online sales gained even more momentum as Americans cashed in their $600 stimulus checks in January. As impressive as they are, both metrics show deceleration in terms of growth rates versus the third quarter. In mid-January, Target reported that sales grew 17% during the holidays, which is a slight slowdown from the third quarter’s 21% spike, but it is still a lot better compared to the 9% that Walmart (NYSE: WMT) experienced.

Profit margin was 26.80% and the operating margin amounted to 6.50%. Net income rose 66% to $1.38 billion, or $2.73 per share, increasing from last year quarter’s $834 million or $1.63 per share. Excluding items, Target earned $2.67 per share, exceeding Refinitiv’s average expectation of $2.54.

New customers and more purchases

Target has attracted new customers and inspired more purchases with its e-commerce offerings and wide range of merchandise, from cereal to workout pants, as competitors like Kohl’s Corporation (NYSE: KSS) were forced to temporarily close stores due to the pandemic. Citing internal and third-party research, Target estimates it gained about $9 billion in market share during the fiscal year. Customers shopped more frequently with Target and bought more when they did during the holiday quarter thanks to its e-commerce offerings and wide range of merchandise.

A variety of approaches to shopping

By offering different multiple channels, Target is strengthening customer loyalty. Same-day services saw sales grow by 212% and curbside pickup service sales grew by more than 500% during the quarter. On average, customers who shop in both in stores and online spend nearly four times more than those who shop only in stores and nearly ten times more than those who only shops online.

Fiscal 2020

2020 sales grew by more than $15 billion which is greater than Target’s combined sales growth of the last 11 years. Comparable sales grew 19.3%, reflecting 7.2% growth in store comparable sales, and 145% growth in digital comparable sales.

Target’s 2020 stock price rally is largely owed to improved margins. While the competitive holiday season usually pressures this figure, this wasn’t so much of an issue this year as shoppers happily paid the full price for more convenient and faster fulfillment options, including premium merchandise.

Another quarter in which Target hit the bull’s eye is in the books ended a record year which is not a pandemic-related blip but the payoff of its long-term business strategy. Record growth in 2020 was a result of many years of investment to build a durable, scalable and sustainable business model that enabled the big box retailer to capitalize on the opportunity that was provided by the pandemic.

Outlook

Target remains extra cautious in the face of continued uncertainty as the pandemic has made it too difficult to predict consumer patterns. No sales or EPS guidance for fiscal 2021 were provided. Although shoppers are still cautious, Target is also seeing hopeful consumers who are looking forward to a post-pandemic life, expecting to see shoppers browsing aisles and returning to buying items such as apparel for work or going out as well as new luggage. To find a way to hold on to customer’s wallets after vaccines kick in, the big box retailer plans to invest about $4 billion per year over the next several years to open new stores, upgrade existing ones and enhance its ability to quickly fulfill online orders.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The US Is Catching Up In the EV Race

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Worksport Terravis Solar System On Electric Pickup Truck

Europe has overtaken China as the world’s biggest EV market. Encouraged by subsidies and offerings, consumers bought EVs at a record pace last year, nearly doubling the continent’s share of global new electric car sales to 43%. But this success is largely owed to government support programs, some of which will expire this year which is why analysts warn the momentum could be reversed if and when that support is withdrawn. Meanwhile, the U.S. is going full speed ahead and unlike Europe, the US market is not as sensitive to government and company discounts.

The US is “waking up”

Around 65 new EV models launched in Europe last year which is twice as many as in China, with another 99 scheduled to hit the market this year. North America saw 15 launches last year, but 64 are planned for this year. What happened with Europe is that manufacturers had the right products to offer such as Volkswagen AG (OTC: VWAGY), Europe’s biggest auto maker, with its ID.3 and ID.4 models. But, the US is well on its way to catch up as legacy automakers are set to being rolling out electric versions of their iconic models. General Motors (NYSE: GM) went as far as making a Super Bowl ad starring Will Ferrell, who called on American consumers to buy EVs and crush Norway that ended up as the world’s biggest EV market per capita last year.

Legacy automakers are catching up

GM’s EVs are starting to take shape with the new lower-priced Chevy Bolts, the first in its lineup of ‘affordable’ EVs. Ford Motor (NYSE: F) vowed to sell only EVs in Europe and the UK by 2030, making it the largest automaker to commit to all-electric sales on the continent by that timeframe with its first Mustang Mach-E arriving hitting dealerships. Although this vehicle needs to convince Wall Street that Ford is headed in the right direction, Ford’s most eagerly anticipated EV, the electric F-150 is a year away.

Electric pickups are coming

Until recently, the EV revolution was limited to small vehicles, with the most popular vehicles in the US, pickups and SUVs, absent from the offerings. But that is about to change this year as advances in battery technology made it more affordable to insert battery technology into heavier vehicles with many pickups due to hit the market over the next 12 to 24 months, including new entrants, Rivian R1T, Atlis XT pickup and Hercules Alpha, along with revived Hammer for GM not to miss any action.

Worksport expands capacity

Atlis Motor Vehicles and Hercules Electric vehicles partnered with innovative truck tonneau cover manufacturer Worksport to configure its ground-breaking TerraVis system, the world’s first solar charging and power storage system for pickups, into its eagerly anticipated models. This revolutionary technology helped Worksport receive its first trademark registration in China in February.

Expansion

Worksport LTD (OTC:WKSP) announced this morning its strategic manufacturing expansion. The company is in final phases of discussions with a few very-high-value strategic partners, Tier-1 and Tier-2 OEM manufacturing power houses in Canada to expand its manufacturing into North American state-of-the-art facilities with 20,000 to 50,000 square feet of operating space to meet its recent U.S.-based Private Label customer growth.

New ecosystems

These discussions involve logistics for the best and most effective ways to support the company’s growth and ensure scalability in Worksport’s manufacturing processes. The company tapped into both the pickup market as well as the consumer market by extending its solar fusion line with mobile TerraVis COR™ system that can be used independently and recharged via solar or A/C power. The expansion will not only support Worksport’s expanding and maturing footprint, it will give the company control over capital expenses, greatly reducing risks of overextending its financials during periods of intense demand while building its major-player Automotive, Freight & Transport, Marine, and Rail ecosystems, at helm of its CEO Steven Rossi. The company is going all in to exceed customer expectations and all of its efforts directly enhance and benefit the EV market.

Takeaway

While most industry leaders welcome government efforts to fuel new technology markets such as EVs, auto makers worry that subsidies will only have a short-term impact. A global adoption without broader structural changes won’t create a self-sustaining market. What governments should focus on is developing the supporting infrastructure such as charging stations.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s Stars Are Zoom, Target and Costco

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Zoom Video Communications (NASDAQ: ZM) will open the week on Monday after market close whereas big box retailers highlight the week’s other big releases, led by Target Inc. (NYSE: TGT) on Tuesday and Costco Wholesale Corp. (NYSE: COST) on Thursday.

Zoom Video Communications

According to Financial Times, researchers at Stanford University have confirmed what millions of remote workers already knew, that “Zoom fatigue” causes greater stress than meeting in real life because of the “non-verbal overload” of endless video calls. Not to mention that users are seeing reflections of themselves at a frequency and duration that hasn’t been seen before in the history of media and the history of people. Although some problems could be solved with trivial changes to its user interface, such as automatically hiding the “selfie” window, the bigger problem is On Zoom, behavior ordinarily reserved for close relationships such as faces seen close up has suddenly become the way we interact with casual acquaintances and even strangers. This new way of communication takes a toll on our mind and that could eventually hamper Zoom’s success with the stocking already having lost its luster due to vaccine developments.

Novavax (NASDAQ: NVAX) is preparing to launch its COVID-19 vaccine after 33 years of failed attempts and facing delisting from the Nasdaq as it couldn’t deliver a single approved shot. We will get a new chapter in a fairytale-like story of a little company that was on the verge of potentially closing getting the chance to play with the big boys in the race for the Covid vaccine. As soon as its vaccine gets approved, it is ready to produce 150m doses a month.

Nio (NYSE: NIO) will pop the hood after market close. Earlier it stated that Q4 deliveries were at a record of 17,353 vehicles which is an increase of 111% YoY and over the upward end of its guidance. But, when it comes to EVs, profitability has frequently taken a back seat and despite the encouraging deliveries, the company has been in the red.

Tuesday

Kohl’s (NYSE: KSS) and Target are due to report before market open. Last week, a group of activist investors pressured the department store to address stagnant sales and operating margins so it will be interesting to see how the story continues as critics find the company isn’t moving fast enough to turn itself around. On the other end, Wall Street expects Target to post a profit of $2.54 per-share on $27.4 billion in revenue which would be an impressive 50% profit increase. Some of its biggest peers have already reported fourth-quarter earnings but investors have big expectations for its holiday quarter. We already know Target had a good season as it revealed that sales grew 17% during the holidays which on its own is enough to outpace Walmart (NYSE:WMT), which just reported a 9% holiday quarter boost. But, this is a slight slowdown from its third quarter’s 21% growth so we’ll learn whether Target continued to win market share in each of its core selling categories. Nordstrom (NYSE: JWN) and Box Inc. (NYSE: BOX) will board the reporting train after market close.

Wednesday

Dollar Tree (NASDAQ: DLTR) will report before market open with Okta (NASDAQ: OKTA), Snowflake (NYSE SNOW) known for its ‘too hot to handle IPO’, Vroom Inc (NASDAQ: VRM), Splunk (NASDAQ: SPLK) will reveal their earnings after market close.

Thursday

Kroger (NYSE: KR) will report before market open with Opendoor Technologies (NASDAQ: OPEN), Broadcom (NASDAQ: AVGO), SmileDirectClub (NASDAQ: SDC), Costco and The Gap (NYSE: GPS) closing the earnings week after market close.

This week will be full of retail that was dramatically changed by the pandemic. We will also get a better idea if Zoom can maintain its success beyond the pandemic as despite its many benefits, digital communication didn’t measure up to in-person socializing.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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