Lyft – reported results post market, where they said margins were expected to increase by +500bps. Oops! That was an error! They meant 50bps! The stock surged +60% then dropped 30% after reporting the error — the amazing thing that it’s trading still up near 60% afterhours for the day (as of writing). I mean — it’s a monkey market1, and we’re just participating in it. Maybe companies should make more clerical errors? (not financial advice). It all goes back to Musk — of course — remember when he tweeted “Am considering taking Tesla private at $420. Funding secured”. It was sort of a joke because 420 (lol), and the courts found Musk not liable. As Matt Levine is always saying “is everything securities fraud?”
In brief
Had to smirk (like an indulged child at the back of a classroom) at finance minister Nicola Willis’ statement today –
“Our goal is to make this a much wealthier country,” she said.
We all love that — but what we would love more is to make NZ a country that is more innovative with capital that flows throughout the economy, including our capital markets — that is key and we hope Willis can deliver. Why did we lose our best companies like Xero to the Aussies?
You know where I’m going with this — the NZX. NZX Limited is worth $1.35-1.40 per share basis. It’s trading close to $1.04 today (buy!!). There’s been talk of floating various assets, like KiwiBank, but the NZX needs to do more to attract innovative companies that aren’t just a power company, bank or moribund lines company. Partially this sits with the govt and various regulators to adjust settings to make listing less onerous, but also it lies with the NZX to incentivise good businesses to list…we are awaiting NZX’s results later this month to comment further. Of course we want wealth as a nation, but we also want innovation and tenacity.
Spulu?!
Remember the ESPN/WBD/FOX mashup that will be a sports streaming service that captures about ~55% of sports streaming rights in good ol’ Yankee land? Allegedly former Apple exec Pete Distad has been tapped as the top candidate. Distad came to Apple from Hulu (so he’s already aware of the cluster of issues that arises when two companies own a streaming service — in Hulu’s case it was Comcast/Disney — he knows how to deal with Mommy and Daddy fighting).
And this is key — there’s real doubt about whether all networks can get along and then there’s the sports leagues themselves — NFL commissioner Roger Goodell allegedly had a contentious call with ESPN chair Jimmy Pitaro. Sports leagues will be worried that Spulu (or whatever the sports streaming service will be called) takes too much bargaining power away and is monopolistic — IMO this is poor logic; they get to renegotiate contracts every few years and no doubt the monster-mash streaming service will happily pay a pretty penny for those rights. As I keep saying — the future of streaming is cable: bundled products and fewer players.
Remaining buy-rated on WBD, DIS, PARA, etc.
Ack-tivist-man: Is Bill Ackman alright? Here’s a quote from a very real and very recent profile in NY Mag. I’m going to quote it in full, because it’s quite, well, something:
Ackman believes that our lives are often fated from birth. “I have a view that people become their names,” he told me. “Like, I’ve met people named Hamburger that own McDonald’s franchises.” We’d been talking for nearly an hour and a half when Ackman asked me what my name was, hoping to offer a diagnosis. After he seemed momentarily stumped by my surname, I offered him my first name, which he misheard as Reed. “Read … write,” he said, before turning back to himself. “So, my name is Ackman — it’s like Activist Man.”
I mean, this logic is a little bonkers — does Stephen Fry sell fried food, or does Elon Musk make perfume? Are you ok, Bill? I both love and can’t stand Ackman — he was right about Herbalife but he still lost (billions) of dollars. He bought Netflix and then sold, before the rally. He was right about UMG but made a very weird SPAC to try do it through. I guess when you have several billion dollars you get bored and you start to lie in bed awake at night thinking “Ack-man, Ack-ti-vist-man, Ack-tion Man, Ackman-the-man”. I don’t know; I don’t have a billion dollars. I lie in bed thinking about when and if Rakon will be acquired (still crickets there).
NZ/AUS
Skellerup — So long to CEO David Mair, who has had a stellar run at the company. CFO Graham Leaming is stepping into the CFO role. NPAT of $21.6mn a little disappointing…FY24 NPAT likely similar to that of FY23’s $50.9mn…it’s nothing to get excited by, but nor is it a reason to sell. We think the market is over-reacting (down -4.5% — Mair did a great job but we are sure he left the co. in good hands).
Fletchers — BusinessDesk with more on a “useless monopoly that needs to be broken up”. Yours truly quoted, and reiterating what I said yesterday — as a monopoly Fletchers is not working; spilt into parts it would work better. Trading down and dirty at $3.56 as of writing…will it rebound? Probably. But it still needs a lot of work — why not just buy Infratil and UMG and Exor and go on holiday?
Kiwi Property Group — Meh numbers, more visitors (+3%) but spend down 1.1%…we don’t like retail. Most of KPG’s properties will be “fine” but as always, the valuation of REITs and so on are a function of interest rates…don’t see those coming down anytime soon.
Tower — expects NPAT to exceed or be on the upper end of $22-27mn…stock rallied on the news but still needs to earn back credibility with the market. Their float has sat largely flat at $250mn…prefer QBE over in Aus.
Unemployment — Aussie unemployment sitting at 4.1% with ~22,000 more people unemployed. Perversely this is what drives down inflation…right now the RBA is walking a fine, fine line between recession and “soft landing”.
Intl.
AI / Nvidia —UBS thinks more supply than demand is good — I don’t know what they’re up to at UBS but came across this piece of news — where the analyst says “normally this is bad, but…”
But but — look, I am not a CFA holder or anything but normally when there is more supply than demand it is a bad thing. Has basic economics changed overnight?! This is still manifestly a bad thing. And talking of supply/demand…
Just to be a contrarian here — what if Ozempic has side effects? (there’s already lawsuits, and Ozempic sag is a real thing. Is this a case of supply/demand…?
Chart of interest — “all the money is in the buying”
I guess there is the joke about if you put enough monkeys in a room with typewriters chance would have them write the works of Shakespeare; I suppose if you give enough monkeys access to trading accounts they can move markets that make a 450bps error matter naught. As Shakespeare said — “The common curse of mankind, – folly and ignorance”. From Troilus and Cressida; not one of his better plays.