Monday Morning Milestones XIII - everything you need to know for the week ahead

Hi Folks :ocean:

13 is unlucky for some and it’s unlucky for this column. I’m afraid that this will be the last milestones column I’m writing for the community. Now to be very clear Freetrade have ever asked me to write these and helping to manage the community is something I took on myself. I have loved writing these and engaging with you about the stories of the week however, putting these together takes between 5 - 8 hours of writing & research - hours I don’t really have and I can no longer really justify this particular hobby. A whole lot of respect goes out to @sampoullain @Viktor @adam @mynameisgeraint @nickfell @Alex_B and everyone else who helped build a community I instantly felt at home in. A special :sauropod: :fist: goes to @Rajan07 who’s puts up with my requests and is always helpful and very friendly.

To everyone who’s read, commented, liked and voted - Thank you! Your valueless internet clicks made research into the small hours worth while. I’ll still be around and filling threads with needless GIF’s so don’t worry.


For the last bit of philosophical nonsense I thought id share a couple of stoic principles that I’ve learned that are fast becoming a bit of a mantra.

"Vex yourself not at the course of things, they care not for you vexation"
When you allow your energy to be used for useless things it is wasted, but worse still you cannot be using it for good.

"You always have to opportunity to have no opinion"
Not having an opinion is incredibly freeing, comment below on things you don’t have an opinion on, you can take or leave them. It is quite excited not to have an option in a world that is telling you that you should.


So lets take a look at some of the companies who are reporting earning this week.


Take TwoZynga

Take Two & Zynga

For anyone who has spent anytime in the grand theft auto universe official confirmation from Take 2 interactive that they are working on GTA VI was probably greeted with cheers of joy as you carjacked a minivan and drove it up the railway line into a train.

GTA V was launched in 2013 and remains one of the most played games online, this is an incredible feat or product development and had been brought in more than $6bn.

Take Two have announced an $11bn deal to buy Zynga who also report their latest number this week. Take Two intend to combine Zynga into a new ‘Take Two Mobile Unit’ so mobile versions of their games might be popping up.

Zynga is trading it $9.11 while the offer is set for $9.86 which was a 64% premium before the deal was announced. There is an interesting industry I take over arbitrage that has sprung up where buyers who have more confidence in the deal completion will collect the difference by holding until the deal completes. In this case it would be tasty 7.5% upside.

A position in Take Two could be a worth addition to your portfolio if you believe that insider trades for 202 dwarfing sales & 11 of the 14 analysts who cover TTWO give buy recommendations with an upside of as much as 35%.


Alibaba

Alibaba Group

I don’t know what numbers Baba could report that would stop the market from taking every opportunity to kick the Chinese e commerce giant while it’s down. After a well published spat with the ruling elites the former darling of the NASDAQ has dropped 56% for the last 12 months and now boasts a frankly insane P/E of 15.

The Q3 report due today will show how Alibaba performed during the important Christmas holiday shopping season and the very important Single’s Day.

Every way you look at Alibaba is undervalued from a technical stand point, but this would be like predicting a football result for the team sheets without realising that the one team is allowed to change the size of their goal. All the while President Xi has his whistle in this lips nobody knows if or when he’ll blow full time on Alibaba ambitions.


Pfizer GSK

Pfizer & GSK & Astra Zeneca


Google Finance - 5 year stock movements

I’ve combined these three companies because while all bed fellows to different degrees there are things we can learn from comparison.

1 - A COVID vaccine did wonders for your stock price, even if they unlikely to be profitable in the short term. At the beginning of 2020, when nobody knew what or where Wuhan was the fortunes of our our three pill pushers couldn’t;t have been more different. Pfizer is up 30%, Astra Zeneca is up 15% while GSK is down 8% - compare that to the S&P500’s returns of 24%.

2 - GSK are trying to offload their consumer goods business with a target price of $60bn but after Unilever and P&G balked and walked away GSK are going to be looking into a spin off. If successful at their valuation it would instantly be the 11th largest company in the FTSE100.

3 - Heads should be low at GSK HQ who still, almost 2 years after the pandemic ‘started’ don’t have a COVID vaccine. Pfizer alone forecast $31 billion in 2022 Covid vaccine revenue with a further $17 billion more in sales of the treatment tablet Paxlovid. They could certainly have used that revenue, instead they’re focused on selling Aquafresh.

4 - Pfizer and GSK have below market P/E ratings while AstraZeneca are trading at 88x revenues. Now P/E needs to be treated with a gain of salt because it is backwards looking (Current Price / Previous Earnings) but I should how much of the future growth is already baked.


Warner Music

Warner Music Group

It is impossible for me to talk about Warner Music without getting hung up on the fact that many of the Pershing Square Tontine shareholders would have been expecting to be sitting on this music giant in their portfolio by now if it weren’t for Bill Ackman making things complicated, any way that’s all water under the bridge. Holders when WMG was spun out of Vivendi last summer should count their lucky stars as the stock price has just gone up & up since. Boasting artists from Madonna, Coldplay & Metallic to name but a few the third largest record label in the world, and home to the malcontent Neil Young, are bringing their latest results to a hopefully well soundtracked earnings call this week.


Pepsi

We don't have Coke, is Pepsi okay?

If you hold Coca Cola it might be time to take a Diet Coke break, after a great 2021 which saw the stock rise over 23% its starting to look harder to make the current see where share price growth will come from. To justify P/S of 30 you’d want to see high growth but Coca Cola have increased EPS by just 1.4% over the past five years, and its revenue has actually declined over a this same time.

The noisy neighbour in a sugar soft drinks market is valued almost exactly the same at 30x revenues. They don’t appear to have the EPS decline but it is much more erratic, having said that they’re aim for the 9th EPS beat in a row.

Both valued between $260bn & $280bn with the same dividend and P/A you’d be hard pushed for someone to tell the difference unless its Crystal Pepsi! Who else remembers it?
image


Taxi :taxi:

Firstly I’ll lay my cards on the table here, I don’t really like either of these companies. They have just found a way to build a fancy platform to circumnavigate minimum wage laws in the name of ‘ride sharing’. That aside …

In what at the time seemed like an odd move Uber getting into the food delivery business and the latterly buying post mates turned out to keep the company on track throughout the depths of the pandemic. Expect another loss this quarter of between 20c & 30c per share on revenue between $5.3bn - $5.4bn. Historically under is as likely to drop after an earnings call as it is to rise, a bump of 7% on Friday might speak to optimism - this isn’t optimism I share I’m afraid their path to profitability seems like such a tough needle to tread.

Uber dwarfs its moustachioed competitor by roughly 5x revenue with Lyft expected to bring in 8c a share on revenues of $940m - $945m.

A management plan from both of these companies of how they will stop the cash burn and bring their companies into profit will be very well received, given they are both trading below their IPO prices.


Alan Partridges favourite petrol station

The oil business is a good business to be in a t the moment, with crude oil prices surging 30% this year alone. So If you want to know what to expect from Tuesday take a look at Shell’s numbers from last week. Like Shell, BP is expected to show a substantial upturn in profits mostly thanks to those higher oil prices.

An expectant market is predicting a sixfold increase in net income and more will be writing with bated breathe for what BP will do with that extra money will it be a buy back or will a tasty special dividend be announced. .



Peloton

Peloton

The thread for peloton has been very active of late so I’ll link it here and a read through of the last 10-20 posts will do a better job than I can. The beleaguered loss making connected fitness company could not be long for this world in its own right with Amazon and Nike apparently circling.

Peloton Interactive (PTON) - Share Chat



Disney

Walt Disney

Does anyone else find it weird that Disney haven’t made a decent movie staring their figure head mouse since Fantasia which was decades ago?

There will be two key areas of focus from the earnings report when they’re released on Wednesday evening.
Disney Plus - As the streaming wars heat up continuing to grow your users is critical, see Netflix.

Parks Revenues - With the world slowly reopening guidance on the parks revenues will be closely watched, they have been a bit of a millstone for the company of late.

Spare a thought for Bob Chapek, as if following in the footsteps of the much loved Bob Igar wasn’t going to be hard enough he took over the big chair in February 2020. Before he’d arranged his stationary the pandemic hits! what luck. Now Chapek knows his was around Disney being the former head of Parks and having worked for the company since 1993 across various divisions. In the first earnings call he’ll be expected to strike an optimistic tone and prove he is the man who can arrest the 20%+ drop over the last year. Analysts are expecting $20.27 billion, lets see if they’re more Mickey and less Donald Duck.


Twitter

A full time CEO you say? How novel.

Parag Agrawal meteoric rise started in 2011 when as a software engineer he joined Twitter, 10 years and many promotions later he stepped up to CEO. With Jack Dorsey stepping aside to focus on growing his beard (and net worth at Block nee Square) the spotlight is on the former CTO. The main accusations that have been thrown at Twitter stick to Jack as much as they do to Parag.
Why don’t they generate financial returns inline with the role their platform plays in the world.
Why have new features been so slow to be developed, why can’t we edit tweets!? Why have Sub stack monitored newsletters from people who built their audience on Twitter.
Why did you close down Vine only to ceed the ground to TikTok

Expect an earnings drop from last year, 0.33 EPS is published widely so anything above that will be seen as a positive thing even if they’re still down.


To woke for some

Unilever have had a rocky few weeks, they finally abandoned a $50bn bid for the consumer good business of GSK which drew the eire of lots of investors who tented to revolt over the deal only to be accused of people too woke. This accusation is mostly levelled at its subsidiary Ben & Jerrys with the premium ice cream brand now being sold in Israel due to … well … the Bible I guess!

All is not well with some of the top 10 shareholders who are calling for a split up of the business. In the same way we’ve seen conglomerates come under pressure to split off seconds of the businesses where cost effeciecies don’t apply, see Johnson & Johnson & GE Unilever could be next.


The Queen celebrated her official accession day, when her father died and she accented to the thrown, at the weekend so lets find out which queen is second best (I said second, I don’t want to be shown the cells in the Tower of London!)

  • Queen (the band)
  • Queen Bees (general)
  • The Queensferry Bridge
  • Queensland, Australia
  • Drag Queens
  • King of Queens (the sitcom starting Kevin James)
  • Queens Park Rangers

0 voters

Signing off the the last time :cry: May the your portfolio be as green as my skin :sauropod: & your dividends plentiful

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55 Likes

Thanks for your efforts on this column. Great read.

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Thanks for doing this - it’s been interestng and fun.

Cheers :+1:

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It will be missed buddy but I get the reasoning! :+1: FT should validate those hours with a small wage to make it worth while. :stuck_out_tongue_winking_eye: Just hope it is only this message that is quitting.

On a side note am I the only one who loved King of Queens? Something nostalgic about that and Raymond being on at 6am and kicking butt over the other options at that time in the morning. :rofl:

5 Likes

Awwww, sad to hear this @NeilB , it’s always been a great read & your efforts have been very much appreciated. But I completely understand why.

4 Likes

Thank you for this most informative and entertaining read at the start of each week.

I’m a (relative) newbie to FT so found the threads especially valuable. It will be missed.

:clap::clap::clap:

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Thanks @neilb entertaining and engaging reading

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Thank you @NeilB for the hard work you put into these, really appreciated it.

** Also expecting good things from Disney regarding Disney+

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You are the best man. The best.

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Thanks very much for taking the time to put these together @NeilB - they’ll be missed!

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Under rated great show!

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Thanks for the kinds words everyone, you’re all very kind.

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The reason I’ve been writing these was for benefit of the community - I’m glad you’ve all enjoyed them / found them useful.

@Big-g :wink: image

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Another reader here who has enjoyed these but I completely understand you stopping doing them, it’s basically a days unpaid work a week and not many could put that effort in unpaid.

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Aww, that’s so kind - thank you! It’s my pleasure.

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Thank you for all your help and dedication on all things forum @NeilB

MMM will be mmmissed

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This was something decent to look forward to reading on a Monday - have really appreciated your hard work and efforts @NeilB and am sorry they aren’t continuing but understand the big time suck needed to produce such quality writing (and amusing polls!)

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Always an interesting read, thanks for taking the time to do them

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Thanks @NeilB As a relative newbie I have found your posts helpful, enjoyable and entertaining :grin::grin::+1:t3::+1:t3: Your efforts both on the Monday morning update and generally on the community forum have given me confidence to invest. My sincere thanks and gratitude.

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you did an amazing job for the community !!

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Never say never! You might say @NeilB

giphy

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