In a foreshortened week due to the Independence Day holiday there was not much of a celebratory mood around on Wall Street.
Federal Reserve minutes which hinted at further rate hikes to come and US private sector jobs coming in a double the rate of expectations have served to dash any hopes we might be nearing the end of the US rate hiking cycle.
Yields on US government debt have surged to levels last seen in 2007 as the market resets its expectations.
On a stock level, Tesla (TSLA:NASDAQ) bucked the negative trend as it reported strong sales in China.
Entertainment firm Paramount Global (PARA:NASDAQ) ticked higher ahead of the hotly anticipated release of the latest film in the Mission Impossible series.
Health care firm Laboratory Corp (LH:NYSE) or Labcorp for short saw its shares fall as the market adjusted for the spin-off its contract research business Fortrea (FTRE:NASDAQ).
META PLATFORMS
So Meta Platforms (META:NASDAQ) wants to take a chunk out of Twitter, launching during the week its Threads rival to Elon Musk’s microblogging tool.
As talk swirls about Mark Zuckerberg and Elon Musk facing off in a cage fight, Threads logged more than 10 million sign-ups in its first hours, according to a post on Mark Zuckerberg’s own account on the app. Threads has many features in common with Elon Musk’s beleaguered Twitter, but still has some way to go to match the latter’s 300 million users. Threads is available in about 100 countries, including the UK, but not yet in the EU, more on this later.
But before we get too excited, there’s a few things worth remembering. First, you’ll need an Instagram account to sign-up, which may be a faff too far for many. And having spent years building a Twitter following, how willing will people be to switch knowing that many of their fans may not come with them.
Lastly, and the biggy, Zuckerberg sees Threads as being self-regulating and we have plenty of Twitter experience to see how that is likely to work out. Cue complaints about hate-speak, any number of ‘isms’, online stalking, etc and what about data privacy? Threads moving the Meta revenue needle could take years if it happens at all, and who’s to say it won’t unravel in time.
NETFLIX
Shares in Netflix (NFLX: NASDAQ) have put in a mixed performance this week, at one point gaining nearly 7% before falling back, as attention continues to be drawn to the streaming platform's revamped advertising strategy. Netflix’s shares are now trading around the $433 mark and are up 135% over the past year.
Last year the global streaming platform began rolling out its advertising video on demand (AVOD) service to boost revenues. Netflix wants to develop ‘increasingly targeted and tailor-made advertising formats’ to attract and the US streaming service met with global advertising executives to discuss this at this year’s Cannes Lions festival, according to reports in the Financial Times.
The US streaming service is looking to develop ‘episodic campaigns’ that would generate different but related sequential ads to consumers.
Goldman Sachs (GS:NYSE) believes Netflix’s revamped advertising strategy and controversial password sharing crackdown, introduced in the US in May, is making the stock more attractive to investors.
Goldman Sachs analyst Eric Sheridan said: ‘Netflix [management] has executed its password sharing initiative in excess of our prior assumptions, has regained content creation momentum in a manner that has muted any post-pandemic growth headwinds and overall industry competition has become more muted (especially from traditional media companies) in the past six months.’
Despite only adding 1.75 million subscribers in the first three months of 2023, Netflix said it was ‘on track’ to meet their full year 2023 financial objectives forecasting revenue of $8.2 billion up 3% year-on-year, or on a constant currency basis 6% growth. The company is due to report its second quarter earnings on 19 July.
SAVERS VALUE VILLAGE
In a further sign the previously-frozen IPO (initial public offering) market continues to thaw, Savers Value Village (SVV:NYSE) enjoyed a strong stock market debut on 29 June. Shares in the thrift store operator surged from an $18 IPO price, above the expected $15 to $17 range by the way, to almost $23.
While the shares drifted 3.5% lower to $22.80 in their first full week of trading on the New York Stock Exchange, caught up in wider Wall Street selling, Savers Value Village has come to market at an opportune time with consumers watching every penny.
The owner of a chain of for-profit thrift stores across the US, Canada and Australia, the company is geared into structural growth trends including the consumer’s quest for value and sustainability.
By partnering with non-profit organisations, Savers Value Village redirects secondhand clothing and household goods away from landfills and onto its store racks and shelves for reuse, conserving the planet’s natural resources in the process.
