Gapping up
In reaction to earnings/guidance:
- JPM +1.4% (provides guidance at investor day)
Other news:
- GOEV +6.5% (files for 48043111 share common stock offering by selling shareholder)
- GLSI +5.6% (to resume stock repurchase program)
- AXL +5.2% (provides statement on company sale speculation)
- GNK +5% (positive Barrons article)
- NEXT +4.7% (files for 4618226 share common stock offering by selling shareholder)
- CMPS +4.7% (COMPASS Pathways presents largest ever study of psilocybin therapy at American Psychiatric Association annual meeting)
- PSN +3.4% (entered into a definitive agreement to acquire Xator Corporation in a transaction valued at $400 mln)
- EA +2.6% (positive Barrons article)
- GH +2.1% (Presents New Data Showing Blood Test Accuracy in Detecting Colorectal Cancer in First-of-its Kind Prospective Study at Digestive Disease Week 2022)
- BNTX +1.9% (Pfizer/BioNTech (BNTX) COVID-19 vaccine demonstrates strong immune response high efficacy and favorable safety in children 6 months to under 5 years of age following third dose)
- POSH +1.8% (positive Barrons article)
- OCN +1.7% (Board of Directors authorizes $50 million share repurchase program)
- VG +1% (announces that termination date of previously announced deal for ERIC to acquire VG has been extended to August 22)
- RIVN +1% (positive Barrons article)
Analyst comments:
- MSI +2.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- THS +2.6% (upgraded to Buy from Hold at Truist)
- ZBRA +1.6% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
- ED +1.5% (upgraded to Neutral from Sell at Guggenheim)
- TRMB +1.1% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
*STIGLITZ: RAISING INTEREST RATES WON'T SOLVE INFLATION PROBLEM
*STIGLITZ: WE NEED SUPPLY SIDE INTERVENTIONS
*STIGLITZ: OUR DEMOCRACY, ECONOMIC SYSTEM IS AT RISK
Marketing Budgets Rise as Share of Company Revenues, Gartner Survey Finds
Inflation, Russia’s invasion of Ukraine and supply-chain issues are creating headwinds for ad spending
Marketing budgets have risen to 9.5% of total company revenue in 2022, according to the annual CMO Spend Survey by research firm Gartner Inc.
The figure represents an increase from the 6.4% seen in 2021, but still lags behind prepandemic levels. Marketing spending averaged 10.9% of company revenue between 2018 and 2020 in Gartner’s surveys.
The survey collected responses from more than 400 marketing executives from North America, Western and Northern Europe from February through March on the marketing budgets for their current fiscal years. Respondents came from various industries and company sizes, with the majority reporting annual revenue of more than $1 billion, Gartner said.
The report found that average marketing spending increased across almost all industries surveyed, with financial services recording the highest budgets, at 10.4% of company revenue, up from 7.4% in 2021. Spending at consumer-goods firms has declined slightly, however, dropping to 8% in 2022, from 8.3% in 2021.
A December forecast from media-buying firm GroupM predicted that global ad spending would rise 22.5% to $763.2 billion this year, excluding U.S. political spending. That raised a previous estimate of 19.2% growth this year.
But inflation, Russia’s invasion of Ukraine and supply-chain issues are creating headwinds for ad spending.
The disruptions roiling the world economy are likely to hurt many companies’ performance, which will put downward pressure on marketing spending relatively quickly, said Ewan McIntyre, vice president analyst and chief of research for the Gartner for Marketers practice.
“We’ve seen this in previous years—marketing budgets are generally the first to be impacted in times of economic difficulty,” he said.
Al Moffatt—who runs Moffatt Advisory, which consults for ad agencies and brands—said companies often should lean into marketing during tougher times to maintain their position with consumers.
“If you have a strong brand, you’re able to charge more for it, regardless of the sector,” he said. “And that’s going to help you with your margins to help offset the cost of goods.”
He said the lesson for marketers is that if they do need to cut, they shouldn’t cut too much.
Christine Moorman, a professor at Duke University’s Fuqua School of Business and managing director of another CMO spending study, said marketers should consider factors such as customer behavior and competitor activity when deciding whether to adjust spending.
“You want to look at what’s going on with your customers, and that’s where it’s really important to get close to them and spend time talking to them—not just guessing or doing large surveys, but really talking to people,” Ms. Moorman said. “But then also thinking about what your competition is going to do. If their revenues are tight, or if you see them being cautious, or in earnings calls with analysts they talk about cutting their marketing budget, maybe you want to push harder.”
The Average Age of Vehicles on U.S. Roadways Hits a Record 12.2 Years
Drivers are holding on to cars and trucks longer to avoid high prices on replacements and an inventory shortage at dealerships
The average age of vehicles on U.S. roadways edged higher in 2021, hitting a record of 12.2 years, as Americans challenged by high car prices and slim pickings on dealer lots held on to cars longer.
This was the fifth straight year the average vehicle age in the U.S. has increased, according to new data released Monday by research firm S&P Global Mobility.
Vehicles on average have been getting older in the U.S. for the past two decades as quality has improved and cars generally are lasting longer, analysts say.
During the pandemic, the trend has only accelerated, largely because of a computer-chip shortage that has curbed factory output and left dealership lots bare, S&P Global Mobility said.
With car supplies constrained, prices have also soared on both new and used vehicles, resulting in more shoppers choosing to delay purchases. The average vehicle age crossed 12 years for the first time in 2020, the firm found.
“You can’t find a replacement for a reasonable cost,” said Todd Campau, associate director of aftermarket solutions at S&P Global Mobility.
With drivers hanging on to vehicles longer, the percentage of cars and trucks scrapped—or taken out of use—each year fell to a two-decade low of 4.2% in 2021, according to S&P Global Mobility.
Meanwhile, drivers are putting more miles on their vehicles, as they get back on the road following a period of lockdowns and travel restrictions during the early days of the Covid-19 crisis. Last year, light vehicles in the U.S. traveled an average of about 12,300 miles, up 10% from 2020, S&P Global Mobility found.
Trina McCray is among those reluctant to give up her current vehicle, a 2014 Toyota Avalon that recently needed a $1,200 repair on the alternator. The Florida resident said she considered replacing it with a similar model, but quickly changed her mind when she saw the elevated prices dealers were charging.
“I just decided that it wasn’t worth me trying to find something,” Ms. McCray said.
The upward pressure on vehicle ages could last through this year and into 2023, the firm said. The auto industry continues to deal with a range of challenges that are preventing car companies from restocking selling lots, including the computer-chip shortage that is stretching into another year and more recent supply-chain disruptions like those linked to the Russia-Ukraine crisis, it added.
New-vehicle prices also continue to rise with auto executives saying the inventory crunch on selling lots could spill into next year. For instance, the average price paid in April 2021 for a new 2021 model-year vehicle was $38,585, according to J.D. Power. In January 2022—nine months later—that same model-year vehicle was selling for an average of $48,765 as a slightly used vehicle.
Buyers are also paying near-record sums for used vehicles, although in recent months they have started to see some relief with transaction prices starting to soften after a prolonged period of steady increases.
“Right now, there is no horizon where I can say we’re going to reach that inflection and start to go back down,” Mr. Campau said of the average vehicle age. He added that during economic crises, buyers tend to hold on to vehicles longer, a trend that was also observed during the 2008-2009 financial crisis.
While overall vehicles are getting older, there is one niche of the car market where the average age is in decline: electric vehicles. The average age of an EV was 3.8 years in 2021, down from 3.9 years in 2020, S&P Global Mobility said. More widespread adoption of electric vehicles could potentially lower the age of the average American car, but that shift likely won’t be noticeable until the next decade, Mr. Campau said.
For now, the need to fix and maintain these aging vehicles is driving more business for repair shops, he added.
The average revenue per service visit hit a record of $514 in April, according to Xtime, a software-focused brand under Cox Automotive that tracks this data. That figure is about 30% higher than the $394 per-service transaction recorded in January 2018, when Xtime started collecting data.
Bobby Colemire, owner of Crowes Master Tech Auto Repair in Lexington, Ky., said he is seeing a big uptick in demand for service work and he has had to hire more people because of it. Before the pandemic, customers facing expensive repairs would often put that money toward a new vehicle, he added.
“Now, we’re getting much fewer refusals based on price,” Mr. Colemire said.
Iran Vows Revenge for Killing of Senior Revolutionary Guard Member in Tehran
Killing is likely to increase tensions with Israel, which accuses Tehran of plotting assassinations of Israeli officials abroad
Iran vowed Monday to avenge the killing of a senior member of its top paramilitary force, the Revolutionary Guard, who was shot by unknown assailants in Tehran on Sunday, an incident that is likely to increase animosity between the Islamic Republic and its rivals, particularly Israel.
Iranian President Ebrahim Raisi said security officials would pursue the killing of Col. Hassan Sayyad Khodaei, who was shot by two motorcyclists outside his home in the Iranian capital on Sunday afternoon, according to the Revolutionary Guard.
“I have no doubt that revenge for the pure blood of this martyr on the hands of the criminals is inevitable,” Mr. Raisi said on state television Monday.
Iran hasn’t explicitly accused anyone of the killing, but Mr. Raisi blamed “global arrogance,” a term usually applied to the U.S., which Iran accuses of supporting hostile acts by its enemies such as Israel.
The Revolutionary Guard, which is responsible for Iran’s military operations abroad, said Mr. Khodaei, who was unknown to the public until Sunday, called the colonel “defender of the shrine,” a catchall term used by Iranian media to describe its soldiers fighting in Iraq and Syria.
Israel says Iranian-backed militias have been entrenching themselves in Syria in recent years and have used that perch to launch attacks against Israel. The Israeli military, in a yearslong campaign, has carried out hundreds of airstrikes in Syria in response, which Iran says have killed several Revolutionary Guard members.
Speaking about the killing, a senior spokesman of Iran’s armed forces Brig. Gen. Abolfazl Shekarchi called the U.S. and Israel the global centers of terrorism. “And we are victims of terrorism,” he said, according to the semiofficial Fars news agency.
Mr. Shekarchi also pointed to an Iranian missile attack in March that hit the northern Iraqi city of Erbil and sent U.S. troops rushing for shelter, warning: “That operation gave a lesson that if mischief escalates, we will give stronger responses.”
Sunday’s killing comes as Israel expresses concern about alleged Iranian attempts to assassinate Israeli officials abroad. But it also coincides with Iranian attempts to improve diplomatic relations with some Arab neighbors in the Persian Gulf following a U.S.-brokered process that normalized relations between Israel and some Arab nations.
Mr. Raisi landed on Monday in the Omani capital of Muscat to expand diplomatic, trade and energy ties. It is the first Iranian state visit since 2020 to the Gulf nation, which traditionally has served as a mediator between Tehran and Washington.
The killing could also further complicate negotiations to revive the 2015 international nuclear deal with Iran that have stalled partly as a result of Iranian demands that the U.S. remove the Revolutionary Guard from its list of designated terrorist groups.
Israel is strongly opposed to the nuclear deal, which it says will destabilize the Middle East by freeing up money that Iran can use to fund its regional militias, and which doesn’t go far enough to prevent Tehran from obtaining nuclear weapons.
Iran has accused Israel in the past of conducting assassinations on it soil, including the killing of its top nuclear scientist Mohsen Fakhrizadeh in 2020. Between 2010 and 2012, four Iranian nuclear scientists were killed, while a fifth survived an assassination attempt.
Neighbors of the slain colonel who spoke to Iranian state media at the scene of the killing said they had no idea that he was a “defender of the shrine.”
Binance promoted terra as 'safe' investment before $40bn collapse
World’s biggest crypto exchange marketed stablecoin lending scheme offering nearly 20% yield
Binance promoted terraUSD as a “safe” investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry.
The world’s biggest crypto exchange advertised on April 6 an investment scheme in which clients lend out their terra to earn a yield of almost 20 per cent as a “safe and happy” opportunity, according to a message Binance sent on its official channel on the Telegram messaging app.
Terra and luna, a set of linked digital tokens, were popular with crypto traders seeking to earn high returns through lending programmes known as “staking”, but lost nearly all of their value earlier this month in one of the crypto industry’s biggest-ever crashes.
Binance is one of the most influential players in the crypto sector, processing around $1tn of trades a month and offering a wide range of financial products through its website. Its promotion of terra as a safe investment highlights the central role crypto exchanges play in choosing which digital tokens are made easily accessible to mainstream traders.
Advertising of crypto investments has emerged as a concern for regulators in several countries, who worry about promotions that downplay the risk of cryptocurrencies or encourage small investors to put their money into complex digital asset products that have few legal protections.
The UK government plans to tighten the standards for crypto ads. Singapore earlier this year banned almost all public transport and social media influencer ads for crypto, while Spain said it will require influencers to notify regulators in advance about crypto posts.
Binance’s Telegram message, which was viewed 117,000 times on an app widely used by crypto enthusiasts, provided no disclosures, although a website the advert linked to noted that “cryptocurrency trading is subject to high market risk”. Binance had also in 2021 promoted a luna staking scheme as a “safe” investment.
Binance told the Financial Times it is now “reviewing how campaigns for projects, such as Luna, are evaluated prior to them being advertised”.
Terra is a so-called stablecoin that attempts to mirror the value of $1 through a relationship with cryptocurrency luna that is set by algorithms. If terra falls below $1, traders are incentivised to purchase the stablecoin, and then redeem it for $1 worth of newly minted luna tokens. They pocket the difference in price as profit. However, the relationship broke down earlier this month, causing the values of both coins to collapse to near zero.
The fall of luna hit many retail traders with severe losses and ricocheted through the crypto market. Bitcoin, the world’s most valuable crypto token, fell to its lowest level since late 2020 as the luna incident added to broader pressures across the digital asset market.
Binance chief executive Changpeng Zhao acknowledged in a blog post on Friday that “it’s now obvious that the whole thing was built on a self-perpetuating, shallow concept”.
He added: “While terra did have an ecosystem with some use cases, the speed of growth of the ecosystem did not match the speed of the incentives used to attract new users.”
Zhao said at the Financial Times Digital Assets Summit in April that while the exchange performs “due diligence” on the coins on its platforms, the most important metric for its decision-making is a token’s popularity. “If something is used by a large number of users . . . it has value,” he commented.
The group, which has no fixed headquarters, was censured last year by the UK financial regulator, which warned that the group’s “complex and high-risk financial products” posed “a significant risk to consumers”.
However, it has recently made headway in garnering regulatory approvals elsewhere. Binance is planning to make France “at least” a regional headquarters after regulators earlier this month gave its local subsidiary approval to act as a registered digital assets service provider — the first EU country to do so. Binance has also received similar approvals in Dubai and Bahrain.
EA Looking To Sell Or Merge
The Madden and Apex Legends publisher is apparently looking for a way out
Link : https://bit.ly/3yUGoWa
The video game market is consolidating like never before, and Electronic Arts is scrambling like everyone else. The Battlefield and FIFA maker recently pursued a merger with NBCUniversal, and also held potential acquisition talks with Disney, Apple, and other companies, according to a new report by Puck. While a deal isn’t currently in the works, it doesn’t sound like EA plans to give up anytime soon.
“In recent years, as media companies have taken greater interest in the rapidly growing gaming industry, Wilson and Electronic Arts have held talks with a number of different potential suitors, including Disney, Apple and Amazon, sources with knowledge of those talks told me,” wrote Puck’s veteran media reporter, Dylan Beyers. “Several sources familiar with these talks say EA has been persistent in pursuing a sale, and has only grown more emboldened in the wake of the Microsoft-Activision deal. Others say that EA is primarily interested in a merger arrangement that would allow Wilson to remain as chief executive of the combined company.”
But it was apparently a deal with NBCUniversal that got the farthest along. According to Beyers, Comcast CEO Brian Roberts was looking to spin off the entertainment conglomerate into a separate entity with EA, with one version of the deal leaving current EA CEO Andrew Wilson in charge of the new mega-business. Negotiations eventually fell apart over price, however.
*dun-dun*
“We don’t comment on rumors and speculation relating to M&A,” EA spokesperson John Reseburg told Kotaku in a statement. “We are proud to be operating from a position of strength and growth, with a portfolio of amazing games, built around powerful IP, made by incredibly talented teams, and a network of more than half a billion players. We see a very bright future ahead.”
Over the past year there’s been a frenzy of video game studio acquisitions, one that was sent into overdrive in January after Grand Theft Auto publisher Take-Two announced it was buying Zynga for $12.7 billion and Microsoft announced it was planning to buy Call of Duty maker Activision Blizzard for $69 billion. Sony followed weeks later with a deal to buy the studio behind Destiny 2, Bungie, for $3.6 billion, a price some analysts considered massively inflated and possibly a sign of a new mad rush to consolidate among the gaming industry’s biggest players.
In an earnings call in February, Andrew Wilson implied the company was focused on making acquisitions rather than being acquired. As evidence, EA spent $5 billion over the last year buying up studios to increase its size. But now it appears the publisher has been aggressively pursuing other ways of scaling up. Beyers reports that Wilson approached Disney as recently as March “in pursuit of what sources described as ‘a more meaningful relationship’ than licensing deals.”
This news comes as EA has lost or abandoned some of its biggest existing licensing deals. While the publisher recently revealed three new Star Wars games currently in production, including a new Star Wars Jedi: Fallen Order that’s rumored to release early in 2023, its exclusivity deal with Disney for the Star Wars license isn’t going to be renewed when it expires in 2023. That’s allowed competitors like Quantic Dream and Ubisoft to announce their own big Star Wars projects. EA also revealed last week that it’s ending its similar 10-year exclusivity deal with FIFA, and beginning in 2023 will rebrand its blockbuster soccer franchise EA Sports FC.
Whatever EA’s future holds, one big concern with consolidation is how it will ultimately impact employees at these companies. Even as EA’s reported another profitable year, Kotaku recently learned that an estimated 200 customer service staff are being laid off. According to four of the impacted employees, their work is being outsourced to cheaper third-party vendors in Romania and India.
Comcast, Disney, and Apple did not immediately respond to a request for comment.
Early premarket gappers
- Gapping up:
- AXL +12.6%, GOEV +7.4%, ALGN +2.2%, GNK +1.5%, POSH +1.4%, CVX +1.2%, EA +1.1%, VG +1%, RIVN +1%, BURL +0.9%, ABBV +0.8%, TJX +0.8%, BA +0.7%, MCRB +0.6%, GH +0.6%, CNI +0.6%, WRBY +0.5%, QCOM +0.5%
- Gapping down:
- LTCH -4.1%, NIU -3.1%, XPEV -2.2%, VIR -2.1%, NEXT -1.7%