Gapping up
In reaction to earnings/guidance:
- KFY +6.7%, TWST +3.8%, CEL +1.9%
Select travel related names showing strength:
- NCLH +3.3%, CCL +3.1%, HA +3%, RCL +1.9%, DAL +1.8%, UAL +1.8%, SAVE +1.8%, AAL +1.7%, ALK +1.6%, JBLU +1.6%, .
Other news:
- IDEX +32.5% (has increased its stake in California-based Solectrac, Inc. through a follow-on investment of an additional $1.3 million)
- RESI +20.2% (Front Yard Residential amended merger agreement with Pretium and Ares Management -- consideration increased to $16.25/share from $13.50/share)
- APXT +10.3% (AvePoint, the largest Microsoft (MSFT) 365 data management solutions provider, announces $2bn merger with APXT)
- EIGR +9.9% (FDA approves Zokinvy for HGPS or Progeria and processing-deficient Progeroid Laminopathies)
- SDGR +6.5% (Announces a multi-target drug discovery, development, and commercialization collaboration with Bristol Myers Squibb (BMY))
- REGN +4.1% (receives Emergency Use Authorization for REGEN-COV2 antibody cocktail)
- BCLI +3.9% (to present NurOwn Phase 3 clinical trial results)
- NVTA +3.3% (confirms the FDA accepted the submission of a premarket approval application for a companion diagnostic claim for STRATAFIDE on Nov 18)
- RIGL +3.3% (Rigel Pharma and Medison Pharma announced that Health Canada has approved the new drug submission for TAVALISSE for the treatment of thrombocytopenia)
- PEIX +2.9% (files for 8,900,493 share common stock offering by selling shareholder)
- CSIQ +2.7% (signed a power purchase agreement with BTG Pactual and was awarded with two projects in a private auction by Furnas Centrais Elétricas)
- AON +2.4% (authorizes additional $5.0 bln share repurchase program)
- SMMT +2.3% (Dr. Mahkam Zanganeh has been appointed as Chief Operating Officer, effective immediately)
- MRK +2% (will acquire all outstanding shares of OncoImmune for an upfront payment of $425 million in cash)
- VFF +1.6% (receives cannabis research license for on-site sensory evaluation from Health Canada / Pure Sunfarms Brand debuts internationally )
- CGC +1.6% (announces completion of study on the long-term effects of CBD)
- BDX +1.3% (announces streamlined reporting capabilities for COVID-19 Data)
- PFE +1.2% (FDA has scheduled a meeting for December 10 to discuss the request for EUA of a COVID-19 vaccine)
Electric vehicles: double, double toil and bubble
Two more EV bubble data points.
Two more data points this wintry morning to back up our assertion last week that there’s currently the mother of all bubbles in the electric vehicle market.
First up, there’s the share price of a Nasdaq-listed company called Arcimoto:
]Errr, what’s going on here? Well, if you don’t know the $542m business, it produces “affordable, practical, and joyful pure electric vehicles” for consumers and businesses like DHL. Its initial product is called the FUV (not to be confused with this article, which undoubtedly will be deemed FUD) which, believe it or not, stands for “The Fun Utility Vehicle”.
The electric heir to the Reliant Robin starts at $17,900, and according to the company’s latest 10-Q filing, Arcimoto has produced 79 — yes, 79 — of them year-to-date. It promises four further vehicles, including the “Deliverator”, a delivery van, in the coming year.
Yet, with just $1.5m of sales year-to-date, or $2m annualised, that puts its current EV/sales multiple at a rather aggressive 210 times trailing revenue. Investors don’t seem to think it’s too expensive though: on Friday the company announced it was raising another $15m of stock at above the market price.
Arcimoto isn’t the only example. You may recall last week that Arrival, a UK-based electric vehicle manufacturer, is set to go public via yet another Spac deal with a valuation of $5.4bn.
Like Arcimoto, it’s a small company with a decent pre-order book, a promising product and some viable commercial partners, but what caught our attention was one slide in its investor presentation used to justify its future market capitalisation.
Open the below in a new tab, and cast your eyes down to the bottom of the screen:
–Yes, you read the correctly, there’s a brand new valuation metric for you to now add to your models: EV/ TAM. TAM being, of course, Total Addressable Market. A popular acronym with companies where the economics don’t quite add up yet.
While it’s fine to compare enterprise value to a company’s annual revenues — as there’s some always some certainty that historical revenue stream will continue into the future — there is far less certainty that a company will capture some share of a market’s revenues in the future. In fact, at times there’s zero certainty.
So really, expressing a company’s valuation as a percentage of its total addressable market seems about as useful as just saying “I don’t know”.
Which is the same answer we’d give now if we were asked to predict who would be the winners of the current electric vehicle hype-cycle. Although, if we were to look back at the great pot-stock bubble of 2018 for a clue, the answer may well be “no one at all”.
Germany says Turkey stopped it checking ship for arms-running to Libya
BERLIN (Reuters) - Turkey prevented German forces belonging to a European Union military mission carrying out a full search of a Turkish cargo ship that they suspected of taking weapons to Libya, both countries confirmed on Monday.
Soldiers from the frigate Hamburg boarded the Turkish freighter, the Rosaline A, overnight, but had to abandon checks and withdraw after Turkey protested to the EU mission, the German defence ministry said.
The frigate was operating in the Mediterranean as part of the EU’s Irini mission, which aims to stop arms reaching the warring factions in Libya.
“By the time the soldiers left the ship, they had not found anything suspicious,” a German defence ministry spokesman said.
Turkish security sources said the Rosalina-A was carrying various materials such as food and paint, and that the search team had violated international law by not waiting for permission from Turkey.
It said the soldiers had found nothing despite spending the entire night opening containers on the ship.
“Following the search that lasted until the early hours of the morning, the soldiers understood that there was nothing on the ship apart from humanitarian aid, foods such as biscuits, and paint materials, and left the ship,” a source said.
Confirming a report in the news magazine Der Spiegel, the German spokesman said the Hamburg had intercepted the Rosaline A about 200 km (125 miles) north of the Libyan city of Benghazi on Sunday night.
He said the Hamburg had followed standard procedure by waiting four hours for approval from the flag country, and then boarding. Later, once the objection arrived, they withdrew.
“All procedures were followed correctly,” a German foreign ministry spokeswoman said.
The 16,000-tonne container ship left the Turkish port of Gemlik near Bursa last week, and was last seen off Athens, heading southwest towards Libya, according to Refinitiv Eikon data.
Early premarket gappers
- Gapping up:
- SDGR +7.9%, PEIX +5.9%, EIGR +5.7%, REGN +4.9%, NCLH +4.2%, CCL +3.9%, RCL +3.5%, SAVE +3.2%, MRK +3%, AAL +2.6%, UAL +2.5%, KFY +2.5%, AON +2.4%, DAL +2.3%, LUV +2.3%, PFE +1.8%, ALK +1.6%, ROKU +1.5%, CEL +1.4%, HA +1.1%, T +1%, CSGP +0.9%, JBLU +0.8%
- Gapping down:
- SOLO -10.4%, BZUN -5.8%, CASI -2.7%, VXX -1.6%, OPK -1.3%, ZM -1.3%, KIN -1.3%, MEG -1.1%, AZN -0.9%, PTON -0.7%, BCYC -0.6%, LOGI -0.5%
Gartner: Q3 smartphone sales down 5.7% to 366M, stemming Covid-19 declines earlier this year
As we head into the all-important holiday sales period, new numbers from Gartner point to some recovery for the smartphone market as vendors roll out a raft of new 5G handsets. Q3 smartphone figures published today showed that smartphone unit sales declined 5.7% globally over the same period last year to 366 million units. Yes, it’s a drop, but it is still a clear improvement on the first half of this year, when sales slumped by 20% in each quarter, due largely to the effects of Covid-19 on spending and consumer confidence overall.
In terms of brands, Samsung continued to lead the pack in terms of overall units, with 80.8 million units, and a 22% market share. In fact, the Korean handset maker and China’s Xiaomi were the only two in the top five to see growth in their sales in the quarter, respectively at 2.2% and 34.9%. Xiaomi’s numbers were strong enough to see it overtake Apple for the quarter to become the number-three slot in terms of overall sales rankings. Huawei just about held on to number two. See the full chart further down in this story with more detail.
Also worth noting: overall mobile sales — a figure that includes both smartphones and feature phones — were down 8.7% 401 million units. That underscores not just how few feature phones are selling at the moment (smartphones can often even be cheaper to buy, depending on the brands involved or the carrier bundles), but also that those less sophisticated devices are seeing even more sales pressure than more advanced models.
Smartphone slump: it’s not just Covid-19
It’s worth remembering that even before the global health pandemic, smartphone sales were facing slowing growth. The reasons: after a period of huge enthusiasm from consumers to pick up devices, many countries reached market penetration. And then, the latest features were too incremental to spur people to sell up and pay a premium on newer models.
In that context, the big hope from the industry has been 5G, which has been marketed by both carriers and handset makers as having more data efficiency and speed than older technologies. Yet when you look at the wider roadmap for 5G, rollout has remained patchy, and consumers by and large are still not fully convinced they need it.
Notably, in this past quarter, there is still some evidence that emerging/developing markets continue to have an impact on growth — in contrast to new features being drivers in penetrated markets.
“Early signs of recovery can be seen in a few markets, including parts of mature Asia/Pacific and Latin America. Near normal conditions in China improved smartphone production to fill in the supply gap in the third quarter which benefited sales to some extent,” said Anshul Gupta, senior research director at Gartner, in a statement. “For the first time this year, smartphone sales to end users in three of the top five markets i.e., India, Indonesia and Brazil increased, growing 9.3%, 8.5% and 3.3%, respectively.”
The more positive Q3 figures coincide with a period this summer that saw new Covid-19 cases slowing down in many places and the relaxation of many restrictions, so now all eyes are on this coming holiday period, at a time when Covid-19 cases have picked up with a vengeance, and with no rollout (yet) of large-scale vaccination or therapeutic programs. That is having an inevitable drag on the economy.
“Consumers are limiting their discretionary spend even as some lockdown conditions have started to improve,” said Gupta of the Q3 numbers. “Global smartphone sales experienced moderate growth from the second quarter of 2020 to the third quarter. This was due to pent-up demand from previous quarters.”
Digging into the numbers, Samsung has held on to its top spot, although its growth was significantly less strong in the quarter. “Fortunately” for Samsung, it’s still a long way ahead. That is in part because number-two Huawei, with 51.8 million units sold, was down by more than 21% since last year, in the wake of a public relations crisis after being banned in the US and phased out in the UK, due to the accusations that its equipment is used by China for spying.
It will be interesting to see how Apple’s small decline of 0.6% to 40.6 million units to Xiaomi’s 44.4 million, will shift in the next quarter, on the back of the company launching a new raft of iPhone 12 devices.
“Apple sold 40.5 million units in the third quarter of 2020, a decline of 0.6% as compared to 2019,” said Annette Zimmermann, research vice president at Gartner, in a statement. “The slight decrease was mainly due to Apple’s delayed shipment start of its new 2020 iPhone generation, which in previous years would always start mid/end September. This year, the launch event and shipment start began 4 weeks later than usual.”
Oppo, which is still not available through carriers or retail partners in the US, rounded out the top five sellers with just under 30 million phones sold. The fact that it and Xiaomi do so well despite not really having a phone presence in the US is an interesting testament to what kind of role the US plays in the global smartphone market: huge in terms of perception, but perhaps less so when the chips are down.
“Others” — that category that can take in the long tail of players who make phones, continues to be a huge force, accounting for more sales than any one of the top five. That underscores the fragmentation in the Android-based smartphone industry, but all the same, its collective numbers were in decline, a sign that consumers are indeed slowly continuing to consolidate around a smaller group of trusted brands.
The Cloud, AI and the Transformation of Retail
Google Cloud report covers the AI imperative in specialty retail, plus AWS weighs in on the pandemic’s influence.
According to Google, retail is in a redefining moment with artificial intelligence and machine learning, and the transformation has implications that go beyond today’s COVID-19 reality.
The tech giant’s cloud division commissioned a retail survey from McKinsey & Co., and the results portray a landscape that may be fraught with challenges, but also holds major opportunities for brands and stores — if they know how and where in their business to apply intelligence.
The report reflects what many retail and technology experts have already accepted — that the pandemic has fast-tracked tech adoption in a retail industry that suddenly finds itself forced to adapt.
In essence, the pandemic “condensed the timeline available to play ‘catch up’ in developing agile, resilient operating models powered by cloud infrastructure, artificial intelligence and machine learning (AI/ML) technologies,” Carrie Tharp, vice president of retail and consumer solutions at Google Cloud, wrote in a blog post published Friday.
The survey’s scope covers 100 retail executives from companies with $300 million or more in revenue across North America, Asia Pacific, Europe, Middle East, Africa and Latin America.
Tharp went into a bit more detail in a conversation with WWD: “We all know that the capital is locked up in the product, and merchants and marketers and everybody in these organizations is very specific on maximizing returns and engaging customers in the most effective way. What really came through in the research is really putting a number to that value,” she said.
The survey revealed that AI and ML could potentially drive $230 billion to $520 billion in value by 2023 for specialty retailers, including fashion, accessories, beauty and other categories. The figures are even higher for food retailers, drug stores and big box chains.
When it comes to AI in retail, the conversation often centers around the flashiest, consumer-facing areas. Think chat bots, personalized product recommendations, conversational commerce, computer vision and augmented or virtual reality.
These are important — increasingly so — but they are only one part of a much deeper puzzle that extends across both the front and back ends of the business, according to Google. The span is wide and includes 10 areas, including customer acquisition and retention, omni-channel commerce, merchandising, logistics, real estate and other corporate functions.
Of these areas, Google Cloud found that a few segments that accounted for an overwhelming share of the potential, representing more than 75 percent. For specialty retailers, those segments are merchandising and assortment, product lifecycle management and logistics and fulfillment — with the overwhelming emphasis on merchandising and assortment.
To be sure, AI and ML can help companies recognize critical patterns often missed by traditional analytics, while powering retail services and other critical features. For instance, Hanes Australasia improved product recommendations and revenue with the tech giant’s Recommendations AI. Vestiaire Collective used the company’s cloud translation tools to translate thousands of descriptions from six languages into English automatically, saving as much as 82 percent over its previous service.
Google Cloud is not the only game in town, of course. There’s no shortage of cloud platforms that are lining up to help retailers, chief among them is Amazon and its Amazon Web Services (AWS).
Some retail businesses may be reluctant to join forces with the e-commerce giant, which is often accused of competing with its own marketplace merchants. But the truth is that there are plenty of brands and retailers that rely on its cloud services — including Bonobos, J. Crew, Skechers, Levi’s, Poshmark, Etsy and many others. Its vast retail experience, plus 20 years in AI and machine learning, gives it an informed perspective and no small amount of technical expertise.
From AWS’ point of view, retail in the coronavirus era is fixated on one particular area: efficiency.
“Cloud technologies are really in the forefront now, especially in this pandemic. Retailers are looking primarily at a couple of things,” Tom Litchford, head of worldwide retail at AWS, told WWD. “One, ‘how can I basically start cutting costs?’ And number two, ‘how do I start recovering all that revenue I’ve lost while my stores were closed?’”
First and foremost, Litchford believes businesses need to accelerate their cloud migrations and modernization efforts, “including moving stuff out of data centers and into the cloud,” he said, which could bring savings of anywhere from 30 to 50 percent.
As for AI and ML, he said that every retailer AWS works with has been racing to figure out how to approach it, especially during the pandemic.
“Specifically from a fashion perspective, you’re sitting there on sale merchandise, and you’re trying to figure out how to liquidate, while at the same time, you’re coming into a holiday season trying to get merchandise in for that and planning for your spring merchandise,” Litchford added. “That’s coming up all at the same time. It’s a harsh scenario, not really knowing what’s going to happen and when COVID is going to be under control and we’re back to some sort of normalcy.”
Indeed, apart from efficiency and cost-cutting, the pursuit of deeper customer connections tends to be what drives most intelligence initiatives, regardless of platform or service provider. That has retailers pushing hard for personalization and forecasts, so they can understand their customers better. The goal, of course, is to develop stronger relationships.
It’s a scenario Google’s Tharp sees all the time. “Many merchants are so locked up, perhaps, in an Excel spreadsheet with macros,” she said. “The value of bringing a broader point of view, broader data insights, into an AI and ML-based solution [is that] there’s just a lot of value left to be unlocked. One of the effects is really about ‘everything customer’ — so customer personalization, customer 360.”
This need is not going to go away, even if COVID-19 does.
The Google Cloud executive likens it to the period after 9/11: “From a peak perspective, we’re in it. Much of this year, instead of thinking of the big picture for 2021, a lot of retailers are focused on being ready for battle stations and ‘what do I urgently need in place?’, focusing on survival and living to fight another day — in a way that many retailers had to do in the wake of 9/11,” she said. “And so you saw this very focused period on the most critical things.
“But from a bigger picture, when you think about this study, this is really about, it’s never too late,” she added. “It’s always a good point to start this journey.”
Google offers that glimmer of hope, and it’s not just wishful thinking. It’s backed by data.
Although the market has undoubtedly contracted for major parts of the apparel industry this year, the search giant found that enthusiasm for fashion is still alive and well.
Searches for “fashion online shopping” jumped globally by over 600 percent between March through May versus the same period the previous year. And between June and August, searches for “clothes shopping apps” grew globally by over 200 percent, compared to the year before.
In other words, the public’s appetite for fashion hasn’t gone anywhere. Who will be around to meet it when the restrictions lift, economies recover and people are ready again to indulge may be defined by more than just grit and resilience. It will take preparation. And intelligence — in every sense of the word.