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AppFolio, Chegg и Digital Turbine наращивают продажи. SoftBank hinders the growth of Chinese stocks. Robinhood gives voice to its shareholders and others. L3Harris gets smaller. Moody's begins to consider climate risks.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
Reports
We analyze the reporting of companies, for which we had reviews and investment ideas.
Property management software maker AppFolio (NASDAQ: APPF) reported an increase in revenue from 81.047 to 89.040 million. No major tax deduction this year, who was in 2020, and increased costs led to, that the company's profit fell from 19.257 to 2.021 million. Looking only at operating income, then she almost fell into 6 once.
Chegg Online Education Platform (NYSE: CHGG) increased revenue by 30%. The services segment grew the most 38%. The number of subscribers grew by 31% — up to 4.9 million people. The company's profits more than tripled, in no small part due to, that there were no large debt service payments this year. Operating profit increased by about half.
Advertising software manufacturer Digital Turbine (NASDAQ: APPS) almost quadrupled revenue, largely through the acquisition of other companies, and profits have grown since 9,9 up to 14.3 million.
Less China
The SoftBank conglomerate announced, that it will refrain from new investments in the Chinese market until the position of regulators in China is clarified. All this happened in connection with a series of attacks by the Chinese authorities on Chinese technology companies..
The news about SoftBank is important, because this bank is a kind of weather vane in the world of technology investments, by which you can navigate, who just invests in the stock market. SoftBank's position reflects the attractiveness of the Chinese economy or lack of it for investors around the world in principle.
With its size—now managing $100 billion in high-tech investment fund Vision—and long history—the company invested in Uber—SoftBank serves as a benchmark for investors around the world., and both for institutional, as well as for retail. That fact, that SoftBank refrains from investing in the Chinese market, may lead to, that trading in shares of Chinese companies will become less attractive.
Other investors may decide, that “since even SoftBank considers it too risky business, what are we to do?". That is, Chinese companies, even if they have a good business foundation and not a very high price, how, for example, Alibaba, may not grow just because, that Western investors will bypass them, focusing on SoftBank.
In theory it is possible, that the shares of Chinese companies, listed on Chinese exchanges, will grow faster, how ADR in USA. This can happen due to the demand for them in China.. When the difference between the value of Chinese stocks and US-traded ADRs of the same companies becomes too large - provided, that Chinese stocks will rise, while ADR will stagnate, — investors will buy ADRs, and their price will also rise.
But such a scenario of events implies a high level of development of the stock market in China and large sums in this market.. And it's not like that. If the USA is 55,9% from the capitalization of all companies in the world, then China is only 5,4%. Basically, the Chinese market is a provincial swamp, about the same as MICEX, this is why many Chinese companies have opted for an IPO in the US, where the money is trite. So it's unlikely, that Chinese stocks will show good growth rates, without support in the West.
Although, maybe, SoftBank's stance won't have such a devastating effect on Chinese issuers and I'm just blowing water.
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M&A News
<
p class=’paragraph’>Here we will talk about large purchases of companies, on which we have already published reviews and investment ideas.
Online broker Robinhood is going to buy Say Technologies. Say does that, what does it say in its title, — provides shareholders with a communication platform to participate in the life of the company, in which they have a share. With Say, investors can view documents posted by management, ask management questions, give feedback, vote.
The purchase price of Say is $140 million.. Certainly, considering the unprofitability of Robinhood itself, one might wonder, is it worth spending money like that, - but the company recently held an IPO, so she has extra money now, at least for now.
In terms of the development of Robinhood, this is a completely logical purchase.. During the IPO, the company allocated to its users almost a third of the total volume of shares put up for the IPO - and after a while they flew into the stratosphere. In my mind, Robinhood will use Say technology to further flirt with its users and not only - and to pump up its capitalization at their expense.
Defense company L3Harris Technologies sells its electronics business for $185M. Earlier this summer, the company sold another part of the business - combat training and combat installations - for $1.85 billion.. All these transactions were planned during the L3-Harris merger in 2019.
Rating agency Moody’s buys RMS company, climate risk modeling. RMS cost - $2 billion. According to Moody's experts, Problems, related to climate change, have an increasing impact on the business of most companies - for example, in the field of logistics. That's why, according to Moody’s, this information must be taken into account when making investment decisions and assigning investment ratings. This story matters to investors for two reasons..
Firstly, this is another vivid example of, how the ESG agenda is being pushed aggressively at the very top of investment circles. Think, that many investment companies will take this transaction as an indicator, that it is necessary to increase pressure on issuers on the climate agenda.
Secondly, ESG hysteria allows any company to charge an exorbitant price, that fits into this agenda. RMS is, by the way, not some startup: the company is bought from the English media holding Daily Mail and General Trust. The latter fact may lead skeptical people to interpret the deal as another example of, how people from the Old World sell some stupidity to American dupes at exorbitant prices under the guise of "scientific achievements".
Freud's words come to mind, what he said before his visit to the USA: "We bring them a plague, and they don't know about it.". In practical terms, deals of this magnitude allow any "green" enterprise to hope, that someday they will buy, much to the delight of their shareholders, regardless of their achievements and the practical applicability of the business model.
