Apollo Global Management, a prominent US asset management firm, is reportedly preparing to invest up to $5 billion in Intel, Bloomberg reported on Monday.
The potential investment comes as Intel navigates a period of significant market decline, with its stock price dropping nearly 60% since the start of the year.
The report further suggests that Apollo is ready to make an equity-like investment in Intel, a deal that could provide a financial boost to the once-dominant chipmaker.
The details were shared by a source familiar with the matter, as cited by Bloomberg.
Intel, once the world’s most valuable semiconductor company, has seen its market position weaken in recent months.
Since Patrick P. Gelsinger took over as CEO, Intel has embarked on an expensive overhaul aimed at diversifying its product offerings and client base.
However, these efforts have yet to yield positive financial results, with a series of disappointing earnings reports.
This has eroded investor confidence, leading to a sharp drop in Intel’s market value, wiping out tens of billions of dollars in the process.
The company’s recovery now faces significant challenges amidst increasing competition.
As the company weighs Apollo’s proposal, it’s clear that the investment could serve as a lifeline during a challenging period.
Talks are still in the preliminary stages, and there is no certainty that the deal will move forward, according to the report.
The size of the investment could shift, or negotiations may fall apart entirely.
However, Intel has not provided any public comment regarding the potential deal.
Apollo also has 49% stake in Intel’s $11B Ireland facility
This is not Apollo’s first move involving Intel.
Earlier in the year, Apollo acquired a 49% equity stake in a joint venture tied to Intel’s new $11 billion manufacturing facility in Ireland.
The interest in expanding their partnership signals Apollo’s strategic focus on the semiconductor industry.
Qualcomm also eyeing acquisition of Intel
Intel’s difficulties have caught the attention of other major players in the tech sector.
Just days ago, Qualcomm expressed interest in a potential acquisition of Intel, according to reports.
Qualcomm CEO Cristiano Amon is personally involved in the early-stage negotiations, though significant obstacles remain for such a transformative deal.
Qualcomm has previously explored acquiring parts of Intel’s chip design business, suggesting that its interest in the company is not new.
As these discussions unfold, the future of Intel and its position in the global semiconductor market remains uncertain.
Samsung Display Co., a leading South Korean electronics manufacturer, plans to invest $1.8 billion in a new OLED display factory in northern Vietnam this year.
The facility, located in the Yen Phong industrial park, Bac Ninh province, will focus on producing OLED screens for automotive and tech equipment, according to a statement from the Vietnamese government.
The announcement came after a meeting between Vietnam’s Prime Minister Pham Minh Chinh and Samsung Vietnam’s General Director Choi Joo Ho.
This investment boosts Samsung’s total investment to $8.3 billion from its previous $6.5 billion investment in Yen Phong Industrial Park, with Bac Ninh authorities and Samsung Display formalizing the deal through a memorandum of understanding.
Vietnam has established itself as a key production hub for major electronics companies over the last decade.
On Sunday, Bac Ninh Province in northern Vietnam granted investment approvals, registration certificates, and memorandums of understanding for 18 projects.
Apart from South Korean tech giant Samsung, these projects include investments from major companies like Taiwan’s Foxconn, and Amkor Vietnam, with a total pledged capital exceeding $5.5 billion.
Global partnerships expand Samsung’s market reach
Samsung is further expanding globally, having been onboarded by Vodafone Idea alongside Nokia and Ericsson in a $3.6 billion deal to supply network equipment for three years, marking Samsung’s entry as a key partner.
With a cumulative investment of $22.4 billion in Vietnam, including six manufacturing plants and one R&D center, Samsung continues to strengthen its global presence and partnerships, driving innovation in electronics production.
This latest investment strengthens Samsung’s commitment to Vietnam’s growing electronics sector, as the company continues to scale its operations in response to rising global demand for OLED displays.
German business activity contracted at its fastest pace in seven months, according to data released on Monday.
The HCOB German flash composite Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 47.2 in September, down from 48.4 in August.
This reading, below the 50-point threshold, indicates a significant contraction in Europe’s largest economy.
The economic downturn in Germany also dragged the broader eurozone economy into contraction this month, marking the first such decline in seven months.
The steep fall signals growing concerns over Germany’s economic performance, with economists now predicting a technical recession.
“A technical recession seems to be baked in,” said Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, adding that he expects the German economy to shrink by 0.2% in the third quarter.
Manufacturing sector deepens downturn
Germany’s manufacturing sector remained the primary driver of the economic decline.
The manufacturing PMI dropped to 40.3 in September from 42.4 in August, marking the sector’s most severe contraction in recent months.
This continued downturn in manufacturing has dampened hopes for a swift recovery, with new orders collapsing and companies cutting jobs at a rate not seen since the COVID-19 pandemic. De La Rubia, said:
The downturn in the manufacturing sector has deepened again, evaporating any hope for an early recovery.
He noted that this sharp decline in output is spilling over into the services sector, which has seen four consecutive months of slowing growth.
Services sector and business confidence decline
While Germany’s services sector index remained in positive territory at 50.6, it showed a decline from August’s reading of 51.2, reflecting growing caution among customers.
Businesses have reported a decrease in new investments, citing concerns over the overall health of the economy.
Dr. de la Rubia highlighted the growing pessimism among manufacturers, stating:
Optimism is something of the past. Manufacturers are downright depressed about their future activity.
The recent challenges facing major players like Volkswagen have intensified concerns of deindustrialization, with many companies announcing significant job reductions.
The carmaker itself is considering shutting two German factories, in what would be its first closures ever in its home country, as it struggles with the transition away from fossil fuels.
As Germany’s flash composite PMI fell to its lowest point since February, economists are now bracing for a continued economic downturn.
A contraction of 0.2% in Q3 would confirm that Germany has entered a technical recession after GDP declined by 0.1% in the second quarter of 2024.
Downturn pulls the wider eurozone economy into a contraction
The economic downturn in Germany has dragged the broader eurozone into contraction this month, marking the first such decline in seven months.
Business activity across the eurozone fell in September, as indicated by the HCOB Flash Eurozone PMI index, which dropped to 48.9 – its lowest level in eight months.
In addition to Germany’s ongoing slump, the eurozone’s decline was exacerbated by a contraction in France’s private sector, where the boost from August’s Olympics-related activity has faded.
Business confidence also continued to weaken, with firms reporting a decline in new orders across the region.
Britain’s national debt has recently hit a critical threshold, reaching 100% of GDP for the first time in more than six decades.
As the country faces mounting financial pressures, Chancellor Rachel Reeves is gearing up for her first Budget on October 30, where she must address a rapidly deteriorating economic situation.
With public sector borrowing rising sharply, inflation pushing up costs, and debt servicing payments piling up, the UK is, quite literally, spending beyond its means. The scale of the challenge ahead is immense, and tough decisions are on the horizon.
How bad is Britain’s debt problem?
The latest data from the Office for National Statistics (ONS) reveals that Britain’s public sector debt has hit 100% of gross domestic product (GDP), a level not seen since the early 1960s when the country was still grappling with the financial consequences of World War II.
This milestone highlights how deeply embedded the UK’s financial troubles have become, driven by a combination of weak economic growth, high inflation, and substantial public spending.
In August 2024, the UK government borrowed £13.7 billion, £3.3 billion more than the same month in 2023, and £2.5 billion above forecasts made by the Office for Budget Responsibility (OBR).
Over the first five months of the 2024/25 financial year, the government’s borrowing totalled £64.1 billion, which is £6 billion higher than OBR projections.
This growing fiscal gap has triggered alarm across the political spectrum, with concerns that the country is on an unsustainable path.
Compounding the issue is the rising cost of debt servicing.
In August alone, debt interest payments reached £5.9 billion, only marginally lower than last year, despite the Bank of England beginning to lower interest rates after a prolonged period of high inflation.
These payments are tens of billions higher than what was anticipated before the Covid-19 pandemic, reflecting the abrupt end of the “low for long” interest rate environment that had eased the government’s borrowing costs for years.
Why is public spending spiraling out of control?
While the government’s tax revenues have increased, they have been far outweighed by escalating public spending, particularly on welfare benefits and public services.
Inflation has significantly raised the cost of running these services, while benefits like the carer’s allowance and disability living allowance have been adjusted to keep pace with rising prices.
As a result, the government is struggling to keep its finances in check.
These factors are putting immense pressure on Rachel Reeves, the Labour Chancellor, who is set to deliver a Budget in late October that many expect to be painful for the British public.
Reeves has already warned that tax hikes are unavoidable, but she has ruled out increases in income tax, corporation tax, and value-added tax (VAT), leaving her with limited options for raising revenues without breaking Labour’s manifesto commitments.
However, inflationary pressures continue to mount.
Not only are public sector wages being driven higher, but essential services are also becoming more expensive to maintain, pushing up overall government expenditure.
Reeves has already taken steps to reduce spending, such as scrapping the winter fuel payment for most pensioners and shelving planned investments in social care, infrastructure, and hospitals.
Yet, even with these cuts, there are widespread concerns that the country’s fiscal situation is becoming increasingly precarious.
Consumers don’t look too optimistic
As the government prepares for its next fiscal steps, consumer confidence is beginning to falter.
A recent report from data provider GfK showed a sharp decline in consumer confidence in September, the lowest since March, with many households fearing the effects of upcoming cuts and potential tax hikes.
Concerns about the loss of the winter fuel allowance, combined with the possibility of even higher energy bills, have left many Britons worried about their financial future.
Despite these warnings, some experts caution against overstating the public’s fear.
Retail sales figures, for instance, do not yet show signs of widespread consumer panic, suggesting that the full impact of the government’s economic measures may not have fully sunk in.
Still, with the October Budget looming and energy costs set to rise as winter approaches, sentiment could deteriorate further.
Can economic growth save the UK from financial disaster?
When it comes to managing high national debt, there are typically four options available, but only one of them is favorable.
The first option is to raise taxes, which puts a strain on households and businesses, potentially slowing down the economy.
The second is cutting public spending, which often leads to reduced services and welfare programs, affecting the most vulnerable in society.
The third, and least desirable, is printing more money, which can fuel inflation and destabilize the economy.
The only positive solution is fostering economic growth.
If the economy grows, the national debt becomes more manageable in relation to the country’s overall wealth, reducing the need for drastic fiscal measures.
Yet, economic growth in the UK has been sluggish.
The Bank of England recently revised its growth forecast for the third quarter of 2024 down to just 0.3%, a downgrade from the previous 0.4%.
The government’s focus on fiscal tightening, combined with weak consumer confidence and potential job losses, could further stifle growth in the months ahead, making the path to reducing debt even steeper.
Labour, despite its strong mandate following a recent election, has adopted a starkly negative tone on the state of the economy, warning of dire consequences if fiscal discipline is not restored.
While this approach may help Reeves prepare the public for painful decisions, some within the party worry that the messaging could backfire, undermining the government’s popularity before it even has a chance to implement its agenda.
Zooming out, the current fiscal environment in the UK represents a period of heightened uncertainty, but also opportunity.
In general, higher borrowing costs and volatile consumer sentiment might lead to short-term market dips.
However, this could also present buying opportunities for those with a longer investment horizon, especially if the government prioritizes infrastructure and innovation to stimulate growth.
The final months of 2024 will be critical in defining the direction of Britain’s economy.
Intel (INTC) stock price will be in the spotlight on Monday as investors reflect on the rumoured offer by Qualcomm and news that Apollo Global will make a $5 billion investment in the company. The stock, which rose by over 3.3% on Friday, will likely continue rising on Monday.
Apollo Global to invest in Intel
The most recent Intel news is that Apollo Global, one of the biggest players in the private equity and credit industry is considering making a $5 billion in the company.
That investment, if it goes on, is a sign that Wall Street believes that the company is severely undervalued and that the turnaround efforts by the management are working out.
Intel and Apollo have worked together before. Earlier this year, Intel sold a stake in a joint venture to Apollo in a $11 billion deal.
The new reporting came a few days after the Wall Street Journal reported that Qualcomm had made an offer to buy Intel, in which would be the biggest deal in the tech industry.
Qualcomm has a market cap of over $188 billion while Intel is valued at over $93 billion. Because of the expected equity premium, the deal would be valued at over $110 billion.
I believe that this deal will not go ahead for three main reasons. First, regulators in the United States and other countries, including China, will resist a combination of some of the biggest players in the semiconductor industry.
Second, Intel will argue that the deal severely undervalues its business. Besides, Intel was valued at over $280 billion a few years ago. As such, the management believes that it can engineer a comeback.
Third, Qualcomm’s shareholders may resist the deal, which will likely have a significant share component.
Analysts believe that other companies may come in and express a bid to acquire Intel. One of the most mentioned names is Broadcom, which has recently finalized its buyout of Vmware.
Other potential companies would be AMD and Nvidia, but their bids would also be rejected by regulators.
Intel has been a troubled company
These developments come at a time when Intel has transformed from the biggest semiconductor company in the world into a fallen angel.
Over the years, Intel has lost some important clients, especially Apple, which is now making better chips. It has also lost market share in the CPU and GPU industries and some of its recent acquisitions have turned costly mistakes.
A good example of this is Mobileye, an Israeli company that provides technology solutions to the automotive industry. It acquired it for $15 billion a few years ago only to spin it off for a lower valuation. Today, Mobileye is valued at less than $10 billion.
Intel has also been passed by companies like Advanced Micro Devices (AMD) and NVIDIA, which are known for building some of the best CPUs and GPUs. This is a notable development since Intel had the biggest market share in these sectors in the past.
The potential investment from Apollo and the likely bid from Qualcomm is a sign that these firms see value in Intel’s turnaround efforts.
As part of its turnaround, the company has decided to make its fabrication business a subsidiary and not its core business.
Analysts believe that this is a good decision since it will allow Intel to focus on designing better chips. Besides, the most valuable chip companies are usually fabless, meaning that they don’t run manufacturing plants.
Instead, companies like AMD and NVIDIA rely on Taiwan Semiconductor to do the manufacturing for them.
Intel has also been considering selling its stakes in Mobileyeand Altera. In a recent statement, the company ruled out that measure, pushing the Mobileye’s stock up by over 20%.
The other part of Intel’s turnaround is layoffs. In a recent statement, the firm said that it would fire over 15,000 workers in a bid to preserve cash.
These layoffs came after the company published weak financial results, which showed that its revenue dropped by 1% in the second quarter to $12.8 billion. This decline happened as NVIDIA’s sales surged by over 115%.
Intel also lowered its forward guidance and suspended its dividend starting in the fourth quarter of this year.
The weekly chart shows that the INTC share price has been in a strong sell-off after peaking at $62.25 in 2021. It recently dropped below the key support level at $23.5, its lowest point in October 2022.
The stock also formed a death cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) crossed each other.
Therefore, the stock will likely have some volatility this week as investors evaluate the growing interest in the company and the turnaround. The key support and resistance levels to watch will be at $19 and $25.
The Constellation Energy Corporation (NASDAQ: CEG) stock price went parabolic on Friday, reaching its highest point on record after inking a deal with Microsoft, the second-biggest company in the world.
CEG shares surged to a high of $254, bringing the year-to-date gains to 120%, making it one of the best-performing companies in Wall Street. It has also soared by over 500% from its lowest point in 2023, bringing its market cap to almost $80 billion.
The surge happened in a high-volume environment. Its Friday’s volume jumped to over 15 million, up from the average of 3.4 million.
Constellation Energy and Microsoft
The main reason why the Constellation Energy stock price surged is that the company inked a deal with Microsoft. Under the new plan, the company will restart unit one of the Three Mile Island nuclear power plant, the site of America’s worst disaster.
The plant, which is set to come back online by 2028, will provide power to Microsoft data centers, which are consuming substantial amounts of energy. As part of the reopening, the company will provide about 835 megawatts of carbon-free energy to Microsoft and other customers.
Nuclear energy is often seen as one of the best energy source globally because it does not emit carbon. It is also a better source than wind and solar, which produce energy only when the wind blows and the sun shines.
Microsoft and other large tech companies have been working on their data centers as computing demand rises because of artificial intelligence. Altogether, it is estimated that these firms will spend over $1 trillion in the next few years.
The challenge, however, is on whether the industry will achieve the return on this investment. While the AI industry is growing, it is unclear whether top companies are seeing a substantial benefit.
A good example of this is Microsoft, which is selling its copilot solution to companies. While some companies have signed up, many of them don’t believe that the cost is justified for the substantial cost.
Constellation has been growing
The deal with Microsoft came at a time when Constellation Energy’s business is doing well. Its annual revenue has jumped from over $18.9 billion in 2019 to over $24.5 billion. It has also become a highly profitable company as its annual profit in the last financial year stood at over $1.6 billion. Its trailing twelve month (TTM) revenue stood at over $2.39 billion.
The most recent quarterly results showed that its quarterly revenues rose from $5.4 billion in 2023 to over $5.47 billion. However, its quarterly profit retreated to $814 million from $833 million in the same period last year.
According to Yahoo Finance, analysts expect that Constellation’s revenue for the third quarter will come in at $6 billion, a 1.80% drop from the same quarter last year. For the final quarter, the estimate is that revenue will fall by 8.40% to $5.3 billion. As a result, the annual revenue is expected to drop by 6.2% to $23.39 billion.
Valuation and balance sheet
A key concern about the Constellation Energy stock price is that the company is a bit overvalued.
At a $80 billion valuation, the company has a P/E ratio of 36.42, much higher than the sector median of 18.6. Its forward non-GAAP P/E ratio is 32, also higher than the industry median of 18.
Constellation also trades at a forward EV-to-EBITDA ratio of 20, almost double that of other companies in the energy and utility industries. Its forward price-to-book ratio of 6.52 is higher than the industry median of 1.62.
This explains why the stock is trading at a higher price than estimates. The average estimate among Wall Street is $224, lower than the current $254.
Therefore, the company will need to boost its growth to justify this valuation. Besides, restarting the nuclear plant will take time and money. It will also need more permits to go on, a process that can take longer than expected.
According to SeekingAlpha, Constellation ended the last quarter with over $311 million in cash and equivalents and $1.6 billion in receivables. It also has $680 million in short-term debt and $7.4 billion in long-term debt.
Constellation Energy stock analysis
The daily chart shows that the Constellation Energy share price went parabolic after the Microsoft deal. As it surged, it moved above the key resistance point at $235.32, its previous highest point this year. It invalidated the double-top chart pattern when that happened.
The stock has remained above the 50-day and 100-day moving averages. Also, the two lines of the MACD and the histogram moved above the neutral level. The Relative Strength Index (RSI) has moved to the extremely overbought point of 82. Therefore, the stock will likely pull back and retest the support at $235.
Groupon (GRPN) stock price has suffered a harsh reversal in the past few weeks as concerns about the e-commerce industry continued. It retreated to a low of $10.85, down by almost 45% from its highest point this year, giving it a market cap of over $431 million.
Groupon’s fall from grace
Groupon, an e-commerce company, has had a fall from grace in the past few years. Its market cap has dropped from over $7 billion to less than $431 million.
Like Yahoo, which rejected a buyout offer from Microsoft worth over $44 billion, Groupon also rejected an offer from Google worth over $6 billion.
At the time, Groupon was one of the most popular e-commerce companies, known for its discounts. It was often seen as a good alternative to the likes of eBay and Amazon.
The company’s growth has waned as customers have focused on buying from Amazon, Target, and Walmart.
Its annual revenue has dropped from over $2.2 billion in 2019 to over $514 million in 2023. It has also struggled to turn a profit, with its annual loss coming in at $55.4 million in 2023.
Groupon has also seen the number of visitors to its website drop in the past few months. Data by SimilarWebshows that the number of visitors to its website dropped by almost 3% in August to 25.3 million. At its peak, the company used to have substantially more visitors.
Groupon slowdown continued
The most recent financial results showed that Groupon’s revenue dropped by 3% in the last quarter to $124 million while its gross profit remained flat at $112.7 million. Gross billings dropped from $393 million in Q2’23 to $374 million.
On the positive side, its net loss improved to about $9 million as the company continued to slash costs.
The company also lowered its forward guidance. It expects that its revenue dropped by 10% to $114 million, partly because of a website outage. It also sees its free cash flow remaining in the negative zone.
Groupon expects that its annual revenue will be between $495 million and $515 million. Analysts expect that the company’s revenue for the year will be $510 million followed by $542 million in 2025.
Cheap but could be a value trap
Groupon stock seems like an undervalued company since it trades at a price-to-sales multiple of 0.77, much lower than other e-commerce companies like Amazon and eBay. It is also significantly cheaper than the $6 billion that Google offered to buy it.
Groupon’s business has changed significantly over the years. It has reduced its marketing budget as a percentage of its total revenue, which has affected its growth.
Also, the company’s balance sheet has continued to worsen over the years. Its cash and short-term investments has dropped from over $750 million in 2018 to over $178 million in the last financial report.
Groupon’s total debt load has also risen and currently stands at over $227 million, up from $214 million in 2018.
The biggest challenge, however, is that the company has struggled to sign big brands on its platform.
At the same time, it has become an afterthought among most customers who are shopping online. Most of them have signed up to other popular e-commerce platforms like Walmart+ and Amazon Prime, which give out free and faster deliveries and more perks.
Therefore, I suspect that Groupon’s business will continue slowing down in the next few years as competition continue rising.
Groupon is not well-covered by Wall Street analysts. According to Yahoo, it is only covered by three analysts: Roth MKM, Northland Capital, and Goldman Sachs. Goldman has a sell rating while the other two have a buy rating.
The average Groupon stock price forecast by analysts is $17.75, much higher than the current $10.85. This, however, should be taken with a grain of salt because it comes from just analysts.
The daily chart shows that the GRPN share price peaked at $19.54 in March, up by over 577% from its lowest point this year. This rebound happened after the company published encouraging financial results in May.
The stock has recently formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. In most periods, this is one of the most bearish chart patterns in the market.
The shares have moved below the 50% Fibonacci Retracement level. Also, the Relative Strength Index (RSI) has moved below the neutral point.
Therefore, the outlook for the stock is bearish, with the next point to watch being at $10.26, its lowest point on August 8. A break below that level will point to more downside, with the next level to watch being at $9.26, its lowest point in April and the 61.8% retracement point.
The civil aviation and defense industries are doing well, helped by the ongoing recovery of travel and defense spending.
However, top companies in the industry are not doing well. Boeing (BA) stock price has dropped by over 41% this year as it moved from one crisis to the other. Just recently, the company suffered a major setback as some of its workers went on strike.
Airbus stock has dropped by over 3% this year even as it continued to take market share in the civil aviation industry. Its most recent financial results showed that its backlog continued rising.
Airbus stock has dropped by over 3% this year because of the supply chain issues that have affected its plane manufacturing process.
Arline stocks have had a mixed performance this year. Southwest (LUV) stock has risen by 2.35% because of the activist pressure from Elliot Management. Delta and United Airlines have risen by 17% and 26%, respectively. However, airline stocks tends to be more cyclical.
Aercap seems like a better bet
Aercap, a company that most people outside of the aviation industry, is doing much better than airlines, Boeing, and Airbus.
Its stock has risen by 31% this year and by 76% in the past five years. In this period, Boeing has dropped by 60% while Airbus has jumped by just 14%. Airlines like Southwest, United, Delta, and American have all dropped by over 20%.
Aercap operates in the aircraft leasing industry, where it buys aircraft and then provides them to other airlines. It provides most of its aircraft to companies like American Airlines, China Southern, Azul Airlines, Hainan, and Ethiopian Airlines. It owns 1,556 aircraft and has placed an order of 338.
These companies opt for leasing aircraft instead of buying because it is a more cost-efficient model.
In addition to aircraft leasing, Aercap has over 1,000 aircraft engines, which it leases to companies. Most of its engines are manufactured by General Electric and CFM International, a joint venture between Safran and GE. Aercap is also a big player in the helicopter and aviation leasing industries.
Aercap’s business has been growing in the past few years. It has done that organically and through acquisitions. Its biggest acquisition was General Electric’s aviation business in a $30 billion deal.
That acquisition, which was mostly through stock, gave GE a big stake in the combined company. GE has continued to reduce its stake in the firm as it continues with its transformation.
The deal solidified Aercap’s role as the biggest aircraft leasing company in the world. It also saddled it with substantial debt, which has risen from over $29.34 billion in 2019 to over $45 billion today.
Aercap’s financials shows that the company was still growing. Its total revenue has grown from about $4.9 billion in 2019 to over $7.5 billion in 2023.
The most recent financial results showed that Sercap’s revenue rose to over $1.74 billion, a 2% increase from the $1.95 billion it made in the same period in 2023. For the first half of the year, revenue rose by 5% to over $3.9 billion.
Analysts expect that its revenue for this year will be $7.85 billion a 3.5% increase from last year’s $7.58 billion. This revenue will be followed by $8.06 billion in the next financial year.
Plane shortage and pricing
Aercap’s main benefit is that it has a long relationship with Airbus and Boeing since it is one of the biggest buyers.
It also has a large inventory of over 2,000 planes at a time when Boeing and Airbus are going through major challenges. The implication is that it can now charge more money for its aircraft.
Additionally, the company has received a series of credit rating upgrade, with Moody’s moving its rating to Baa1 and S&P raising it to BBB+. Fitch has revised its rating to positive.
The weekly chart shows that the Aercap share price has been in a strong bull run in the past few years. It recently jumped above the key resistance point at $70.95, its highest point in November 2021.
The stock has also remained above the 50-week and 200-week Exponential Moving Averages, which formed a golden cross pattern in 2023. In price action analysis, this is one of the most bullish signs in the market.
Most oscillators have continued pointing upwards. Therefore, the stock will likely continue rising as bulls target the next psychological point at $120. This view will only become valid when the stock rises above the key resistance point at $98.56, its highest point this year.
Yelp (NYSE: YELP) stock price has gone nowhere since 2015 as concerns about its growth and role in the tech industry has remained. In this period, it has remained inside the range of $14.17 and $52 while popular indices like the S&P 500 and Nasdaq 100 indices have soared to a record high. It remains 66% below its highest point on record.
Struggling for relevance
Started over 20 years ago, Yelp is one of the top survivors of the dot com bubble burst. Its goal has been to improve local businesses by ensuring that users leave reviews and ratings after using their services.
Over the years, the website has accumulated over 287 million reviews and ratings, making it one of the top players in the industry. It also has over 7.1 million local businesses in its ecosystem.
However, it has come under intense pressure in the past few years as competition in the sector has grown. Most people today leave their feedback in platforms like Google, Facebook, Amazon, and even X, formerly known as Twitter.
As a result, Yelp’s revenue has grown, albeit at a slower pace in the past few years. Its annual revenue has risen from about $872 million in 2020 ro over $1.2 billion in the last financial year.
Yelp makes its money in various ways, including advertising and transactions. Local businesses have an incentive to keep advertising on Yelp because it is still a large brand in the US. Most of the businesses in its ecosystem, with restaurants and retail accounting for about 40% of its revenue.
Data by SimilarWeb shows that Yelp had over 148 million visitors in August, down by 1.69% from the previous month. Most of these visitors, or about 78%, came from organic search, especially Google.
Yelp’s financial results
Yelp’s business has been growing, albeit gradually in the past few years. Its annual revenue stood at over $1.33 billion in 2023 and $1.37 billion in the trailing twelve months (TTM).
However, its profits have remained quite small over the years. After making a net loss of $19.4 million in 2020, its annual profit has recovered to $99.2 million in 2023 and $137 million in the trailing twelve months.
The most recent financial results showed that Yelp’s revenue rose by 6% in the last quarter to over $357 million. Its net income jumped by 158% to $38 million while its adjusted EBITDA came in at $91 million.
The management hopes that its full-year business will continue doing well, with its full-year revenue expected to come in at between $1.41 billion and $1..4 billion.
Yelp also has a solid balance sheet, with over $392 million in cash and short-term investments and almost no debt. Its short-term debt and capital leases are less than $70 million.
Looking at its valuation, we see that the company has a non-GAAP P/E ratio of 8.39 and 9.67, respectively. Its GAAP multiples are 18 and 20, respectively, which are lower than the industry median.
Analysts are relatively neutral on the Yelp stock price. The average target among analysts is $39.43, higher than the current $34.28, a 20% increase.
Bank of America analysts have an underperform rating while Morgan Stanley has an underweight rating. JPMorgan has a neutral view while Craig-Hallum has a buy rating.
The neutral view is mostly because analysts don’t expect the business to see the double-digit growth metrics they were used to before. It is facing substantial competition from the likes of Google and Facebook and demand for its advertising solutions seems to be waning.
Yelp has also been reducing its costs to grow its profitability. Its sales and marketing spending has dropped from between 51% amd 57% between 2013 and 2018 to about 42%. Its adjusted EBITDA margin is expected to grow from 13% in 2013 to 25% in 2023.
Fundamentally, I believe that Yelp’s business faces substantial challenges in the coming years. However, the company has continued to do well, constantly growing its revenue and profitability.
Turning to the weekly chart, we see that the Yelp share price peaked at $49 earlier this year and has now retreated to below $35. It has slipped below the key support level at $43.85, its highest swing in May 2021.
Most importantly, the stock is about to form a death cross as the 200-week and 50-week moving averages near their crossover. It also lost the key support level at $35.56, its lowest point in February this year.
Therefore, the path of the least resistance for Yelp stock is downwards, with the next point to watch being at $25.32, its lowest swing in 2023 and 26% below the current level.
Apollo Global Management, a prominent US asset management firm, is reportedly preparing to invest up to $5 billion in Intel, Bloomberg reported on Monday.
The potential investment comes as Intel navigates a period of significant market decline, with its stock price dropping nearly 60% since the start of the year.
The report further suggests that Apollo is ready to make an equity-like investment in Intel, a deal that could provide a financial boost to the once-dominant chipmaker.
The details were shared by a source familiar with the matter, as cited by Bloomberg.
Intel, once the world’s most valuable semiconductor company, has seen its market position weaken in recent months.
Since Patrick P. Gelsinger took over as CEO, Intel has embarked on an expensive overhaul aimed at diversifying its product offerings and client base.
However, these efforts have yet to yield positive financial results, with a series of disappointing earnings reports.
This has eroded investor confidence, leading to a sharp drop in Intel’s market value, wiping out tens of billions of dollars in the process.
The company’s recovery now faces significant challenges amidst increasing competition.
As the company weighs Apollo’s proposal, it’s clear that the investment could serve as a lifeline during a challenging period.
Talks are still in the preliminary stages, and there is no certainty that the deal will move forward, according to the report.
The size of the investment could shift, or negotiations may fall apart entirely.
However, Intel has not provided any public comment regarding the potential deal.
Apollo also has 49% stake in Intel’s $11B Ireland facility
This is not Apollo’s first move involving Intel.
Earlier in the year, Apollo acquired a 49% equity stake in a joint venture tied to Intel’s new $11 billion manufacturing facility in Ireland.
The interest in expanding their partnership signals Apollo’s strategic focus on the semiconductor industry.
Qualcomm also eyeing acquisition of Intel
Intel’s difficulties have caught the attention of other major players in the tech sector.
Just days ago, Qualcomm expressed interest in a potential acquisition of Intel, according to reports.
Qualcomm CEO Cristiano Amon is personally involved in the early-stage negotiations, though significant obstacles remain for such a transformative deal.
Qualcomm has previously explored acquiring parts of Intel’s chip design business, suggesting that its interest in the company is not new.
As these discussions unfold, the future of Intel and its position in the global semiconductor market remains uncertain.
