| Happy Friday, Insiders! Today’s issue covers: - American Airlines boosts 2023 outlook
- Analysis of why small businesses seek customer funds
- J&J outperforms with higher earnings and raised guidance
If there's a topic you want to see discussed in the newsletter, let us know! If you find this newsletter helpful, please share it with your friends and colleagues. Shriram
p/Shriram | |
| 1 | | American Airlines raised its 2023 earnings outlook after a solid start to the peak travel season, with record revenue of $14.06B, up 4.7% from last year. The company raised its annual earnings projection from $2.50 to $3.50 to $3 and $3.75 per share. More: - In Q2, the company reported adjusted earnings per share of $1.92, surpassing expectations of $1.59, while total revenue amounted to $14.06B, exceeding the anticipated $13.74B.
- American Airlines' net income increased from $476M, or $0.68 per share, in the same period of the previous year to $1.34B, or $1.88 per share.
- According to the Texas-based airline, a projected capacity increase of up to 7% compared to the same period in 2022 might result in a potential 6.5% drop in unit revenues.
- On Thursday, American stocks fell more than 6% to $17.44, a steeper decline than its competitors.
|     | |
| 2 | | 
What the numbers say: Over 1,300 businesses have attempted to raise capital by issuing bonds or revenue-sharing notes since 2017, with more than 60% of those attempts occurring in 2021, according to Kingscrowd. Of these companies, over two-thirds have successfully achieved their fundraising goals or are currently raising funds through these platforms. This method allows nonaccredited investors to get in on the action — the maximum investment limit for nonaccredited investors is $124,000, but some are putting up as little as $10. Relevance: Small businesses are now using bond offers to acquire financing by interacting with their consumers and the community in response to more stringent bank lending policies. As a result of new legislation allowing them to seek contributions from nonaccredited investors, crowdfunding platforms are enabling firms to issue loans and draw in a broad spectrum of investors. Where to see the impact: Small firms that have had trouble obtaining conventional loans are now considering issuing bonds to their clients and the local community for finance. Local governments are working with debt-fundraising platforms to help women- and minority-owned small companies qualify for bond issues to boost access to capital in underrepresented communities. | | | |
| 3 | | Johnson & Johnson reported sales of $25.53B and adjusted earnings per share of $2.80 in the second quarter, which were higher than analysts' estimates. The company's MedTech division, which makes gadgets for surgical procedures, orthopedics, and eyesight, saw sales increase as demand for non-urgent surgeries recovered. More: - J&J's stock closed 6% higher on Thursday, offsetting its 5% year-to-date drop and bringing its market value to about $437B.
- The pharmaceutical section of the business recorded sales of $13.73B, with growth spurred by medications like Darzalex, Erleada, and Stelara.
- The consumer health division sales, now known as Kenvue, increased to $4.01B thanks to increases in over-the-counter and Neutrogena brand goods.
- To resolve the numerous lawsuits alleging that J&J's talc-based products caused cancer, its subsidiary LTL Management filed for bankruptcy in April.
| | | |
| 4 | | Big Deal Round-Up: In the third week of July, notable M&A activity included Safran's acquisition of Collins for $1.8B and the purchase of Gresham House by Searchlight partners for $615M. Additionally, Swedish firm SBB divested shares worth $230M to Morgan Stanley, while McKinsey collaborated with AI firm Cohere. M&A: - Safran, the French jet engine maker, is buying Collins Aerospace's flight controls business for $1.8B to capitalize on the increasing importance of computerized parts in aircraft.
- The American investment firm Searchlight Capital Partners announced that it had acquired Gresham House, a British asset manager, for $614.9M.
- Entain, a British company, is set to acquire American-based Angstrom Sports for a potential maximum amount of $266M, aiming to expand its presence in the U.S.
Private Equity: - SBB, the landlord central to Sweden's property crisis, is selling $228M worth of shares in a new subsidiary to Morgan Stanley as it tries to address its financing gap.
- Sheela Foam is set to acquire a 95% stake in Kurlon for $262.09M in cash, aiming to gain a larger portion of India's mattress market.
Partnerships: - McKinsey has collaborated with startup Cohere to assist clients in implementing generative artificial intelligence (AI) technology.
- UAE's ADNOC Gas has announced a 14-year LNG agreement worth $7B and $9B with Indian Oil Corp.
| | | |
| 5 | | China's leading mobile payment platforms, Alipay and WeChat Pay, have announced that international travelers can now link their Visa and Mastercard accounts to their platforms. This enables travelers to use their Visa and Mastercard accounts for various transactions, including payments for goods, services, taxis, and public transportation in China. More: - To use the services offered by the applications, foreign users formerly required a bank account in mainland China and a local mobile phone number.
- Over 80% of daily consumption transactions in China, with an annual electronic transaction volume of $434T, are conducted on mobile platforms.
- With a combined 91% market share in digital payment services, Alipay and WeChat Pay have opened up more access to using international credit cards in their applications since they first offered restricted access in 2019.
- With the expansion of their cooperation, Mastercard and Alipay now allow Mastercard cardholders to use the Alipay app to make local payments in China. Tencent plans to open access to other international card networks like Visa in July.
| | | |
| 6 | | American Express (AmEx) beat predictions with second-quarter profits, posting an EPS of $2.89. However, despite high credit card usage, the company's shares fell 5% due to its cautious outlook and maintained earnings projection. More: - With combined spending up 21% in the U.S. from a year earlier, millennial and Gen Z customers were the segment with the largest growth.
- AmEx increased its provisions for credit losses from $410M to $1.2B due to rising borrowing prices to be more prepared for debt repayment defaults.
- Despite the positive results, AmEx maintained its $11 to $11.40 per share earnings prediction for 2023.
- According to the company's CFO, Jeff Campbell, travel and entertainment expenditure was high across all demographics and geographical areas.
| | | |
| 7 | | Quick Hits: - Elevate your cloud expertise with the AWS Cookbook. Practical, concise, AWS-focused: This resource is your key to cloud success.*
- The NFL has fined outgoing Washington Commanders owner Dan Snyder $60M for harassment and misconduct claims. The league also approved the sale of the franchise to private equity billionaire Josh Harris.
- Tesla beat forecasts with adjusted earnings of $3.1B, or $0.91 per share, a gain of 20% over YoY, and a profit margin of 18.2%, despite the effects of price reductions throughout the year.
- Jamie Dimon, CEO of JPMorgan, revealed plans to expand the reach of its online bank Chase to Germany and other EU nations, ratcheting up the competition in a congested sector.
- Companies are vying to recycle electric vehicle batteries in North America to be eligible for subsidies, challenging China's hegemony in the industry.
- There are 12,000+ ways small businesses can qualify, but finding out if you're approved takes only two minutes. Apply now with no obligation, and discover what refund you're entitled to.*
*This is a sponsored listing. | | | |
| Upcoming Events | | JUL
25 | | Lacework hosts former CEO of Starbucks, Jim Donald, for a fireside chat on what CEOs need to know about cybersecurity.* | | | | | | | JUL
31 | | #TwoCents Discussion Community Challenge | | | | | | | AUG
2 | | Join Vanta and VioletX and find out how growing startups should navigate the complex compliance space.* | | | | | | | OCT
16 | | Meet Our Fund 5, Building and Investing in AI | | | | | | | NOV
7 | | Join us for Strategic Marketing 2023 and meet 300+ CMOs and senior marketing leaders from the world's biggest brands.* | | | | | | * This is a sponsored event | | | |
Term of the Day Earned media: Earned media describes the publicity and awareness that a company receives for free as a result of positive word-of-mouth or recommendations. Question of the Week What's your stance on unpaid internships: valuable experience or exploitation? Join the conversation |
INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
| |
| |
