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| Here's your daily business briefing. - 📈 Arm holdings soar 40% in AI-fueled surge
- 🔍 Deep Dive: U.S. EV charging challenges
- 📺 YouTube celebrities boost NFL viewer numbers
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Arm Holdings ($ARM) shares rose over 40% on Monday, reaching $139.65, a 21% increase from its Friday close, driven by optimism in AI and a better-than-expected quarterly outlook. The company's market value has soared to a record $141B, nearly tripling since its IPO in September. More: - Approximately 10.5 million Arm shares, worth about $1.4B, have been sold short by traders betting the stock will fall, with the recent surge attributed to long share buying rather than short covering.
- The current surge in Arm's stock price is similar to Nvidia's notable gains in May 2023, which were driven by the high demand for its chips in AI computing.
- The owner of Arm, Softbank, retained 90.6% after the IPO, making Arm shares less readily traded.
- The chip design technology firm's forward price-to-earnings ratio (PE) is exceptionally high at 99 times expected earnings, indicating significant investor optimism.
- In Q3 2023, the company outperformed analyst estimates with adjusted earnings per share of $0.29, exceeding the expected $0.25, and reported a 14% increase in revenue to $824M, surpassing the projected $761M.
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What the numbers say: In 2023, the U.S. added 27,600 public EV chargers, a mere 13% of Europe's total and significantly less than China's installations. Despite the allocation of $7.5B from the Bipartisan Infrastructure Law for EV charging infrastructure, slow disbursement, at around 11%, has impeded the rollout, with a recent $623M award for 7,500 EV chargers indicating a positive shift and increased competition against Tesla. Relevance: The delayed distribution of federal funds and Tesla's market dominance are impeding the growth of EV charging infrastructure in the U.S., limiting its progress compared to Europe and China. However, the entry of new companies and increased funding signals potential for substantial expansion in the U.S. charging market, fostering a more diverse and competitive landscape. More data: Tesla dominates ultra-fast charger installations in the U.S. and Europe, while the European market sees more competition among the top five charging companies. Over 50 companies winning awards under the National Electric Vehicle Infrastructure Formula Program (NEVI) indicates increased competition, suggesting potential market fluctuations and eventual consolidation. | | | |
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| 3 | | Last year, YouTube's $2B yearly commitment to NFL Sunday Ticket rights resulted in a surge in YouTube TV subscribers from 5 million in 2022 to over 8 million, with prominent creators driving engagement. This collaboration, termed a "helmets off strategy," aimed at expanding football season-related content. More: - A YouTube TV subscription costs $73/month, and access to NFL Sunday Ticket costs an extra $349 annually.
- YouTube engaged lifestyle, vlogging, and sports creators to broaden the NFL's audience, with influencers attending games and collaborating with advertisers.
- NFL started airing YouTube series like "Creator of the Week" with influencers like Ninja and Sean Evans.
- Creator partnerships — such as those involving Pierson Wodzynski and Donald De La Haye — focused on younger audiences, contributing to the NFL's spike in viewership.
- According to Nielsen, YouTube surpassed Netflix and Disney+ in December with 8.5% of all TV viewing time.
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| 4 | | Gilead Sciences Inc. ($GILD) is acquiring CymaBay Therapeutics Inc., a liver disease drug developer, for $4.3B in equity value, offering $32.50 per share — a 27% premium over CymaBay's Friday closing price. Following the announcement, Gilead's shares rose by up to 2%, and CymaBay's shares surged by as much as 25%. More: - CymaBay's seladelpar, intended to address a rare bile duct disorder primarily affecting women, obtained priority review from U.S. regulators following a successful late-stage trial.
- Gilead is seeking to broaden its growth prospects beyond its primary antiviral-drug franchise, which encompasses treatments for hepatitis C, a liver-targeting virus.
- The acquisition of CymaBay Therapeutics represents Gilead's most substantial deal since its $21B purchase of Immunomedics in 2020.
- Analysts predict that CymaBay's medication, with peak sales expected to reach $650M, might emerge as the best-in-class treatment for the uncommon ailment.
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| 5 | | Rising cocoa prices have prompted chocolate manufacturers like Hershey to consider price hikes, leading to a 5% workforce reduction due to inflation concerns affecting earnings. The surge in cocoa prices is attributed to climate issues in West Africa, which is responsible for over 60% of global cocoa production, leading to reduced crop yields. More: - In addition to other factors like labor expenses and sugar prices, cocoa futures have increased 40% since January and have doubled in value over the previous year.
- Over the last two years, retail chocolate prices have increased by almost 17%, and more rises are anticipated.
- Approximately 92% of Americans intend to share chocolate and candy for Valentine's Day this year, with sales surpassing $4B in 2023, as reported by the National Confectioners Association.
- Despite the high demand for chocolate, cocoa growers continue to experience difficulties, with some giving up on the industry because of low profits.
Zoom Out: - The cocoa bean value chain in Africa may lose almost $529M as a result of changes in climate patterns, according to data provided to CNN by ClimateAi.
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| 6 | | Cloudflare's ($NET) stock soared 21% in after-hours trading on Thursday, driven by earnings that surpassed expectations. The company reported adjusted earnings per share of $0.15, beating analysts' estimates of $0.12, quarterly revenue of $362.5M, surpassing the expected $353.1M, and a 32% revenue increase with a narrowed net loss of $27.9M. More: - The business achieved a record yearly contract value by securing its largest renewal and largest new customer transaction.
- The company plans to deploy graphics processing units for artificial intelligence in 120 cities by the end of 2023, catering to software developers.
- Additionally, the company emphasizes selling security services to businesses and government agencies, particularly in response to the rising cyberattacks since October.
- Mark Anderson, a former Alteryx CEO, became the president of Cloudflare.
- Cloudflare has exceeded analyst estimates by announcing guidance for the first quarter, including 13 cents in adjusted EPS and revenue of $372.5M to $373.5M.
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 | 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 | |
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