June 8th, 2022 | 13:26 CEST
Split fantasy: Amazon, Aspermont, Alibaba, Tencent - After the sell-off is before the rally!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Amazon - Before the split is after the split?
The split has been completed, and now the e-commerce giant is visually much cheaper on the stock exchange. After the 1:20 split, one share currently costs USD 122.3, which is particularly pleasing for many private investors. The stock had gained a full 12% in the run-up to the split, while the NDX continued to correct.
Stock splits are popular with companies whose share value is comparatively high in nominal terms. To make a single stock more attractive to retail investors, Amazon again completed a reorganization of its share count for the fourth time. However, this year, the gulp from the bottle is enormous at 1:20. In 1998, a split was carried out at a ratio of 1:2, in January 1999 at a ratio of 1:3, and in the same year again at 1:3. In recent years, the market capitalization has developed to USD 1.5 trillion, and after the major correction, it is still USD 1.25 trillion. Amazon is one of the five most expensive stocks in the world.
Analysts still see plenty of potential for the e-commerce and cloud giant, but growth is expected to come more from the cloud corner. With estimated revenues of USD 525 billion in 2022, earnings are expected to be USD 9.6 billion. So the P/E ratio is still beyond 50, but the price-to-sales ratio has come down to 2.5. Out of 51 analysts, 49 are positive, and only 2 houses are on the sell-side. The AMZN share remains an NDX classic and, as a global market leader, probably also permanently with a high valuation.
Aspermont Ltd - Out of Corona hibernation
Perth-based Aspermont Ltd is a media and fintech company rolled into one. The Corona pandemic has allowed for growth at the Australian provider of information services in the resources industry. However, the absence of live events meant it was still limited in intensity. However, the "Corona" hibernation is now over, events are starting again, and investments in electronic platforms will be continued.
CEO and founder Alex Kent is optimistic: "The resumption of live events has contributed to exceptional growth (72%) in our services business this quarter. We expect a similar impact in the fourth quarter as even more live events take place and our technical developments continue."
The more Aspermont pushes digitization, the more present its services are in the market. The fully digitalized B2B approach already guarantees Aspermont exclusive access to commodity companies' management and decision-making levels, which can dock with the financial world through strong networking. Thus, roadshows, financings and capital placements also generate revenue from investment banking activities. These are important additions for young, growing companies that can be secured through regular subscription and membership fees.
On the operational side, Aspermont is currently making rapid progress as each new activity increases operating profit margins. With the "Blu Horseshoe" digital subscription route now established, investors can participate in placements very easily, quickly and inexpensively, rather than going through the extended channels of bank advisors. The Aspermont share price has turned around at AUD 0.018 and has been trending upward for several days. On Tradegate, the stock can be purchased for EUR 0.014, and the operating profit series should continue.
Alibaba Group and Tencent - Emerging from the gloom?
The Chinese tech giants Alibaba Group and Tencent have been hit hard in 2021/2022. Both stocks corrected from their highs by between 50% and 75%. However, the climate seems to be slowly improving, as the Chinese regulator is probably satisfied with the measures taken to improve transparency. The US SEC has also accepted the latest accounting changes for ADR-traded stocks.
From an investor's point of view, it would be interesting to see whether former institutional investors such as the ARK Innovation Fund would also take hold once again. After all, the way out of the valley of tears still requires greater turnover and a positive bias towards Chinese stocks. Investors should also observe the ending lockdown in China. In Shanghai, life is now set to resume for 25 million residents, with stores, schools and factories open, Shanghai's deputy mayor Zong Ming announced. The Chinese market has been rising since mid-May.
Alibaba moved up strongly from the EUR 80 level recently and now costs EUR 93.5, while Tencent successfully tested the EUR 40 mark several times. Both stocks are growing at more than 20% per year. With the latest well-reported figures, Alibaba has a P/E ratio of only 14, while Tencent has a P/E ratio of 18. From a long-term perspective, both stocks are already very cheap. However, given exploding interest rates, it is impossible to predict when the major correction in tech stocks will be over.
The technology bear market is taking on new features every day. One day you think the correction is over, and the very next moment the index turns down again by 2.5%. This fluctuation intensity can be seen in the volatility indicator VIX, which indicates more than 26% fluctuation per year. Typically, this indicator stands at around 12 to 15, so remain cautious.
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