Weekly StockWatch: Disney Dethroned Netflix, Deliveroo’s Loss Widened, Telstra Increased its Dividend & More

  • DIS.us
    (${instrument.percentChange}%)
  • AD.nl
    (${instrument.percentChange}%)
  • NFLX.us
    (${instrument.percentChange}%)
  • TLS.au
    (${instrument.percentChange}%)

Disney Dethroned Netflix

The Walt Disney Company reported strong financial results for the third quarter of Fiscal 2022 (period ended July 2), as its Revenue grew to $21.5 billion and its Operating Income surged 50% from a year ago, to $3.567 billion. Furthermore, the Parks, Experiences and Products segment (DPED), registered its sixth profitable quarter. [1]

These solid results however, paled against the blowout metrics of its direct-to-consumer business metrics, which were the main focal point. Disney's streaming services had 221.1 million paid subscribers as of the end of the reported quarter, overtaking rival Netflix. The embattled streaming pioneer has lost 1,170,000 subscribers during the first half of the year, shrinking its user base to 220.67 million.

Furthermore, the entertainment behemoth provided more details and pricing for its ad-supported subscription plan, which will launch in December in the United States.

DIS.us rallied after the eye-catching news and blockbuster results, heading towards its fourth consecutive week with gains.

Ahold Delhaize Upgraded Guidance

Ahold Delhaize Group (AD.nl) is a Netherlands-based supermarket and e-commerce company that operates in Europe, the United States and Indonesia, under various brand names. It serves 55 million customers each week, in-store and online, having around 7,452 local grocery and specialty stores.

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The Group reported solid second-quarter results on Wednesday, with Revenues of €21.4 billion, higher than both the year-ago and the prior quarter. Operating Income also rose, to €895 million, whereas Operating Margin ticked up compared to Q1 to 4.2%, but declined on a yearly basis. [2]

President and CEO Frans Muller talked of a "strong" quarter, with the results confirming the "strength and breadth" of the Group's portfolio.

Despite the fact that the Dutch Retailer expects high inflation and energy costs to persist into the second half, it raised the full year guidance. Underlying Earnings per Share (EPS) are now expected to have mid-single-digit growth over 2021, while Free Cash Flow is projected to approximately €2.0 billion.

Late last year, Ahold Delhaize had expressed its intention to explore a sub-IPO for bol.com, its general merchandise online store. Today however, the firm said that H2 2022 is "no longer the right time". As such, it will suspend those plans and will "revisit when equity market conditions are more conducive".

AD.nl surged more than 7% on the news and despite losses over the next two days, it heads towards a profitable week, having hit the highest levels since late April.

Deliveroo Resilient, but Losses Widened

The British food delivery firm posted results for the first half of the year on Wednesday, which left much to be desired, although overall, they showed resiliency. Adjusted Loss (EBITDA) nearly tripled from a year ago, to £67.9 million, but the figure marked a significant improvement from the £106 hit in H2 2021. [3]

Deliveroo received 160.9 million orders during the reported period and generated £3.558 in Gross Transaction Value (GTV), up 10% and 7% respectively. However, these figures don't come anywhere close to the explosive 100% growth in H1 2021.

The firm announced its first ever share buyback, of £75 million and maintained its 2022 GTV growth of 4–12%, after last month's guidance downgrade.

It is also looking to pull out of Netherlands, after having exited the Spanish market recently. The delivery business is facing challenges in the post-lockdowns world and this is probably another sign that we are heading towards further consolidation.

Dutch-based multination giant Just Eat Takeaway (TKWY.nl) for example, is looking to sell its recently acquired US Grubhub brand, having taken a €3 billion impairment in H1.

Markets liked the results, since ROO.uk jumped around 7% on Wednesday and heads towards a profitable week.

Rivian Projects Wider 2022 Loss

The off-road EV start-up's top line impressed on Thursday, when it reported its results for the second quarter, since it generated Revenues of $364 million - a noteworthy increase from the $95 million of Q1. [4]

This was primarily driven by the significantly higher number of vehicles it delivered, as it handed down 4,401 automobiles in Q2, compared to 2,553 in the first quarter. This meant larger production levels as well, whereas the firm maintained its 25,000 output target for the current year.

Rivian Automotive also said that it had approximately 98,000 preorders for its R1T pickup truck and R1S SUV as of June 30, up from 90K at the end of Q1. Apart from the passenger vehicles, the EV maker has 100,000 order's from Amazon.com for its commercial Electric Delivery Vehicles (EDV), which began rolling out across US cities last month.

All of the above are very encouraging and show the progress of the startup that beat established automakers to the electric truck market, but a look in its bottom line is far less impressive, highlighting potential pitfalls ahead.

Its Net Loss widened to $1.712 billion as compared to $580 million for the same period last year and $1.593 billion in the previous quarter, while its losses increased on an Adjusted (EBITDA) basis as well, to $1.305 billion.

More to it, Rivian revised its 2022 Adjusted EBITDA guidance and now expects a wider loss of $5.45 billion, from $4.75 billion previously projected.

After its collapse in the first half of the year, RIVN.us finds reprieve, running its second straight profitable month. The current week is positive so far, but we will have to see how markets will react today to the financial results.

Telstra Profit Dropped, Dividend Increased

The Australian telecommunications giant released its financial results for the full 2022 fiscal year (period ended June 30) on Thursday before the market open, in a mostly strong report, despite the lower profitability.

Net Profit After Tax (NPAT), EBITDA Profits and Total Income, all dropped around 5% from FY2021, to A$1.8 billion, A$7.3 billion and A$22 billion respectively. However, the company appears rather confident for the new fiscal year (FY 2023), projecting higher Total Income of A$23-25 billion and increased Underlying EBITDA of A$7.8 - 8.0 billion. [5]

In another sign of belief in its future, the firm announced the first dividend increase in seven years, which will bring total dividend for the year A 16.5 cents/share. Outgoing CEO Andy Penn, said that the dividend rise is a result of the successful conclusion of the four-year T22 strategy and the ambition around the new T25 plan.

Mr Penn also stood on the performance of the mobiles business, which he said was "outstanding", having generated A$700 million EBITDA (up 21.2%).

Telstra Corporation also commented on its 5G network, which "around twice the size of the next nearest competitor", covering around 80% of the population, but the Australian Competition & Consumer Commission had some issues with its practices.

The ACCC found that Telstra was registering low band spectrum 5G sites for the "substantial purpose or likely effect of preventing or hindering" rival Optus form deploying its 5G network and instructed the company to decommission "radiocommunications sites it registered with the ACMA in the 900 MHz spectrum band in January 2022". [6]

Markets did not like poor bottom line sending TLS.au lower after the results and into a negative week, despite Friday's rebound.

Next Week (August 15-19)

Us retail giant will be in the spotlight during the upcoming week, just a few days after the softer inflation figures and the easing of expectations around the fed's next rate hike.

Walmart (WMT.us) reports on Tuesday and Target follows a day later, with both companies having recently downgraded their guidance on key metrics.

Also standing out, Chinese smartphone maker Xiaomi, which releases its latest results on Friday, following a rather poor first quarter.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 12 Aug 2022 https://thewaltdisneycompany.com/app/uploads/2022/08/q3-fy22-earnings.pdf

2

Retrieved 12 Aug 2022 https://media.aholddelhaize.com/media/xaucuxv4/ahold-delhaize-q2-2022-press-release.pdf

3

Retrieved 12 Aug 2022 https://dpd-12774-s3.s3.eu-west-2.amazonaws.com/assets/7916/6010/7981/Deliveroo_H12022_Interim_Results_RNS.pdf

4

Retrieved 12 Aug 2022 https://downloads.rivian.com/2md5qhoeajym/5guovvWjDEkfMMiOF9NfoO/05d0cda099e40549ef7bd74c4cf80955/Rivian-Q2-2022-Shareholder-Letter.pdf

5

Retrieved 12 Aug 2022 https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-g/TLS-Market Release-FY22.pdf

6

Retrieved 24 Sep 2022 https://www.accc.gov.au/media-release/telstra-undertakes-to-address-5g-competition-concerns

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