Michael Schacht, 70, is a typical German saver. To avoid risk, the clothing store owner kept $ 300,000 in cash in a local bank in a small town near Hamburg.
Then, earlier this year, Mr. Schacht’s bank informed him it wants to sue it 0.5% negative interest rate to save the money.
Enraged, Mr. Schacht did something he would never have considered: He put it all on the market. Its portfolio includes investments in stocks and corporate bonds from Europe and elsewhere through funds, plus gold and silver.
“I don’t want to make a lot of money, I just want low-risk investments that give a reasonable return on capital, like 2%, 4%,” said Mr. Schacht. “It has always been realistic in the past.”
More Germans entered the stock market for the first time during the pandemic than since the dot-com boom. Deutsches Aktieninstitut, the financial industry association, estimates that 2.7 million people in Germany started owning shares directly or through funds last year, raising total investors to 12.4 million, up 28% from 2019.
Verizon Communications Inc. confirmed on Monday that it plans to sell its media business to Apollo Funds for $5 billion.
After the transaction is completed, the telecommunications company will hold a 10% stake in the company, and the company will be called Yahoo. The Verizon Media umbrella includes brands such as Yahoo, AOL, TechCrunch and Engadget.
After the transaction is completed, the company will receive US$4.25 billion in cash and US$750 million in preferred rights. The transaction is expected to be completed in the second quarter.
In pre-market trading on Monday, Verizon’s stock rose 0.5%.Wall Street Journal Reported the sale plan last week.
“We firmly believe in Yahoo’s growth prospects and the macro headwinds driving the growth of digital media, advertising technology and consumer Internet platforms,” Apollo senior partner David Sambur said in a press release.
Verizon CEO Hans Vestberg said in a press release: “In the past two and a half years, Verizon Media has done a very good job reversing its business and has huge growth potential.”
Although the Verizon Media business only accounted for 6% of Verizon’s revenue in the most recent quarter, the sale of assets will allow Verizon to focus more on the telecommunications business and bring in funds to help pay for the expensive 5G network construction costs.
The company pointed out in its latest earnings report that it recently paid approximately $45 billion to the Federal Communications Commission to obtain the C-band spectrum obtained in a recent wireless auction. The company raised US$12 billion in the fourth quarter and more than US$31 billion in the first quarter to purchase spectrum, although various other capital costs are involved in establishing a 5G network.
As of Friday, Verizon’s share price has fallen 1.6% year-to-date, while the SPDR Communication Services Select Sector exchange traded fund XLC, -0.37%
The Uber Eats platform has strengthened its profile with grocery delivery through Cornershop in addition to recent acquisitions of food delivery competitor Postmates and alcohol delivery platform Drizly.
Maybe food delivery companies are rushing to explore new verticals because they have to. A published study indicates a great headwind is coming. The paper, written by Elliot Shin Oblander, doctoral candidate in marketing at Columbia Business School, and Daniel McCarthy, assistant professor of marketing at Emory University’s Goizueta Business School, looks at what would happen to US food delivery sales if Covid-19 was not there for. measure the impact of a pandemic.
Sales for the US food delivery business were approximately $ 51 billion last year, an increase of $ 28 billion from 2019, according to the authors. Using credit card data, geolocation and restaurant lists, they found that about $ 19 billion, or about 70%, of last year’s growth, was “purely due to the pandemic.” If a pandemic does not occur, sales growth in 2020 will slow more than half compared to the previous year, their analysis shows. Last year’s growth was largely due to consumers opting for delivery as a substitute for dining in restaurants, the study noted. Conclusion: If internal eating returned to pre-pandemic levels, growth in food delivery would logically decline: “That’s how substitution works,” write the authors.
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To see how food delivery companies expect pandemic-fueled consumer habits to persist, consider DoorDash. Amid its guidance, the company expects around 28% gross order value growth for its largest business segment this year compared to 2020 – significantly up from the more than 200% year-on-year growth it made last year. However, the 2021 outlook implies about 300% growth at the midpoint of this year versus 2019. That’s much higher than the 186% growth DoorDash sees in segment gross order value between 2018 and 2019, implying that it expects its eaters to continue ordering at a higher rate. high, even in a reopened economy.
At least DoorDash may be in the best position to retain customers in the vaccinated world, according to the study’s co-author, Mr. McCarthy. He notes the “double hazard effect” in the food delivery industry in which DoorDash is the market leader make the brand more attractive for eaters. New York City is perhaps the best illustration of this dynamic. While Grubhub has over the years held its grip on that market, Bloomberg Second Measure data for March showed that DoorDash suddenly had 34% of sales there compared to Grubhub’s 37%. Of the top 12 US metro areas by population, DoorDash now leads in 10 of them.
The added benefit of being a consumer’s first choice is that restaurants may be more inclined to list it, McCarthy said. Adding a restaurant – even when closed for in-room dining – is not easy. While one might expect restaurants to race to pay for last year’s discovery and delivery, research shows that food delivery platforms added it at a lower rate overall between April 2020 and December 2020 compared to the same period in 2019.
DoorDash is trying to attract new restaurants by introducing price levels with the lowest commission starting from 15%. While that will make DoorDash more economically attractive to restaurants, it will also require consumers to take at least some of the differences in the tabs. Food delivery platform there are already some consumers who pay nearly the same cost as they paid for food in some cases – all for the benefit of waiting for lukewarm packaged food.
US food delivery customers recorded 28% more orders with an 18% larger average order size in December last year compared to a year earlier, according to Mr. McCarthy’s analysis. How often will they choose to deliver a meal when the promise of a hot meal at their favorite restaurant’s table returns? Investors sticking with this year’s food delivery stock should expect that, even when the eater returns come out, they’ll at least order their paper towels and drinks.
Packaged food companies have been the main beneficiaries of the pandemic as food at home soars. Now investors are worried about the sale will start to wobble when people get back to eating, even when margins hit increasing input costs. Both of these worries began to look excessive.
reported organic sales growth – which eliminates the impact of acquisitions, divestments and currency movements – of 2.5% from a year earlier in the first quarter. That compared with analyst expectations for growth of around 1%, according to Visible Alpha. Keep in mind that sales compared to the start of the kitchen storage wave in the first quarter of last year when Kraft Heinz organic sales jumped 6.4%.
The company said it expects single-digit cost inflation for the rest of the year, in line with similar guidance from peers including
as food inputs are increasingly expensive, along with shipping and logistics. Prices of soybeans, wheat and sugar futures have risen 82%, 40% and 73% respectively over the past 12 months, according to FactSet.
Investors don’t have to worry too much about this. Barclays analyst Andrew Lazar says history shows that food companies have generally been able to weather periods of inflation, even after the lull, through a combination of rising customer prices and cutting costs. When commodity costs fall, the increase in prices persists, leaving the company in a better position in the long run.
This pattern was evident during the last two waves of commodity price inflation around 2007 to 2008 and 2012 to 2014. Kraft Heinz doesn’t exist in its current form, but looking at colleagues like General Mills,
they generally come out of both episodes with a higher operating margin after the initial drop. At General Mills, for example, profit margins before interest and taxes fell from 16.6% in the fiscal year ended May 2008 to 15.4% in fiscal 2009. Then they jumped to 18% in fiscal 2010, according to S&P Global Market Intelligence. .
Meanwhile, on the demand side, evidence is mounting that households continue to consume significantly more food at home than before the pandemic, even though it has reopened. It could happen at least in part because they have invested in kitchen equipment and improved their cooking skills over the past year.
This is true even for people who are fully vaccinated, according to research firm Numerator, based on a panel of 100,000 buyers. In the three weeks to April 10, purchases by vaccination buyers of “store-center” groceries – essentially packaged foods – were up 7.6% from the same period in 2019, said Numerator. That’s less than the 11.6% growth among all panelists, but it’s still impressive.
Not all pandemic recipients will look good during recovery. However, food stocks are likely to challenge skeptics.