What happened

Shares of Uber Technologies (NYSE: UBER) popped on Tuesday after the ridesharing and food delivery giant reported strong second-quarter growth metrics. As of 3:25 p.m. ET, Uber's stock price was up more than 18%.

So what

Uber's gross bookings -- essentially, the total dollar value of transactions facilitated by its platform -- rose 33% year over year to $29.1 billion. The gains were fueled by a 21% jump in monthly active platform consumers, to 122 million. People are also using Uber's network more often, which helped to drive a 24% increase in trips, to 1.87 billion.

Uber is benefiting from a recovery in demand for travel-related services. Its airport gross bookings soared 139% and constituted 15% of its total mobility gross bookings, which grew 57% to $13.4 billion. Additionally, demand for food delivery services has remained strong during the pandemic. In turn, Uber's delivery gross bookings increased 12% to $13.9 billion. 

Still, Uber generated a net loss of $2.6 billion, due in part to the reduced valuations of its equity investments in self-driving vehicle start-up Aurora, Singapore-based ridesharing leader Grab, and India-based food delivery company Zomato. 

However, Uber's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved to $364 million from a loss of $509 million in the year-ago period. Uber also produced free cash flow for the first time, to the tune of $382 million.

"We became a free cash flow generator in Q2, as we continued to scale our asset-light platform, and we will continue to build on that momentum," Chief Financial Officer Nelson Chai said in a press release. "This marks a new phase for Uber, self-funding future growth with disciplined capital allocation, while maximizing long-term returns for shareholders."

Now what

Somewhat counterintuitively, inflation appears to be prompting more drivers to join Uber's platform. Although higher gas and vehicle prices can cut into drivers' profits, rising grocery and other living costs are leading more people to work to earn money by driving for Uber. 

All told, the number of new driver sign-ups in the U.S. surged 76% compared with the prior-year period. Better still, drivers and couriers earned a combined $10.8 billion during the second quarter, which represented year-over-year growth of 37%. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why did the Uber share price surge 18% today? appeared first on The Motley Fool Australia.

There is increasing acceptance that electric cars will replace combustion engine vehicles in the coming years.

For those wanting to invest in this trend but feeling nervous about picking individual stocks, a new exchange-traded fund (ETF) is coming that might do the heavy lifting.

BetaShares revealed recently that BetaShares Electric Vehicles and Future Mobility ETF (ASX: DRIV) would be "coming soon".

"Sales of electric vehicles are projected to grow strongly in coming years," stated BetaShares.

"The transition to smarter vehicles is likely to significantly increase the use of semiconductors and high-tech componentry in cars."

Which shares will this ETF hold?

While details, including launch date, are currently scarce, the fund manager did provide 4 examples of shares that the new ETF would hold:

• Tesla Inc (NASDAQ: TSLA): arguably the most famous electric vehicle stock, which has risen more than 1,000% since the start of 2020
• Nio Inc (NYSE: NIO): one of several Chinese car makers focusing purely on electric engines
• Aptiv PLC (NYSE: APTV): a US auto parts provider headquartered in Ireland, which has a large business making electronic active safety technologies
• Uber Technologies Inc (NYSE: UBER): best known for its dominance in ride-sharing.

All up, the Electric Vehicles and Future Mobility ETF will hold up to 50 different stocks involved in the future of transportation. 

According to BetaShares, the convenience of investing in foreign businesses through ASX shares is not the only advantage of the new fund.

"DRIV offers potential portfolio diversification benefits to Australian investors, given that automotive technology is under-represented in the Australian market."

Thematic ETFs are so hot right now

The new ASX listing is the latest in a series of thematic ETFs to come to the market this year.

Just last month, BetaShares itself listed ASX's first cryptocurrency-related ETF, while this month ETF Securities revealed it would debut the first-ever Australian funds directly investing in Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).

ETFs have become popular in recent years on the back of the success of passive index funds.

But Nucleus Wealth spokesperson Jayden Stent warned last month there were considerable risks with theme-based ETFs.

"You don't want to be lulled into thinking that because some ETFs offer low volatility that all ETFs are the same," he said on a Nucleus blog.

"The potential for large swings will mainly depend on the type of the fund… Investors [need] to take note of what the ETF is tracking and what are the underlying risks associated with it."

The post An electric car ETF is coming to the ASX: Here's what we know appeared first on The Motley Fool Australia.

Big tech is getting even bigger.

The FAANG group of stocks crushed earnings across the board this quarter, showing that dominant tech companies are only getting stronger as the economy revs up into the post-COVID era.

All of these giants posted results that were much better than analyst estimates (although Netflix missed expectations on a key subscriber growth metric). The chart below shows how their earnings-per-share (EPS) results compared with expectations.

Source: Yahoo! Finance.

It's remarkable that companies as big as this quintet, which together make up more than $6.73 trillion in market value, were able to beat Wall Street expectations by so much. The chart above represents more than $10 billion in unexpected profits in just a single quarter. That's more than all but a handful of companies make in a year.

The results show that these companies are stronger than ever, but they're actually even more profitable than they look.

Get to know GAAP

All of the FAANG stocks report earnings according to generally accepted accounting principles (GAAP), which is required by the SEC. All companies report GAAP results, but most other publicly traded companies provide an additional adjusted profits figure, which becomes the benchmark for the stock. FAANG stocks don't do this. Their profits are based on GAAP and include expenses like share-based compensation that other companies make disappear by instead emphasizing measurements like adjusted EPS or EBITDA.

To get an idea of how profitable the FAANG group is, compare them to the next wave of tech stocks that have gained fanfare recently.

Tesla (NASDAQ: TSLA), the fast-growing leader in electric vehicles, reported $438 million in GAAP profits, or $0.39 per share in its first quarter, and $1.05 billion in non-GAAP profits, or $0.93 per share. Adjusted EBITDA was even higher at $1.84 billion. There's a significant difference between the three profitability marks Tesla gives. $614 million in share-based compensation accounts for the difference in between GAAP and non-GAAP earnings, which more than doubles Tesla's profits.

Shopify (NYSE: SHOP) is another high-growth stock that has dazzled investors with its surging revenue and returns. In its first quarter, it reported adjusted operating income of $210.8 million, nearly double the GAAP figure as it backed out share-based compensation, related payroll taxes, and amortization of intangibles.  

Other examples abound. Uber (NYSE: UBER) is the leading global ride-sharing company and a threat to disrupt transportation in multiple ways, but the historically loss-making company has only promised to be profitable on an adjusted EBITDA basis by the end of this year. Snapchat parent Snap (NYSE: SNAP) may be one of the most profligate spenders on share-based compensation. In its first quarter, it reported a GAAP loss of $286 million but finished with a $2.5 million non-GAAP profit when not factoring in $237 million in share-based compensation and other expenses. The company has acknowledged that it needs to rein in share-based comp as it is steadily diluting shareholders, with shares outstanding up 3% last year.

What it means for investors

There's nothing wrong with reporting adjusted earnings per share or using share-based compensation, and there are plenty of good reasons to invest in stocks like Shopify and Snap that are growing fast and have disruptive potential. However, their use of adjusted earnings shows that investors aren't making apples-to-apples comparisons when they compare them with FAANG stocks. 

Apple posted GAAP net income of $23.6 billion in its quarter but also had $4 billion in share-based compensation. If it were adjusting its profits, they would be nearly 20% higher. 

The tech giants don't need to do that, though. They are already delivering monster profits, and they may be purposely avoiding padding their figures because of antitrust concerns. They don't want to look even more powerful than they are.

But powerful companies are good for investors, and all four of these businesses dominate their respective subsectors. Unless something changes on the regulatory front, these FAANG stocks will continue to spin off tons of cash, and they all look like great bets to continue beating the market.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post FAANG stocks crushed earnings; here's another great reason to buy them appeared first on The Motley Fool Australia.

The Airtasker Ltd (ASX: ART) share price has cooled off significantly during the trading day. However, shares remain well above their initial listing price. Airtasker officially IPOed this morning after a false start this week and months of anticipation. The company had a listing price of just 65 cents, but opened this morning at $1.01 a share, meaning company insiders and investors were treated with a 55% win right off the bat.

At the time of writing, the Airtasker share price is currently sitting at $1.05, up 0.48%. 

Airtasker share price rockets

However, it wasn't all smooth sailing for investors looking to get into this IPO after trading commences (which is almost all retail ASX investors).  Airtasker's share price then went as high as $1.16 a share. This was prior to falling as low as 88 cents soon after market open. This company had a more volatile start to life than a giraffe!

At the time of writing, Airtasker shares are back to $1.02 a share, almost where they started the day.

IPOs can be ART-fully dangerous for new investors

Of course, Airtasker's listing is nothing the ASX hasn't seen before. Last year saw a smorgasbord of new companies hitting the ASX boards. These included Doctor Care Anywhere Group (ASX: DOC), Booktopia Group Ltd (AS:X BKG), Plenti Group Ltd (ASX: PLT), Nuix Ltd (ASX: NXL), Payright Ltd (ASX: PYR) and Laybuy Holding Ltd (ASX: LBY).

With the exception of Doctor Care, all of these companies are today trading below the price they IPOed at. And even Doctor Care was down 17% at one point from its IPO price before recovering. Laybuy has been a clanger, currently more than 47% below its IPO price.

We have seen a similar trend play out in the United States. Companies like Uber Technologies Inc (NYSE: UBER), Lyft Inc (NASDAQ: LYFT), and Snowflake Inc (NYSE: SNOW) have all IPOed in the last couple of years, and have been highly volatile in the months and/or years since.

IPOs can be dangerous things for retail investors to get involved in at the starting gate, despite all of the hype and buzz they generate. Remember, its often the motivation of those pushing the IPO to offload their shares for the highest price possible. So for any investor thinking about jumping on the Airtasker train, it might be prudent to keep all of this in mind!

The post Airtasker (ASX:ART) share price cools after explosive IPO appeared first on The Motley Fool Australia.

The now infamous ARK Invest updated its Tesla Inc (NASDAQ: TSLA) share price target on Friday – it's now more bullish than ever.

Cathie Wood and her team of analysts last year estimated the US electric vehicle (EV) maker's shares would eclipse US$1,400 by 2024. But, with updated research, the disruptive-focused asset manager now estimates it could hit US$3,000 in 2025.

Although a year later, the upgraded price target represents a 114% increase on the firm's prior base case and an implied 358% upside from Tesla's current price.

There are four main reasons for the revised price target.

Less money, more production, higher Tesla share price

In ARK's 2025 Tesla share price target, the first reason listed for the target increase is refined capital efficiency. Originally ARK estimated that Tesla would spend US$11,000 to US$16,000 per unit of increased production capacity in 2024.

However, Tesla announced an anticipated 75% reduction in investment costs over time due to improved cell chemistry and manufacturing processes. Consequently, ARK has lowered its gross capital expenditure estimate per car.

For this reason, the asset manager now foresees sales somewhere between 5 to 10 million electric vehicles in 2025.

Take out a policy with Tesla

In August 2019, Tesla introduced its own vehicle insurance coverage for customers in California. These policies are provided through partnering with underwriters, but ARK believes Tesla could begin underwriting them itself in the next few years.

In addition to this, the margins on the policies are estimated to be better than average due to the detailed driving data available from the EVs.

ARK thinks the company could roll out the insurance offering to more states and acquire customers at a low cost, given Tesla's high safety profile and dynamic pricing ability. In this case, if Tesla sold 40% of its vehicles with its own insurance in 2025, insurance revenue alone could hit US$23 billion annually – and this is in ARK's bear case.

Did you request a Tesla for John?

Human-driven ride-hail is now incorporated into ARK's Tesla bear case share price. In the bear case, Tesla would deliver a ride-hailing service similar to that of Uber Technologies Inc (NSYE: UBER). However, Cathy Wood's team believes Tesla could do it with a lower cost structure.

If implemented, ride-hail could add US$20 billion to Tesla's operating profit by 2025, by ARK's estimates. This would also lay the groundwork for an autonomous service while providing a highly profitable recurring revenue stream.

Highest Tesla share price target = no human driver

Lastly, ARK's previous valuation model considered Tesla's chances of achieving fully autonomous driving before the end of 2024 to be 30%. The revised model has seen the team ambitiously raise the probability to 50% by 2025.

ARK estimates that if 60% of Elon's Autopilot-equipped EVs were to serve as robo-taxis', the company would generate an additional US$160 billion in earnings before interest, tax, depreciation, and amortisation (EBITDA) in 2025.

Furthermore, in ARK's targets, electric vehicle sales and robo-taxi business operations account for 40% and 50% of Tesla's estimated market capitalisation. Additionally, ARK estimates Tesla's combined operations to generate US$507 billion in revenue by 2025.

The post 4 reasons ARK recently increased its Tesla share price target to US$3,000 appeared first on The Motley Fool Australia.

Demand for shares from Airtasker Limited (ASX: ART) staff during its initial public offering (IPO) ended up 10 times what the company offered.

Company chair James Spenceley made the admission during a chat with The Motley Fool.

"We set aside a figure for [shares to] internal staff, and it ended up being 10x that number," he said.

"We're talking north of $1 million from internal staff. That blew me away."

The gig economy platform is floating on the ASX on Monday after an IPO that sold its shares at 65 cents.

The market seems to be rotating away from high-growth technology shares, just as Airtasker is about to list. The S&P ASX All Technology Index (ASX: XTX) has dropped almost 14% since its recent peak on 10 February.

Spenceley, who was also the founder of Vocus Group Ltd (ASX: VOC), told The Motley Fool he was not worried about temporary market movements.

"Quality businesses are still doing well. The ones that have a lot of hot air in them are moving around quite a bit," he said.

"We're pretty confident. Both [chief executive] Tim and myself, we're here for the long run. I've seen the power of this business."

Labour market concerns for Airtasker?

Gig economy platforms have been under the spotlight in recent times for their relationship with the people who provide the service.

Those businesses have maintained them as independent contractors in order to avoid the overheads involved if they were counted as employees.

But the shortcomings of that model have attracted critics, who say many workers are underpaid and lack physical, legal and financial protections.

Just this week, a UK court ruling forced Uber Technologies Inc (NYSE: UBER) to reclassify 70,000 vehicle drivers as workers. This entitles them to benefits such as holidays and a minimum wage.

Potential labour regulations were not a concern for Airtasker, according to Spenceley, as its business model was different to transport and food delivery providers.

"[Other platforms] are incentivised to squeeze the person doing the work as much as possible so they make more money," he said.

"We have the reverse – we only get paid when the task gets completed, and we only get paid a percentage of the task. There's an incentive for us to have our taskers earn more money."

Airtasker chief executive Tim Fung told The Motley Fool that in his discussions with unions and the government, everyone's goals seemed to be aligned.

"We want the exact same things. We want to create high-quality work for Australians. And we want to have a positive impact on the future of work."

Expansion and customer development

While the 6-month focus after the ASX listing will be amplifying the marketing within Australia, Fung is keen to grow internationally in the long run.

"We've launched a marketplace in the UK. And we've recently opened up markets in Singapore, New Zealand, Ireland and the US."

The Motley Fool has previously reported Airtasker is increasing its average value per task.

The average dollar value in the early days almost 10 years ago was $97 per task. That had gone up to $159 for the 2020 financial year, while $189 is forecast by the end of the current year.

Fung attributed this to some taskers having built up tremendous trust and respect through performing thousands of tasks over the years.

"Customers are demanding more sophisticated and complex work through Airtasker," he said.

"We're starting to see people come to Airtasker and say, 'I need someone to do tax advice for me. I need a lawyer to write up an agreement for me. I need an architect to design a home for me.'"

Airtasker shares will start general trade on the ASX on Monday with a market capitalisation of $255.4 million.

The company made a $5.2 million pro forma net loss after tax last financial year. It forecasts a loss of $6.2 million for the year in progress.

The post Airtasker IPO: staff demand 10 times the shares offered appeared first on The Motley Fool Australia.

If you're a fan of (or more importantly an investor in) ridesharing services, this is a week to make sure that you're awake at the wheel. Lyft Inc (NASDAQ: LYFT) reports its fourth-quarter results shortly after the close on Tuesday. Larger rival Uber Technologies Inc (NYSE: UBER) pulls over for its fresh financials the following day.

Lyft and Uber seem to be joined at the hip in the eyes of Wall Street. They are the two undisputed leaders in the US car-hailing market. They also went public just five weeks apart in the springtime of 2019. But pop open the hoods, and you'll find two different engines in action. Lyft will take some time to warm up in the new normal, but Uber should impress you.

Lyft you higher

Lyft was the first of the two ride-hailing platforms to go public, and since it reports first this week, we may as well start there. The coronavirus pandemic has naturally hit the personal mobility market hard. With more people working, learning, and playing at home to contain the spread of the COVID-19 virus, demand has dropped sharply since mid-March of last year.

As the smaller of the two players, Lyft stood out when it hit the market by growing a lot faster than Uber. Lyft's business has also been the harder hit of the two companies on the way down. We've seen revenue at Lyft decline 61% in the second quarter of last year, the first full period under the grip of the pandemic. The top line took a 48% year-over-year hit in the third quarter. Analysts see that improving marginally to a 45% decline when it reports on Tuesday afternoon.

The climate is getting kinder, but for now, the problem is the temporary pause on conventional ride-pooling. UberPool and Lyft's shared-ride feature were suspended in March of last year. The ride-pooling was a win-win for the platforms. Riders willing to share a car with others going in the same direction would receive lower fares. Drivers would make more money by lumping overlapping routes in the same vehicle. This doesn't fly in the new normal, where strangers shouldn't be sharing the backseat even if they are donning the now-required masks.

The market's been kind. Despite the brutal year, Lyft shares moved 14% higher in 2020, and the stock enters this trading week 23% higher than where it was at the start of last year. Investors assume we will resume our ridesharing ways as the vaccination rollout gnaws away at the pandemic as 2021 plays out. For now, expect another sharp quarterly deficit to accompany the 45% revenue hit on Tuesday.

Super Uber

Investors will get a very different report out of Uber after the market close on Wednesday. It's expected to follow Lyft in posting a quarterly loss that is narrower than the same period a year earlier, but analysts see a mere 12% decline in revenue. 

The difference here is that Uber has emerged as the country's second-largest player in restaurant delivery. We're not hailing rides these days, but with indoor dining unsafe (if not entirely off the menu), there's been an explosion in the popularity of third-party apps that pick up takeout orders and bring them to hungry customers. 

Uber's third quarter is a perfect illustration of the state of things. Uber's 18% decline in revenue for the period – way kinder than Lyft's 48% slide – was the combination of a 53% drop in passenger rides that was largely offset by a 125% increase for Uber Eats. It works. It's why Uber stock has trounced Lyft, nearly doubling (up 97%) since the beginning of last year. 

It's not just Uber Eats that is helping the larger of the two players, which now trades at a much higher revenue multiple than Lyft. Uber is an international player, and many overseas markets are closer to bouncing back to pre-pandemic levels. Both stocks should be growing their top lines again at some point later this year, but right now Uber is the one that's shining brighter than Lyft.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Uber and Lyft: A tale of two earnings reports appeared first on The Motley Fool Australia.

An expert has warned this year will be a tough one for share investors.

According to Forager Funds chief investment officer Steve Johnson, share markets have now gone too far ahead of economic recovery from COVID-19.

"I think it's going to be a difficult year," he said on a Forager video.

"People need to expect those returns from equities to be lower than they've been historically from today's pricing level. That makes it more difficult."

The major dark cloud in 2021, according to Johnson, is interest rates heading up in response to a steep economic recovery out of the current recession.

"If we're ever going to see pressure on interest rates going up and inflation, it's going to be over the course of the next two years," he said.

"I think that's the big risk for financial markets of all sorts out there, that interest rates start to pick up over the next few years and that people start looking at 5% and 6% returns on equities and saying 'Well, I can get 3% on a bond portfolio now. I want more.'"

His perspective is a contrast from other finance experts who have predicted a boom year for equities in 2021.

BetaShares chief economist David Bassanese said last month earnings forecasts have "held up remarkably well in recent months".

"We are looking at 15 per cent growth in forward earnings by end [of] 2021 if current expectations hold up."

Johnson's cautiousness was why his team's funds, including Forager Australian Shares Fund (ASX: FOR), are concentrating on current cash flow.

"We're really positioning ourselves to be [in the] short duration we own businesses that are going to give us cash flow in the short to medium term, rather than using low discount rates to justify high prices for businesses down the track."

Buying in dips takes nerves of steel

During last year, the Forager team took advantage of the volatility to pick up some bargains during the dips.

But that takes courage because no one knows when the market's hit the bottom until afterwards.

"At the times when the best opportunities are there, it is going to be stressful," Johnson said.

"That's probably my most important role as CIO here that I get up in those times of crisis and I say to our whole team: 'Everyone is panicking, it is time for us to invest.'"

He added this is why it's important during quiet times to prepare a target list of stocks one will buy if the market sinks.

"[Being] ready to pull the trigger in those environments is the most important thing that you can do to take advantage of it."

Johnson recalled how his team was able to pick up shares of a very prominent US tech company during the panic last March.

"We copped a lot of criticism for our investment in Uber Technologies Inc (NYSE: UBER) at US$24 a share. It's trading north of US$50 now and it really was widespread panic in that part of the market that nobody was ever going to start using that company's products again," he said.

"I don't think anyone that actually sat down and did a proper analysis of what that business was worth at the time would have concluded it was worth less than US$24."

The share price for Forager Australian Shares Fund was at $1.15 a year ago but traded at $1.38 as of late Monday afternoon.

The post Warning: 2021 is going to be difficult appeared first on The Motley Fool Australia.

As both US and Australian shares have climbed into the stratosphere since the March COVID-19 crash, a fierce debate has continued.

Are stocks overvalued?

This question is asked most of growth shares. The successful ones now have market capitalisations that are incredible multiples of their actual financial numbers.

For example, Tesla Inc (NASDAQ: TSLA) is now trading at a mind-blowing 1,377 price-to-earnings (P/E) ratio. The S&P 500 Index (SP: .INX) generally has a ratio of 42.08.

If this doesn't mean much to you, consider this. Tesla is now worth as much as the 8 biggest petrol-car producers in the world.

In Australia, Afterpay Ltd (ASX: APT) shareholders have been laughing this year but the company doesn't even have a P/E ratio — because its earnings are negative.

It's now worth more than Coles Group Ltd (ASX: COL). Are we seriously believing people are using buy now, pay later more than buying groceries?

Why are investors willing to plough so much money into companies with such inflated valuations? 

Isn't it risky? Won't the bubble burst when everyone realises they've made a big mistake?

Why markets aren't as risky as P/E ratios suggest

Monash Investors principal Simon Shields has a very simple explanation as to why it's not as risky as it seems.

"I have yet to see anyone consider risk when comparing the high prices of today with the lower prices of yester-year," he said on Livewire.

"Investing in stocks was riskier 30 years ago, much riskier 60 years ago, and riskier still 90+ years ago."

How has investing in shares become safer in modern times? 

Shields attributes the shift to the many checks and balances that have been introduced over the decades.

"Over that time, the world has become a much safer place in which to buy stocks. Investors are better educated. Companies disclose more information and accounts are more reliable. Security regulators and legislators have closed loopholes and reduced the opportunity for fraud," he said.

"Calculators and then computers have improved analysis. Technology has allowed everyone from investors, to companies, to regulators to make better-informed decisions, and so be less likely to be surprised. Central banks and governments have become much more risk averse."

This may help explain why investors are willing to pay such high prices for companies they think have bright futures.

Growth shares are not as cyclical these days

Shields also pointed out that the very nature of growth stocks have changed in the past couple of decades.

"In the past, a lot of the growth achieved by growth companies was cyclical (as shown in the consumer discretionary, media, building materials, or transport sectors)," he said.

"When the economy slowed or went into a recession, companies in these cyclical sectors saw earnings forecasts pulled back much more than those for the less cyclically exposed value stocks."

But since the internet boom in the 1990s, structural growth started to take precedence over cyclical growth.

"It used to be that 'tech' stocks were a distinct and small market sector. But new and better ways of doing things have spread rapidly across many industries with the penetration of smartphones, Web 2.0 and cloud computing," Shields said.

"Structural growth now is a greater proportion of the market's overall growth outlook, and it is at the expense of many mature low growth companies."

Examples of structural growth include consumers moving from physical to online retailers and shifting from owning items to pay-as-you-use (eg Uber Technologies Inc (NYSE: UBER)).

With the onset of the coronavirus pandemic, even travel has been structurally changed with video conferencing and work-from-home becoming the norm.

Structural growth is more stable, giving investors more confidence to throw money at these businesses.

"These structural trends are playing out regardless of the economy's cycle," said Shields.

"[This] means the growth companies' forecasts are less susceptible to cyclical disappointment, while at the same time they cause the value companies' forecasts to weaken."

The post Why shares are less risky now than 30 years ago appeared first on The Motley Fool Australia.

Investing in the United States and its markets has become increasingly popular in recent years. It's easy to understand why. As technology and globalisation become ever more prevalent, we can't help noticing brands like Apple Inc (NASDAQ: AAPL) and Alphabet Inc's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google pop up in the everyday household. Or cars made by Tesla Inc (NASDAQ: TSLA) or even Ford Motor Company (NYSE: F) appear on our roads, perhaps driven by an Uber Technologies Inc (NYSE: UBER) driver. Or apps that Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS), or Amazon.com Inc (NASDAQ: AMZN) supply on our TVs.

If you dig a little deeper in your own cupboard, you might find Kellogg Company (NYSE: K) cereal or razors made by Procter & Gamble Co's (NYSE: PG) Gillette.

American companies are everywhere in Australian life, often hiding under familiar brands. Take the popular ice creams Paddle Pop and Golden Gaytime. They are actually owned by the British-Dutch company Unilever UN (NYSE: UL), listed in the US.

So it's understandable that Aussie investors might want a slice of the pie. And they do. You can take a look at our coverage of some of the most popular US shares that Aussie are buying.

Recently, we covered how the rising Australian dollar was making investing in US shares more attractive. So if you've never taken the plunge across the Pacific, it might be a good time to have a think about it. There's nothing wrong with our own S&P/ASX 200 Index (ASX: XJO) of course. But the reality is that our market is a minnow in the ocean of global markets. The US markets are, by comparison, a pod of whales. I say a pod because the US has a few different markets you can invest in. Rather than just one major index, like our ASX 200, American investors have a few choices. There's the old-school Dow Jones Industrial Average (INDEXDJX: .DJI), the uber-popular S&P 500 Index (INDEXSP: .INX), and the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX).

Buying US shares on the ASX

You can always buy US shares directly through your ordinary broker. Many of the most popular Aussie share brokers, like Commonwealth Bank of Australia's (ASX: CBA) CommSec, or National Australia Bank Ltd's (ASX: NAB) NABtrade offer the opportunity to buy US shares like Apple or Netflix directly. There are also newer dedicated US brokers, like the popular Stake, which do the same.

However, if you don't want to buy these shares directly, there are other options. Various managed funds and Listed Investment Companies (LICs) that are listed on the ASX invest in US shares. Some popular examples include the Magellan Global Fund (ASX: MGF) and MFF Captial Investments Ltd (ASX: MFF).

Otherwise, there are always US market-tracking index funds available on the ASX as well. Some examples include the iShares S&P 500 ETF (ASX: IVV), the Vanguard US Total Market Shares Index ETF (ASX: VTS), and the BetaShares Nasdaq 100 ETF (ASX: NDQ). There's also a couple of currency-hedged options for the investor who wants to take currency fluctuations out of the equation. These include the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).

Foolish takeaway

For the investor who wants to branch out and invest in US shares, there are more options available than ever. In the end, it just depends on your individual preferences as to which route you wish to take.

The post How to invest in US shares in 2021 appeared first on The Motley Fool Australia.

Most weeks, Commonwealth Bank of Australia's (ASX: CBA) CommSec brokering platform tells us the international shares (which are almost always US shares) that are the most popular with its customers, along with the most popular ASX shares.

CommSec is one of the largest online brokers in the country. As such, this data can be a nice gauge of general investing trends in our market. This week's data covers 7-11 December.

So here are the top 10 United States shares CommSec customers were buying last week:

Most traded US shares on the ASX

1. Tesla Inc (NASDAQ: TSLA) – representing 9% of total trades with a 77%/23% buy-to-sell ratio.
2. Nio Inc (NYSE: NIO) – representing 2.9% of total trades with an 80%/20% buy-to-sell ratio.
3. AirBnB Inc (NASDAQ: ABNB) – representing 2.4% of total trades with a 97%/3% buy-to-sell ratio.
4. Apple Inc (NASDAQ: AAPL) – representing 2.3% of total trades with a 69%/31% buy-to-sell ratio.
5. Palantir Technologies Inc (NYSE: PLTR) – representing 1.5% of total trades with an 83%/17% buy-to-sell ratio.

   The next five most traded shares were these:

6. Pfizer Inc (NYSE: PFE)
7. Xpeng Inc (NYSE: XPEV)
8. Microsoft Corporation (NASDAQ: MSFT)
9. Moderna Inc (NASDAQ: MRNA)
10. Zoom Video Communications Inc (NASDAQ: ZM)

What can we learn from these trades?

Well, a notable inclusion this week is AirBnB, which had a very publicised initial public offering (IPO) last week (meaning AirBnB launched on the share market for the first time). AirBnB shares rocketed as high as 142.6% at one point on IPO day, surging past the opening price of US$68. The following day, the shares climbed as high as US$165, but have since cooled somewhat and last traded for US$130 per share a the time of writing.

AirBnB is one of those 'unicorn' businesses, similar to Uber Technologies Inc (NYSE: UBER), that people right around the world have become familiar with long before they achieved 'public company' status. As such, these IPOs often attract a lot of attention. AirBnB was evidently no different, including for Aussie investors. We can see this on CommSec's list, where it usurped the No.3 spot last week.

In other news, electric car/battery manufacturers Tesla and Nio seem to be unstoppable. These 2 companies have been swapping the top positions with each other for most of the year, with Tesla stealing back much of the interest last week. That might have had something to do with Tesla's upcoming inclusion in the S&P 500 Index (SP: .INX), or perhaps Tesla shares appreciating more than 56% in the past month alone. Tesla trades were almost as popular as those of the other top 5 stocks combined, which says something.

Notably, only one of the famous 'FAANG' stocks made the top ten at all – Apple. It seems ASX investors are losing their appetite for Amazon, Alphabet and Facebook, at least for now. And almost a third of Apple trades were 'sells' (far more than the others).

The post Here are the US shares ASX investors are buying appeared first on The Motley Fool Australia.

Earlier this year, Amazon.com Inc (NASDAQ: AMZN) purchased Zoox, a six-year old start-up seeking to create autonomous driving vehicles from the ground up. It reportedly paid over $1.2 billion in the deal, making it one of Amazon's largest ever acquisitions.

On Monday, the company revealed the Zoox vehicle and its plans for the fully autonomous electric vehicle. Amazon is planning to compete with Uber Technologies Inc (NYSE: UBER) and Lyft Inc (NASDAQ: LYFT) using the Zoox electric vehicle (EV) as a driverless robotaxi, according to a Bloomberg report.

The EV can carry up to four people, travel in either direction, doesn't contain a steering wheel, and has a maximum speed of 75 miles per hour. Its two battery packs are enough for the vehicle to run up to 16 hours on a single charge. The company plans to launch an app-based ride hailing service in some U.S. cities, including San Francisco and Las Vegas, as well as overseas. 

Zoox chief technology officer Jesse Levinson said the vehicle has passed all safety crash tests, according to the Bloomberg report. It navigates using spinning laser sensors and cameras on each corner of the vehicle, giving it the ability to see a complete field of vision at all times. 

CEO Evans also said the EV "could move packages" at some point, referring to the possibility of creating a fleet of autonomous delivery vehicles, though she said there are no current plans for that. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Amazon's driverless electric vehicle is coming appeared first on The Motley Fool Australia.

Australians are busy Googling technology companies to buy shares in, according to new research.

The study commissioned by investor education provider Invezz.com found that 9 out of the 10 most-searched stocks are in the tech sector.

Tesla Inc (NASDAQ: TSLA) was the most-searched share among Australians, seeing an average monthly search volume of 79,800 over the last 12 months.

The result is perhaps not surprising, with the electric car maker's shares going gangbusters this year. It started 2020 at US$86.05 but is now US$574 — multiplying 6.7-fold in just 11 months, during a pandemic year no less.

In fact, The Motley Fool reported this week that there are now more Tesla shareholders in Australia than people who actually own the company's cars.

The only ASX share Australians are interested in

Zero-brokerage trading platforms for US shares have apparently shifted Australian investors' attention overseas. The only ASX-listed company to feature in the top 10 was Afterpay Ltd (ASX: APT).

The buy now, pay later provider's shares have also been on a wild uphill ride. 

The Afterpay share price sat at $8.90 during the bottom of the COVID-19 crash, but is now hovering around $96. It has broken the $100 ceiling several times in recent weeks.

The only non-technology share in the top 10 was Boeing Co (NYSE: BA).

The aerospace company has had a turbulent couple of years with well-publicised accidents in its new 737 MAX plane and COVID-19 killing the aviation industry.

The share price reached US$440 in March last year just before the manufacturer grounded the 737 MAX. It then sunk to US$95.01 in March as flying became a distant memory.

Boeing stocks have climbed well this month in anticipation of coronavirus vaccines to sit currently at US$217.61.

Australians want knowledge before diving into shares

The study also asked more than 1,700 Australians who did not own shares what would encourage them to buy some.

Almost three-quarters said more knowledge of what they're investing in would get them over the line. Cutting down on personal expenses to free up more cash was the big concern for 65% of respondents.

A fear of risk was also a factor that caused hesitation. An acceptance of those risks would get 62% to buy their first shares, while 34% would take the leap if they were less afraid of negative market forecasts.

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Over the past 12 months, the S&P/ASX 200 (INDEXASX: XJO) is down 11%. But some ASX shares have bucked the trend and recorded major gains. We take a look at the top 10 performers over the past year. 

Afterpay Ltd (ASX: APT)

The Afterpay share price is up a massive 136% over the past year. The buy-now-pay-later (BNPL) provider has seen huge growth in customer numbers which has contributed to the rising share price. Last month Afterpay reached 5 million customers in the US, and this month the company recorded more than 1 million customers in the UK. 

Perseus Mining Limited (ASX: PRU)

The Perseus Mining share price is up 124% over the past year and made it into the S&P/ASX 100 (INDEXASX: XTO) in the most recent rebalance. The gold miner produced 57,983 ounces of gold in Q3 FY20 and has benefitted from the recent rise in the gold price. The gold price has increased from around A$2,100 an ounce in January to closer to A$2,600 an ounce currently. 

Mesoblast Limited (ASX: MSB)

The Mesoblast share price has gained 123% over the past year and joined the S&P/ASX 100 in the most recent quarterly rebalance. The Mesoblast share price has surged since March on speculation its potential treatment for coronavirus will reach commercial production. The company's stem cell product candidate remestemcel-L has shown promising results in treating chronic obstructive pulmonary disease. 

Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price has gained 113% over the past year. The healthcare company announced record results for the New Zealand financial year ended 31 March 2020. Operating revenue increased 18% to $1.26 billion, leading to a 37% increase in net profit which reached $287.3 million. The increase in revenue was primarily driven by growth in the use of Fisher & Paykel Healthcare's Optiflow nasal high flow therapy, demand for products to treat COVID-19, and strong hospital hardware sales. The company was already on track to deliver strong growth before the onset of coronavirus, then beginning in January demand for respiratory humidifiers accelerated to an unprecedented extent. 

Megaport Ltd (ASX: MP1)

The Megaport share price is up 82% over the past 12 months with the company also joining the S&P/ASX 100 this month. Megaport is a leader in the network-as-a-service space, providing connectivity via 601 data centres worldwide. Monthly recurring revenue increased by 19% in March to reach $5.4 million. The technology firm boasts 1,777 customers including Amazon.com, Inc. (NASDAQ: AMZN), Uber Technologies Inc (NYSE: UBER), Facebook, Inc. Common Stock (NASDAQ: FB), BHP Group Ltd (ASX: BHP), and REA Group Limited (ASX: REA). 

Domino's Pizza Enterprises Ltd (ASX: DMP)

The Domino's share price has gained 79% over the past year. Same-store sales in Australia remained consistent post-COVID-19 at a national level. Stores in Japan and Germany have maintained their strong sales performance, while stores in New Zealand and France have reopened following coronavirus shutdowns. COVID-19 caused some franchisees to pause expansion plans temporarily. The pause affected the timing of store openings and franchising, but not the strategy. Over the medium-term Domino's plans to increase store numbers by 7%–9% per year and increase same-store sales by 3%–6% per year.  

Silver Lake Resources Limited. (ASX: SLR)

The Silver Lake Resources share price has gained 79% over the past year. Another miner to benefit from the rising gold price, Silver Lake Resources produces 65,548 million ounces of gold in the March quarter. The miner also produced 438 tonnes of copper. During the quarter Silver Lake Resources reported record sales of 68,183 ounces of gold at an average price of $2,170 an ounce. All-in sustaining costs of production were $1,380 an ounce. In April the company upgraded its FY20 sales guidance to 250,000 to 260,000 ounces of gold equivalent. 

Polynovo Ltd (ASX: PNV)

The PolyNovo share price has gained 72% over the past year. The healthcare company is behind a biodegradable polymer technology with applications in the dermal scaffold, hernia, and breast markets. The value of near-term addressable markets is estimated at US$7.5 billion. Sales revenue increased 129% in 1H FY20 to $8.57 million. Record sales were recorded in the US in March, and Australia and New Zealand are on track for a strong Q3. The company is building a factory to produce its hernia products which is expected to be completed in July 2020. PolyNovo plans to enter the US$1.5 billion United States hernia market in July or August 2021. 

JB Hi-Fi Ltd (ASX: JBH)

The JB Hi-Fi share price is up 67% over the past 12 months with sales accelerating during coronavirus lockdowns. In 2H FY20 to date, JB Hi-Fi Australia's sales are up 20%, while The Good Guys sales are up 23.5%. The strong sales growth has come as customers spend more time working and learning from home. Additional operating costs have been incurred but have been more than offset by elevated sales growth and disciplined cost control. New Zealand stores were impacted by temporary closures which means 2H FY20 sales to date have dropped 19.3%, however, this is a small portion of the company's overall business. Over the full year, JB Hi Fi has estimated net profit after tax will be $300–$305 million, an increase of 20% to 22% on the prior corresponding period. 

Gold Road Resources Ltd (ASX: GOR)

The Gold Road Resources share price is up 64% over the past year, assisted by the surge in the gold price. During Q3 Fy20, its Gruyere mine produced 59,595 ounces of gold and remains on track to meet annual guidance of 250,000 – 285,000 ounces of gold. Gold Road Resources repaid and retired a $50 million working capital facility during the quarter. It ended the quarter in a strong liquidity position with cash and bullion on hand of $115 million. The company's $100 million revolving credit facility was drawn to $80 million giving Gold Road Resources a net cash position of $35 million. 

The post The top 10 performing ASX shares over the past year appeared first on The Motley Fool Australia.

An IPO (or Initial Public Offering) can be an exciting event on the ASX, or any other share market for that matter. That's because it involves the process of a private company becoming public, with its shares trading on the stock exchange for the first time.

Normally, most investors are locked out of investing in private companies because the shares aren't publicly traded on a market.

But an IPO 'democratises' a company by allowing it to be accessible for the first time to any investor with money to spare. Thus, it's always an exciting event with a lot of 'buzz' when a company goes public for the first time.

All listed companies underwent some kind of IPO in their history. This is the case whether relating to recent listings like Splitit Ltd (ASX: SPT) or those that occurred over a century ago, like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Some big names that have IPOed on the ASX in the last 5 years include Splitit, as well as Viva Energy Group Ltd (ASX: VEA), Marley Spoon AG (ASX: MMM) and Elixinol Global Ltd (ASX: EXL).

Over in the United States, there are some bigger names you might have heard of that recently had IPOs. These include Uber Technologies Inc (NASDAQ: UBER), which floated just last year, along with Beyond Meat Inc (NASDAQ: BYND). These were very exciting events that generated a lot of investor interest.

Should you invest in IPOs?

Just because you can invest in something, it doesn't necessarily mean you should. Investors often get swept up in the hype of an IPO. But here's why I think investing in one usually isn't a good idea for the average investor.

When a company is private, it is subject to far less scrutiny than a public company. Even after a private company becomes public, it can sometimes take years for all of the company's skeletons to come out of the closet.

What's more, you don't get a chance to see how a company is actually weighed up by the market until after the IPO occurs. This can result in the shares being quickly re-valued.

Thus, a company can believe its own shares are worth $10 each and, as such, offers them at its IPO for $10. But if the market has a different opinion, you might find the shares trading at $7 or $5 each very quickly.

Boom, you've just lost 30% or more of your money on day one.

Foolish takeaway

In my experience, losing money on an IPO happens more often than not. Therefore, I generally think it's preferable to wait until after a company has floated to buy in. That way, you can ensure you are buying its shares at the market price, rather than at a price the company has concocted. Too often, IPOs are done to let old investors out, not to let new investors in. Thus, I think all investors should be very careful with IPOs and be sure to have a cold shower before jumping in.

The post Should you ever buy into an ASX IPO? appeared first on The Motley Fool Australia.

It's a tough time for all ASX investors right now. Chances are that if you have a portfolio of ASX shares, it's in the red as we speak. It can be very disheartening thinking about how much better your cash would have been in the bank rather than the markets today – believe me, I know!

But fortunately, or unfortunately, that's what investing is all about. None of us could have predicted what has happened. Rewind to January and it seemed as though we were on track for another bumper year of ASX gains. We have to take the good with the bad when it comes to shares – there's no alternative.

So right now, with the S&P/ASX 200 Index (ASX: XJO) having lost around 30% of its value since mid-February and firmly in bear market territory, I think it's an important time to be brave.

Be brave in resisting the urge to 'cut your losses' and just get out of the market (it's normal to feel this way, no matter how irrational).

Be brave in putting your money into a highly volatile market that no one knows where it will be next week, let alone next month or next year.

I myself have tried to follow this path. I've topped up on some of my favourite ASX shares in recent weeks, including WAM Global Ltd (ASX: WGB), MFF Capital Investments Ltd (ASX: MFF), Pact Group Holdings Ltd (ASX: PGH) and Washington H. Soul Pattinson & Co. Ltd (ASX: SOL).

I've even opened up some new positions, including in Ramsay Health Care Limited (ASX: RHC) and WAM Research Limited (ASX: WAX), as well as also dabbling in some quality ETFs that have lost a lot of value, like the SPDR S&P Global Dividend Fund (ASX: WDIV).

I even picked up some Uber Technologies Inc (NASDAQ: UBER) shares.

But it wasn't easy doing this. I was scared that the shares would fall significantly further than my purchase price (which many have). I was scared that some of these companies might be affected by the coronavirus in ways that I didn't yet know (which they still might be). But there are always fears and doubts swirling in this kind of market. And there is no flashing signal that marks the best time to buy shares.

At the bottom of the GFC market crash in early 2009, there were newspaper headlines warning of a Dow Jones Industrial Average of 5,000 (it bottomed at around 7,000).

As the old saying goes, it's always darkest before the dawn.

And when the dawn comes, it's too late to be brave!

The post The importance of being brave in this ASX bear market appeared first on The Motley Fool Australia.

The Afterpay Touch Group Ltd (ASX: APT) share price is down 7% to $34 today after a nearly blasphemous research note out of UBS claimed the buy-now-pay-later business is wildly overvalued. 

I don't have a copy of the report, but according to my colleague James Mickleboro UBS is worried the U.S. market will prove too competitive for Afterpay.

It's logical that the likes of Klarna, Sezzle Inc (ASX: SZL), Splitit Ltd (ASX: SPT) and other far larger payments businesses like PayPal or Visa could take market share from Afterpay.  

The kicker being that their best opportunity to take market share is by undercutting the fees Afterpay currently charges merchants. 

This could create a race-to-the-bottom type scenario amongst deep-pocketed competitors that has eviscerated the profitability of other large-scale consumer-facing disruptors.

For example the likes of Uber, Lyft and Ola cannot turn a profit to save their lives, while the takeaway restaurant aggregators like UberEats, Deliveroo, DoorDash, Menulog and Just Eat are also now sacrificing profits in a ferocious fight for market share. 

Notably, not dissimilarly to Afterpay, all these 'disruptors' also rely on dubious regulation (over whether drivers are employees or contractors in Uber's case) and the largesse of law makers to keep their shows on the road.

Uber for example just reported a US$5.2 billion quarterly loss and the argument from high profile fund manager Magellan Financial Group Ltd (ASX: MFG) that it's little more than a Ponzi-type scheme reliant on new investors money to prop up old investors' returns may hold water given the preposterous losses. 

UBS also reportedly raised the prospect of tougher regulations for Afterpay hurting its potential profitability down the line.

Overall, I still think investors would be wise to only make Afterpay a small part of a balanced investment portfolio. As despite the hype the risks around slowing growth halving the valuation are real. 

The post Is UBS right to drop a bombshell on the Afterpay share price? appeared first on The Motley Fool Australia.

The world is moving away from cash and toward digital payments, and PayPal Holdings' (NASDAQ: PYPL) share price has been rising in the process. The stock has ridden this consumer sea change to a more than 200% gain from November 2017 to July 2019, as compared with the S&P 500's gain of 35%. 

Second-quarter earnings showed lower full-year revenue than had been forecast ($4.32 billion actual, vs. $4.33 billion predicted), and the stock price fell 15% on the news. Management blamed a delay in the launch of new services with strategic partners for the decline. Currency exchange effects have also played a significant negative role.

You can get an easy read on PayPal's health by looking at just a few metrics, all of which were up year-over-year: payment transactions (up 9.2%), active accounts (17.2%), total payment volume (23.6%), and engagement, or the number of app downloads (27.8%).  

Image Source: YCharts.

So is now the right time to buy?

If you're a long-term investor, you can be rest assured that PayPal is a stable business and that its stock price will rise over the long term. One of the main drivers for the company has been Venmo, a peer-to-peer payments app that's highly popular with young adults. Venmo, which offers an easy way to transfer money with a Facebook-like feed, enjoyed torrid growth in the second quarter, with a total payment increase of 70% year over year to $24 billion. That said, Venmo is not yet profitable, as PayPal is just beginning to monetize the platform. It does provide a very strong user base, which is a path to future growth. 

The balance sheet shows $1.04 billion in free cash flow and $10.7 billion in cash and investments, two of which include $500 million in Uber Technologies (NYSE: UBER) and $750 million in a partnership with Latin American company MercadoLibre (NASDAQ: MELI). Both of these partnerships work in PayPal's favor by providing access to more than 300 million users across 60 countries. However, Uber's inability to make money cost PayPal $228 million in the quarter (a drop of 34%). The value of the MercadoLibre investment dropped 10%. 

PayPal's long-term fundamentals are intact, and there is huge room for growth. This short-term dip in price -- mostly due to temporary factors -- looks like a good opportunity for investors. In terms of financial performance, growth, and users, the business remains as strong as ever, with a gross profit margin of 45.1%, operating margin of 14.1%, and net profit margin of 15.4%. Over the next year, analysts expect the stock to move to $128 from its current $102.

PayPal will continue to benefit from the rise in online shopping, with impressive increases in the number of transactions and new accounts just over the past year. Competitive forces may move the stock price from moment to moment, but over the long term its future looks clear. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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