Wednesday 21/04/21

1. In MARKETS & VACCINE NEWS, the FTSE drops, Johnson & Johnson’s vaccine gets the OK and Avacta benefits from Covid test
2. In CONSUMER/RETAIL NEWS, businesses report a strong trade, UK unemployment falls, there are high hopes for luxury spending, Primark moves forward and Amazon does hair
3. In TECH NEWS, the Daily Mail’s publisher faces off against Google, TikTok’s India ban hurts, Apple unveils subscription podcasts and Clubhouse faces boredom
4. In MISCELLANEOUS NEWS, Netflix has a shocker, tobacco companies wobble and Baillie Gifford ploughs into crypto
5. AND FINALLY, I leave you with a bit of Pomplamoose…

So the FTSE has a rough day, Johnson & Johnson’s vaccine gets back on track and Avacta moves forward on testing…

📢 Have a look in your mailboxes today for the latest Watson’s Daily – Quick Bites! It’s about the commercial implications of the Super League thing going on at the moment…

In markets, FTSE suffers biggest fall in 2 months (The Times, Robert Miller) shows that London’s premier market took a pasting yesterday as concerns that rising numbers of Covid cases in India and Asia would hit travel-related companies. British Airways owner IAG, jet engine manufacturer Rolls-Royce, easyJet, Premier Inn owner Whitbread, Inter-Continental Hotels and Carnival all saw their share prices lose ground. Although this was the FTSE’s worst performance since February 26th, the index is still up by 6.2% so far this year.

In vaccine-related developments, J&J to restart vaccine shipments to Europe after regulatory green light (Financial Times, Nikou Asgari) highlights the latest status of Johnson & Johnson’s vaccine as the European Medicines

Agency concluded that the benefits of taking it outweighed any blood-clotting risks. The company said it would resume shipments of 200m vaccines to the EU, Norway and Iceland – which will no doubt come as welcome relief to the company given that Johnson & Johnson’s Covid-19 vaccine adds $100million to quarterly sales (Wall Street Journal, Peter Loftus and Matt Grossman) highlights the considerable financial contribution of its jab over the first quarter.

Then in Covid test trials a shot in the arm for Avacta investors (Daily Telegraph, Julia Bradshaw) we see that British biotech company Avacta saw its share price rise by almost 6% yesterday on news that its lateral flow test was 98-99% accurate. Analysts are expecting sales volumes of up to 20m units this year, rising to 90m in 2022. The test will be rolled out in May and the company is in talks with governments, big corporates, healthcare distributors and diagnostics companies. * SO WHAT? * After the initial phase of getting vaccines and testing kits out it certainly looks like companies that have anything Covid-related are going to jack up their prices, just like Pfizer. Given that they aren’t charities, this is understandable – and I would have thought that customers will be more willing to pay especially if their economies bounce back strongly.

Businesses do brisk trade post-lockdown, unemployment falls, there’s optimism surrounding luxury goods, Primark sticks to its plans and Amazon starts to do hair…

UK businesses report strong trade after lockdown reopening (Financial Times, Valentina Romei) highlights a strong rebound as consumers return to the high streets. Data on footfall from Springboard backed this up and figures from Fable Data showed that consumer spending rose by 10% versus the equivalent week in 2019. UK unemployment rate falls to 4.9% despite Covid restrictions (The Guardian, Richard Partington) cites the latest data from the Office for National Statistics which sounds pretty good considering, although Jobless levels among young spikes to five-year high (Daily Telegraph, Russell Lynch) highlights one demographic that still has plenty of room for upside.

In the retailers themselves, there are positive rumblings in Anna Wintour predicts lockdown easing will unleash demand for luxury goods (Financial Times, Anna Nicolaou and Alex Barker) as the Vogue editor said that she expects pent-up demand for luxury goods to be unleashed and Kering rebound points to recovery for luxury and Gucci (Financial Times, Leila Abboud) shows that the luxury group reported  strong quarter sales that came in above market consensus. This comes in not long after LVMH announced a strong performance as well. It’s all going on in posh frocks and trinkets!

At the other end of the fashion scale, it seems that “Primani” is bouncing back after a nightmare pandemic in Online? High street trips ‘part of life’, says Primark boss (The Times, Charlie Parker) as the fast-fashion specialist’s boss clung on to its offline-only business model despite losing over £3bn of revenues under lockdown. It expects to be trading from 68% of its retail selling space by the end of this month, rising thereafter. The company said that it will

resume paying out a dividend, would repay government furlough money and will press on with new store openings. ABF/Primark: fast fashion poised for quick recovery (Financial Times, Lex) makes the very valid point that the general absurdity of the fact that Primark is owned by Associated British Foods (I’ve always thought it was completely random!) has actually worked to its advantage in that at least the group were saved by revenues (albeit reduced) from the ABF side of the business as Primark’s went to zero. * SO WHAT? * As I’ve said on many occasions, I believe that the pandemic has developed the haves and have-nots in our society, with many of the haves hanging onto their money and even saving a big chunk of it. I really think that they will be unleashing some of this pent-up cash – and luxury seems to be a logical area to see some serious spending action. I also think that, lower down the scale, Primark will do extremely well as they open up stores to shoppers who have been itching for a bargain. The main danger there, as far as I can see, is further lockdowns as it does not currently have an online business to fall back on. However, given that it HAS got ABF to fall back on, it might not be so ridiculous to think that Primark can continue to be an offline-only retailer. The company maintains that having no online presence means that they can keep their prices low because they don’t have to pay for a delivery network and they don’t have to stump up costs for all those returned goods.

Talking about randomness, Amazon gets stylish with new hair salon in London (Daily Telegraph, Laura Onita) shows that the e-tailing giant is moving into hair styling with Amazon Salon. The new two-floor 1,500 sq ft site in Spitalfields in London will use tech and augmented reality to help with cuts and styling. This will initially only be available to Amazon employees, but it will then be rolled out to the public in the next few weeks. I wonder whether Prime members will be able to get their hair styled by qualified stylists and non-Prime members can only access trainees 😂?!? Will Alexa be listening furtively in-store to all our hopes, fears, work niggles and travel plans while the staff chat away??

The Daily Mail’s publisher gets shirty with Google, TikTok highlights a major lesson, Apple puts more effort into podcasts and Clubhouse faces the danger of boredom…

Daily Mail publisher launches lawsuit against Google (Financial Times, Mamta Badkar and Richard Waters) shows that the publisher of the Daily Mail (Associated Newspapers and Mail Media) has filed an antitrust complaint against Google and its parent company Alphabet in the US over its advertising and search, alleging “bid-rigging” and search bias. It says that news publishers have not benefited from increased online ad spend due to Google’s massive power in the market and even punishes them for not selling enough advertising inventory. * SO WHAT? * This is a long-standing gripe and it’ll be interesting to see whether the publishers get anywhere against the vast financial might of Google or whether they will come to some kind of agreement.

It’s been a while since we’ve heard much about TikTok but TikTok’s India ban should be a warning for tech companies (Financial Times, Stephanie Findlay) is a really interesting article which suggests that tech companies around the world should look to take lessons from what can happen if a whole country decides to essentially shut you down. Last year, ByteDance’s TikTok – along with many other popular Chinese apps – was shut down in the wake of skirmishes between Indian and Chinese troops on the Himalayan border and there is no sign of when or if it will come back. After touting India as a market with massive growth potential (it was also its biggest market outside China), in January this year, the company announced it would be making major cuts to the 2,000 staff it has in the country. India’s market may be full of promise, but it also has some major pitfalls especially under the current nationalist regime that wants to take more control of the internet.

Meanwhile, Apple unveils subscription podcast, latest iPad Pro (Wall Street Journal, Tim Higgins and Anne Steele) shows that Apple unveiled some new/upgraded products last night as well as a subscription podcast service. It unveiled some new wireless tags that help iPhone users track gadgets (Air Tags, a direct competitor to Tile), a full iMac redesign (its first since 2012) and more powerful iPad Pros. * SO WHAT? * The fact that the company is making more efforts in podcasting just goes to show how far rival Spotify has come in this genre – eMarketer says that Spotify will overtake Apple in terms of US podcast listeners this year! This is amazing to think given Apple’s massive head-start (they are called “pod-casts” after all!) but it is now pushing into paid-for podcasts which will allow users to subscribe to ad-free versions of their favourite shows.

Given all the hype, particularly over the last few months, Clubhouse: $4bn valuation ignores downloads in freefall (Financial Times, Lex) shows that Clubhouse could be looking vulnerable given that Clubhouse downloads fell by a whopping 72% between February and March according to app analytics company Sensor Tower. It is amazing to think that, since the end of January, the app has dropped from 28th most popular among US iPhone users to 410th. * SO WHAT? * There are a number of problems with Clubhouse. Firstly, it’s small verses its rivals – its weekly active user numbers are just 0.5% of Facebook’s, for instance. This means that revenue generation potential is limited. It is also uncertain as to whether users will actually want to pay for their favourite creators. I would also add that there is one hell of a lot of noise on Clubhouse. I think that for every properly good-quality “room” and “chat” there is a lot of complete dross. I do get the opinion, though, that it is an app that is, to quote Lady Gaga, on “the edge of glory”, but that it could also quite easily disappear down a precipice if it doesn’t stay ahead of well-financed me-to’s. It needs to stop believing its own hype and get practical otherwise it will wither and die IMO. 

Netflix and Big Tobacco suffer while Baillie Gifford wades into Bitcoin…

Netflix subscriber growth slows as economies reopen (Wall Street Journal, Joe Flint and Micah Maidenburg) shows that Netflix’s winning run has come to a juddering halt as subscriber growth came in way shorter than expectations – there were “just” 4m new subscriber adds versus the projected 6m. The share price fell by 8.4% in after-hours trading but it is still up by 26% on a 12month basis. * SO WHAT? * I have absolutely zero way of proving this, but I would have thought that the next two quarters will be pretty rubbish for Netflix as we hit spring and summer and people just opt to go out and enjoy themselves rather than stay couped-up indoors. During that time, hopefully the company will be able to generate some hit content in time for the end of the year when there are more chances of lockdowns and rubbish weather!

Meanwhile, Plan to limit nicotine level cuts £6bn off tobacco firms (The Times, Alex Ralph) shows that Britain’s big tobacco companies suffered an almighty hit to their share prices yesterday on concerns that the Biden administration was looking into cutting nicotine levels in ciggies and a ban on menthol versions. * SO WHAT? * This isn’t 100% a given, so if it DOES actually come into force I would expect MUCH more weakness in these companies. This is something that has been bandied around for a while, but it looks increasingly likely that it could actually come to fruition. Watch this space!

Then in Baillie Gifford invests $100m in the UK’s biggest cryptocurrency group (Daily Telegraph, James Titcomb) we see that one of the UK’s biggest investors has put a massive slug of money into the Britain’s biggest cryptocurrency company, Blockchain.com, becoming its biggest outside shareholder in a $300m funding round. Given that the Scottish manager is known for successful early stage investments in Google, Tesla and Airbnb, this is a serious endorsement that will help the service that enables uses to buy and store cryptocurrencies. The company expects to go public at some time in the future but has given no guidance on timing.

…in other news…

You will be able to tell when I’ve not been able to find a suitably interesting/”amusing” story because I’ll leave with something from Pomplamoose 😂! This is a great cover (as always), but band members do look like they are about to leave after “jamming” to go for job interviews. This is somewhat surprising when you consider that the keyboard player is the CEO of Patreon 😂