Friday 26/02/21

1. In VACCINE NEWS, Europe’s vaccine rollout continues to cause frustration, Moderna outlines bullish projections and Russia makes Africa pay more for its jab
2. In RETAIL & RELATED NEWS, GameStop trading goes wild again, Klarna cashes in, Asda faces job losses and Primark hangs on
3. In AUTOMOTIVE NEWS, the EV hype takes a breather while Aston Martin’s losses quadruple
4. In MISCELLANEOUS NEWS, India imposes new social media rules, Airbnb posts a loss and Beyond Meat signs major supply deals
5. AND FINALLY, I bring you the “proper” way of touching your toes…

So vaccine rollout in Europe continues to be a source of frustration, Moderna’s fortunes turn around on its vaccine and Russia charges Africa more for its vaccine…

EU leaders vent fears over delays to vaccination drive (Financial Times, Michael Peel, Sam Fleming and Mehreen Khan) highlights ongoing difficulties surrounding the slow deliveries of coronavirus vaccines and manufacturing issues in the bloc. The mass EU conference call sounded like a virtual finger-pointing exercise with leaders rallying around EC president Ursula von der Leyen and blaming pharma companies. At the moment, Europe has an inoculation rate of 6.6 shots per 100 residents versus 20.1 in the US and 28.3 in the UK, according to FT data, but is aiming to offer vaccines to 70% of the adult population by the end of the summer. EU vaccine woes shift from supply squeeze to rollout (Financial Times, Ben Hall, Michael Peel and Guy Chazan) gives more detail as to the relative successes and failures regarding vaccine rollout on the Continent as Denmark and Sweden are a month ahead of the UK but distribution in Germany, France, Italy and the Netherlands continues to be problematic. Vaccine supplies are expected to triple in Q2 and although holes have been picked in the procurement process, attention will be turned to individual countries’ ability to expand delivery capacity as data compiled by the European Centre for Disease Prevention and Control shows that there are wide variations in the effectiveness of national rollouts. Estonia and Luthuania have administered all doses delivered to them but places like Belgium, the Netherlands and France have been pretty rubbish. * SO WHAT? * It seems to me like Europe’s politicians have **cked up here and are blaming everyone but themselves. Circling the wagons around von der Leyen is clearly meant to project unity amid mounting criticism. Still, the priority here is getting things done whoever’s fault it is because until they start doing a better job at getting then distributing the vaccines, economies cannot get back on track. 

Meanwhile, Moderna forecasts $18bn in sales of Covid vaccine this year (The Guardian, Julia Kollewe) shows that the US biotech firm is expecting to make a whopping $18.4bn in sales from its coronavirus vaccine this year in a stunning turnaround that will catapult the formerly ailing company into profit. Moderna charges $30 for two shots in the US and $36 in the EU versus the Pfizer/BioNTech one that costs $39 for two in the US and just under $30 in the EU. In contrast, AstraZeneca’s vaccine costs anywhere between $4.30 and $10 for two doses as the company has vowed to do this at cost until the pandemic is declared to be over. * SO WHAT? * Before you all rail at Moderna’s mercenary tendencies, it only employed 830 people in 2019 versus AstraZeneca’s 70,000 and has had a tough time since it floated in 2018. However, its share price has shot up from $19 to $155 over the last 12 months and has made its chief exec a paper billionaire with his 9% stake in the company. Still, its late stage trial clinical results show 94% efficacy and it is the first company to develop a booster that will combat the South African variant.

Talking about mercenary, Africa will pay more for Russian Covid vaccine than ‘western’ jabs (Financial Times, David Pilling and Henry Foy) shows that the African Union will pay triple the price for Russia’s Sputnik V vaccine versus what it will pay for the Oxford/AstraZeneca and Novavax vaccines. When you consider that the Russian Direct Investment Fund, which overseas the vaccine’s foreign sales, has boasted that its jab’s cost is “two times lower than that of other vaccines with similar efficacy rate”, this does grate somewhat. There have been calls for more transparency regarding deals struck between pharmaceuticals companies and individual countries.

GameStop goes wild again, Klarna rakes it in, Asda faces job losses and Primark battles on…

GameStop shares surge as trading frenzy returns to market (The Times, Callum Jones) shows that the beleaguered US video games retailer continued to see major moves in its share price as trading was halted a number of times yesterday on Wall Street. After more than doubling in value on Wednesday, it shot up by 77% at one stage before settling at “only” being up 19% on the day. * SO WHAT? * This is just getting ridiculous. And very risky. It seems that if you are in the right chatroom at the right time, you can make huge amounts of money – but it is completely based on hype as the underlying firm is having all sorts of problems that don’t seem to be getting better any time soon.

In Klarna cashes in on the rise of ‘buy now, pay later’ shopping (The Times, Ashley Armstrong) we see that Klarna has benefited from a 46% rise in the value of transactions over the course of 2020 as demand for Buy Now, Pay Later (BNPL) increased over lockdown. It is looking to treble its valuation to $31bn in the next funding round where it hopes to raise between $800m and $1bn – and this comes less than six months after it raised $650m. * SO WHAT? * This all sounds rather glitzy, but given that the company is highly exposed to the demographic most affected by unemployment during the pandemic, you do wonder whether they will be hit by a wall of payment defaults. I guess if they can style it out with a bit of extra money to cover this until economies and employment prospects improve they will be back on track. However, I am glad that the UK regulator, the FCA, is taking a closer interest in this firm in order to protect customers. Klarna/credit apps: buy now, panic later (Financial Times, Lex) points out that although recent data shows higher household savings, this is skewed more towards wealthier people because, overall, more households have seen their savings fall then rise. The risk for all BNPL players is that they could be subject to more risk AND more defaults, so it’s not necessarily all a bed of roses out there…

Things aren’t looking so great for employees in Asda to scrap 5,000 roles in push for web dominance (Daily Telegraph, Laura Onita) as the company announced intentions to slim down the management structure and boost capability in online groceries. At the same time, however, the company is looking to recruit 4,500 staff to pick internet orders. Asda currently has 145,000 employees. * SO WHAT? * Asda has had a tough time over the last couple of years what with a failed takeover from Sainsbury’s and its recent takeover by EG Group, but it is good that it is putting more resource into what has been a rapidly growing area. My own concern here is whether supermarkets such as Asda are putting too much faith into lockdown behaviours translating into long-term permanent behaviours. I guess we will see soon enough!

Then in Primark sales plunge by £1.5bn but chain ‘expects to break even’ (The Guardian, Sarah Butler and Jasper Jolly) we see that sales at the offline-only apparel retailer fell massively as its shops closed over the pandemic but it remained upbeat about opening up again. This optimism is backed up by what has happened in Austria, where its shops reopened three weeks ago and shoppers bought a broader range of clothing after not buying smarter clothes for work, nights out and special occasions. * SO WHAT? * I guess that Primark did pretty well when it opened in between the UK lockdowns when there wasn’t a vaccine, so I think that there is a good chance that things could get even better when lockdown lifts this time around and we HAVE got vaccines. If people start to go to work and socialise again, I am sure that they will be keen to mark the return with a new outfit or two! The question is whether the company will continue to stick doggedly to its offline-0nly policy going forward. This paid dividends right until coronavirus hit but surely the company (well, the parent company, ABF) will have to have some sort of contingency plan for if this happens again.

EVs get a bit of a dent and Aston Martin announces massive losses…

In Pothole threatens to puncture the electric dream (The Guardian, James Titcomb) we see that some of the sheen is coming off EVs as the share price of Lucid Motors’ SPAC sugar-daddy Churchill Capital IV weakened considerably earlier this week (-39% on Tuesday) as investors where underwhelmed by its prospects. Tesla and Nio have also seen their respective share prices weaken but investors continue to seek out the next Tesla and chase high valuations. Interestingly, the combined value of EV makers reached $976bn this month – not far off the $1.2tn combined value of all of the traditional carmakers. This becomes even more ridiculous given that EV sales only make up 3% of global car sales! It will be interesting to see who can survive the long haul…

Losses at Aston Martin almost quadruple as Covid cuts sales (The Guardian, Jasper Jolly) shows that the company’s losses nearly quadrupled over the course of last year as the company’s new bosses put together a turnaround plan. Sales slumped and it wrote off almost £100m in investments into now-abandoned products such as the Rapide EV. The lack of Bond film last year also didn’t help matters but there were positive signs at the end of the year with sales of its new DBX SUV. * SO WHAT? * I guess that it has been important for the new owners to give the ailing marque a spring clean – so all it needs to do now is to sell more cars! It sold 4,150 cars last year but hopes to sell around 6,000 this year and then 10,000 by 2024 or 2025. Best of luck to this iconic manufacturer! 

India clamps down on social media, Airbnb announces a loss and Beyond Meat signs supply deals…

In other major news stories today, India imposes sweeping new social media rules (Financial Times, Stephanie Findlay) shows that India has decided to launch new guidelines to make platforms more accountable to law following recent dissatisfied rumblings from the government about Twitter’s inaction regarding farmer protests. The new rules will force social media companies to break into encrypted messages and take down posts that the government deems unfit. These guidelines will apply to pretty much everything online. * SO WHAT? * There seems to be a definite authoritarian trend by the current government that could severely restrict relations with Big Tech companies who have seen India as an attractive growth market. It sounds very much like India is going the same way as China on this front. It’ll be interesting to see how the companies react – there has been no official comment thus far.

Airbnb points to its ‘resilience’ as business begins to bounce back (Financial Times, Dave Lee) shows that the revenue for the three months to the end of December for the company were considerably above market expectations while other competitors such as Expedia and Booking.com suffered more under lockdown. Longer stays in more remote locations have been behind Airbnb’s relative success, but it still had big losses to contend with – mainly related to its December market debut. * SO WHAT? * I think that Airbnb will be a winner over the next year or so as travellers stay nearer home in the initial stages after lockdown and then as international travel restrictions lift, overseas visitor numbers will rise – which will hopefully make up for the number of Brits who start to travel abroad. I think it did very well to limit losses last year.

Then in Beyond Meat signs supply deals with McDonald’s, Yum (Wall Street Journal, Jacob Bunge) we see that the plant-based meat alternatives company has managed to do deals to supply McDonald’s, KFC, Taco Bell and Pizza Hut that will help its products go mainstream. * SO WHAT? * This comes as welcome news for the firm as it announced a $25.1m loss in Q4 last year because restaurant orders were at rock-bottom levels during lockdown. Deals on this scale will surely be a massive boon to Beyond Meat and take it beyond the realms of being seen as a “health food”. A historic development! I wonder how rival Impossible Foods feels about this??

…in other news…

I thought I’d leave you today with something for the weekend in Woman claims everyone can touch their toes – and we’ve been doing it ‘wrong’ (The Mirror, Courtney Pochin). Why not give it a go?