Investors can get ready for another week of earnings release as companies such as Paypal, Disney and on the local front MTN and Sibanye Stillwater share their earnings.
Update 15 May 2023
US Inflation Eases and SA Taxi Restructures: A Look at the Latest Market Developments
The latest market developments have brought some exciting news for investors and consumers alike. While the US inflation rate is easing, offering some relief to market concerns, SA Taxi is undergoing a major restructuring that has resulted in a significant decline in the company’s share prices.
In April, the US inflation rate decreased slightly to 4.9% from 5% in March, the lowest since April 2021. The food prices increased at a slower pace while the energy costs decreased further. The cost of rentals, which makes up over 30% of the CPI basket, slowed down for the first time in two years. Additionally, the prices for used cars and trucks declined again.
The CPI (month-on-month) increased by 0.4%, which was expected. As expected, the core CPI, which doesn’t take into account unstable items such as food and energy, declined slightly to 5.5% in April from 5.6% in March. The market viewed the lower-than-expected inflation rate positively, as it reduces the likelihood of the Federal Reserve implementing further interest rate hikes.
Transaction Capital (JSE: TCP)
The company’s half-yearly results for the fiscal year ending March 31st, 2023, reveal a significant decline in basic earnings per share and headline EPS from continuing operations attributable to the group, leading to a loss per share of 183.0 cents and 183.3 cents, respectively. The core earnings from continuing operations attributed to the group for the half-year ended March 31st, 2023, also decreased by 46%, from R648 million in the previous year to R353 million.
These results coincide with the company’s decision to restructure SA Taxi during the current fiscal year fundamentally. However, the company is confident that this restructuring will provide SA Taxi with the necessary operational, financial, and strategic flexibility to recover and grow. The group’s returns are expected to improve after the completion of the restructuring, supported by a shift in earnings composition towards capital-light revenue streams from WeBuyCars and Nutun.
The share price ended down approximately 35% on the day.
PayPal (NSDQ: PYPL)
Shares of PayPal Holdings declined on Tuesday despite the company raising its revenue and profit outlook for the year. The company reported first-quarter revenue of $7.04 billion, beating expectations of $6.98 billion, while adjusted earnings per share of $1.17 were higher than analysts’ estimates of $1.10. The rise in earnings was mainly attributed to a 10% boost in the overall payment volume (TPV). The total active accounts also increased by 1%, and transactions per active account grew by an impressive 13%.
Sources: Marketwatch, Business Insider, Barrons, Bloomberg
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
