Hey all,
Here’s another outlook, looking forward to commentary from all of you.
Market Performance: Performance lately has been awful, with rates set to rise another 75bps according to JPow, an above expected CPI report, energy yet to be restored in EU, etc.
Week Close
1W
YTD
Nasdaq
11,805.0
-4.09%
-27.86%
S&P
4,023.86
-4.19%
-19.36%
Dow
30,822.42
-3.72%
-15.77%
Bitcoin/USD
30,040.8
-14.03%
-59.77%
10-Year
3.45%
(+) 0.03%
(+) 193bps
Adobe:
Adobe recently acquired Figma, forward-thinking and collaborative design platform and a formidable competitor, largest takeover of a private software company ever
Adobe has just acquired Figma, for 20B, specifically 10B in cash, and 10B in stock
The whole deal now is about 18B now since the stock has dropped almost 20% since the announced price, since in the merger terms list there is a fixed number of shares, but it wouldn’t be a fixed monetary value.
6M in RSUs will be granted to the Figma CEO & employees that will vest over 4 years.
Stock has dropped from $370 to $297 since announcement
The acquisition in and of itself is interesting, Adobe definitely paid a significant premium for Figma. The fact that they paid such a premium I think illustrates the significance of Figma in their market and the disruption they were causing either for Adobe or to just Figma’s addressable market in general. The market themselves have seen this as a negative investment for the time being, mostly due to valuation is how it seems, but it has drove Adobe’s share price down, which at first glance seems like an overreaction, meaning they would be currently undervalued. Adobe’s CEO had mentioned that this acquisition was primarily to accelerate top-line growth and that they would offset dilution while the transaction is under way.
This in turn, has driven concerns from investors as this last week they also released quarterly results which showed a deceleration in revenue growth and issued guidance than came in below Wall Street’s estimates. This is partially an explanation for why Adobe paid 50x Figma’s expected ARR for the acquisition because Adobe’s main business is becoming stagnant. The acquisition is expected to be accretive in 3 years, but no estimate yet as to by what margin. I think long-term this will be good for Adobe, as it adds a potential growth aspect to the business for the foreseeable future. I doubt it will happen, but it gives them the ability to reprice or repackage Figma to their benefit, but I would think off the hip they wouldn’t want to touch it, just let it be a standalone and do its thing, especially since that way has already been working for Figma so why change now.
FedEx CEO Recession Announcement & Recession Probabilities:
There is a ton of signs that are combative against each other as to whether we are in a recession or not. Recently the CEO of FedEx was asked if he thinks we are in a recession eventually he said yes, he believes we’re in one. In response, FDX dropped out of the sky from roughly $204 per share to $161 per share. When I had mentioned that there is combative data as well, I refer to the graphs below, that list relative to the last few recessions (excluding 2020) us performing significantly better still. Based on this data below, one could assume that we aren’t in one but by other measures like the recent above average CPI report along with JPow and the Fed saying they have another 75bps to go, could prove that we’re in one as well.
With all the data it makes it very difficult to understand where we are, and we may never know until well afterwards. So, I am curious what you all think and why, there are no wrong answers!
Geopolitics, Commodities & Other:
Russia has shown no signs of opening Nord Stream Pipeline
New drone technology for sprayers have began to be implemented as a compliment to ground sprayers, increases efficiency
CDC Director says Monkeypox outbreak is slowing
Holding News:
RHI names George Denlinger new Operational President for US Technology, Marketing and Legal Talent Solutions
CYBR short interest up 16.8% in August
Former Board Member, David Evans, for SMG, will take of the CFO role on an interim basis; no estimate yet on timeline of new CFO but would assume they would want someone on by next year
XPEL has continued to show strong signs of growth - https://seekingalpha.com/article/4533547-xpel-continuing-the-rapid-growth
Analyst sees IPGP as being closer to resistance than support, could be a long road ahead
Outflows of MCHP in ETFs noticed
WEX authorized new share repurchase program last month