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07-09-2022 : 150% above break-even in the automotive industry!

This was the performance of Stellantis on the occasion of the publication of its half-yearly results. Given the cyclicality of results in the automotive sector, as this picture from page 806 of the French edition of the Vernimmen shows, such a situation makes it possible to withstand a drop in sales of up to 60% while remaining profitable. This is all the more remarkable as Stellantis is mainly present in the mass market segment (Peugeot, Citroën, Fiat, Chrysler) and little in the luxury segment (Maserati, DS). It is true that the all-time high of 14.1% for the operating margin is also amazing.

 

Hats off to Mr Tavares and his teams

05-09-2022 : A staggering inefficiency

It happened while you were at the beach or at the mountain, in the US market where a Hong Kong fintech, with 50 employees, 3 years of existence and $25m in turnover, went public on the Nasdaq on 15 July at $7.8 a share. Its share price rose on 2 August to $1,679, giving it a market capitalisation of $310bn, i.e. more than that of the world's leading bank, JP Morgan, and we won't even mention the price reached in the middle of the session at $2,550, i.e. 327 times the IPO price! It is true that the description of its activities fully justifies it: “...to act as a fusion reactor for the best entrepreneurs and innovative ideas, fusing synergistically all elements within the AMTD SpiderNet ecosystem using digital means, harnessing and magnifying the power from each partner to create a force with meaningful and influential social, technological, and economic impact.”

The share price has since fallen to $100, which is still 13 times the IPO price, giving a market capitalisation of $18bn, equivalent to that of Société Générale, or twice that of Amundi.

The only rational explanation for this aberration on the supposedly most efficient financial market in the world, apart from a few exceptions, is a listing symbol, AMTD, which is very close to that of the semiconductor manufacturer AMD, whose share price rose 33% in July. This shows that absent-mindedness and incompetence can produce a detonating cocktail in staggering proportions.

 

Have a nice day.



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The Vernimmen.com Letter

Number 144 of September 2022

News : Do zombie companies exist?

Statistics : The value creation of UMG demerger from Vivendi

Research : Dividends and share buybacks in the US: a sharp rise since 2000

Q&A : What is EFRAG?

COMMENTS : Comments posted on Facebook