Deliveroo, US Infrastructure and Gold with Alan Green

UK Investor Magazine
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Deliveroo, US Infrastructure and Gold with Alan Green

The UK Investor Magazine Podcast is joined by Alan Green for our regular markets and UK equities debate.

The main topic of discussion from a macro perspective is the passing of the Infrastructure bill through the Senate. Although the bill faces the next hurdle at the House of Representatives, there is a significant level of optimism the world’s largest economy is set for an injection of fiscal stimulus.

We run through earnings from Deliveroo who posted a sharp jump in revenue but again failed to produce a profit and the latest updates from ECR Minerals.

We discuss Deliveroo (LON:ROO), Ashtead (LON:AHT) and ECR Minerals (LON:ECR).

Deliveroo doubles orders while long-term outlook remains uncertain

Liam Roche
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Deliveroo doubles orders while long-term outlook remains uncertain

Deliveroo share price down by over 4% during morning session

During H1 2021 Deliveroo (LON:ROO) doubled its orders despite the easing of coronavirus restrictions.

The London-listed food delivery firm confirmed orders of 149.9m during the six months to the end of June, compared to 75.4m over the same time period a year ago.

Deliveroo’s revenues soared to £922.5m, an increase of 82%.

As a result, the food delivery company narrowed its losses. Deliveroo confirmed a pre-tax loss of £104.8m during H1, compared to a loss of £128.4m for the first half of last year.

“The growth momentum in the second quarter is still really strong,” said Will Shu, chief executive and co-founder of Deliveroo.

“Our lockdown love affair with takeaways shows little sign of cooling just yet, with Deliveroo bringing home resilient sales even when restaurants have opened back up,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“Deliveroo appears to be dominating the takeaway scene in many towns and cities where its distinctive mint green jacketed riders operate, despite Uber Eats and Just Eat rivals breathing down their neck. But investors appeared to have lost a little appetite for shares in early trading, with the company expecting customer behaviour to moderate later in the year,” Streeter added.

But Deliveroo’s business model has been given a vote of confidence after its Berlin based rival Delivery Hero snapped up a £300m stake this week, pushing up shares to the highest level since the company’s stock market flop.

“One of Deliveroo’s strengths is that it offers higher quality restaurant options than some rivals, which, coupled with its personalised app content and hyper-localised delivery approach, could be a major draw.”

However, the Deliveroo is down on Wednesday morning by 4.21%, despite the positive results.

Last month Deliveroo confirmed plans to cease its services in Spain because of the high costs involved in operating in the country.

“The pandemic has clearly offered a structural growth opportunity for Deliveroo”, said Streeter, “but the longer-term outlook depends on how demand holds up in a post-pandemic world, and if that road to profitability looks any clearer.”

FTSE 100 higher ahead of US inflation data

Liam Roche
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FTSE 100 higher ahead of US inflation data

The FTSE 100 added 0.39% on Wednesday morning, bringing the UK index to 7,188.84.

“The FTSE 100 built on Tuesday’s gains to trade around a one-month high suggesting investors have moved on from the latest set of jitters over Covid variants for now,” say AJ Bell financial analyst Danni Hewson.

“Progress on a huge US stimulus package helped stocks close in positive territory on Wall Street, providing a positive cue for European equities – while the carving up of the UK market by overseas buyers continues apace as Avast agrees to a merger with NortonLifeLock.”

The other key threat stalking the markets is inflation. US inflation figures are out this afternoon and could provide a test for the current sunnier sentiment.

FTSE 100 Top Movers

Avast (2.99%), Spirax-Sarco Engineering (2.53%) and JD Sports (2.38%) are leading the way on the FTSE 100 on Wednesday.

While at the bottom end, Phoenix Group (-1.70%), Flutter Entertainment (-1.15%) and National Grid (-1.01%) have lost the most ground so far today.

Coinbase profit soars as volatility brings high trading levels

Liam Roche
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Coinbase profit soars as volatility brings high trading levels

Coinbase has lowered its expectations for the coming quarter

Coinbases’s (NASDAQ:COIN) revenue soared during Q2 of 2021, compared the year before, as volatility characterised crypto markets.

The exchange’s revenue rose by more than 1,000% during the past quarter, although Coinbase warned against expecting that to continue as it lowered its expectations for the coming year.

Coinbase confirmed net revenue of $2.03bn, an increase of 27% compared to the previous quarter, the only other time it has posted results since going public in April. Year-on-year it represents a 1,042% rise in net revenue.

Net income also rose by a substantial amount to $1.6bn, up from $32m the previous year.

Trading volumes rose to $462bn for the quarter ended in June, up from the $335bn during the quarter ended in March.

The proportion of trades being made up by bitcoin fell from 39% during Q1 to 24% in Q2.

However, for Q3, trading volumes are expected to be lower than Q2, as the surge in trading levels will cool off, according toto the company.

Coinbase, which generates revenue by facilitating trades on its platform, has benefitted from the adoption of crypto and such assets. The volatility is an area of concern for some and has brought about calls for further regulation.

Chief Financial Officer Alesia Haas said Coinbase is keeping an eye on comments by the US Securities and Exchange Commission (SEC) Chair Gary Gensler, who turned to Congress a week ago seeking more authority to better police cryptocurrency trading, lending and platforms.

“We’re eager to understand the legal framework for the concerns that he has raised and how any of those may impact our product road map,” Haas said. However, the platform is carrying on with plans to expand its range of assets on the platform.

The Coinbase share price closed 3.85% down on Wednesday at $269.67.

Coinbase shares traded at $381 on its New York debut in April, over 50% above its $250 reference price, on a day hailed as a watershed moment for cryptocurrencies on the world financial markets.

Greatland Gold confirms appointment of new group mining engineer

Liam Roche
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Greatland Gold confirms appointment of new group mining engineer

Richter hired by Greatland Gold in newly created role

Greatland Gold (LON:GGP) confirmed the appointment of Otto Richter as Group Mining Engineer effective from Monday 16 August 2021.

Richter comes to the role with over twenty years of experience in international mining and consulting roles.

He has held key technical and operational positions with multiple underground and open-pit operations in Australia and other locations.

Richter’s consulting experience has covered mining projects at all levels, Greatland said, including technical and due diligence reviews and independent technical advisory roles to multiple international companies.

With an operational and consulting background, Otto has a solid foundation in a broad range of mining methods. This includes: sub-level caving, block caving and open pit, across various commodities, including gold and base metals.

Richter’s recent roles include Group Study Manager for Resolute Mining Ltd, Principal Consultant for Snowden Mining Industry Consultants and Mine Planning Manager for Newcrest Mining Ltd – Telfer Mine.

Shaun Day, chief executive of Greatland, expressed his delight at the hire: “To appoint someone of Otto’s calibre and skillset in this newly created role is a significant addition to the company and reflects the scale of the opportunity ahead.

“His underground expertise across multiple mining methods coupled with local knowledge of Telfer will be invaluable as we progress with mine development at Havieron. This appointment further enhances Greatland’s organisational capability as we continue to transition into a leading development and exploration company.”

The Greatland Gold share price is up by 0.53% during the morning session on Wednesday.

Heathrow passenger numbers on the rise as airport says more must be done

Liam Roche
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Heathrow passenger numbers on the rise as airport says more must be done

Heathrow is pressing for UK travellers to go to America without restrictions

Heathrow airport reported an increase in passenger numbers in July, while urging America to ease its restrictions on passengers travelling from the UK.

During July, Heathrow dealt with 1.5m travellers, a 74% increase on the same month a year before, although the number is still down by 80% from levels seen before the pandemic.

It said the improved numbers were down to the government’s easing of restrictions, although it added that Heathrow is yet to see the impact of the decision to allow vaccinated people from the USA and the EU to come into the UK without having to quarantine.

However, travellers heading to America have not yet been allowed to make the journey without restrictions.

Having reaped the benefits from North American travellers coming into the country, Heathrow is now pressing for the UK travellers to be able to do the same going the other way.

“With fully vaccinated US visitors now able to travel to the UK without the need to quarantine, the joint UK/US travel taskforce must capitalise on the UK’s world-leading vaccine rollout and reach a reciprocal agreement for fully vaccinated UK travellers,” the airport said.

Heathrow’s chief operating officer, Emma Gilthorpe, was optimistic over the outlook for the travel industry in a statement, but reaffirmed the need for the government to act.

“The job though is far from complete. Government must now capitalise on the vaccine dividend and seize the opportunity to replace expensive PCR tests with more affordable lateral flow tests.”

“This will ensure travel remains attainable for hardworking Brits, desperate for well-earned getaways and keen to reunite with loved ones before the summer travel window closes.”

BlackRock retains confidence in China despite recent clampdowns

Liam Roche
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BlackRock retains confidence in China despite recent clampdowns

China will keep its hawkish stance over the medium-term in order to protect the quality of growth

China is set to release key economic data, including its GDP figures and inflation, which will give investors a better idea of where the world’s second largest economy stands.

Analysts have suggested that the its growth could reach 8% during Q2 year-on-year, as it kept the spread of Covid mostly under control, while demand from elsewhere held steady.

The CCP has also made efforts to support businesses, in addition to its strong policies aimed at keeping the virus under wraps.

As a result, China’s economy has weathered the pandemic and come out the other side ahead of its peers.

“China is already a distinct pole of global growth,” said BlackRock in its mid-year outlook. The world’s largest asset manager added that now is the right time to treat country as an investment destination separate from emerging markets and developed markets.

BlackRock also believes that Chinese authorities will begin to loosen their policies as growth begins to slow, adding that the country will keep its hawkish stance over the medium-term in order to protect the quality of growth.

China’s clampdown on a number of private industries remains an issue, especially for those investing in Chinese stocks. Tencent was the latest stock to fall as the gaming sector recently came under pressure from the authorities in China.

“We believe the clampdown on some private industries could go on for years, but its intensity would likely fluctuate,” said BlackRock. “We have yet to see the peak of the regulatory campaign, but could see its pace and intensity moderate amid slower growth.”

BlackRock advised investors to be aware of ongoing tensions, but added that its neutral allocation to Chinese assets is multiples larger than typical benchmark weights.

The MSCI China 10/40 Index, designed to measure the performance of large and mid cap representation across China, added 4.55% over the past year. This follows the recent sell-off of Chinese stocks, causing the index’s value to lose 13.50%.

The top constituents of the MSCI China 10/40 Index are Alibaba (8.83%), Tencent Holdings (8.21%) and Meituan (4.6%).

Deliveroo share price bounces again after Delivery Hero buys minor stake

Liam Roche
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Deliveroo share price bounces again after Delivery Hero buys minor stake

Deliver Share Price

The Deliveroo share price (LON:ROO) jumped up by nearly 10% on Monday morning, after it was reported that German rival Delivery Hero acquired a 5.09% stake in the company. It was up by another 7% on Tuesday as news emerged that the London-listed food delivery company poached a leading technology executive from Amazon, one of its own investors.

At 366.28p per share art the time of writing, the Deliveroo share price is down from its launch price of 390p back in March. Following its disastrous IPO, the food delivery company has managed to gain some momentum, adding 27.03% over the past six months.

Delivery Hero

Delivery Hero, based in Berlin, now owns 87.4m Deliveroo shares valued at £284.1bn. This figure is based on the closing Deliveroo share price last Friday.

The German company also owns minority stakes in other food delivery companies, one being Just Eat, the largest platform in Europe.

Jefferies analyst Giles Thorne told The Financial Times: “it is hard to say with conviction at this point what Delivery Hero’s intention is” behind this latest minor stake take-up.

Both companies, two of the largest food delivery companies in Europe, have been competing for market share across the content for nearly ten years now.

Despite competing in Europe, and via other companies in other regions, Delivery Hero doesn’t operate in the UK, which is Deliveroo’s main market. Back in 2016, Delivery Hero sold its UK business, Hungryhouse to Just Eat for £200m.

How well do Brits understand cryptocurrencies?

Liam Roche
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How well do Brits understand cryptocurrencies?

Family and friends are the first port of call for information on investing in crypto

The number of people in the UK investing in cryptocurrencies has surged to 2m.

Research has revealed that over a third of those British investors do not have a full understanding of how cryptocurrencies function.

A survey put together by Appinio, the global market research platform, and FINTECH Circle, a leading fintech community, found that 36% of people who have invested into crypto only have a rough understanding of the concept. While 25% feel they can easily explain crypto to others.

With 26% of those surveyed now investing in cryptocurrencies, it is the third most popular investment choice behind ISAs and individual equity/shares.

Sustainability doesn’t appear to be a priority for crypto investors, compared to other investment industries, with only 40% saying that it is a priority. Over 40% of investors in the space admitted that they are not aware of how sustainable or socially responsible their portfolio is.

When asked what the main source of information is for researching what to invest, family and friends are the first port of call with 54% of 16-24 year-olds stating this followed by 41% of 55-65 year-olds.

Social media has notably become an important source of information when it comes to investing as 31% of 18-24 year-olds admit they use social platforms with 31% referring specifically to YouTube.

Susanne Chishti, CEO at FINTECH Circle, said: “We have worked with Appinio in tracking the growing popularity of cryptocurrencies and wanted to see both the knowledge in this sector and the effect of online communities that have democratised investing, be that in cryptocurrencies or stocks/ETFs and bonds.”

“The findings clearly show that despite investments into and speculation with cryptocurrencies, there is still a gap in knowledge as to what they are and how they work. This shows there is a greater opportunity for crypto marketplaces to grow closer to investors and potential investors by offering more education about risks and learning in this space.”

July consumer spending up 11.6% as Brits enjoy newfound freedoms

Liam Roche
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July consumer spending up 11.6% as Brits enjoy newfound freedoms

Barclaycard noted that pent-up demand from lockdown appears to be cooling off

Consumer spending rose by 11.6% in July, compared to the same period in 2019, as improved weather and the easing of restrictions led Brits to get their wallets out, according to the Barclaycard report.

More specifically, the entertainment sector saw growth for the first time since the onset of the pandemic, as Brits ventured to the cinema and sporting events.

Spending on fuel rose by 4.1%, the highest level since before the pandemic came into effect, on increased prices at the pump. More people drove to their UK-based holiday destinations or began travelling to work by car.

On the other hand, the travel industry is continuing to struggle. Despite overseas bookings rising, spending on airlines and travel agents is down by 56.2% and 66.6% respectively. This compares to a decline of 70.9% and 75.3% in June.

Barclaycard noted that pent-up demand from lockdown appears to be cooling off in some sectors, such as restaurants and face-to-face retail.

Raheel Ahmed, Head of Consumer Products, said: “July’s major sports fixtures and the heatwave kept the nation in good spirits, providing more reasons to celebrate together, and giving the entertainment industry its long-awaited boost back into growth.”

“While some sectors took a small step back as the post-lockdown ‘honeymoon’ period cooled, July was a positive month overall. However, with inflation expected to rise, it will be interesting to see how this impacts consumer spending behaviour over the coming months.”

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