In today’s top stories, Block’s shrinking market cap attracts acquisition rumours, Kellogg splits into three separate companies and CRISPR Therapeutics’ stock price flops after releasing underwhelming data. In other news, Swedish electric vehicle maker Polestar is set to debut on the Nasdaq this week and Morningstar reveals its top Chinese stock picks.
Block’s shrinking market cap
When Block [SQ] completed its $29bn acquisition of Afterpay in January it was seen as a great opportunity for Jack Dorsey’s company to penetrate the buy now, pay later space. But as of 21 June, Block’s market cap had fallen to $35bn. According to a report by Axios, “a well-capitalised suitor” might buy Block if it “isn’t able to pull off this [Afterpay] integration faster and build its market value back up”.
Kellogg splits into three
Breakfast cereal sales are in decline as more people eat on the go. It’s no surprise, then, that Kellogg [K] has decided to split into three separate companies. The largest will focus on snacking, another plant-based food, and the smallest its legacy cereal business. The strategic move should help the company to promote growth, but the question is whether it’ll satisfy investors’ appetite.
CRISPR drops on weak data
Swiss-US biotech CRISPR [CRSP] hosted its ‘Innovation Day’ on Tuesday, but the share price dropped as much as 10% in intra-day trading due to a perceived lack of innovation. Investors reacted negatively to underwhelming data for its renal cell carcinoma gene-edited therapy CTX130. Only one patient in its trial had displayed signs that the tumour had been reduced or destroyed in response to the drug treatment.
Morningstar’s China picks
As the latest Covid-19 breakout in China subsides, the country’s economy should get a boost. “We think the market is trading at almost about 20% below our fair value estimates,” Morningstar analyst Lorraine Tan told CNBC’s Squawk Box Asia. The two sectors that are the most attractive are consumer discretionary and technology. Her top picks include Taiwan Semiconductor Manufacturing Company [TSM] and fast food chain Yum China [YUMC].
Polestar set for public debut
Swedish electric vehicle maker Polestar is set to start trading on the Nasdaq on Friday pending shareholder approval of its merger with the special purpose acquisition company Gores Guggenheim [GGPI]. The deal values Polestar at roughly $21bn. Bloomberg reporter Heejin Kim believes the EV maker, which is jointly owned by Volvo and the automaker's Chinese parent company Geely [0175.HK], is “well-positioned to make inroads into [South Korea’s] notoriously parochial car market”.
Rare earth mining race
With EV adoption driving up demand for rare earth metals, the race is on to get them out of the ground. Lynas Rare Earth Metals [LYC.ASX] has secured a $120m contract with the Pentagon to build the first separation facility in the US. Sand minder Iluka [ILU.ASX] will refocus on Australia after selling off assets in Sierra Leone. Australian Strategic Minerals [ASM.ASX] has turned to South Korea.
Wizz Air’s price warning
As UK holidaymakers plan to jet away over the summer, budget airline Wizz Air [WIZZ.L] has warned that it’ll have to raise prices by 10% between July and September. The company will endure a bumpy road in 2022, which will mean incurring higher costs, but the pricing environment should improve next year. “The structural backdrop for Wizz remains supportive in the medium to long-term,” argues Citi analyst Manikandan Chandran.
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