Finimize - 👟 Adidas got scuffed

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Today's big stories

Adidas delivered an update that had investors shaking in their sneakers
Here’s a look at what the gurus of Wall Street are predicting – Read Now
China’s car sales met a red light at the start of this year

Bad Sport

What’s Going On Here?

German sportswear giant Adidas didn’t have a sporting chance, posting a mishit of an update on Wednesday.

What Does This Mean?

Adidas is in a bit of a pickle right now. For one, sales in China – the company’s one-time growth engine – dropped by half last quarter, as local competitors and lockdowns kept shoppers away. And for another, the company faced the thorny matter of Ye (formerly known as Kanye West): a series of controversial comments saw Adidas end its collaboration with the rapper, shelving his highly popular Yeezy sneaker line to boot. That move didn’t just lose the firm sales last quarter, it also left Adidas with a $1-billion-plus heap of unsellable gear. It came as no huge surprise, then, that the sportswear giant posted an operating loss last quarter. But what did shock shareholders was the outlook: the company said the break with Ye could make 2023 its first annual loss in 31 years – and that, combined with a 79% dividend cut, had investors heading for the exits.

Why Should I Care?

Zooming in: Not so "Happy".
Adidas is facing a real doozy here. Yeezys make up less than 10% of its revenue, but they’re estimated to account for over 40% of profit – and that means Adidas is staring down the barrel of a serious financial threat, even if it manages to repurpose and sell the remaining stock. What’s more, the association with Ye probably gave Adidas’ other offerings a popularity boost too, so the firm will have to rely on different famous collaborators to plug the gap from now on. (Good luck, Pharrell Williams.)

The bigger picture: Just do it.
This news will have Nike – Adidas’ arch-rival and the biggest sportswear company in the world – cracking a smile. Reports say that Nike’s already benefiting, dominating last month’s sneaker sales. And that’s got analysts thinking the fitter firm will keep advancing as Adidas retreats, laying claim to its competitor’s market share.

You might also like: Here’s how you can work out which sportswear giant’s stock is worth backing.

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Analyst Take

Where Wall Street’s Top Minds See Opportunities, And How You Can Profit From It

By Russell Burns, Analyst

If you’ve been struggling to get a read on whether markets are about to go higher or lower, you’re not alone.

Even the brainboxes along Wall Street can’t seem to agree.

So I’ve had a look at what the leading strategists are saying at four of the world’s biggest investment houses – Morgan Stanley, Blackstone, BlackRock, and Goldman Sachs.

That’s today’s Insight: where Wall Street’s top minds see markets headed – and the portfolio moves you can make if you think they’re right.

Read or listen to the Insight here

There’s a new hot commodity, and you might’ve drunk it for breakfast

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World-shaping events like the pandemic and war in Europe stamped down global supply, and that pressure pulled prices up to a boiling point.

And while some once-dazzling commodities have started to fizzle now that interest rates are on the rise, plenty of them are holding their own – and then some.

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Them’s The Brakes

What’s Going On Here?

Data out on Wednesday showed that China’s car sales stalled at the start of this year.

What Does This Mean?

The Lunar New Year is China’s longest holiday, falling in either January or February every year. And because the break interrupts business, it makes sense to compare year-on-year figures in a two-month block – taking both January and February together. For cars, it seems that period was seriously rocky this year: overall sales fell around 20% from the same time last year, hitting just 2.7 million this time around. That’ll come as a bolt from the blue for folks expecting the reopening to jazz up China’s economy, but it makes sense when you dig deeper. Tax cuts that gave cars a jumpstart over the pandemic have been slashed, after all, and some subsidies for EVs have fallen by the wayside too.

Why Should I Care?

Zooming in: EVs are plugged in.
Scrapping those subsidies doesn’t seem to have done too much harm, though: plug-in hybrid and battery EV sales in China outpaced the market with a jump of 23%. That could be down to domestic manufacturers following Tesla’s lead and cutting prices – triggering what some see as a price war, and helping EVs nab some best-selling gas guzzlers’ market share. One knockout performer was Chinese EV maker BYD: half of last month’s top eight best-sellers were BYD cars, trouncing the two Tesla models on the list.

The bigger picture: The biggest loser.
These price cuts are good for motorists, and good for the planet too – but they’re not so kind to car companies’ bottom lines. The race to the bottom has got firms cutting prices faster than input costs are falling, which means that their profit margins are going to feel the pinch. And that’s not to mention the savvy drivers who are holding off on buying in the hope that prices will go even lower – which won’t do sales any favors.

You might also like: Here’s what investors are getting wrong about the EV market right now.

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Get The Lowdown

🌍 Finimize Live

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📈 Five Shares For ISAs – How HL Researches: 5pm, March 20th
🌎 Three Ways Long-Term Investors Can Act On Climate Change: 12pm, March 21st
🚀 What Will Be The Next Big Thing In Artificial Intelligence?: 1pm, March 22nd

🎯 On Our Radar

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Finimize - 👟 Adidas got scuffed

Today's big stories

Bad Sport

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Where Wall Street’s Top Minds See Opportunities, And How You Can Profit From It

There’s a new hot commodity, and you might’ve drunk it for breakfast

Them’s The Brakes

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Discover a next-level all-in-one crypto exchange

Join the all-inclusive AI tour

🥳 Coming Up Soon…

Older messages

⚔️ Lego meets Fortnite

😳 China's underconfident

🛢 Russian oil slipped

🍺 Tipples toppled

🛞 Rivian needs to step on it

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