Today's big stories

Google-parent Alphabet reported first-quarter results
Goldman Sachs has laid out a simple strategy for how to more accurately value US stocks going forward – Read Now
Major oil company BP told investors it'd bolstered its bank balance in response to coronavirus and low oil prices

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Class Act

What’s Going On Here?

Alphabet’s profit may have fallen short of expectations late on Tuesday, but its stock still made the grade, initially rising 3%.

What Does This Mean?

Alphabet’s overall revenue, made up mostly of Google’s advertising business, was a little higher than investors had forecast. That’s despite advertisers on its websites – which tend to be from “consumer cyclical” sectors like travel, autos, and retail – having yanked much of their ad spending in March. Not that it was much of a surprise, mind you: customer spending in those industries ebbs and flows with the economy’s fortunes. So even though user engagement on platforms like YouTube likely increased thanks to a homebound audience, travel firms like Booking.com – which normally spends $4 billion a year with Google – have, for obvious reasons, paused ads altogether (tweet this). Alphabet’s own costs, however, aren’t quite as flexible – meaning its quarterly profit came in lower than hoped.

Why Should I Care?

The bigger picture: You cut, we bleed.
Alphabet is America’s sixth-largest public company, and its decision to cut its marketing budget in response to coronavirus-strained revenues will have knock-on effects on the wider economy. Microchip-makers hoping for a boom ahead of the tech giant’s new smartphone launch later this year, for instance, might suffer. And sorry, chipmakers, but it gets worse: Apple’s reportedly delayed the manufacturing of its new flagship phone.

For markets: Looking for something long term.
Analysts expect Alphabet’s ad revenue to have accelerated by next year, once the global economy reopens and companies start vying for consumers’ attention again. Longer-term investors think Alphabet’s non-ad businesses like Google Cloud – as well as other ventures like Waymo, DeepMind, and Verily – might now come to the fore. Very little of the potential value of those segments is currently reflected in Alphabet’s share price, so if new investors decide to take advantage of that oversight by buying up Alphabet’s shares, existing investors could be in for a windfall.

Spot opportunity: The three Alphabet businesses that might be immune to coronavirus.

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What’s Going On Here?

New analysis from investment bank Goldman Sachs this week shed light on why US stock prices are holding up relatively well – and where to look to make sure those prices are actually fair.

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3/3

Stash Flow

What’s Going On Here?

Oil giant BP announced an almost 70% drop in first-quarter profit on Tuesday, sure, but forward-looking investors probably paid more attention to cash it’d tucked away for later.

What Does This Mean?

BP is an “integrated” oil and gas company, which means it specializes in everything from exploration and production to refinement, distribution, and trading. It even has a renewable energy arm for good measure.

But as the coronavirus pandemic wrecked demand for both oil and its end-products like diesel and jet fuel – and, by extension, the oil price – BP’s earnings unsurprisingly took a tumble. And the oil titan looks like it might be worried the worst is yet to come: it took on a fresh $10 billion overdraft and sold $7 billion of new bonds to investors.

Why Should I Care?

For markets: Blood, debt, and tears.
BP’s increased debt comes with pros and cons. On the one hand, the reserves should give the company enough financial firepower to survive the current economic battle. On the other, if the oil price stays as low as it has and the impending recession drags on too long, BP’s falling income may make it difficult to cover its now-higher interest payments. The company's ratio of debt to equity is higher than it’d like at the moment, and while it still plans to sell off $15 billion worth of assets to narrow that ratio, next quarter’s dividend payment might come under review if it can't.

For you personally: Scrip the bottom of the barrel.
Dividends aren’t necessarily a case of do or die, as BP reminded investors on Tuesday. The oil major said it’d consider “scrip dividends” instead, where – rather than cash – investors receive a fraction of a new share in the company. Some investors will appreciate the lower-tax reward, but others might find the loss of cash income unforgivable.

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💬 Quote of the day

“It was such a lovely day I thought it a pity to get up.”

– W. Somerset Maugham (an English playwright, novelist, and short story writer)

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👗 Let’s talk fashion

We’re pretty trendy here at Finimize. If we weren’t, Vogue Business probably wouldn’t be joining us for a chat about COVID-19’s impact on retail and luxury, where they will, presumably, tell us our shoes are so fetch. And if you already have a ticket? Remember, you can continue the conversation afterward in our Premium Groups.

🌍 Global: COVID-19’s Impact on Retail & Luxury – 6pm UK time, April 29th
🇺🇸 USA: Your Money During a Pandemic – 6pm EST, April 30th
🇮🇳 India: Surviving the Pandemic as a Startup – 5pm IST, May 30th
🇨🇭 Switzerland: Learning the Economic Recovery Alphabet – 6pm CEST, May 4th
🇸🇬 Singapore: Concerns & Opportunities in the Global Economy – 6pm SGT, May 6th
🌍 Global: Fintech’s Post-Pandemic Future – 6pm UK Time, May 7th

⚡️ Lightning insights

Defensive stocks – think healthcare, utilities, telecoms, where earnings and dividends are considered pretty predictable – tend to be investors’ go-to in a bear market.

Find out how bear markets happen, which industries stand to benefit, and how you can take advantage of the fall. It’s all in our Pack.

📚 What we're reading

How to take a break from your own mind (Raptitude)
#TooManyFilters (Teen Vogue)
Esports are having a moment (Matthew Ball)

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Finimize - 📉 Google's 4 billion dollar void

Today's big stories

Class Act

What’s Going On Here?

What Does This Mean?

Why Should I Care?

All Sights Reserved

😏 You can’t hide from us, opportunity

Stash Flow

What’s Going On Here?

What Does This Mean?

Why Should I Care?

📈 Get the one-on-one feeling with Navellier

👗 Let’s talk fashion

Older messages

🤖 Big tech saves stocks

😨 JC Penney’s bankruptcy nightmare

💪 Blackstone: what coronavirus?

💪 Roche takes on coronavirus

📺 Everyone. Watches. Netflix.

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