Market Loop - 📈ITV and M&S post smashing results

STOCK MARKET
ITV and M&S post smashing results

What’s going on?
Two of the UK’s biggest public companies posted strong results beating market expectations.

Retailer M&S swung back into the black with profits of £187m in the six months to October, compared with a loss of almost £88m during the same period last year.
 
Broadcaster ITV said it expected annual advertising revenues to be the highest in its 66-year history as the economy bounces back from the pandemic.

Why is this important?

Lockdown may be over, but consumers still have an appetite for M&S food. Grocery sales grew by 10% in its first half. Even the much-maligned clothing department put in a decent performance, full-price clothing sales jumped 17%.
 
M&S also raised profit forecasts for the full-year from more than £350m to about £500m.

But like almost every retailer, M&S has warned that supply chain issues are likely to push prices up going forward. 

Worker shortages and rising freight prices are putting pressure on costs but M&S 
said it had deployed several recruitment projects and incentives to attract new lorry drivers.

During lockdown companies pulled back on marketing but ITV said that business confidence is now back. The UK’s biggest free-to-air broadcaster said total advertising revenue for the first nine months of the year jumped 30% to £1.3bn

Performance at ITV Studios, which makes and sells shows such as Love Island and Come Dine With Me and dramas for Apple TV and Netflix, was also strong. Revenues grew by 32% to £1.2bn in the first nine months.

Total ITV rose 28% to £2.4bn in the first nine months of 2020 -  8% higher than in 2019.

Looking ahead ITV expects to generate record advertising revenues this year thanks to a rise in online marketing spending and the reopening of the economy.

Takeaway
Both companies have struggled in recent years – M&S to revitalise its frumpy clothing image and ITV to compete with streaming on demand services. But the latest results show a marked improvement which was well received by investors, M&S shares closed up 17% and ITV shares rose 15%.

TRANSPORT
Electric carmaker makes historic public market debut

Yesterday American electric carmaker Rivian listed on the New York Stock Exchange in the largest public market debut of the year.

The company raised $11bn - the most since Facebook in 2012 and the 10th biggest ever – and is worth over $90bn. That’s more than car giants Ford and General Motors.

An impressive achievement given Rivian made only $1m in revenue in the past three months and posted a loss of over $1bn in the same period. 

So why all the hype? Investors are hoping that it will become the next Tesla (recently valued at $1tr) and capitalise on the growing electric car market as the world moves away from fossil fuels.

There were 10m electric cars on the road at the end of 2020 but by 2030, that number could reach 145m.

Rivian has heavyweight backers and customers. Amazon owns a 20% stake and Ford has a 12% stake. Amazon has also committed to buying 100,000 electric delivery vehicles from the startup by 2025. 

Some observers have called out Rivian’s blockbuster listing as a sign that valuations are out of control. A company that currently has capacity to make only a few thousand cars a year is worth more than those that make millions. The size of the electric car market is set to boom and traditional carmakers and pioneers like Tesla will provide stiff competition for Rivian.