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Netflix, Amazon, Zoom, Shopify drop over 10%

Zoom Video was down by over 17% and Amazon and Netflix plunging about 5.1% and 8.6%, respectively.

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Netflix, Amazon, Zoom, Shopify drop over 10%, US stocks

Shares of stay at home stocks dropped sharply at the last trading session amid concerns that individuals would need less of such utilities amid the release of Pfizer’s positive COVID-19 vaccine data.

  • Zoom Video was down by over 17%.
  • Amazon and Netflix plunged about 5.1% and 8.6% respectively.
  • Teladoc Health down 13.7% and Shopify dropped by 13.6%.

READ: Apple, Amazon, Netflix drop over 4%, investors Jittery on COVID-19

What this means

The record losses are coming on the macro that Pfizer and BioNTech reported their COVID-19 vaccine candidate showing a 90% efficacy rate in stopping the dangerous viral infections during a late-stage trial.

Stock traders sequel to the release of Pfizer’s COVID-19 vaccine update, increased their buying pressure across these popular tech brands that include Amazon, Netflix, Zoom, and Shopify in 2020, as COVID-19 pandemic exploded beyond control and reduced social mobility, meaning more people stayed indoors.

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  • Before the plunge on Monday, Zoom Video gained 635% YTD.
  • Amazon and Netflix were up 79.2% and 59.1% respectively in 2020.

READ: COVID-19: AfDB postpones Africa Investment Forum to 2021

What they are saying

Milan Cutkovic, Market Analyst at Axi, in an explanatory note to Nairametrics, spoke on the macros that could affect U.S stocks in the coming days,

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“The drama is not over yet, and with Trump still sitting in the White House for another two months, wild price swings should not be ruled out.

READ: Netflix adds 10.1 million paid users in Q2 2020, yet stock plunges more than 9%

“However, for market participants, there is little doubt that Biden will be sitting in the Oval Office in January. With the US presidential election (almost) behind us, the pandemic will come back to the fore. The on-going lockdowns didn’t stop the recovery rally, as investors continue to count on central banks and governments to support the economy with drastic measures.”

Stimulus talks are likely to resume soon in the US and the European Central Bank could announce new measures as early as December.

Explore Data on the Nairametrics Research Website

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Featured Financial Market Analysis for a Fortune Global 500 Company. Member of the Chartered Financial Analyst Society. Follow Olumide on Twitter @tokunboadesina or email [email protected]

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Spotlight Stories

Explaining Nigeria´s flattering economy and equities

Get great advice and stock recommendations when you subscribe to Nairametrics Stock Select Newsletter.

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Lafarge, Nigerian Breweries, Stanbic IBTC, others top best performing stocks in Q3 2020

Nigeria has entered a second recession in less than five years and the third-quarter real GDP growth rate contracted by 3.62%, with inflation rate at the end of October being 14.23%, setting up the Nigeria economy for a double dose of recession and stagflation with hopes of surviving.

With the economy seeming uncontrollable, focus is once again on the investment outlook for the rest of the year 2021.

Nigeria equities gained 2.19% at the end of the week, stock defied a gloomy economic outlook to close strongly. 27 stocks gained during the week compared to the 21 the week before, while 42 lost grounds compared to 55 the week before.

For SSN, most of the stocks lost ground due to profit-taking and lack of significant value. The stock market is also quite shallow with very few stocks to pick from. This is a challenge for investors looking for a market that could produce a constant stream of winners.

The economy in focus, Nigeria’s major drivers for the contraction was oil GDP which contracted by 13.89% in Q3 2020 compared to 6.63% contraction in the prior quarter.

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The Buhari administration is taking Nigerians through the arduous task of refocusing the economy on local production rather than imports. Whilst this is good in the long term, it is a painful route that will string along with it, higher inflation, increased poverty levels, and frustrate foreign investments.

According to data from Nairalytics, the NSE 30 companies have posted a combined pre-tax profit of N1.3 trillion which when annualized comes to about N1.7 trillion. When compared to 2019 and 2018, N1.8 trillion and N1.79 trillion respectively, it is obvious that stocks will fare slightly worse than last year.

Stagflation is the combination of inflation and tepid GDP growth rate and its implications on stocks has to take note of other factors. Dividend yields for some stocks still rank far above inflation rate and even higher than Core-inflation (less the more volatile food inflation). So long as the stocks we own are profitable, there is some buffer to withstand the effect of the stagflation

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The Economic Outlook of the year 2021 will be shaped largely by insecurity and social media. The spate of kidnappings, terrorist-related killings and fear of increased militant activities is a big concern for the Nigerian economy. While policies like capital control, border closure remain a drag on economic recovery, they are within the control of the government and at least can be adjusted as data continues to guide.

Disclaimer

There is a wealth of information that should help decide whether you should buy a stock or not and how long you can hold on to it. Our recommendation is based on the information we currently have and is wholly the opinion of Ugodre Obi-Chukwu.

Nairametrics does not own some of the stocks recommended and may not purchase them despite including them in our Stock Select Portfolio. Ugodre does not also own all the stocks he recommends.

This newsletter is an investment guide and as such you should conduct extra analysis before deciding whether to buy, sell or hold a stock. The decision to buy, sell or hold a stock is solely yours.

 

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Stock Market

UBA, GTBank, Zenith Bank tumble, Bears take a grip on Nigerian Stocks

The market breadth index was negative with 25 losers against 13 gainers.

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Nigerian bourse closed negative on Thursday. The All Share index declined further by -0.25% to close at 34,968.94 from 35,056.82 points.

  • Year-to-date and market capitalization similarly dropped by -0.25% to settle at 30.40% and N18.27 trillion respectively.
  • A total volume of 289.3 million units of shares, valued at N7.34billion exchanged hands in 4,878 deals. UBA was the most traded shares by volume at 34.4 million units, while MTNN topped by value at N4.37billion.
  • The market breadth index was negative with 25 losers against 13 gainers. CADBURY (-5.43%) led the laggards today, while ARDOVA (+7.69%) was the top gainer.
  • The sectorial performance was mixed as the Banking, Insurance, and Consumer Goods indexes dipped -2.07%, -0.82%, and -0.20%, while the Oil & Gas gained +0.35%. The Industrial sector closed flat.

Top Gainers

  1. MTNN up 0.77% to close at N156.2
  2. ARDOVA up 7.69% to close at N14
  3. REDSTAREX up 4.00% to close at N3.38
  4. CUTIX up 5.56% to close at N1.9
  5. UPL up 4.26% to close at N1.47

Top Losers

  1. CADBURY down 5.43% to close at N8.7
  2. UBA down 5.20% to close at N8.2
  3. ZENITHBANK down 1.88% to close at N23.55
  4. FLOURMILL down 1.85% to close at N26.5
  5. GUARANTY down 1.47% to close at N33.6

Outlook

Nigerian stocks drifted lower at the fourth trading session of the week, as significant sell-offs seen in Nigerian tier -1 banks added pressure on the Nigerian All-Share Index.

  • Stock experts anticipate more consolidation now as investors become more choosy on stocks to buy taking into consideration that experts don’t see any new highs now till next year.
  • That said, Nairametrics envisages cautious buying on the bias that stock traders are expected to be a bit cautious amid recent macros prevailing at the Nigerian currency market.

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Stock Market

Camey & Rock executes N4.3 billion worth of share purchase agreement with Resort Savings and Loans

Camey & Rock Business Consulting executes a share purchase agreement with Resort Savings and Loans Plc, worth N4.3 billion.

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Rock savings raises N4.3 billion, as Camey and Rock acquire majority shares  

Camey & Rock Business Consulting Limited has finally executed its share purchase agreement with the board of Resort Savings and Loans Plc, worth N4.3 billion.

This is according to a notification sent by the latter to the Nigerian Stock Exchange market yesterday and seen by Nairametrics.

The cash involved in the deal is scheduled to be injected in tranches. Also, activities related to the transactions are still ongoing.

In order to resolve some administrative and basic regulatory issues, Camey & Rock called for an extension from CBN to enable it conclude the recapitalization exercise of the bank outside the deadline of 31 December 2020 to 30 June 2021.

The call comes at a time when the investors plan to inject the next tranche of cash into the bank.

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The notification also revealed that the investors (Camey & Rock) have so far, assisted in motivating staff resolution and arrangement of some critical financial obligations, towards the filing of outstanding financial statements and relocation of the bank’s head office to 12, Boyle Street, Lagos.

What they are saying: A part of the recent disclosure reads: “The Board of Resort Savings and Loans Plc (the bank) wishes to notify the Nigerian Stock Exchange and investing public on the updates on the Bank’s recapitalization exercise.

“The Bank has executed a Share Purchase Agreement with Camey & Rock Business Consulting Limited (Camey & Rock or the investor) to the tune of N4.3billion, following Camey & Rock’s strategic equity investment in the Bank. The cash will be injected into the Bank in tranches.”

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Why it matters: The recent announcement will help recapitalize the bank. In addition, the board and management firmly believe that the strategic investment will change the face of the bank, repositioning it in the committee of financial services providers in Nigeria, and grow its capacity with consequent effect in increasing the wealth of stakeholders.

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