Tuesday's Headlines: Apple Enters the Buy Now, Pay Later Space
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Duolingo (DUOL) +8.2%
Baozun (BZUN) +7.5%
Nautilus (NLS) +7.0%
Bumble (BMBL) +6.7%
Moving Down ⬇️
Upstart Holdings (UPST) -5.0%
Zendesk (ZEN) -4.1%
Boston Beer Co. (SAM) -4.0%
nCino (NCNO) -3.2%
Datadog (DDOG) -2.2%
Here are the stories that you need to know ahead of market-open today, Tuesday the 7th of June:
Apple Takes on Buy Now, Pay Later 🍏
Apple (AAPL) kicked off its Worldwide Developers Conference (WWDC) yesterday and made some announcements that are sure to pique investor interest. While the annual event rarely has any significant impact on the firm’s stock price — with shareholders typically not trading based on new products or software updates — this year’s conference threw up a curveball.
So what did Apple announce?
The Cupertino-based firm revealed that it's finally entering the buy now, pay later (BNPL) market in an attempt to rival growing fintech companies such as Affirm and Klarna. The BNPL industry as a whole is expected to be worth over $90 billion by 2029, and Apple wants to get in on the ground floor. While there was no significant movement in Apple’s stock price following the news, Affirm slumped by close to 6% yesterday as the market reacted.
Apple’s service will be rolled out natively within its Wallet app, taking advantage of its already impressive interface and large base of existing users. It offers payment for purchases in four installments over six weeks without any fees or interest being charged. This could bring a host of new customers to Apple’s growing payments ecosystem, with rivals expected to struggle in the coming months amid rising inflation and lower levels of consumer spending. Apple has the cash, resources, and other revenue sources to navigate those issues much more comfortably, and could very realistically come out on top in this emerging and competitive market.
Kohl's Moves Closer to a Sale 🛍
Shares of Kohl’s are up in pre-market trading this morning after the American department store chain announced that it had entered into exclusive sales talks with Franchise Group.
In what is just the latest part of this long-running saga, Kohl’s management said last night that its talks with the retail holding company Franchise Group were now entering an exclusive three-week period to allow for negotiations and due diligence. Franchise Group is proposing to buy the struggling retailer for $60 a share, which would value the company at about $8 billion.
Like much of the retail industry, Kohl’s business was obliterated by pandemic lockdowns, although its problems actually predate that, particularly in terms of its bricks-and-mortar stores. At the turn of the year, activist investor firms began to put pressure on the company to consider either a sale or the divestment of its more successful digital business due to the poor performance of the stock, which had underperformed industry peers by almost 20% according to the group.
In February, the company then announced that it was working with Goldman Sachs to field offers and even rejected a buy-out offer of $64 a share in the same month, claiming that it undervalued its business. However, a poor quarterly report in the last month — where revenue fell year-over-year and guidance targets were slashed — probably makes $60 a share seem like a pretty good deal after all.
Gitlab Soars After Strong Earnings 👾
Shares of Gitlab are up more than 10% in pre-market trading after the company posted strong revenue growth and issued upbeat guidance for the fiscal year.
Revenue rose 75% year-over-year to $84.4 million for the quarter. That was far higher than the $78.1 million that analysts had expected. Though the company is still unprofitable, adjusted losses were 18 cents per share, again beating analyst estimates. For fiscal 2023, the company now expects to bring in between $398 million and $402 million.
Gitlab is an open-source company that helps developers secure and operate software in a single application. DevOps is a combination of practices and tools that helps organizations deliver applications and services at high velocity. Since its founding, Gitlab has been a pioneer of remote working and employs over 1,350 people in more than 65 countries. Its software empowers teams to work together in a remote environment.
“We have seen a substantial shift in how enterprises are developing, operating, and securing software by moving to a platform strategy. As a result, our One DevOps Platform is gaining momentum and broader adoption,” said Sid Sijbrandij, GitLab CEO and co-founder.
Though the company operates a freemium model, in which smaller teams can trial and use the basic software for free, it has seen a substantial increase in paid users. Customers paying more than $5,000 a year increased to 5,168, up 64%, while enterprise customers paying over $100,000 increased to 545, up 68%.
Gitlab went public through an IPO in October 2021 and has seen its share price struggle as investors rotate out of high-growth companies. The shares are currently down over 67% from their 52-week highs.