Is the UEFA Champions League only watched by football lovers? And can we make money on the stock market by following football-related events/news?
We all know that football is a very lucrative industry, where business interests rarely leave room for long-lasting relationships between club, footballers and supporters. Football clubs are revenue and, in some cases, profit generating entities listed on public stock exchanges.
The most followed and coveted European competition is the UEFA Champions League (UCL). After this mid-week's quite exciting semi-finals we finally know the two lone survivors: Liverpool FC and Tottenham Hotspur.
Supporters' disappointment and usual end-of-season market transfers rumours have not been the only source of concern for the clubs which failed to make it all the way to the final stages. As we can see in our “Chart of the week”, the UCL path to the final has largely influenced the stock price fluctuations of those clubs listed on respective stock exchanges.
If we consider the stunning Ajax journey to the semi-final as an example, we see the stock being up by more than 60% since early Jan-19. On the other hand, Ajax stock fiercely dropped by more than 30% right after the semi-finals result. Similar stock reaction happened to Juventus’ stock price which rallied 18% after successfully qualifying for the quarter-finals, but also plummeted 43% (basically erasing all year-to-date gains) during the quarter-finals elimination week. AS Roma and Man Utd have also experienced ups and downs based on their performance on-pitch, although with less spiky fluctuations.
Juventus's stock skyrocketed after Cristiano Ronaldo acquisition (+35% in the 2 days following the official announcement). Key players’ injuries and disqualification before crucial football matches throughout the season might also affect stocks price.
We all love and follow football, but what we see on TV might only be part of what is a much bigger picture, especially if we think of it from a financial point-of-view. The capital employed (equity and debt) is how clubs finance potential footballers acquisition (assets whose value is amortised over time), while profitability is driven by growing revenue (merchandising, Champions League qualification contribution paid by UEFA, TV rights sales), pricing impact on tickets & branded products and labour cost (management and footballers contracts mainly). We now know an extra-reason why we should follow football.
Ferrari (RACE.MI) outstanding Q1 earnings release lifted up the stock price by more than 5%. The Italian luxury car manufacturer beat on Revenue (by €71m, +13% yoy) and EPS (by €0.16, +22% yoy). The company also declared a €1.03 dividend per share and reiterated their FY2019 guidance (see table below).
What really impressed investors was the big jump in Chinese sales. In this respect, Taiwan, China and Hong Kong combined deliveries boosted by 79% yoy, while EMEA, NSA and Rest of APAC continued to post at least double-digit growth of 10%, 27% and 29%, respectively.
Finally, the Industrial Free Cash Flow grew by €191mn yoy, thanks to €122mn increase in working capital (167mn higher than Q1 2018), while the company reduced its outstanding Net Industrial Debt by €192mn.
Apple (AAPL) Q2 earnings release printed a beat on both revenue ($620mn) and EPS ($0.10). Shares moved up 4.5% post-announcement. While the iPhone maker guides for sequential flattish revenue and increasing expenses, the management seems to focus on share buybacks to return capital to shareholders. The limited increase by 5% in dividends paid ($15bn cash outflow vs Q2 net cash position of $113bn) compared to the much more aggressive $75bn shares repurchase programme already initiated (7.3% of number of diluted shares for the time being), indicates that management believes the company is currently undervalued.
The yoy revenue decline of 5% has been largely due to a decrease in iPhone sales ($31bn vs $37bn in Q1 2018). On a positive note, Services and Wearables, Home & Accessories segments continue to post solid growth of 16% and 30%, respectively. Although Apple sales exposure to iPhone decreased from 61.4% to 53.5%, what will be crucial for the upcoming quarters is whether the management will be able to manage the smartphone sales decline without having an impact on margins.
Disney (DIS) reported its Q2 earnings with a strong beat on both EPS ($1.97) and revenue ($390mn). The stock went up 1.6% following the release. Revenue went up 3% for the quarter ($14.9bn), while 1% for the half-year ($30bn). The main contributors for the interim revenue growth were Parks, Experiences and Products (+5%) and Direct-to-consumer & International (+15%).
Segment operating income sharply fell 10% yoy for the quarter ($3.8bn), while it moderately declined by 9% for the half-year ($7.4bn). Studio Entertainment operating income dropped by 39% and 50% in Q1 and H1, respectively. Decline partially due to a decrease in theatrical and home entertainment distribution results.Net income rallied for both the quarter and the half-year by 85% and 12%, respectively.
Revenue grew by 51% yoy, pushed up by a 79% yoy growth in Platform revenue (+40% active users and +74% streaming hours). Gross Margin expanded by 260bps (48.8%). All-in-all, Roku’s Q1 results exceeded previous guidance for revenue, gross profit and adjusted EBITDA, driven by strong operational execution, robust active account growth and the strengthening shift to streaming, which the management expect to continue.
Lyft (LYFT) first public earnings release was mix as the company missed on EPS ($7.95) and beat on revenue ($36mn). Share edged up 1%. Q1 revenue went up 95% yoy ($776mn), as the number of active riders increased from 14mn to 20.5mn (46%) in the quarter, meaning the revenue per active rider also ticked up by 34%. The Adj. EBITDA improved from last year's level of -$239mn to -$216mn in Q1 2019.
Industrial production March 2019 – Eurozone 2019年3月欧元区工业生产数据
Interest rates (3 months) April 2019 – Eurozone 2019年4月欧元区3个月利率
Regional labour market statistics in the UK: May 2019 2019年5月英国地区劳动力市场统计
Flash estimate GDP and employment - euro area and EU Q1/2019
International trade in goods March 2019
Inflation (HICP) April 2019 – Eurozone
Production in construction March 2019 – Eurozone
Chart of the Week
Fact of the Week
Over the past six months alone, Apple has bought approximately 20 to 25 companies (one every two to three weeks on average). The US tech giant often doesn't announce these deals because the companies are small, and Apple is "primarily looking for talent and intellectual property”. --Tim Cook, CEO of Apple
“After delivering the biggest opening of all time, the movie has generated almost $2.3 billion in worldwide box office to date, making it the second-highest grossing film of all time, after just 2 weeks in theatres.”--Robert Iger, Disney CEO, on latest Avengers saga movie release phenomenal success