Evacuate The Chip Floor

MARKET UPDATE

TODAY’S BIG HEADLINES

• Evacuate The Chip Floor

• DoorDash to deliver pizzas & hammers

• Europe Still Loves Its EVs

• The “Magnificent Seven” is over

SEMICONDUCTORS
Evacuate The Chip Floor🏗️

Earth-Shaking News: Taiwan recently experienced a 7.2 magnitude earthquake, the worst in over twenty four years. This seismic event left many injured and forced Taiwan Semiconductor (TSM) to hit the pause button and evacuate its factories. These factories, by the way, are churning out semiconductors, the world’s current “precious” resource, faster than a popcorn machine at a movie theatre.

Chip Off The Old Block: Along with Taiwan Semiconductor, the Goliath of chip makers, United Microelectronics Corp, a smaller chip maker, also had to shut down their facilities and send their staff home.

Shaky Foundations: Despite our technological prowess, earthquakes remain a formidable foe for the global semiconductor industry. This highlights just how much the world is still leaning on these few regionally-bound companies. It’s like putting all your eggs in one basket, but the basket is sitting on a tectonic plate.

Geographical Concentration: Currently, three-quarters of the world’s chip fabrication plants are nestled in Asia, with virtually all advanced chip manufacturing taking place in the region. Particularly, Japan and Taiwan, home to nearly 200 fabrication plants, are sitting ducks for elevated seismic activity. Fun fact, Taiwan is cozily situated along the Pacific “Ring of Fire” where 90% of the world’s earthquakes occur. Talk about living life on the edge!

AI-Demand Risk: Post-earthquake, these advanced chip fabs typically go into hibernation for weeks for proper inspection. Restarting the manufacturing process can take up to two weeks due to its intricate nature. It’s like trying to start a game of Jenga in a bouncy castle. As you can imagine, this poses a colossal risk for the stock valuations of any AI-related company right now. *cough* Nvidia, *cough* Super Micro Computer.

sources: (financial times), (the guardian)

COLLABORATIONS
DoorDash to deliver pizzas & hammers🛠️

What’s happening? In a bold move, DoorDash (DASH), the firece rival of Uber, have just welcomed Lowe’s (LOW) into its digital fold. This means that DoorDash users can now browse through Lowe’s vast array of home-repair and improvement products without leaving their cozy couches… or even their bathtubs. After all, we believe in freedom of shopping - no judgments here!

The Winners: This alliance spells a win-win situation for both DoorDash and Lowe’s. Lowe’s gets to tap into a fresh customer base, while DoorDash gives its users one more reason to choose its app over the competition.

The Trend: This is just the latest chapter in the ongoing saga of food delivery apps expanding their horizons. What started with takeaways has now embraced groceries, and we’re seeing an increasing number of retailers jumping on the bandwagon.

The Motive: Why would DoorDash do this, you ask? Well, delivery apps like DoorDash and Uber (UBER) earn a commission every time they facilitate an order. So, the more products they offer on their app, the merrier.

The Loser: In this game of thrones, Amazon (AMZN) prime might find itself on the losing side due to the heightened competition. And to add insult to injury, DoorDash and its ilk might even promise faster delivery times! So, Amazon, it’s time to up your game!

sources: (pymnts), (financial times)

ELECTRIC VEHICLES
Europe Still Loves Its EVs🚗

Swedish Surge: Swedish auto giant, Volvo Cars (VLVLY), saw its share price rev up by 6% to its highest level since November. This turbocharged performance was fueled by record-breaking sales figures for March, largely driven by a surge in demand for its electric vehicles in the European market.

By The Numbers: Volvo reported selling a whopping 78,970 cars last month, a 25% increase year-over-year. The first quarter saw total sales hitting 182,687, marking a 12% increase year-over-year. The company’s management spotlighted the new all-electric EX30 model as a key player in boosting the company’s EV sales. This vehicle has now zoomed into the second spot in the Swedish EV market, a market where EVs rule the roost with a 58% share.

European Escalation: Volvo’s EV sales in the European market accelerated by 22% year-over-year in the first quarter, and by a stunning 34% for the month of March.

American Anomalies: On the other side of the pond, management announced a 44% growth in hybrid vehicles in the US, but a jaw-dropping 65% plunge in all-electric sales. Despite this, overall sales growth in the US market still managed to cruise at a respectable 17%.

The Twist: In a plot twist reminiscent of fellow EV manufacturers like Tesla (TSLA), Volvo also witnessed a significant skid in the Chinese market, the world’s largest, with a drop of 36% in its EV sales. However, Volvo managed to steer clear of a total crash, achieving a 4% increase in overall sales in China.

Ownership Overhaul: In a final twist, management announced the company would be divesting its ownership in EV-maker Polestar. It seems like Volvo is not just changing gears on the road, but in the boardroom too!

sources: (CNBC), (cleantechnica)

MEGA CAPS
The “Magnificent Seven” is over❌

Scene Set: Picture this, 2023 was the year of the “Magnificent Seven” (Mag 7). If you weren’t riding their coattails, you were likely trailing behind in the dust. These titans of industry, including the likes of Nvidia (NVDA), Meta (META) and Microsoft (MSFT), were spinning out returns that would make even the most seasoned investor’s head whirl. This dizzying performance was largely fueled by a staggering 37% earnings growth, while the rest of the market watched their earnings shrink by 2%.

Plot Twist: Fast forward to this year, and the analysts are predicting a dramatic role reversal. The remaining 493 companies in the S&P 500 are expected to outshine the Mag 7’s earnings growth for the first time since 2022. These underdogs are projected to boost their earnings by 18% year-over-year, a stark contrast to last year’s figures.

The Ugly Truth: Now, let’s add a dash of suspense to this financial thriller. If you were to remove Nvidia from the Mag 7, this plot twist would occur as early as the third quarter. But don’t despair, this is actually good news for the market. As the rally broadens, we might just see the return of the stock pickers’ heyday. So, buckle up, folks! The market’s about to get a whole lot more interesting. And remember, in the world of stocks, today’s underdog could be tomorrow’s top dog!

sources: (@charliebilello)

MORE NEWS
Additional market-moving events🌎

• Microsoft Advances Supercomputing: Microsoft in co-operation with Qunatinuum, have ushered in a new era of Quantum computing. Their team have successfully ran more than 14,000 experiments without a single error. (Techcrunch)

• Bob locks down the mouse board: Bob Iger and the existing board of Disney have successfully secured the backing of shareholders, beating both Trian Fund Management and Blackwells Capital to board seats. (The Telegraph)

• Spotify raises prices: After holding the monthly subscription cost at $9.99 for years, the streaming giant upped prices last year to $10.99, and it looks like they’re about to do it again by $1-$2 in the UK, Austrailian and three more markets. (The Verge)

• Costco and medicine: Costco partners with Sesame to offer its members medical prescriptions including Ozempic for $179 for three months, and $195 for non-members. (Daily Mail)

OUR PICKS
Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,303.00 SEK (📉-0.94%)

• Hims & Hers Health: $15.47 (📈+4.04%)

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