🖨️ TikTok is a money printing machine

Good morning Investor. "Remembering that you are going to die, is the best way I know to avoid the trap of thinking you have something to lose. You are already naked, there is no reason not to follow your heart."

— Steve Jobs, Founder of Apple

MARKET UPDATE

TODAY’S BIG HEADLINES

• TikTok is a money printing machine

• J&J’s Cancer treatment gets FDA approval

• UK makes big changes to investing

• Goliath European acquisition

MEGA CAPS

TikTok is a money printing machine🖨️

ByteDance Taking Over: Amid the scrolling and trolling, ByteDance Ltd., the puppet master behind the viral sensation TikTok, has just dropped a bombshell. Despite the Chinese economy doing its best impression of a rollercoaster, ByteDance’s profits have skyrocketed by a whopping 60% in 2023. Now that’s what we call dancing to the beat of their own drum!

The Number Crunch: ByteDance’s EBIT (Earnings Before Interest, Tax, Depreciation, and Amortization) leaped from a cool $25 billion in 2022 to a sizzling $40 billion last year. This digital dynamo also saw its sales balloon from $80 billion to nearly $120 billion. With these figures, ByteDance has officially dethroned the Chinese conglomerate Tencent in both revenue and profit. The secret sauce? The meteoric rise of TikTok’s advertising platform and its “TikTok Shop”, an e-commerce platform so integrated, it’s practically part of the furniture. The company even predicts their e-commerce business will multiply tenfold this year. Talk about growth spurts!

Super-Aggregation: TikTok and its Chinese twin, Douyin, are borrowing a leaf from their rivals’ playbook, morphing into a platform that offers more than just viral dance-offs. It’s a move reminiscent of Tencent’s (TCEHY) WeChat, which has become the Swiss Army knife of apps. This is becoming more apparent with the backdrop that TikTok is launching a photo-sharing app dubbed “Notes” which will rival Meta’s Instagram.

Existential Crisisor or Just Another Tuesday?: However, TikTok’s biggest headache is the regulatory saber-rattling from the US, its most profitable market with a whopping 170 million users. The US House of Representatives recently passed a bill to ban TikTok in the US unless ByteDance sells the platform to a non-Chinese owned company. But the bill is yet to be passed in the Senate. So, will TikTok keep ticking, or is time running out?

sources: (Bloomberg), (TechInAsia)

BIG PHARMA

J&J’s Cancer treatment gets FDA approval🩸

Medical Breakthrough: In a significant development earlier this week, the FDA greenlit the expanded use of Carvykti, a cell therapy, as a preventative treatment in the early stages for adult patients suffering from relapsed or refractory multiple myeloma (a type of cancer). This innovative therapy is the result of a collaborative effort between Johnson & Johnson (JNJ) and Legend Biotech (LEGN).

Context: This approval follows closely on the heels of the FDA’s endorsement of Bristol Myers Squibb’s (BMY) blood cancer treatment, Abecma, which got the nod for use after two prior lines of therapy.

Trial Outcomes: The trial results have been promising. Both CAR-T therapies, Abecma and Carvykti, have demonstrated a substantial reduction in the risk of disease progression or death when compared to standard regimens. With an estimated 35,780 new cases of multiple myeloma expected to be diagnosed in the US in 2024, resulting in 12,540 fatalities and a mortality rate of 35%, an effective remedy for this disease could prove to be a game-changer.

Stock Market Whispers: Legend Biotech, known for its volatility, has seen its stock rise by over 9% in the past year, despite a significant 18% decline since mid-March. On the other hand, shares of JNJ have dipped nearly 9% over the past year, making this positive news a much-needed boost.

sources: (reuters), (biopharmadrive), (cancer.org)

FINANCIAL REGULATIONS

UK makes big changes to investing✍️

Plot Twist: In a twist that would make a pretzel jealous, the UK’s finance minister, Jeremy Hunt, has been shaking up financial market regulations like a snow globe in his quest to boost investment in the London Stock Exchange (LSE). His latest manoeuvres, however, are as unconventional as a square football.

Private Party: Hunt is currently cooking up a scheme to let private companies float shares on the LSE without the fanfare of an IPO. It’s like having a party without sending out invitations. This move to lighten the regulatory load of public listing is as enticing to businesses as a double chocolate fudge cake at a diet convention. The hope is that this will reel in more businesses to list on the LSE, under the catchy moniker of “PISCES”.

The Catch: But here’s the kicker - companies won’t be able to raise capital through PISCES, and retail investors won’t be allowed to buy shares through this system according to current expectations. It’s like being invited to a buffet but not being allowed to eat. However, pensions will be given the green light.

Tax-Free Tidings: Adding another feather to his cap, the finance minister recently unveiled the “British ISA”, a scheme that allows UK citizens to invest £5,000 annually tax-free in LSE-listed companies. For context, the UK already has a tax-free investing account, the “stocks & shares ISA”, which offers a £20,000 annual investing allowance with no restrictions on the geographical location of the companies invested in. It’s like having a discount at any store you like.

sources: (reuters), (The Guardian), (Forbes)

MERGERS & ACQUISITIONS

Goliath European acquisition🤖

Show Me The Money: On a Wednesday morning that was as ordinary as a slice of bread, the European energy market was hit with a jolt of espresso. Europe’s largest gas distributor, Italgas, made a preliminary offer that was as hefty as a sumo wrestler. They proposed to buy their main domestic rival, 2i Rete Gas, for a whopping 4-5 billion euros ($4.3-5.4 billion). It’s like offering to buy the moon!

Antitrust: Now, you might be thinking, “Surely the European antitrust authorities would put a stop to this faster than a speeding bullet!” Well, according to the grapevine, Italgas has a plan up their sleeve to charm the regulators, which includes selling off various assets. It’s like selling your grandma’s antique vase to buy a new sports car.

IPO Interrupted: Before this news broke, 2i Rete Gas was busy preparing for an IPO on the Milan bourse (the Italian Stock Exchange). The company was hoping to sell €600 million worth of shares, giving it a valuation of €5 billion. This would have made it the biggest IPO in over 12 months, like a whale in a pond. But now, it seems the IPO might be as cancelled as a rain-soaked cricket match.

sources: (reuters)

MORE NEWS

Additional market-moving events🌎

• Adobe The Buyer: Adobe have begun building up its library of training data for its AI models by buying up videos at a rate of $3/min. This comes after the release of OpenAI’s groundbreaking video-generation model Sora. (Bloomberg)

• QT is Slowing: The Fed are looking to decrease the current rate of Quantitative Tightening through shedding treausry securities from its balanace sheet. Policymakers were in favour of cutting the rate of QT by half. (Reuters)

• Perfect Investment: Dude Perfect, one of the most popular YouTube channels you might know from their elaborate trick shot videos, just secured a nine-figure private equity investment from Highmount Capital. (Worldscreen)

• Olympic Screen-Time: Comcast has sold $1.2 billion in advertising slots for the upcoming Paris Olympics. (BusinessTimes)

EARNINGS

This Week’s Earnings Calendar📅

• JPMorgan Chase (JPM) will report Friday.

  • Analysts estimate $42.05B in revenue (+6.90% YoY)

  • $4.21 in earnings per share (+2.68% YoY).

• Wells Fargo & Company (WFC) will report Friday.

  • Analysts estimate $20.19B in revenue (-2.60% YoY)

  • $1.09 in earnings per share (-11.38% YoY).

• The Progressive Corporation (PGR) will report Friday.

  • Analysts estimate $17.65B in revenue (+30.42% YoY)

  • $3.11 in earnings per share (+378.46% YoY).

• BlackRock (BLK) will report Friday.

  • Analysts estimate $4.66B in revenue (+9.83% YoY)

  • $9.25 in earnings per share (+16.65% YoY).

• Citigroup (C) will report Friday.

  • Analysts estimate $20.41B in revenue (-4.84% YoY)

  • $1.22 in earnings per share (-44.29% YoY).

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: 1,298.50 SEK (📉-1.10%)

• Hims & Hers Health: $14.65 (📈+0.97%)

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