Daniel Ek, Spotify CEO

Spotify’s free audiobook offer

This week, Spotify shares slide after its latest audiobook offer, Pepsi reports stellar earnings, and Rivian looks on track to outperform production goals. Let’s get straight into The Weekly Scoop!

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Spotify slides 3% after its free audiobook offer 🎧

Entering new markets: Spotify has announced premium users in the UK will now have 15 hours of free access to audiobooks a month. But investment research firm Redburn-Atlantic (who is part of the Rothschild & Co group) is wary about the move.

  • It’s all about profit: The investment research firm feels the move will be ‘gross margin dilutive’, or in other words, Spotify has overestimated how much profit this will generate. Redburn-Atlantic downgraded its status on Spotify from ‘buy’ to ‘neutral’. 

  • Awakening the beast: Redburn-Atlantic also noted it may prompt a response from Amazon who own Audible and Amazon Music. But Spotify has 200 million more monthly active users than these two platforms combined, so is this a fight it thinks it can win?

Stock analyst rating stating strong buy

*Ratings are provided by analysts at Zacks, a leading investment research firm

Pepsi shares jump 3% as it beats Wall Street estimates🧋

Quenching investor thirst: On Tuesday, PepsiCo reported its Q3 earnings with revenue beating analyst expectations. The company also raised its outlook for its full-year earnings, much to the joy of investors.

  • A $60 mill boost: Pepsi outperformed its revenue expectations by $60m and its net income broke the $3bn mark for this quarter, which is a whopping $300m more than this time last year.

  • Discrete price hikes: It's done this by hiking prices. From this point last year, PepsiCo has increased its pricing by 11%, selling products in smaller package sizes and for higher prices. It’s sneaky, but very effective.

Stock analyst rating saying hold

*Ratings are provided by analysts at Zacks, a leading investment research firm

Rivian jumps 5% as it exceeds production targets 🏎️

A UBS boost: Analysts at UBS (a leading investment bank) have given Rivian a buy rating, causing the stock to rise more than 5%. So, what’s causing them to feel optimistic?

  • A company in demand: Legacy car brands (like GM, Ford and Toyota) have been too ambitious with their EV release dates, meaning brands such as Rivian are expected to be in hot demand over the coming years.

  • 2,500 extra vehicles: UBS analysts predict Rivian will produce around 54,500 EVs this year, surpassing the company’s own prediction of 52,000. Will this happen? No one can be sure just yet, but investors will be marking November 7th in their diaries, as Rivian will update the market on its Q3 earnings.

Stock analyst rating stating strong buy

*Ratings are provided by analysts at Zacks, a leading investment research firm

What have we learned this week? 🤓

  • The audiobook market is growing, rapidly: It’s worth over $5bn and is projected to reach $35bn in 2030, making it the fastest growing format in the publishing industry. Spotify knows it, and it’s taking action.

  • PepsiCo is more than just Pepsi: The company has discretely altered its sizes and prices across its vast portfolio of brands including Lay’s crisps, Lipton Tea, Quaker Foods, Doritos and many more. 

  • Rivian could generate an extra $168m this year: With its average vehicle priced around $67,500, an extra 2,500 cars would make around $168m more in revenue. It would also prove to investors Rivian can keep up with demand, which is one of its largest challenges.

Stocks we're watching 👀

  • Tesla: On October 18th, Tesla releases its Q3 earnings. So far, it has underdelivered by around 21,000 cars, but it’s the bottom line investors will be keen to know about. 

  • Domino’s: The pizza powerhouse has struck a partnership with Microsoft Azure to create a generative AI assistant to help store managers speed up their operations.

  • Meta: On October 17th, Meta unveils its new Ray-Ban smart glasses. Will Meta conquer a product where so many have failed? Or will it become another one of its tried and failed experiments?

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*Figures and ratings correct as of October 11th 2023.

Past performance does not guarantee future results. Capital at risk when investing. This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.

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