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Apple unveils the iPhone 15 series

9th September 2023 – 15th September 2023 | Another week in the markets

S&P 500Nasdaq VIXDJIARussell 1000NYSE
Nifty 50GoldSilverBrent crudeUSD-INREUR-INR

Source: MarketWatch 

Hello Saturday,

This week, Apple unveils the iPhone 15 series, Arm Holdings debuts on the Nasdaq, and VinFast’s trading frenzy burns investors. 

  • Apple unveils its iPhone 15 lineup and makes other key announcements at its ‘Wonderlust’ event.
  • Arm Holdings successfully debuts in the US stock market, notching close to 25% gains on its first trading day. The chip designer, whose designs are used by almost all global tech giants, expects its total market to be worth $250 billion by 2025. 
  • Fuel prices are surging on account of extended production cuts by OPEC and Russia, along with delays in refinery startups in Africa and the Middle East, causing consumer prices to rise and impacting transportation and construction businesses. 
  • VinFast’s stock plunges about 80% from its high after going public via a SPAC IPO a month ago, highlighting the perils of taking the SPAC route. 
  • Howard Schultz steps down from the board of directors of Starbucks, having served as a long-time leader after purchasing the Seattle-based coffee business in 1987.

Taking stock | Small wonder | Worth an arm and a leg | Fuel flare-up | VinFast, lose faster? | Starbucks’ brightest star | Invest wisely

Taking stock

Stocks ended lower Friday over mixed economic data and fears of an auto strike. The S&P 500 and the Nasdaq booked weekly losses, losing 0.16% and 0.39%, respectively. The Dow managed to close out a positive week, gaining 0.12%. 

Small wonder

Apple held its September keynote event, dubbed ‘Wonderlust’, this Tuesday, where the tech giant unveiled its highly anticipated iPhone 15 lineup along with the Apple Watch Series 9 and Apple Watch Ultra 2. 

Some noteworthy features of the new iPhone series include a faster chip, a new titanium shell, and a USB-C charging port. But interestingly, the company did not raise its price points in the US. This time around, Apple did not have much price leverage given the global smartphone slump — last quarter, global smartphone shipments saw an almost 7% drop. However, this did not stop the company from raising prices in key markets other than the US, like India and China. There are several reasons for this. 

First, both the rupee and the yuan have depreciated against the dollar in the last year. So, the aggressive pricing in these markets compared to the US could partly be to offset the impact of currency depreciation and maintain profitability. Second, in markets like India and China, options for financing and trade-in are well-established. Third, people who buy premium products like iPhones are unlikely to be put off by relatively small price hikes. Finally, Apple expects to see only a 1% growth in its smartphone shipments in 2023. Hence, higher prices in such markets could help bolster the company’s revenue. However, it should be noted that there are also some markets where Apple has reduced prices, such as the UK. 

However, the Wonderlust event did not hold any surprises for Wall Street, and Apple stock ended Tuesday 1.7% lower. 

Worth an arm and a leg

Wall Street was eagerly waiting to see how the biggest IPO of 2023 would perform, and it got its answer this Thursday when British chip designer Arm Holdings started trading on the Nasdaq this Thursday. 

Arm shares started trading at $56.10, which was 10% higher than the IPO price of $51. They continued to soar throughout the trading day and closed at $63.59, notching an almost 25% gain on the very first day, giving the company a valuation of $65 billion.

Most global tech giants, including Apple, Samsung, Google, and Nvidia, use Arm’s designs and architecture to create their chips. The company’s architecture is used in the production of most smartphones, laptops, video game consoles, etc. And by 2025, Arm expects the total market for its chip designs to be worth about $250 billion. Japanese investment giant SoftBank, which still holds 90% of Arm’s stock, is hoping that the company will benefit from the AI boom.

Arm’s successful IPO, in a year that has been the worst for the IPO market since 2009, could lay the foundation for positive market sentiment and encourage the hundreds of companies waiting to go public. 

Fuel flare-up

Crude oil, diesel, gasoline, and jet fuel prices continue to soar amid production cuts by OPEC and its allies. 

A graph on wholesale price of oil

Source: The Wall Street Journal

Such high prices have several economic consequences. For one thing, they put pressure on companies in industries like transportation and construction, which are the biggest users of fuel. Moreover, they make consumer inflation worse. This week, the consumer price report for August showed that surging fuel prices were the primary reason behind the increase in consumer prices from July to August. The Consumer Price Index (CPI) in August increased by 0.6%, which is the highest monthly jump since June 2022.

Such high fuel prices, however, are good news for US refining giants. The shares of companies such as Valero Energy, Marathon Petroleum, and Phillips 66 are trading at or near all-time highs. The extended production cuts from OPEC and Russia, including delays in refinery startups in the Middle East and Africa, are proving to be a boon for those in the fuel-making business. 

VinFast, lose faster?

About a month ago, Vietnamese electric car maker VinFast made its US debut on the Nasdaq through the Special Purpose Acquisition Company (SPAC) route. This is an alternative way for a company to go public quickly, and has been becoming increasingly popular since the pandemic. But the problem with this route is that it can be extremely volatile. And the trading frenzy for VinFast stock over the last few weeks is proof. 

Shares of VinFast closed 68% higher than its opening price on its first trading day, and over the days that followed, the market cap of the company reached $190 billion. This valuation surpassed that of General Motors, BMW, and Ford, and made VinFast the third most valuable automaker globally, right behind Tesla and Toyota Motor Corp. But over the 11 trading days following this high, VinFast stock plunged by almost 80%. Why? Mostly because this trading frenzy, much like the frenzy associated with meme stocks like GameStop, was divorced from reality. 

VinFast is only six years old, is not yet profitable, and is only just starting to ramp up its production. Hence, the $190 billion valuation was always unjustified relative to its fundamentals. The openness of investors to such SPAC trends has only resulted in investors getting burned with wild stock price swings. 

Starbucks’ brightest star 

This week, Starbucks announced that Howard Schultz would be stepping down from the company’s board of directors. Schultz is the man responsible for transforming the small Seattle-based coffee business into a global coffee giant, and has served as a long-time leader. 

He served as the CEO from 1987, when he purchased Starbucks, to 2000, and then again from 2008 to 2017. In April 2022, Schultz returned to serve as interim CEO while the coffee giant was looking for the right leader. Later that year, Laxman Narasimhan was named the new CEO and officially took the reins in March this year. Schultz has expressed his confidence in Narasimhan, and though he is officially retiring (once again), the company has now given him the title of “lifelong Chairman Emeritus”.

Invest wisely 

In the world of investing, even macroeconomic issues like soaring fuel prices can serve as an opportunity to earn high returns. This, however, requires you to invest in the right companies at the right time to strike while the iron is hot. And Appreciate helps you do just that by giving you quick and easy access to the US stock market. Download the App today!

Warm regards,
Another week
in the markets

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