SoftBank Mobile Goes Live 📱 Pharma Swallows A Bitter Pill 💊

by | 19 Dec, 2018

 

1. SoftBank Mobile Goes Live 

The much-anticipated Initial Public Offering (IPO) of tech investment giant, SoftBank’s, telecommunications arm, SoftBank Corp, kicked off this morning in Japan’s biggest-ever IPO. The $23.5 billion price tag, however, proved to be a bit overambitious with the share dropping more than 14% during the session, and it may not be done yet!

2018 has been a rough year for IPOs, especially in the tech sector, with many sliding significantly in the first few weeks or months before forming a solid base. Amidst one of the worst global sell-offs in a decade, SoftBank’s above-market 1,500 Yen opening price was seen more as a high-risk move by investors, rather than a sign of confidence. Bold moves don’t always pay off.

The run-up to the IPO was far from smooth and may be part of the reason why it drowned in a sea of red today. Network outages in Japan caused by software issues, and links to Huawei’s IP theft allegations put the IPO on shaky ground before it had even gone live.

Saudi Arabia’s involvement in SoftBank’s $100 billion Vision fund has also become a contentious issue, with many businesses objecting to joint-ventures on moral grounds following the Khashoggi execution.

The overall picture of a weak global environment, network outages and sketchy business partners culminated into an overvalued IPO, which may still have another 10-20% still to lose…Hard luck, SoftBank!

 

2. Pharma Swallows A Bitter Pill

Pharma’s 12 largest companies have released data showing their lowest returns on R&D in over 9 years, falling to a lowly 1.9% from 3.7% in 2017. Yikes, that is a bitter pill to swallow!

Drug development has almost doubled in price since 2010 and looks set to continue at its current pace unless big pharma can come up with a solution. Peak sales of new medicines have also halved since then, giving a grim picture of higher costs and lower consumption…The feared double-whammy!

The focus seems to have shifted away from broad production to niche, specialist treatments and medications for small targeted groups of patients. By comparison, the next generation of more agile specialised biotech firms fared much better, only declining from 12.5% returns on R&D to 9.3%. It seems bigger is not always better.

The big names, such as Pfizer, Novartis & GlaxoSmithKline had better get innovating before their returns sink into the negatives. It’s about time the top dogs got a shake-up!

Today we are watching…

1. WTI Crude Oil (#wtioil)

WTI cascaded below the $50 per barrel mark during yesterday’s session, sliding more than 7% to shatter its previous low. Rampant oil production in the US, Russia and the Middle-East has caused an oversupply crisis that has forced prices down 40% in the space of two months. With production still breaking record levels, the floor may still be further out in 2019!

2. Tesla (#tesla)

Morgan Stanley and Goldman Sachs Cut Tesla down to size yesterday in reports predicting dwindling demand in Q1 of 2019 and downside potential between 15-35%! Tesla dipped 3.29% yesterday, and may have room for more if the two banking giants keep adding selling pressure. All eyes on Tesla.

 

 

 

 

 

 

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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