Latest / What the Flux / Guzman's billion dollar listing | Take me home, Country Road | Salesforce's biggest drop in 20 years

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Guzman's billion dollar listing | Take me home, Country Road | Salesforce's biggest drop in 20 years · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm justin and I'm hish Deep and it's Monday, the
• 0:09
  Speaker 2: third of June.
• 0:10
  Speaker 1: Ay she get this one. Telstra customers who receive their
• 0:13
  Speaker 1: phone mills in the mail will now cop a thirty
• 0:16
  Speaker 1: percent increase in price for the privilege of having paper.
• 0:19
  Speaker 1: It's all part of Telstra's plan to reduce costs in
• 0:21
  Speaker 1: their business and obviously position this as an environmental benefit too.
• 0:25
  Speaker 2: Of course, Fluxpam, did you know that the majority of
• 0:28
  Speaker 2: Australians would rather speak about death than money. Yep. Money
• 0:31
  Speaker 2: is a pretty awkward topic and that's why we've built
• 0:34
  Speaker 2: this month's academy around having money conversations in your life.
• 0:37
  Speaker 2: Very much needed with your partner, your friends and families.
• 0:40
  Speaker 2: It's guaranteed to help you have better relationships and feel
• 0:43
  Speaker 2: better about your money.
• 0:44
  Speaker 1: Money back guarantee from Flux. Three delicious stories today.
• 0:49
  Speaker 2: Let's get into it.
• 0:50
  Speaker 1: For our first goods. Mini Gomez, the Mexican fast food chain,
• 0:54
  Speaker 1: has announced plans to list on the ASX in June
• 0:57
  Speaker 1: and a multi billion dollar valuation.
• 0:59
  Speaker 2: Who knew beres could turn into billions? Tell me more?
• 1:02
  Speaker 1: Okay, so goods, Midigo Mares or gyg As they call
• 1:05
  Speaker 1: themselves Oh Yes. First opened in Sydney in two thousand
• 1:07
  Speaker 1: and six.
• 1:08
  Speaker 2: The goal was to become a quality Mexican fast food
• 1:11
  Speaker 2: chain and take on the big dogs in fast food
• 1:13
  Speaker 2: like Macas and Hungry Jacks.
• 1:15
  Speaker 1: And actually, since then it's expanded its network to two
• 1:17
  Speaker 1: hundred and ten restaurants.
• 1:19
  Speaker 2: And Jazz they aren't just dishing out burrito bowls in Australia.
• 1:22
  Speaker 1: Oh no, no no, They've also got stores in Singapore,
• 1:24
  Speaker 1: in Japan and the US as well.
• 1:26
  Speaker 2: After many years of do we don't we list on
• 1:28
  Speaker 2: the Airsex, GYG has announced they will list on the
• 1:31
  Speaker 2: Airsex in June this year.
• 1:33
  Speaker 1: And as part of this float, GYG will raise two
• 1:35
  Speaker 1: hundred and forty two point five million dollars WOW and
• 1:38
  Speaker 1: will listed evaluation of get this two point two billion
• 1:42
  Speaker 1: dollars Jazz.
• 1:42
  Speaker 2: Forty two point five million of this raise will be
• 1:45
  Speaker 2: given to existing investors who are looking to sell down.
• 1:48
  Speaker 1: And the other two hundred meal will be used to
• 1:50
  Speaker 1: fund growth of the business by expanding its network of
• 1:52
  Speaker 1: stores in Australia and then globally as well.
• 1:55
  Speaker 2: And Jazz Gyg has mentioned there is a voluntary escro
• 1:58
  Speaker 2: arrangement in place for twelve months from listing.
• 2:00
  Speaker 1: Which means fifty eight percent of their shares will be
• 2:03
  Speaker 1: under this ESCRO.
• 2:04
  Speaker 2: So tell me what is the key learning here.
• 2:06
  Speaker 1: A voluntary escro arrangement is when the key stakeholders in
• 2:09
  Speaker 1: the business agree to voluntarily lock up their shares for
• 2:12
  Speaker 1: a certain period post the IPO.
• 2:15
  Speaker 2: This can range from six months to a year or
• 2:17
  Speaker 2: even longer.
• 2:18
  Speaker 1: And actually by agreeing to hold on to their shares
• 2:20
  Speaker 1: it sends a strong signal to the market.
• 2:22
  Speaker 2: Yeah, we believe in the long term potential of the
• 2:25
  Speaker 2: company and are just looking for a quick cash out.
• 2:27
  Speaker 1: But actually the number of shares in escrow as a
• 2:29
  Speaker 1: percentage of total shares is also important.
• 2:31
  Speaker 2: Oh yeah, because if only ten percent of shares are
• 2:34
  Speaker 2: in escrow, then ninety percent can still be sold on
• 2:36
  Speaker 2: the market.
• 2:37
  Speaker 1: The average number of ordinary shares that are subject to
• 2:39
  Speaker 1: ESCRO for Australian companies that are worth less than one
• 2:42
  Speaker 1: hundred million was twenty to forty percent, and.
• 2:44
  Speaker 2: For Australian companies worth more than one hundred million dollars
• 2:47
  Speaker 2: it ranged from forty to eighty percent in escrow.
• 2:50
  Speaker 1: That's according to law firm Herbert Smith Freehills.
• 2:52
  Speaker 2: So Guzmand's fifty eight percent of shares in Escro should
• 2:55
  Speaker 2: help stabilize the share price host.
• 2:57
  Speaker 1: Ipo without the shares tumbling like a holy built breckydo.
• 3:01
  Speaker 2: For our second story, the owner of Country Road Group
• 3:05
  Speaker 2: has warned that it expects its earnings to be more
• 3:07
  Speaker 2: than twenty percent lower in comparison to last year.
• 3:10
  Speaker 1: Jeez, clearly those country Road double bags just I'm selling anymore?
• 3:13
  Speaker 1: So tell me everything well.
• 3:15
  Speaker 2: Jazz country Road is the fashion retailer that was started
• 3:18
  Speaker 2: back in nineteen seventy four.
• 3:19
  Speaker 1: And by twenty fourteen, the brand was wholly owned by
• 3:22
  Speaker 1: a South African retailer called Woolworths Holdings Limited.
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  Speaker 2: Not the Australian Woolies that is, no.
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  Speaker 1: No no, and Walwort's Holdings has also got other Aussie
• 3:29
  Speaker 1: brands like Mimco, Trenery, Politics, Witchery under its belt and
• 3:33
  Speaker 1: formerly had David Jones as well.
• 3:35
  Speaker 2: Now Jazz Wolworth's Holding has just come out with the
• 3:37
  Speaker 2: Country Road Group's twenty twenty four earnings update, and let
• 3:40
  Speaker 2: me tell you it is not looking forward.
• 3:42
  Speaker 1: Me throw it so.
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  Speaker 2: Wilwors has worn that it expects country Roads earnings to
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  Speaker 2: drop by twenty percent compared to FY twenty three.
• 3:49
  Speaker 1: And actually this is largely due to the slower economic environment.
• 3:52
  Speaker 1: The Country Road is actually facing a double whammy yep.
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  Speaker 2: On the one hand, there's a pressure of high living costs,
• 3:57
  Speaker 2: meaning less demand from customers, and.
• 3:59
  Speaker 1: On the other hand, there's higher import costs thanks to
• 4:02
  Speaker 1: a weaker Australian dollar.
• 4:03
  Speaker 2: So tell me what is the key learning here.
• 4:05
  Speaker 1: When a company relies on imports for its materials or
• 4:08
  Speaker 1: its manufacturing, it's beholden to fluctuations of its local exchanger.
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  Speaker 2: You see jazz. Like many fashion retailers, Country Road imports
• 4:16
  Speaker 2: goods for its operations, and when it.
• 4:18
  Speaker 1: Does, it often pays for those goods in the supplier
• 4:20
  Speaker 1: country's currency.
• 4:21
  Speaker 2: If the Australian dollar is stronger against that currency, that
• 4:24
  Speaker 2: means each Aussie dollar can buy more and.
• 4:26
  Speaker 1: The cost of importing becomes cheaper.
• 4:28
  Speaker 2: But if the Australian dollar becomes weaker against that currency,
• 4:31
  Speaker 2: like it is right now, the cost of those imported
• 4:34
  Speaker 2: goods goes up.
• 4:35
  Speaker 1: For example, the Australian dollar has dropped over thirteen percent
• 4:38
  Speaker 1: compared to the US dollar in the last twenty four months,
• 4:40
  Speaker 1: and because.
• 4:41
  Speaker 2: Of the weaker Aussie dollar, Country roads expenses have jumped
• 4:44
  Speaker 2: significantly more than.
• 4:46
  Speaker 1: Its revenue, and while many retailers try to offset this
• 4:49
  Speaker 1: foreign exchangers by using hedging strategies, this clearly hasn't been
• 4:53
  Speaker 1: quite successful for the Country Road Grip.
• 4:55
  Speaker 2: For our third and final story, Salesforce has seen its
• 4:58
  Speaker 2: shares tumble more than twenty percent in its worst day
• 5:01
  Speaker 2: of trading since two thousand and four after week results.
• 5:05
  Speaker 1: Wow, that is more than fifty billion dollars in a
• 5:07
  Speaker 1: drop in just one day. That's what you call it.
• 5:09
  Speaker 1: Top date at the office. So tell me more.
• 5:11
  Speaker 2: Okay. So, Salesforce is one of the og software companies
• 5:14
  Speaker 2: that launched back in nineteen ninety nine and is now
• 5:17
  Speaker 2: worth more than two hundred billion US dollars.
• 5:19
  Speaker 1: Salesforce specialized in the very sexy industry of CRM software.
• 5:24
  Speaker 2: Oh yeah, CRM stands for Customer Relationship management. In other words,
• 5:28
  Speaker 2: it provides software for large companies.
• 5:30
  Speaker 1: And helps them drive sales and customer service, marketing, automation
• 5:33
  Speaker 1: and analytics as well.
• 5:34
  Speaker 2: We're talking mega companies like IBM, PayPal, Sonos, and even Headspace.
• 5:39
  Speaker 1: And actually, don't forget this sluck. He's also now owned
• 5:42
  Speaker 1: by Salesforce since twenty twenty one.
• 5:43
  Speaker 2: But late last week, Salesforce warned that its first quarter
• 5:46
  Speaker 2: results would miss its revenue estimates.
• 5:48
  Speaker 1: And interestingly, this was the first time it's missed its
• 5:51
  Speaker 1: estimates since two thousand and six.
• 5:53
  Speaker 2: And it warned of a weaker earnings guidance for the
• 5:55
  Speaker 2: upcoming quarter two.
• 5:56
  Speaker 1: And as a result, Salesforce shares dropped more than twenty
• 5:59
  Speaker 1: percent in it's worst day of trading since two thousand
• 6:01
  Speaker 1: and four.
• 6:02
  Speaker 2: So tell me, Charles, what is the key learning here?
• 6:04
  Speaker 1: Achieving revenue guidance is crucial for companies because it reinforces
• 6:08
  Speaker 1: investor confidence.
• 6:09
  Speaker 2: And Salesforce has had quite a good run of hitting
• 6:12
  Speaker 2: and exceeding their guidances for upcoming quarters.
• 6:14
  Speaker 1: But actually, interestingly, the forecasts that SMP five hundred companies
• 6:18
  Speaker 1: present to the market are getting less and less accurate.
• 6:21
  Speaker 2: In fact, between twenty fourteen and twenty eighteen, only sixteen
• 6:25
  Speaker 2: percent of SMP five hundred companies reported results within their
• 6:29
  Speaker 2: guided rates.
• 6:29
  Speaker 1: Is low, and when a company like Salesforce misses their
• 6:32
  Speaker 1: revenue guidance, especially for the first time in a very
• 6:34
  Speaker 1: long period, it can create uncertainty.
• 6:37
  Speaker 2: And potentially erode investor trusts.
• 6:39
  Speaker 1: Wex SAM money is awkward, and that is why we
• 6:41
  Speaker 1: want to help you. In the Flux Academy. This month,
• 6:44
  Speaker 1: we give you all the tips and tricks to speak
• 6:45
  Speaker 1: to your partner, your friends, and your family about money.
• 6:48
  Speaker 1: So make sure to download the Flux app and check
• 6:50
  Speaker 1: out the Academy.
• 6:51
  Speaker 2: Thanks for listening and we'll see you on Wednesday.