Latest / What the Flux / Cochlear's biggest one-day fall in 30 years | Intrepid Travel billion-dollar push | Adobe's $25 billion share buyback

Transcript

Cochlear's biggest one-day fall in 30 years | Intrepid Travel billion-dollar push | Adobe's $25 billion share buyback · What the Flux

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  Speaker 1: This is what the flux. I'm Brettan, I'm justin and
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  Speaker 1: it's Friday, the twenty fourth of April.
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  Speaker 2: Doesy boy? Gone are the days of the one dollar
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  Speaker 2: milk wars. Coles has just announced its private label branded
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  Speaker 2: milk will jump twelve percent to one dollar eighty five
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  Speaker 2: per liter due to the ongoing fuel pressures. And you
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  Speaker 2: can bet that means your coffee prices will follow shortly after.
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  Speaker 1: Cafe coffee becoming a major luxury these days, flocks spam.
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  Speaker 1: It is Friday, which means Quick Sticks is live and kicking,
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  Speaker 1: and your chance to win fifty bucks on the Flux
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  Speaker 1: app is there today. To make sure download the Flux app,
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  Speaker 1: turn you out officestions on and be the first to
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  Speaker 1: answer three business or finance questions directly to kick off
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  Speaker 1: the weekend on a high.
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  Speaker 2: Three generous stories today, juzzy boy, let's do it for
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  Speaker 2: our first. Cochlear, the ASX listed hearing implant company, has
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  Speaker 2: seen its share price plummet thirty six percent, its biggest
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  Speaker 2: one day fall in thirty years. Not Troevil's hearing you correctly,
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  Speaker 2: p man, that is very big, so tell me more
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  Speaker 2: so some context here. Cochlea is the asxisted medical device
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  Speaker 2: company that makes some of the world's leading hearing plants.
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  Speaker 2: In fact, Cochlear has sold over seven hundred and fifty
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  Speaker 2: thousand hearing implants worldwide in more than one hundred and
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  Speaker 2: eighty countries. Now, Cochlear was originally spun out of the
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  Speaker 2: CSIRO and listed on the ASX in nineteen ninety five,
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  Speaker 2: and since then it has absolutely boomed.
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  Speaker 1: Yeah, it's market cap was under two hundred million dollars
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  Speaker 1: back then and now it's more than seventeen billion. You
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  Speaker 1: mean it was more than seventeen billion. Oh, yes, Because
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  Speaker 1: Cocklear has just downgraded its underlying net profit for its
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  Speaker 1: twenty twenty six fiscal year.
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  Speaker 2: We're talking new profit expectations of between two hundred ninety
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  Speaker 2: and three hundred and thirty million baccarinis instead of four
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  Speaker 2: hundred and thirty five to four hundred and sixty million,
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  Speaker 2: So we're talking up to a thirty seven percent drop
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  Speaker 2: in underlying net profit.
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  Speaker 1: And investors were double checking the announcement. They were like, wait,
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  Speaker 1: did I hear that correctly? Is my cochlear implant glitching?
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  Speaker 2: In the next minute, Cochlear share price fell thirty six percent,
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  Speaker 2: which is their lowest price since twenty sixteen, and what
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  Speaker 2: was the reason for this? For well, it's a mix
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  Speaker 2: of a lot of things, hospital capacity constraints, we referrals,
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  Speaker 2: and deteriorating consumer sentiment.
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  Speaker 1: But in particular, Clear said the purchase of their devices
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  Speaker 1: continued to be seen as a discretionary spend.
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  Speaker 2: Right, So what's the key learning here?
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  Speaker 1: When money gets tight, nice to have don't necessarily disappear,
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  Speaker 1: but they do get postponed.
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  Speaker 2: You see, Juzy boy. Essential spending is goods and services
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  Speaker 2: that people need to pay for, regardless of financial conditions.
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  Speaker 1: Think housing, big food, basic health care, and utilities.
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  Speaker 2: Whereas discretionary spending, on the other hand, includes purchases that
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  Speaker 2: can be delayed or avoided.
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  Speaker 1: Think travel, luxury goods, even elective medical procedures.
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  Speaker 2: And interestingly, even though Cochlears products have clear health benefits,
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  Speaker 2: they're still often seen as something people can delay.
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  Speaker 1: That means when consumer confidence drops, demand also falls.
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  Speaker 2: So it's no surprise that Cochlea is trying to reposition
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  Speaker 2: its products as an essential medical need to create more
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  Speaker 2: consistent demand.
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  Speaker 1: Think about those GLP one weight loss drugs like Nervo,
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  Speaker 1: notice weigov or Ela Lilly's zep bound. Originally they were
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  Speaker 1: framed as weight loss drugs, but then they reframed obesity
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  Speaker 1: as a chronic disease so that it unlocked clinical guidelines,
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  Speaker 1: and in December last year, the World Health Organization began
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  Speaker 1: recommending golp one drugs specifically for treating obesity. And when
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  Speaker 1: that happens, it becomes less of a nice to have
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  Speaker 1: a much more of a need to have. For our
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  Speaker 1: second story, in Trepid Travel, the Aussie tool group operator
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  Speaker 1: is buying its way to billion dollar status by snapping
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  Speaker 1: out a French rival ALTA.
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  Speaker 2: Well, everyone is uncertain about travel right now. In Trepid
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  Speaker 2: is out here shopping around. What is going on?
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  Speaker 1: So in Trepid Travel is the Melbourne based adventure travel company.
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  Speaker 1: It's become the world's largest operator of its kind.
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  Speaker 2: Started back in nineteen eighty nine with two OSSI mates
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  Speaker 2: who shipped a second hand truck from Australia to London,
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  Speaker 2: drove it from Europe to Africa with twelve friends and thought,
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  Speaker 2: let's just offer this to other humans.
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  Speaker 1: And now Intrepid runs more than a thousand different trips
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  Speaker 1: across one hundred countries.
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  Speaker 2: But here's the thing. Almost Their entire business has been
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  Speaker 2: built on English speaking markets, so.
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  Speaker 1: When they decided they wanted French customers, they didn't try
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  Speaker 1: to learn the language on Dui Lingo.
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  Speaker 2: Nope, they bought the company that already had those customers
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  Speaker 2: on board.
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  Speaker 1: So now Intrepid is buying French based Altai, which takes
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  Speaker 1: French tourists to destinations like Tanzania, Egypt, Patagonia, Indonesia. Already
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  Speaker 1: how much are we talking and disclosed some but we
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  Speaker 1: do know that with this acquisition they get them for
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  Speaker 1: one hundred mili in revenue landing on their books, and
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  Speaker 1: it gives them Trepid a real shot at cracking a
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  Speaker 1: billion dollars in annual tool.
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  Speaker 2: Bookings, something at CEO admits would have been very hard
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  Speaker 2: to do organically.
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  Speaker 1: So what is the key learning here?
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  Speaker 2: You don't always have to build your way to growth.
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  Speaker 2: Sometimes you can just buy it.
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  Speaker 1: There are two ways to grow the business organically when
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  Speaker 1: a company earns every customer itself, winning them one by one,
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  Speaker 1: which tends to be the slower option, or inorganically the
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  Speaker 1: fast way by buying a company that already earned those
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  Speaker 1: customers for you. And that's exactly what Intrepid just did.
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  Speaker 2: Intrepid CEO basically said getting into the French market organically
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  Speaker 2: would be really hard, so they bought their way instead.
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  Speaker 2: The problem with inorganic growth through b man is that
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  Speaker 2: it can be risky if the companies have different cultures
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  Speaker 2: or different teams that just don't mesh. In fact, poor
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  Speaker 2: integration is responsible for eighty three percent of failed deals.
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  Speaker 1: But on the flip side, recent research actually shows the
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  Speaker 1: nearly seventy percent of mergers that do succeed or at
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  Speaker 1: least create some value. When you're Intrepid chasing a big
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  Speaker 1: goal of one billion dollars a year, it might be
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  Speaker 1: quicker to get they're on a French ferry rather than
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  Speaker 1: a refurbished truck from Australia m HM.
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  Speaker 2: For our third and final story, Adobe has announced a
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  Speaker 2: massive twenty five billion dollars share buyback program to give
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  Speaker 2: investors confidence in its future despite the launch of claud design.
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  Speaker 1: By Back aka corporates speak for We're fine, everything's fine.
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  Speaker 1: Please don't Paddy sell everything's fine. What he's going on here? So?
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  Speaker 2: Adobe started in nineteen eighty two and played a major
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  Speaker 2: role in developing the PDF format we all still use today.
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  Speaker 1: It's also the company behind tools like Photoshop, Illustrator and
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  Speaker 1: all your second favorite creative softwares behind Camvra or third
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  Speaker 1: favorite now behind the AI tools like claw design or
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  Speaker 1: chat gmt images or even Google's Nano Banana and then man.
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  Speaker 1: Over the past six months, Adobe share price has plummeted
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  Speaker 1: more than thirty percent.
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  Speaker 2: And because of slowing revenue or plummeting growth.
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  Speaker 1: Now it generated over ten point three billion US dollars
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  Speaker 1: in free cash flow in the past year alone.
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  Speaker 2: The reason for the plumber is the fear AI tools
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  Speaker 2: might cannibalize its market share.
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  Speaker 1: But now Adobe's approved a twenty five billion US dollar
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  Speaker 1: share buy back program running until twenty thirty.
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  Speaker 2: So clearly Adobe has the cash and still has the
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  Speaker 2: belief in a long term value.
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  Speaker 1: But also they can use this buyback as a way
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  Speaker 1: to offset their employee stock compensations.
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  Speaker 2: Oh so, what's the key learning here?
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  Speaker 1: A share buy back is when a company buys back
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  Speaker 1: its own shares from the market. This reduces the total
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  Speaker 1: number of shares available, which can increase the value of
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  Speaker 1: remaining shares over time. Think of it like slicing a
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  Speaker 1: pizza into few pieces. Instead of eight pieces, you cut
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  Speaker 1: it into four pieces, So each slice becomes bigger.
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  Speaker 2: But judge boy. In recent years, Adobe issued roughly one
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  Speaker 2: and a half billion to two billion NEWIS dollars worth
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  Speaker 2: of stock compensation annually to employees, which means with.
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  Speaker 1: New shares created, existing shareholders automatically lose one to two
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  Speaker 1: percent of their company value each year. So be man
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  Speaker 1: With this buyback, Adobe's essentially still rewarding employees with stock
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  Speaker 1: but not letting shareholders pay that dilution price. Bluck Am
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  Speaker 1: fifty bucks to start your weekend. Sounds prity sweet. That
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  Speaker 1: is a lot of coffee if you want to do it.
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  Speaker 1: It's all in the Flux app with our weekly game
• 6:48
  Speaker 1: Quick Sticks. Make sure to download the flus app, turn
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  Speaker 1: notifications on, and get ready.
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  Speaker 2: To answer the questions. Thanks for listening, and we'll see
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  Speaker 2: you on Monday.