Comcast's spinoff, Rocket Lab's US$8B deal and the 41 stocks driving the S&P 500.
A half-eaten In-N-Out burger just sold for US$7,000.
The recent for-charity auction, hosted by eBay-owned Goldin ($EBAY), featured a range of YouTube celebrity memorabilia from creators like Jake Paul, FaZe and MrBeast. FaZe’s In-N-Out burger sale is a perfect example of buyers paying a premium for perceived value – even for half of something that’s not exactly fresh.
Case in point: investors sent Comcast ($CMCSA) shares up 26% in Monday’s pre-market session. The company announced it was splitting in half, spinning off NBCUniversal and Sky into a separate company.
Market participants seemed to like the deal because it finally makes it easier to value Comcast, which has two very different businesses under one entity.
Comcast retains the cash-flow-rich connectivity and network infrastructure segment. NBCUniversal keeps the theme parks and TV studios and could be valued closer to Disney ($DIS), which trades at 10x expected EBITDA.
Although Comcast execs have downplayed the possibility, NBCUniversal looks like an attractive target for companies like Netflix ($NFLX), which has been on the losing end of recent takeovers.
But the week’s biggest acquisition news came from another sector. Rocket Lab ($RKLB) plans to mirror SpaceX’s ($SPCX) playbook with a US$8B acquisition of Iridium ($IRDM).
The deal means Rocket Lab can have a satellite network and use its own rockets to launch them. The news sent $RKLB up 10% on Monday, while $IRDM surged 29%.
As the space trade gains momentum, other sectors are losing steam. Healthcare and consumer discretionary names have seen the slowest growth YTD as Wall Street rounds out the best quarter in six years. The S&P 500 and Nasdaq surged 14.9% and 21.4% in Q2, while the Dow gained 12.9%.
Some industry watchers say it comes down to one thing: the stock market is split into two asset classes – AI vs non-AI. The 41 AI-related stocks in the S&P 500 account for 44% of its collective market cap. And based on the 126-day rolling correlation, they are starting to diverge from their non-AI counterparts.
Half a burger for a massive premium? Half the market, same deal.
This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
Markets Analyst
Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.
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