SpaceX Goes Public

 

Last Friday for the first time investors will be able to buy and sell shares in Elon Musk's Texas-based SpaceX, a company that is planning to colonise Mars and put artificial intelligence (AI) data centres in space. It is set to be the biggest ever public sale of shares and will make SpaceX one of the US's top 10 largest listed firms. A higher-than-usual proportion of those shares is being made available to individual investors, but its sheer size means many investment funds will end up with a stake in SpaceX too. SpaceX is currently owned by Musk and other private investors, but they are launching what is known as an initial public offering, or IPO. On Friday, millions of new shares in the company will start trading on the stock market. The IPO has raised at least $75bn and gives investors the chance to buy into a business whose activities range from space exploration and satellite communication to the social media site X and the controversial AI platform Grok. SpaceX is separate from Musk's most well-known company, the electric car maker Tesla, although it is thought the two may end up merging next year. There are more than 550 million shares available, which will start trading at $135 (£100) each. Investors must decide if they think the shares are worth that much. And once they start trading their value could quickly rise or fall depending on whether the wider market thinks that initial price was too low or too high.

BBQ - Would you buy a share in SpaceX?

SpaceX Shares

Walmart Becomes First $1tn Valued Retailer

Walmart has become the first traditional retailer to hit a $1tn (£730bn) market valuation, propelling it into a small group dominated by tech firms. The milestone reflects the US retail giant's booming e-commerce business and its success in drawing in price-conscious shoppers. Wall Street has also responded enthusiastically to its investments in artificial intelligence (AI). Walmart joins an elite club of mostly tech firms, including Nvidia and Alphabet, with valuations over $1tn. The company's share price, which has soared in recent months, rose by more than 3% on Tuesday. Walmart is the biggest brick-and-mortar retailer in the US and is known for its low prices. It has benefited from a trend of higher earners trading down to lower-priced items, as the jobs market cools and inflation persists. Its speedy home delivery offering has also enticed shoppers from households across income brackets. Walmart's online business has helped it emerge as a competitor to Amazon. E-commerce sales in the US jumped 28% in the three months to 31 October, propelled by online orders and advertising. Still, Amazon's market value currently stands at $2.6tn - more than double Walmart's. Wall Street investors have embraced Walmart's adoption of AI, helping push the company's valuation to new highs. The firm reached the $1tn milestone during chief executive John Furner's first week at the helm of the company. Furner has been a vocal backer of its AI investments.

BBQ - What factors cause the change in share price for businesses?

Walmart $1tn

Tesla Shares Fall

Hopes for a significant boost to Tesla's stock price were dashed this week as the much-anticipated rollout of its "lower-cost" models failed to impress investors. Despite CEO Elon Musk's assurances of increased affordability and wider market appeal, the company's shares experienced a noticeable dip following the unveiling, leaving many analysts questioning the immediate future of the electric vehicle giant. While the new models are indeed priced lower than their premium counterparts, the term "lower-cost" seems to be a relative one, with the price point still remaining a significant hurdle for many mass-market consumers - the new Model 3 Standard starts at $36,990 and the Model Y Standard at $39,990. Furthermore, critics point to a perceived lack of groundbreaking innovation in these new vehicles, suggesting they don't offer enough to differentiate them from increasingly competitive rivals in the EV space, underscoring the challenge for Tesla in balancing high-growth expectations with mass-market accessibility and profitability.

BBQ - Explain how the disappointment with the new Tesla Model 3 and Model Y could negatively affect two other elements of the marketing mix (Promotion and Place) for Tesla.

Tesla Shares Fall

 

Ferrero in Talks to Takeover Kelloggs

 

Shares in the US maker of Kellogg's Corn Flakes have soared after reports that chocolate giant Ferrero is close to buying the firm for about $3bn (£2.2bn). A takeover deal for WK Kellogg, which makes the Froot Loops and Rice Krispies breakfast cereals for the North American market, could come as soon as this week, the Wall Street Journal and Financial Times reported. The Italian owner of the Ferrero Rocher, Kinder and TicTac brands has been expanding in recent years, buying Nestle's confectionery business and several other food firms. WK Kellogg's shares surged by more than 56% in extended trading in New York on Wednesday after the reports. The deal could be worth double the firm's $1.5bn stock market value when ordinary trading ended. It would see Ferrero taking a dominant position in the US breakfast cereal market. Founded in 1946, the Italian firm is one of the biggest players in the chocolate market, with more than 30 brands sold globally. WK Kellogg has been struggling financially in recent years and has more than $500m of debt. In 2023, the US breakfast cereals operation was split off from its former parent company's international and snacks business, which was renamed Kellanova.

BBQ - What issues might occur following the takeover?

Kelloggs Takeover

Tesco Staff Shares Scheme

 

Over 20,000 Tesco employees are set to share a £30m windfall generated from the supermarket’s share schemes. An employee who invested an average of £68 per month over the past five years would receive around £6,640 from their £4,080 investment, yielding a profit of £2,560. The majority of the beneficiaries are shop floor or distribution centre workers.This payout is due to Tesco’s strong performance. The news comes after Tesco CEO Ken Murphy faced criticism for his £10m pay package last year. The company’s share schemes offer staff the chance to buy discounted shares in the company. Those who invested the maximum amount of £500 per month stand to make significant profits from the three-year and five-year schemes.

Blog Q: Discuss the impact of such a scheme on the company’s relationship with its employees.

Tesco Staff Shares