Daily Brief: You'll Pay Whatever It Costs For Your Daily Coffee Fix, And Doesn't Nestlé Know It

Daily Brief: You'll Pay Whatever It Costs For Your Daily Coffee Fix, And Doesn't Nestlé Know It

over 2 years ago3 mins

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Nestlé’s cup doth runneth over: the Swiss food giant reported better-than-expected earnings on Wednesday.

What does this mean?

Nestlé has earned plenty of new fans this year: coffee addicts have been jonesing for their fix of the company’s partnership with Starbucks, while lockdown’s newest pet-owners have been stocking up on its pet food. That might be why the company’s organic revenue – which excludes the effects of acquisitions and currency swings – climbed by a better-than-expected 8% over the first nine months of 2021 versus the same time last year. Nestlé has a good feeling about 2021 as a whole too: it’s expecting this year’s sales to grow at their fastest rate in a decade, and upped its full-year revenue outlook accordingly.

Why should I care?

For markets: Nestlé can charge what it likes.

Nestlé sells products that people tend to buy no matter what, which comes in handy in times of shortage-driven price rises: it can pass the extra expenses onto its customers in the form of higher prices without losing them to rivals. The fact that it upped prices by 2% last quarter and still posted better-than-expected revenue, then, looks like it might’ve impressed investors: they sent its stock up 3% after the announcement.

Nestle stock
Source: Google Finance

For you personally: Consumer staples are having a moment.

It’s not just Nestlé’s customers paying more: inflation has been spiking all over the world, with data out on Wednesday showing that UK prices were up 3.1% last month from the same time last year. Economists reckon they’ll stay high for most of next year too, especially given rising food and energy costs. And if that’s the case, stocks of consumer staples like Nestlé that can pass on costs and protect their bottom line stand to keep performing well.

UK inflation

Keep reading for our next story...

WeWork Is Finally Set To List On The Stock Market

WeWork image

WeWork announced earlier in the week that it’s finally hitting the stock market on Thursday, and the coworking giant is hoping its critics give it a kinder reception this time around.

What does this mean?

2019 was a simpler time – a time when WeWork, rather than a pandemic, was stealing all the headlines. The company, after all, went from planning its initial public offering at an eye-watering $47 billion valuation to a spectacular flameout after investors got nervous that it might never turn a profit. But what a difference two years makes: WeWork’s dream is finally about to become reality, albeit this time via a special-purpose acquisition company (SPAC). In other words, it’s set to merge with a listed shell company that’ll fast-track its arrival onto the stock market. Nowhere near the same sort of money’s involved, mind you: the deal’s worth a relatively paltry $9 billion.

WeWork financials

Why should I care?

The bigger picture: Is WeWork a good buy?

SoftBank has been trying to put investors’ minds at ease ever since it bought a controlling stake in WeWork in 2019 – from bringing in a new CEO to cutting the company’s dizzying costs. And while lockdowns have hurt WeWork in the last 18 months, the Japanese conglomerate is confident that demand for flexible workspaces will thrive in a world where people crave a more hybrid lifestyle. Let’s hope so: WeWork has notched up losses of $3 billion in the first half of this year, and it’s behind on its revenue target too.

Zooming out: The robots have arrived.

WeWork isn’t the only SoftBank-backed company going public this week: warehouse automation company AutoStore listed on the stock market on Wednesday, and investors initially sent its shares up by 11%. No surprises there: the Norwegian firm saw revenue surge 88% in the first six months of 2021 compared to the same time last year, as firms piled money into their booming ecommerce segments.

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