Market 02/23: Japanese stocks spectacularly revive

Nvidia surpasses USD 2 trillion market value

Friday's market quite calm, Nvidia continues to rise after explosive earnings report (Nvidia ER details).

Nvidia $NVDA just surpassed 2 trillion USD market cap for the first time in history

Nvidia's gain yesterday was the strongest single-day gain in US stock market history: total +277 billion USD market value increase in 1 day

Nvidia's 1-month growth rate also far exceeds the other members of the Mag 7 club.

Japanese stock market spectacularly revives

Yesterday, Japanese stocks returned to a peak over 34 years ago.

Investors bet Japan has escaped deflation and will grow strongly

• Since the beginning of the year, Nikkei has risen more than +16%, YoY gain also higher than any other stock index in the world.

Currently, ~37% of companies in Nikkei 225 and 47% of stocks in TOPIX basket trade below book value (P/B <1)

• 3% of stocks in S&P 500 trade below book value.

→ Therefore, if Japan's inflation stays above 2%, the stock market will have plenty of room to grow further.

Contrary to capital outflow in China, Japan sees influx of foreign capital

• Foreign investors' holdings ratio rises to 30%, from below 5% in 1989

The weighting of companies in Nikkei 225 is also changing, shifting from industrial and financial to technology, automotive, retail and entertainment

Earnings updates: Warner Bros, Booking Holdings, Nu Holdings, Block

1. Warner Bros: weak earnings with revenue down -7% YoY

• Revenue: 10.28 billion USD, -7% Y/Y

  • Due to continuous decline in traditional TV viewership and weaker economic outlook.

• Net profit: -400 million USD, much improved from last year

• Direct-to-consumer subscribers (DTC subscribers): 97.7 million

2. Booking Holdings: concerns over market share loss

• Q4 revenue: +18% Y/Y to 4.8 billion USD

• EPS: 32 USD

• Annual room bookings: +24% Y/Y to 150.6 billion USD

• Room nights booked: exceeded 1 billion room nights in 2023, Q4 alone up 9%.

• Quarterly dividend: 8.75 USD

Although good earnings, Booking stock still fell due to:

• EBITDA guidance: 680 million - 720 million USD (below expectations)

• Concerns over flat room booking growth → risk of market share loss

3. Nu Holdings

• Customer count +26% Y/Y to 94 million

• Card purchase volume +29% Y/Y to 33 billion USD

• Deposits +38% Y/Y to 24 billion USD

• Average revenue per customer monthly: +23% Y/Y to 10.6 USD

• Revenue +66% Y/Y to 2.4 billion USD (beat estimates by 60 million USD)

• Net income 396 million USD

4. Block

• GPV (gross-processing volume): +8% to 58 billion USD

• Gross profit +22% to 2.0 billion USD

  • Square: +18% to 0.8 billion USD

  • Cash App +25% to 1.2 billion USD

• EBITDA 0.6 billion USD

• Revenue 5.8 billion USD (beat estimates by 60 million USD)

• Non-GAAP EPS 0.45 USD (missed estimates by 0.12 USD)

Other news

1. Barclays sued by US shareholders in class action for selling debt valued more than 17.7 billion USD than law allows

2. JPMORGAN raises year-end interest rate targets:

   ".. forecasts 2Y T-bond yield at year-end from 3.25% to 3.80%; Forecast for 10Y T-bond at year-end from 3.65% to 3.80%.

3. 11 Chinese companies have had their credit ratings withdrawn by Moody's Investor Service