Today's business and finance round up 13th May 2021
Today's issue - Guinness maker to return billions 🍻
13th May 2021
Good morning Last night Tesla CEO Elon Musk tweeted that the company will no longer accept Bitcoin as payment due to environmental concerns. The value of Bitcoin, the world’s biggest digital currency, fell almost 17% after the tweet to its lowest point since the beginning of March.
- Cheers! Guinness maker Diageo to return billions to shareholder
- YouTube injects $100m into competition against TikTok
Yesterday's market moves
FTSE 100 +0.8% 7,005
FTSE 250 -0.3% 22,107
UK markets were mixed with the FTSE 100 up +0.8% and the FTSE 250 0.3% lower. There was positive news that the UK GDP had grown 2.1% in March but the economy is still smaller than it was before the pandemic.
The debate among investors continues to be whether rising prices will be persistent enough to force central banks to raise interest rates. With stock markets hovering near record highs having increased on the back of generous government stimulus, some are concerned that valuations have become expensive.
Cheers! Guinness maker Diageo to return billions to shareholders
What’s going on
Diageo, maker of a host of drinks including Guinness, Smirnoff and Baileys, pledged to return billions of pounds to shareholders as it bounces back from Covid.
The FTSE 100 company, said it expects full-year profit growth of at least 14% (better than investors expected) as sales have staged a further recovery in recent months as pubs and restaurants have reopened.
Diageo said that, thanks to the strong performance, it will resume the plan to return cash to shareholders that was paused in April last year due to the pandemic. Shareholders can expect £4.5 billion of payments over a period to June 2024.
Why is this important
The pandemic hammered sales at spirits makers as restaurants, bars and other types of hospitality were closed but restrictions are being gradually lifted in major Diageo markets like the UK and US this year amid vaccination drives.
Like several businesses, Diageo hoarded cash during the pandemic to help get it through, now profit is expected to bounce back quicker than expected it can afford to be more generous.
Now things are reopening Diageo is likely to see hospitality-linked sales recover with the only area still severely impacted being sales in airports and other travel hubs.
Goldman Sachs research showed US companies have announced $484 billion in share buybacks in the past four months - the highest levels in at least two decades. This will be welcome news for pension funds who suffered a fall in income last year as the world’s biggest companies put dividend payments on ice.
YouTube injects $100m into competition against TikTok
YouTube has announced its putting $100m into paying creators on its TikTok alternative Shorts. The goal is to encourage creators to adopt and continually post to its new service, which doesn’t otherwise give creators a built-in way to make money.
TikTok has taken the world by storm since launching 5 years ago and now has close to 700 million users. Its popularity has driven other social media companies to develop their own versions – YouTube Shorts, Instagram Reels and Snapchat Spotlight. They say that imitation is the sincerest form of flattery...
Shorts launched in March in the US and allows users to create short videos in the YouTube app and, just like TikTok, you can swipe from one to the next in an endless full-screen feed.
YouTube will pay anyone who creates “unique” shorts which “delight the YouTube community.” No further detail on what qualifies as delight.
This is more evidence that the battle for creative talent is stepping up. TikTok launched a $200 million creators fund in July 2020, and Snapchat paid out $1 million per day for a period of time when it launched Spotlight last November.
Covid-19 Vaccine Update
- In the past 24 hours 135k UK adults have had their first dose and 350k have had the second dose.
- This means 67.8% of UK adults have had at least one dose of a vaccine, 35.0% of adults have had two doses.
Other stories to keep you in the loop
Stat of the day
Across the world foreign born workers sent $540bn back to their home countries last year…that's twice the international aid spend