At Spaceship we’re long-term investors, but we still keep an eye on what’s happening in the markets day to day.
This week, we’re taking a look at some of the bigger movements in our Spaceship Voyager portfolios from the month of September 2024.
Moving up
Unity
Rose 38.18% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Unity Software has a platform for creating real-time, 3D content. This content tends to be used in gaming, architecture and construction sectors.
Unity Software is in the Spaceship Universe and Spaceship Galaxy portfolios.
Why did Unity stock go up?
In a phrase: The customer is always right
Five million developers choose Unity to create their app and video games. That’s heaps. And about a year ago, many of them banded together to reject a pricing change that would charge developers per app download put to them by then-CEO John Riccitiello, which could cause considerable disruption for free to play game businesses. They released a petition, complained on Reddit, and threatened to take their creativity and games to Unity’s competitors.
It was such a debacle of a pricing change that Unity modified it just a week later, and eventually announced Riccitiello’s departure. They then replaced him with Matthew Bromberg, the ex-Zynga-CEO (Words with Friends, anyone?), and this month Bromberg announced a complete walkback of the change.
Unity users will have to pay a subscription fee but only after their games start to make $200,000. Which sounds pretty good to us, Unity’s customers, and the broader market. After all, you generally need to keep your customers on side to keep growing your business.
Unity also confirmed that Unity 6, the evolution of the gaming platform, is on track to be released in October.
Tesla
Rose 22.19% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Tesla was founded in 2003, with the mission to accelerate the world's transition to sustainable energy. Its products have included electric cars, batteries, and solar energy panels.
Tesla is in the Spaceship Universe, Spaceship Earth, Spaceship Galaxy, and Spaceship Origin portfolios.
Why did Tesla stock go up?
In a word: buzz
Momentum started to build through September due to investor buzz that Tesla had sold more vehicles than expected. Generally, Tesla reports on its sales figures once a quarter, and if they’re better than expected, the stock rises; and if they’re worse than expected, the stock falls.
Shares also increased after the Federal Reserve cut interest rates. Since most cars are bought through financing, the lower interest rates reduce borrowing costs and car payments, making Teslas more affordable and potentially boosting demand.
There’s still plenty of Tesla news to come, however, with the company set to unveil its robotaxi plans on October 10 at the Warners Bros studio in California.
Sea
Rose 20.39% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Sea Limited was founded in Singapore.
Its mission is to use technology to better the lives of consumers and small businesses.
It's had interests in digital entertainment, gaming, e-commerce, digital payments and financial services.
Sea is in the Spaceship Universe, Spaceship Earth, and Spaceship Galaxy portfolios.
Why did Sea go up?
In a phrase: it’s a triple threat
Sea has three big arms: fintech, ecommerce, and mobile gaming.
And it can cross-sell between each of them. Its Shopee platform provides a pipeline of customers to its fintech platform – 4 million in Q2 alone, while its gaming platform boasted the most downloaded mobile game globally, Free Fire, for that same time period. In fact, Free Fire is built on the Unity platform.
Sea gave its quarterly update which included highlights such as market share gain in Brazil and Taiwan, and a collaboration between YouTube and Shopee. This led some analysts to upgrade their ratings for the stock, which was reflected in its price. Post-Covid, Sea focussed on profitability over growth, and management has executed well. Sea reported positive net income of $80 million last quarter led by gaming and fintech, and saw e-commerce top line accelerate over 34% year over year despite the rapid growth of TikTok boosted by mergers and acquisition in the region. The market liked the growth in e-commerce despite strong competition, all while Sea raised take rates and reduced cost in operations.
Looking ahead, there are headwinds with competition from Temu, cross-border regulatory restrictions in Indonesia and other large markets, but Shopee remains price competitive, and the runway for growth in e-commerce in the region remains long. Sea also has over 100 million daily active users in Free Fire, is launching new games with partnerships with Tencent and others, and is showing strong traction in fintech.
Pro Medicus
Rose 18.59% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Pro Medicus has been helping hospitals analyse x-rays since the early 80s. Its suite of software products helps healthcare professionals analyse medical images. It's an Aussie company with offices around the world.
Pro Medicus is in the Spaceship Universe and Spaceship Galaxy portfolios.
Why did Pro Medicus stock go up?
In a word: momentum
Pro Medicus reported earnings in August that surprised the market and spurred stock price momentum that continued through September.
Highlights included growth in both Australian and US markets, with management noting that its product can service “A two-person radiology practice in Melbourne all the way to the largest, most sophisticated healthcare enterprises in the US such as Mayo Clinic.”
The stock is trading at a premium compared to the broader market, but we believe there’s a good reason for this. Pro Medicus distinguishes itself with its growth rate, margins, and future potential. Analysts estimate that its market penetration in North America is just 7%, while its clients are growing their businesses at 8-10%, suggesting promising future growth opportunities.
Palantir
Rose 18.17% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Palantir is a big data company that helps its customers manage large data sets.
It was founded in 2003, and has worked with government and commercial customers since.
Palantir is in the Spaceship Universe and Spaceship Galaxy portfolios.
Why did Palantir stock go up?
In a phrase: promotion
Think of it like the Premier League. Once you get a certain level of success, you get promoted to the S&P 500, which is the top 500 stocks by market cap in the US. Benefits include things like more exposure, and being added to ETFs that track the S&P 500.
In September, Palantir was added to the S&P 500. According to Nasdaq, stocks that get added to the S&P 500 go on to return more than 12% on average in the twelve months following inclusion since 2019. Of course, past performance doesn’t guarantee future results.
Palantir is an AI and machine learning company with a focus on the defence space, and it has also benefited from the particularly volatile time currently being experienced in global politics. Although the business has historically relied on government contracts, Palantir is experiencing growing success in its US commercial sector through what they refer to as boot camps. These camps enable Palantir to demonstrate real examples and use cases with customer data, rather than just generic software prototypes and demos.
Moving down
Megaport
Fell -13.58% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Megaport was founded in Australia. It uses global reach, a Software Defined Network (SDN), and an online hub to help its customers connect to the cloud, make use of their data, and connect to other services.
Megaport is in the Spaceship Universe and Spaceship Galaxy portfolios.
Why did Megaport stock go down?
In a word: recalibration
Megaport announced earnings in late August which we talked about last month. Since then, its stock price has continued to drift downward – though as we said last month, we intend to allow the new management more time to address their sales go-to-market strategy, as we expect Megaport to benefit from enhanced network and AI connectivity.
Adore Beauty
Fell -13.04% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Adore Beauty is an online beauty store. It was founded by Australian entrepreneur Kate Morris in 1999, when she was aged 21 and hustling from her garage. It listed on the ASX in 2020.
Adore Beauty is in the Spaceship Universe Portfolio.
Why did Adore stock go down?
In a word: moderation
Adore was one of our top movers in August, during which it rose 25.68% in our Spaceship Universe Portfolio (for the month, not annualised.) It’s normal for stocks to moderate after a big month – which has been the case with Adore Beauty.
Adobe
Fell -9.85% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Adobe helps its customers, who tend to be businesses, create and manage content, and advertise and analyse their output. Adobe's suite of products includes famous names such as Photoshop, Illustrator, and Adobe Acrobat.
Adobe is in the Spaceship Universe, Spaceship Earth, Spaceship Origin and Spaceship Galaxy portfolios.
Why did Adobe stock go down?
In a word: disappointment
Adobe announced its third quarter results and there was a lot to like about it.
Take it from Adobe’s CEO, Shanatu Narayen.
“Adobe's record Q3 performance is a testament to our relentless innovation and commitment to delivering value to our customers,” he said. “With groundbreaking advancements in AI across Creative Cloud, Document Cloud and Experience Cloud, we are empowering millions of users worldwide.”
So why the market’s sad face?
Adobe’s growth forecast was lower than expected, sparking fears that returns from artificial intelligence designs will take longer to materialise, leading to investors taking their money elsewhere.
ASML Holding
Fell -8.18% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
ASML is in the semiconductor industry.
Its hardware, software, and services help chipmakers produce more chips.
The company also focuses on meeting the UN's Sustainable Development Goals to help protect the planet and improve the lives of people.
ASML Holding is in the Spaceship Universe, Spaceship Earth, and Spaceship Origin portfolios.
Why did ASML Holding stock go down?
In a word: geopolitics
One of ASML’s biggest markets is China, but because of geopolitical concerns, the company is now prevented by its own government from exporting some of its products there.
Essentially, the US has encouraged its allies to curb its technological support of China, and ASML has been caught in the crosshairs.
Some analysts think it will cause ASML’s revenue from China to decline by 24% in 2025, and 11% in 2026.
Eli Lilly
Fell -7.17% (from 1-30 September 2024, converted in Australian dollars and not annualised.)
Colonel Eli Lilly founded Eli Lilly in the USA in 1876.
It’s a pharmaceutical company that’s created and distributed life changing medicine such as insulin and prozac to international markets.
Its focus is now is on its diabetes franchise with Mounjaro and weight loss drug Zepbound.
Eli Lilly is in the Spaceship Universe, Spaceship Earth, Spaceship Origin and Spaceship Galaxy portfolios.
Why did Eli Lilly stock go down?
In a phrase: taking a breather
Eli Lilly’s stock rocketed after it released its earnings report in early August, and has slowly dipped since then. It’s expected to receive another boost now that its diabetes treatment Mounjaro, which is also used for obesity, has been removed from the FDA shortage list. This means that competitors can no longer create off-brand versions of it which should provide more of a boost to Eli Lilly’s already robust bottom line.
Some of our Spaceship Voyager portfolios invest in Unity, Tesla, Sea Ltd, Pro Medicus, Palantir, Megaport, Adore Beauty, Adobe, ASML Holdings, and Eli Lilly at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
