Second day for large FTSE stock movements, Elon Musk’s status elevated, Just Eat Takeaway offloads Grubhub, Smiths Group lifts guidance, Rivian shares soar and bidding war for 7-Eleven

“There have been some unusually large movements in FTSE 100 stocks for the second day in a row,” says Russ Mould, Investment Director at AJ Bell.

“Yesterday saw DCC and Convatec churn out double-digit share price movements while Vodafone racked up one of its worst days on the market in the past two decades. Now we’ve got Smiths Group joining the double-digit club as it declares its first quarter to have been ‘outstanding’, triggering an 11% rise in its share price. On a normal day, one might only expect FTSE 100 stocks to move in the low single digits.

“Despite Smiths Group leading the charge, the FTSE 100 only edged 0.1% forward to 8,039 as the technology, real estate and industrial sectors did their best to pull the index back.

“US inflation figures will be closely watched this afternoon, with expectations for the cost of living to have edged higher. The consensus is for the annual rate of inflation to move from 2.4% to 2.6%. Any higher could trouble the market, particularly given the incoming Trump administration raising the prospect of higher inflation through various policies.”

Elon Musk

“Elon Musk has form in juggling multiple jobs and has been at Donald Trump’s side throughout his election campaign, so being appointed as an efficiency adviser to the government is not a surprise.

“However, the big question is whether this role might force him to step back in other areas. How has he got time to do this role and still find time to run Tesla, SpaceX and social media platform X? Musk is either the king of delegation or he’s being pulled further apart than a Stretch Armstrong toy.

“Musk’s advice is likely to amount to widespread job cuts, greater use of automation and greatly reducing the number of government agencies. While he is currently admired as a successful entrepreneur and the world’s richest man, admiration could soon turn to hatred if Musk is the driving force for putting thousands of people out of a job.”

Just Eat Takeaway

“The market is clearly pleased Just Eat Takeaway is selling US-based ordering platform Grubhub, both for the injection of cash it will provide and for the increased focus it could bring to the group.

“It is worth taking a step back and considering the destruction of value which has taken place. When Just Eat bought Grubhub less than four years ago it paid more than $7 billion – now it is being sold for just $650 million. This reflects its diminished status since 2021, not helped by New York’s stringent fee caps on delivery apps.

“The whole Grubhub debacle will inevitably leave some scars but investors seem prepared to focus on the future and the promised boost to cash generation and growth for the remainder of the group.

“There will be significant pressure to deliver on cash flow and growth in a highly competitive market where there have been signs of pressure on households’ appetite and ability to spend heavily on takeaways.

“Just Eat might be able to secure more patience from shareholders by serving up a return of capital, with the balance sheet now in much healthier shape.”

Smiths Group

“Industrial conglomerate Smiths Group appears to be firing on all cylinders based on its first-quarter trading update with an uplift in margins now expected for the year as a whole.

“This helped arrest a year-to-date decline in the share price with several areas of the business seeing strong organic revenue growth too. It will come as some relief to recently appointed CEO Roland Carter who had to deliver a disappointing set of full-year results just months into his tenure in September.

“It may also reduce any clamour for a further break-up of a business which has several moving parts. It has faced pressure on this front before, leading to the divestment of its medical business in 2022.

“Smiths has defended its current model with a group of leading niche engineering businesses and when all areas of the business are contributing as they did in the three months to 1 November, this argument carries greater weight.

“Under Carter, the focus has been on building on existing strengths and the company is engaged in upgrading its processes and capacity across the board under a recently unveiled ‘acceleration plan’.

“The company continues to return excess capital to shareholders, unveiling a meaningful increase in its current share buyback programme.”

Rivian

“Rivian moved into the fast lane, with its share price trading 9% higher in pre-market trading after strengthening ties with Volkswagen.

“The latter previously said it would invest $5 billion in the business and this figure has now been raised to $5.8 billion as they prepare to jointly develop electric vehicle architecture and software.

“Tesla boss Elon Musk is unlikely to be troubled by the prospect of two rivals working together, but Rivian investors clearly like the prospect of their company becoming closer to Volkswagen.”

7-Eleven

“The owner of the 7-Eleven convenience stores jumped by nearly 12% on the prospect of a bidding war for the company.

“Seven & i has been subject to bid interest from Canadia’s ACT for a while, but the board has only now agreed to talk business, according to reports. The timing is interesting as it coincides with a rival proposal led by members of Seven & i’s founding Ito family.

“While details are thin, we might find that shareholders prefer a Japanese buyer as part of the uproar around ACT’s takeover interest is that many people don’t want Seven & i to fall into foreign hands.”

These articles are for information purposes only and are not a personal recommendation or advice.