Weekly Reads - September 5, 2022
Please read the Unison Asset Management Social Media Disclaimerhere
Africa is setting itself to be one of the most competitive smartphone markets in the world with many African countries currently testing 5G networks and modernizing their network infrastructure. Leading the march toward 5G are Chinese smartphone brands with Transsion Holdings outpacing Samsung to become the market leader in the region. Apple has struggled to gain a foothold in this market as it charges the highest price for its smartphones and whose closed-source operating system is far less popular than the open-source Android OS which has an estimated 84% market share. Apple faces further headwinds including increasing competition from lower end smartphones and rising inflation/weaker macroeconomic conditions weakening high-end smartphone demand. While Africa remains a massive opportunity for smartphone makers the market will likely remain extremely competitive for the foreseeable future with massive swings in market share as 4G users switch to 5G and non-smartphone users begin adopting smartphones.
The fight for Signify has ended with CVS’ bid of $8 billion coming out on top. Signify is expected to be a massive catalyst for CVS who is attempting to pivot away from being a retailer to becoming a primary care provider. Signify which has a network of doctors making house calls will allow CVS the ability to reach its customer base at their home providing a new revenue channel to the company. Aetna, CVS’s insurance business, is expected to be a big beneficiary from Signify as any care provided to patients at home rather than the hospital helps reduce expenditures for the insurance company. This deal follows in the footsteps of past CVS deals including Caremark Rx and health insurer Aetna which totaled to $90billion. These deals indicate the company is fully invested in moving past its retailer roots with management planning to close nearly 900 stores over three years, while expanding the amount of the services it offers to its customers. With national health spending expected to reach $6 trillion by 2027 its likely we continue to see traditional and non-traditional health care players pushing for more deals in the years to come.
For the first time ever recorded regular use of cannabis has surpassed cigarette usage in the U.S according to a new Gallup poll. Around 16% of participants said they currently smoke marijuana with around half saying they have tried it at one point in their lifetime versus only 4% saying they tried it in a 1969 poll when the question was first asked. In the same 1969 poll 40% of participants said they smoked cigarettes in that same week. This has changed drastically with a recent poll having only 11% of participants reporting being smokers, the lowest recorded since Gallup start collecting data in 1944. This change in consumer smoking trends have been driven by a growing aversion to cigarettes in which 83% of participants in a 2019 poll said smoking was very harmful to adults and in 2015 with 91% of polled smokers wishing they had never started smoking. This is very different than marijuana smokers who have a much a more positive viewpoint of cannabis with 62% of adults aged 18-34 and 53% of adults aged 35-54 saying that marijuana had positive effects on those who use it, according to a July Gallup poll. With young Americans abandoning cigarettes in favor of marijuana it will interesting to see how tobacco companies respond to rapidly changing consumer trends and which cannabis companies emerge as industry leaders.