Frontier’s In Good Spirits; Juul Smokes The FDA; Life’s A Carnival Cruise
Spirits Having Flown
I never fell in love so easily. Where the four winds blow, Wall Street carries on. I’d like to take you where my Spirit flies. Through the empty skies, we invest alone…
Hmmm. Don’t tell me — I got this. Bee Gees, right? Is it “Spirits Having Flown” … from the (criminally underrated) album Spirits Having Flown?
Congrats, well done. What was your first hint? I kid, I kid.
Like Grandpa trying to find the lost Clive Cussler novel he lost somewhere between Terminals A and C … the Great Stuff gang was searching ‘round the market this morning for, well … anything.
Investors don’t get too much heaven no more, and on this ever-so-slow news day Monday, Spirit (NYSE: SAVE) investors just found themselves in a heavenly bidding war. Again.
Remember a few months back when Spirit airlines already “accepted” Frontier’s (Nasdaq: ULCC) buyout offer? And how JetBlue (Nasdaq: JBLU) still — still — kept upping its bid to outdo Frontier in its courtship?
Yeah, guess what: This love triangle continues to get more complicated.
Frontier just upped its initial buyout bid by $2 in an effort to show Spirit investors — and JetBlue — that it’s super seriously for real about this whole thing.
Plus, Frontier just matched JetBlue’s $350 million break-up fee, which would come into play should the deal not pass antitrust scrutiny.
When the buyout’s gone and you can’t go on, it’s tragedy!
And when the morning bell cries and you don’t know why — it’s hard to bear!
Spirit stock tumbled 8% on the news, while Frontier stock crashed 11%. Only JetBlue was airborne (and in the green) by this afternoon … probably out of relief for this whole shebang to almost be over with.
That’s because Spirit investors will vote this Thursday on which bid to accept, with management heavily hinting at voting for Frontier.
By hooking up with Frontier, the newly combined Spiritier (as I want to call it) will be a bargain-budget behemoth of an airline, offering you cheap flights basically anywhere at the cost of your pride and/or luggage.
Oh, and there’s also the fact that this tie-up actually has a chance at passing regulator scrutiny.
By contrast, JetBlue wants to further catch up to large carriers like Delta, United and American Airlines.
But to compete with the big boys, JetBlue needs to expand its fleet — and fast. Spirit’s planes and pilots are, like, right there for the taking. And they’re cheap because … reasons.
Thing is, JetBlue knows it doesn’t have as good of a chance at getting the deal approved. Hence why it’s trying to spice things up with a bigger and bigger break-up fee. Just like Great Stuff expected way back when these talks were first being talked up.
It’s only a few days’ wait until we find out who the Spirit in the sky is flying with, and I know you’re just giddy with excitement. Pay for the whole airfare, only use the edge of your seat, right?
Anyway, while Spirit and Frontier try to right themselves from the turbulence, here’s what else was shakin’ in the market — Quick & Dirty style!
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If we’re not talking buyouts, we’re talking *checks cards* buybacks!
Thor Industries (NYSE: THO), the RV manufacturer and definitely not the god of thunder, just announced that it’s upping its share buyback program from $151.68 million to an even $600 million.
Why? Because Thor can, that’s why.
Y’all should know this one by now: What do we think of share buybacks, class? Repeat after me: They’re not inherently bad, but it shows company management can’t be bothered to think of better ways to use that money.
I mean, it’s not like Thor could completely change the RV game by investing that cash into its “Vision” EV. Investing in growth? No, no, that’d be ludicrous.
You know what’s the No. 1 way to convince gas-price-conscious consumers to buy a fuel-hungry RV? Make it electric. Just simply … do away with the need to worry about gas prices.
You mean to tell me that Thor couldn’t use that $600 million to make its EV platform more efficient, extend the EV RV’s driving range and completely dominate the RV market? The demand is there!
Thor has billions of dollars’ worth of RV orders in its backlog. Now think of dropping an EV RV into the mix.
But nah … nah. We’re going to buy back some shares. Thrilling.
Anyway, if you yourself wanted to put your money where your mouth is and invest in EVs — unlike Thor here — we’ve got you covered.
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Do you smell smoke, Great Ones? That’d be the FDA’s first attempt to ban Juul’s products from the U.S. market going up in flames.
If you recall from yesterday, the FDA drew fisticuffs after Juul provided “insufficient toxicology data” showing its vape products were safe … and by “safe,” I mean not oozing toxic chemicals from its cartridges.
Juul called B.S. on the ban, saying it provided more than enough evidence two years ago that showed its combustible e-cigarettes met the standard of being “appropriate for the protection of the public health.”
However low the bar may be on the whole public safety front, a federal appeals court is willing to hear Juul’s side of things and temporarily extinguished the match the FDA lit to shut Juul down.
Even though Marlboro-maker Altria Group (NYSE: MO) only caught secondhand smoke from Juul’s initial ban — it owns about one-third of the company — shares still climbed a bit on news of the FDA’s flop.
This new lease on life probably isn’t enough to save Juul from impending bankruptcy should the stay be lifted. But it’ll keep the lights on for now.
“Do the bare minimum, get the bare minimum” seems to be the BlackBerry (NYSE: BB) motto these days, and it shows every time earnings season rolls around.
I mean, sure, the smartphone-maker turned cybersecurity company managed to lose less money in its fiscal first quarter than everyone expected.
And yes, BlackBerry did still make $168 million in Q1 despite having to pay that pesky $165 million litigation settlement over shareholder fraud from way back when.
But where’s this new growth coming from that BlackBerry likes to tout every quarter? And how’s it staying competitive against its software security comrades?
If BlackBerry actually went the extra mile to provide these details to shareholders, maybe its stock would get more than the barely there bounce we all saw this morning.
It’s just a thought, BlackBerry. Take it or leave it.
Monday, Monday was no good for Carnival Corp. (NYSE: CCL) … or the future of the cruise industry, if we’re being honest.
Stifel Nicolaus Analyst Steven Wieczynski cut his outlook for Carnival by a whole tenner, saying rough waters lie ahead for cruise stocks now that a potential recession looms over the horizon.
Wieczynski figures seafaring folks with be few and far between if they have to choose between some rest and relaxation on board a luxury cruise ship and … you know, buying food at the grocery store the other 51 weeks out of the year.
“Oh, you wanted to try and mentally recover from these last three years of punishment? Bully for you lot.” — The economy, probably.
And don’t look to the Fed to be your lighthouse keeper, either.
As Great Stuff has said many times already, higher interest rates may provide a temporary port in this inflationary storm … but the Fed can’t fix all the other issues that are driving inflation higher to begin with.
And without this respite, unnecessary travel expenses and other little luxuries like it will be the first things people toss overboard to keep their households from taking on water.
Travel stock investors should take heed. Like ships in the night, it may be a while before Carnival and its ilk see the flashing lights of bullishness on this economy’s stormy seas.
For its part, Carnival stock sank 3% on its downgrade. But don’t let that stop you from setting sail and jumping aboard our … inbox? Yeah, let’s go with that.
If you have thoughts to share on the Spirit/Frontier tie-up, Thor’s RV electrification, Juul bans and cruising fans … drop us a line! GreatStuffToday@BanyanHill.com is where you can reach us best.
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