Jobs Vs. Corona; Drinking Constellations; Tesla Celebrations
Friday Four Play: The “Come on Get Happy” Edition
It’s Friday, and everyone knows you gotta get down on Friday.
You know, you’ve gotta be fresh? Gotta go downstairs … have a bowl of cereal?
(With all the good music you reference, Mr. Great Stuff … Rebecca Black? Why? Just … why?)
Yeah … about that. I’ve always thought of this song as a plague, so … it fits, right?
If you’re into that kind of thing, the song could be uplifting. Look, some folks are so depressed lately they’ve asked me how much they owe for a free market e-zine. (Eric K., I’m looking at you.) I’m desperate here.
And I wish I had better news, but the truth hurts. Sure, it’s not as much as jumping on a bicycle without a seat, but it hurts.
Today, the U.S. Department of Labor announced that the U.S. economy officially lost 701,000 jobs in March. The unemployment rate spiked to 4.4% from 3.5% in February.
But, if you’ve paid attention to our coverage of recent weekly jobless claims, you know the real situation is considerably more dire.
The March jobs report only pulls data through the week of March 14.
Since then, roughly 10 million Americans filed for unemployment benefits. None of those newly jobless Americans are counted in this report.
So, yeah, the outlook isn’t good — especially when you realize that Wall Street barely reacted to this wave of negative economic data.
And now for something completely different … Here’s your Friday Four Play:
No. 1: Corona vs. Corona
I don’t know about your neck of the woods, but ‘round these parts in northern Kentucky, there are things called “Corona parties.” This is where friends gather and drink Corona beer and laugh about COVID-19.
Well … at least until Governor Andy Beshear threatened to punish anyone gathering in large groups. (Thank you, Andy!)
Analysts expected a decline to just $1.62 per share, but Constellation reported a rise to $2.06 per share. Revenue even advanced 2% year over year, driven by a 9% increase in beer sales.
But all Corona parties must come to an end, and the same is true for Constellation. Despite strong quarterly results, the company held back on offering guidance due to COVID-19.
Apparently, Wall Street didn’t expect a company that sells beer in now-shuttered bars and restaurants to warn on guidance, and STZ stock fell as a result.
No. 2: Not the Happiest Place on Earth
Have you ever been stuck on the “It’s a Small World” ride at Disney World? I have. For nearly two hours.
I can’t say I recommend it, but I imagine that’s how The Walt Disney Co. (NYSE: DIS) investors feel right now. It started out hopeful but quickly turned into a gleeful animatronics nightmare.
Today, Disney announced that it will place all non-union theme park employees on furlough. But the unwelcome medicine did come with a spoonful of sugar.
“Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation,” Disney said in a statement. The company will also pay the cost of employee and company health care premiums, and employees will be able to continue Disney Aspire education programs.
Still, Disney’s theme parks employ roughly 177,000 “cast members.” The company didn’t say how many of those will be affected.
That said, Great Stuff still counts Disney as one of those well-run companies to watch throughout the COVID-19 nightmare. This is a stock that will bounce back, so you need to be prepared to pounce when it does.
No. 3: Best First Quarter Ever!
Tesla Inc. (Nasdaq: TSLA) haters will love today’s news…
Despite a broad market decline, TSLA shares are up more than 7% after the company reported that first-quarter deliveries exceeded expectations. Tesla delivered 88,400 vehicles during the quarter — its best ever — despite the coronavirus slowdown.
Deutsche Bank analyst Emmanuel Rosner loved the report so much, he married it. Not really, but he did say results were “robustly ahead” of his expectations.
He even believes that Tesla will report a first-quarter profit of $0.05 per share. Rosner’s peers, however, have a consensus target for a loss of $1.25 per share.
TSLA shares briefly flirted with $500-plus territory at this morning’s open, before retreating back below this key psychological price point. Investors will want to pay close attention to Tesla’s earnings report on April 29. If the company can weather COVID-19, it may finally put TSLA short sellers out of business.
(Psst … looking for long-term tech trends amid the viral market flutter? Search no more … Ian King’s research in tipping-point tech trends could be perfect for you. Click here now!)
No. 4: Wrong on Peloton?
Dear readers, I’m not afraid to admit when I’m wrong. And it’s possible — just possible — that I misjudged Peloton Interactive Inc.’s (Nasdaq: PTON) potential. (In my defense, I also didn’t plan on a massive coronavirus quarantine either … so, I’ve got that going for me, which is nice.)
With gyms and recreation centers closed across the country, Peloton appears to be picking up the slack. For instance, Evercore ISI research indicates that Peloton app downloads grew fivefold since the quarantines started. That growth was boosted by a subscription price cut, now averaging about $12.99 per month — down from $19.49.
Furthermore, Peloton launched an Android TV app, which also offers a $12.99 subscription — ideal for people who own a stationary bike but not a Peloton with a screen.
All of this recently led analysts at Rosenblatt Securities to initiate PTON coverage with a buy rating and a $42 price target. The firm also said that Peloton is “disrupting the fitness industry” with an attractive business model.
I’ll agree on the attractive business model. Selling fitness subscriptions for $12.99 per month sounds much more appealing than peddling $5,000 stationary bikes. But … I’m not sure Peloton is the fitness industry’s disruption. That would be COVID-19.
It does, however, take advantage of a disruption in the fitness industry … something that the company is uniquely positioned to do.
Great Stuff: Sunny Side of the Street
Nothin’ shakin’ on “Shakedown Street”, used to be the heart of town…
Any Deadheads tuning in from Terrapin Station today?
In the past two weeks, we saw head fakes abound and dead cats a-bounce. (Well, well, well, you can never tell.) And, if the onslaught of grim data has you feeling the “Mexicali Blues” times — that’s OK. Take a deep breath. We will get by. We will survive.
Don’t tell me this town ain’t got no heart, you just gotta poke around!
Poke around? In this bloodbath?!
Why certainly. I know many of you out there are having a field day bargain hunting. It seems there’s gold in them thar emerging tech hills … you told us all about it in this week’s Great Stuff Poll!
Now, be careful what you pick up in this prickly patch of pears and prunes … I don’t want you goin’ down the road feelin’ bad.
If you’re still looking for opportunities in tech trends, let me reassure you: You don’t have to go searching for your “Sugar Magnolia” alone. When it comes to finding where to invest in America’s future, no one has a head start like Paul Mampilly.
Dear reader, keep on trucking.
Until next time, be Great!
Editor, Great Stuff