When you're the only one who BYOD'd
Hey Snackers,
Reality TV comes back to reality: contestants on the German TV version of "Big Brother" have been secluded from the world since Feb 10th — producers finally broke the coronavirus news to them. The show (ironically, centered on people confined in a house) will go on.
US markets tanked again. The Dow lost 1.3K points and the S&P 500 fell 5% as the viral sell-off hit a new low. The Senate approved the House's 2nd coronavirus aid bill — it'll provide paid emergency leave to affected people as well as additional food, medical, and unemployment benefits.
Virtually stocking up on nut butters... Online grocery shopping has surged in this virus economy — whether it's delivery or curbside pickup, the less human contact required, the more popular a service becomes. But one player in the e-grocer surge stands out aggressively: Walmart. While the market has plummeted, Walmart stock just hit an all-time high.
Walmart is America's grocery... With 11.5K stores worldwide and 2.2M employees, Walmart is also Earth's biggest brick-and-mortar retailer. And it's spent the past 5 years aggressively expanding its ecommerce infrastructure:
Coronavirus is giving e-grocery its moment... Online grocery is still in the toddler stage with early adopters. Walmart's ecommerce biz is still unprofitable, but its online sales grew 37% last year (largely thanks to groceries, and its ecommerce sites are live in 10 countries). After you try e-ordering Walmart's asparagus and cashew butter, investors think you'll stick around for the cheap socks and absurd number of locations (likely) nearby.
It's a BYOD event... "Buy The Dip" refers to a strategy of buying stocks when their prices are low (taking advantage of "sale" price), and eventually selling if the prices rise (quick reminder: they can fall, too). Starbucks is kind of doing the same thing, but with its own stock — we're calling it: "Buy Your Own Dip" (not to be confused with Superbowl-related "bring your own dip").
Stock buybacks are (kind of) like gifts to shareholders... By buying back a large amount of its own shares (reabsorbing them), a company can improve its stock's price because the number of shares outstanding falls. The fewer shares are out there, the more your ownership/earnings per share increase. Another way to reward shareholders is through paying out dividends to them.
Starbucks is flaunting its confidence... when no one else is. Nervous companies are cancelling buybacks and dividend payments — the biggest American banks already cancelled buybacks on growing concerns that the virus will hurt business and cash could be tight in the future. But for those who can swing it, buybacks are easier/cheaper when the stock price is low. Even mid-outbreak, Starbucks is optimistic in its:
Disclosure: Authors of this Snacks own shares of Starbucks, Tesla, and Amazon and fractional shares of Apple
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