Tuesday Aug.11, 2020
đ Canopy's Growth (beyond the leaf)
_When the CBD-infused treats hit all at once_
Hey Snackers,
The UK's Top Diplocat is retiring. Palmerston, the eminent Chief Mouser at the British Foreign Office, has decided to leave the London diplomatic scene behind and retire to the countryside. His accomplishments are almost as numerous as the cat puns we spared you from.
The tech-heavy Nasdaq was dragged down by stock dips in Microsoft, Amazon, and Facebook. Despite uncertainty around the 2nd coronavirus stimulus package, the S&P 500 index is close to its pre-lockdown highs.
Smoke
Canopy Growth sales soar 22% on "beyond the leaf" initiatives
Q2 hits right... Canopy Growth, Earth's most valuable cannabis company, just hit investors with stronger-than-expected earnings. Somehow Canopy's sales were 22% higher than the same quarter last year despite recreational weed sales in Canada falling overall. Canopy stock popped 8% on the news. To smoke the wider market, the Canadian cannabis giant focused beyond the leaf:
- Beverages: Canopy expanded distribution of CBD-infused sparkling water and sports drinks. It more than 2X'd its beverage production in July, and is now the #1 producer of weed-related drinks in Canada.
- E-CBD: Canopy launched a US online shop for CBD products like softgels, oils, and wrinkle creams.
- Martha Stewart: Launching soon, Martha is partnering on a line of CBD-based animal health products (for when your dog needs to chill).
To put it bluntly... Canopy slashed spending. It sadly cut over 18% of its employees since December and shut some of its cannabis-growing greenhouses. That left it more $$$ to invest in the above mentioned growth initiatives. Canopy was also able to significantly narrow its quarterly loss from $194M to $128M.
"Beyond the leaf" is key... The late 2018 "weed bubble" has popped. Consumer demand for legalized weed in Canada didn't meet hyped expectations, and cannabis companies found they'd over-produced. Now...
- Canopy stock is down 65% from its 2018 high, Aurora is down 92%, and Tilray â which reported a buzz killing massive loss yesterday â is down 95%.
- Going "beyond the leaf" with consumer products like CBD drinks and creams is more important than ever. That majorly helped Canopy's growth last quarter.
Fly
Airline shares soar as passenger numbers hit a pandemic high (2nd bailout TBD)
Restock the Terra chips... Airlines are (kind of) back. Airline stocks surged on some high-flying TSA data: on Sunday, the number of people passing through US airport checkpoints was the highest since pre-lockdowns. Delta and American shares surged over 7%, United soared 9%, and Southwest got a 5% bump.
- On April 15, aka peak pandemic, just 90K people passed through TSA checkpoints â that's 97% fewer passengers than April 15, 2019.
- From April-July, passenger numbers (very) slowly but surely ticked up, coming in at ~700K/day on average in July (still 75% less than last year).
- On Sunday, 832K passengers passed through US airport checkpoints, the highest since March 18. While that's a big jump, it's still 70% fewer passengers than last year.
It trends well, but does it end well?... Investors like how passenger numbers are trending, and this latest milestone has made hopes take off. But much of this surge is likely a result of the summer travel rush.
- TBD whether the trend will continue as the off-peak season hits in the fall â especially if COVID cases continue to surge in the US. Meanwhile...
- Airlines are burning through the $25B in government bailouts they received in April. Under the terms, they can't make layoffs or job cuts until October 1st.
That October deadline is fast approaching... Even as passenger numbers improve, airline sales don't come close to breaking even with spending. Cash-strapped airlines have warned tens of thousands of employees that they might lose their jobs. Labor unions and airline execs have been pushing for $25 billion in extra aid to preserve jobs through March 2021. President Trump and over a dozen senators have backed them. But unless air travel dramatically picks up soon, even that might not be enough to tide over airlines.
What else weâre Snackinâ
- Nikola'd: Electric truck startup Nikola wins an order for 2.5K electric garbage trucks, just a week after its disappointing earnings report.
- Snapped: Kodak stock plunges 30% after its $765M loan from the US gov to make drugs is put on hold â regulators are investigating insider trading allegations.
- Wow: The perfect headline to encapsulate the times â Simon Property, the US' largest mall owner, is reportedly looking to turn shuttered department stores into Amazon warehouses.
- SPACy: Men's telemedicine startup Hims is reportedly in talks to go public by merging with a SPAC at a ~$2B valuation.
- Revv: Online used car seller Carvana saw a 25% jump in vehicle sales last quarter, when many dealerships were closed.
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Tuesday
- Earnings expected from BioNTech, Sysco, and Canada Goose
Disclosure: Authors of this Snacks own shares of Apple
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