🚢 Carnival stock sinks

Friday, March 6, 2020 by Robinhood Snacks | Disclosures

"Get me off this ship"

Dow Jones
26,121 (-3.58%)
S&P 500
3,024 (-3.39%)
8,739 (-3.10%)
$9,113 (+4.04%)
10-Yr US Treasury

Hey Snackers,

The latest venture to take a hit from the coronavirus outbreak: No Time to Die, the (unfortunately-named) new James Bond movie.

Markets fell sharply after Wednesday's relief rally — the VIX (aka Wall Street's "fear gauge") spiked almost 25% on stock sell-offs.

1. Carnival is on an epic losing streak with (another) coronavirus-infected ship

Not living up to the name... Carnival. The cruise operator's slogan is "fun for all, all for fun" — its customers are far from feeling it. A 71-year-old man just died after sailing on Carnival's Grand Princess cruise, on which he was "likely exposed" to coronavirus. Now the ship is being held off the coast of SF, with 100 people identified for testing. This is Carnival's 3rd debacle in 3 months:

  1. First, 2 Carnival ships collided in a Mexican port.
  2. Then, there was Carnival's Diamond Princess ship, quarantined off the coast of Japan with almost 700 coronavirus-infected passengers (leading to 6 deaths).
  3. Now, another ship's infected — Carnival stock plummeted 14% on Thursday, and is down 46% since mid-January. Still...

Carnival enthusiastically dominates the cruise world... In 2018, Carnival took home 50% of sales in the entire cruise market. Since January, shares of the 3 big operators — Carnival, Royal Caribbean, and Norwegian — have plummeted 30% to multiyear lows. Still... Excluding the coronavirus outbreak, Americans' cruise-thusiasm has been strong: Carnival's sales have risen 7% each year since 2015.


Major players in successful industries have resources to weather storms... Carnival's dominance might protect it long term from temporary (but major) setbacks. Today's coronavirus impact reminds us of the travel industry's struggle post-9/11. But industry-shaking issues like coronavirus could be bigger tests for smaller players with fewer resources:

  • Luminous Cruise, a small Japanese operator, filed for bankruptcy due to virus cancellations.
  • Struggling UK airline Flybe collapsed — the virus-related fall in sales dealt it its final blow.

Golden egg in the Eagle's nest... American Eagle enjoyed expectations-beating quarterly growth thanks to its teen-centric Aerie brand. Aerie is known for comfy basics from hoodies to bralettes (aka, loungewear). Now it has become American Eagle's golden growth egg. Fun fact: "aerie" means "the nest of an eagle...built in a high place" (we thought it related to breathable fabric). Then we jumped into American Eagle's numbers more...

  • +2% : AE's overall same-store sales growth for the quarter (that beat expectations)
  • -3% : How much sales of the AE brand were down
  • +26%: Aerie's impressive quarterly sales growththat surge single-handedly drove the bump in AE's same-store sales.

Aerie snuggled into sweet product/market fit... Its products satisfy a strong and growing market demand: Aerie's ad campaigns promote body-positivity, authenticity, and inclusivity, featuring non-supermodels (like scientist/CEO Keiana Cavé). This branding strategy — backed by in-depth studies/research on young women's preferences — has paid off:

  • Aerie's just notched its 21st straight quarter of double-digit sales growth.
  • 33 new Aerie stores were opened last year — compared to only 6 AE stores. And 70 more Aerie stores arrive in 2020.

Filling the Victoria's Secret vacuum... VS' sales have fallen because its brand of airbrushed models and extra-padded bras lost touch with customers (VS was recently sold off by its parent company). But the AerieREAL Role Models campaign features unretouched pics of female athletes, activists, and entrepreneurs, boosting sales significantly. The same shift in tastes that led to VS' sale/loss also led to Aerie's growth, positioning Aerie to take what Vicky missed.

What else we’re Snackin’
  • Canned: Canopy Growth — the world's biggest cannabis company — is closing down greenhouses and laying off 500 employees (weed demand has been lower than expected)
  • Rejected: HP turns down Xerox's hostile takeover bid, calling the offer too low
  • Recover: JPMorgan's CEO Jamie Dimon undergoes emergency heart surgery — 2 company deputies will take over while he recovers
  • Wanta Planta: El Pollo Loco launches plant-based chicken tacos and burritos made with a soy protein it created itself (Wendy's also created its own alt-meat for its Plantiful burger)
  • WFH: Facebook closes its Seattle office after a contractor there tested positive for coronavirus — its encouraging all 5K Seattle employees to work from home until March 31
Snacks Daily Podcast

If you build it, will they come?

GM just unveiled a snazzy new electric battery and plans to invest $20B over the next 5 years in e-vehicles. But...

Americans haven't shown high demand for electric cars. Only 1.4% of the 17M cars sold last year were electric...

Will GM end up with a bunch of EVs and no buyers? More in our 15-minute Snacks Daily pod.

  • February's big Jobs Report

Disclosure: Authors of this Snacks own shares of Carnival Cruises

ID: 1111257

Subscribe to Robinhood Snacks

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2020 Robinhood. All rights reserved.