Friday Mar.06, 2020

🚢 Carnival stock sinks

_"Get me off this ship"_

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.

Cruise

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:

First, 2 Carnival ships collided in a Mexican port.
Then, there was Carnival's Diamond Princess ship, quarantined off the coast of Japan with almost 700 coronavirus-infected passengers (leading to 6 deaths).
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.

Wear

Aerie emerges as American Eagle's MVP — its "product/market fit" game is strong

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 growth — that 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

Friday

February's big Jobs Report

Disclosure: Authors of this Snacks own shares of Carnival Cruises

ID: 1111257

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Friday, Apr 26th

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Sales of what are up 136% since 2019?

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Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

What’s up doc?

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HOP TO IT

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4/25/24

No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?