Podcast Summary
Retail sales plummet, online shopping surges amid pandemic: Retail sales dropped 16.4% in April, with clothing, furniture, and bars/restaurants hit hardest. Online retail sales rose 8.4%. Unemployment claims reached record highs, but some states plan to reopen, causing concerns about a second wave.
The COVID-19 pandemic has had a devastating impact on retail sales, with consumer spending on non-essential items taking a significant hit. Retail sales in April fell by a record-breaking 16.4%, with sectors such as clothing, furniture, and bars and restaurants experiencing the greatest declines. However, non-store retailers saw an increase of 8.4%, highlighting the shift towards online shopping. The economic downturn has led to an unprecedented number of unemployment claims, with over 30 million Americans filing. Despite the grim figures, some states are pushing for reopenings, raising concerns about a potential second wave of infections. The Think Fast, Talk Smart podcast, recommended by Motley Fool Money cohost Dylan Lewis, offers valuable insights on developing communication skills, essential for navigating both personal and professional challenges during these uncertain times.
Virtual networks connecting suppliers and buyers present opportunities: Companies like Wayfair and Etsy thrive, while traditional retailers struggle. Restaurants face up to 25% closure risk, requiring cost adjustments.
The shift to virtual networks connecting suppliers with buyers has presented significant opportunities for businesses during the pandemic. Companies like Wayfair and Etsy have seen increased traffic, conversions, and repeat business, while traditional retailers, such as Dillard's, have struggled with store closures and revenue losses. The restaurant industry, which generates over $850 billion in sales annually, is also facing a challenging future, with up to 25% of restaurants in danger of never reopening. As businesses adapt to the new normal, they may need to consider incorporating increased costs for safety measures and other expenses into their operations, potentially through transparent pricing or open communication with customers. The ongoing challenges in the retail and real estate sectors are also worth monitoring closely.
Negotiating Lower Rents for Retail Tenants Amidst COVID-19: Long-term tenants with strong records may negotiate lower rents amidst COVID-19. The new normal remains uncertain, but quick-serve and fast casual restaurants may thrive due to delivery options.
The COVID-19 pandemic has created uncertainty for businesses in the commercial real estate sector, particularly for retail and restaurant tenants. However, tenants with long-term leases and strong track records may have some leverage in negotiations for lower rents. The real question is what the new normal will look like, as we'll be living with COVID-19 as part of our existence. The restaurant industry could be hit harder than expected, with high-end restaurants potentially facing more trouble than fast food or quick-serve chains, which have thrived with delivery options. The quick service and fast casual restaurant sectors have the opportunity to come out of this stronger due to their focus on delivery and less reliance on in-facility dining. However, the restaurant industry is known for being a tough business, and smaller, independent restaurants may struggle to survive without access to large amounts of capital. Uber's potential acquisition of Grubhub could be a smart move, as it would give Uber a stronger foothold in the food delivery market and leverage its existing network to build a more sustainable business model.
Merger of Grubhub and DoorDash raises regulatory concerns, Quidel's new COVID-19 test a promising breakthrough, Marriott reports significant Q1 loss: Regulatory concerns over Grubhub-DoorDash merger, Quidel's new COVID-19 antigen test can detect virus in 15 minutes, Marriott reports 90% decrease in April RevPAR, some recovery in China
The potential merger between Grubhub and DoorDash raises regulatory concerns due to the combined entity controlling over half the domestic market in food delivery. However, there is still competition, and smaller competitors could potentially be put out of business if the merger is blocked. On a positive note, Quidel's new COVID-19 antigen test, which has received emergency approval from the FDA, is a promising breakthrough in testing and diagnostic technology. The test, which uses machines already in place, can detect the virus in 15 minutes with an accuracy rate of about 85%. Marriott International, on the other hand, reported a net income decline of over 90% in Q1 due to the closure of 25% of its hotels. The company raised additional debt to shore up its balance sheet, but the revenue per room (RevPAR) was down 22.5% for the quarter, with a 90% decrease in April. Despite these challenges, Marriott sees some recovery in China, where occupancy hit 25% in April.
Under Armour and DraftKings face challenges due to COVID-19: Under Armour reports a 23% sales decline, DraftKings sees bigger-than-expected loss, but both companies remain optimistic about future growth opportunities
Both Under Armour and DraftKings faced significant challenges in their first quarters due to the ongoing COVID-19 pandemic. Under Armour reported a 23% sales decline, with 15% of that attributed to COVID-related impacts. The company has halted share repurchases and furloughed employees, but maintains a positive adjusted EBITDA and a solid balance sheet. DraftKings, on the other hand, reported a bigger-than-expected loss but saw shares rise due to optimism about the absence of COVID impact on future revenues. The recently public company has a strong cash position and is creating new offerings to engage customers in the absence of live sports. Despite these challenges, it's important to remember the value of diversification, as losses in one investment can be offset by gains in others. Both companies have a lot of work to do in the face of difficult environments, but there may be opportunities for growth as they adapt to the new normal.
Camping World's Multifaceted Business Model in the RV Industry: Camping World, led by Marcus Lemonis, dominates the RV industry through sales, servicing, financing, and aftermarket accessories, insurance, roadside assistance, and warranty services. Its success is attributed to its core business focus and unique control, allowing it to weather the COVID-19 crisis and capitalize on the growing RV trend.
Camping World, led by Marcus Lemonis, is a dominant player in the RV industry, encompassing sales, servicing, financing, and aftermarket accessories, as well as insurance, roadside assistance, and warranty services. With a significant market share and 168 dealership locations across the country, the company has been successful since its inception in 2001 and went public in 2016. Lemonis' unique control, with a golden share granting him 100% of the votes, has been crucial during the COVID-19 crisis. Despite business mistakes, such as an acquisition from a bankrupt company, Camping World has focused on its core business and did not close any locations. With people spending more time at home due to the pandemic, there's a growing interest in RV travel, making Camping World an attractive business to own. However, the company's success relies on a sustained credit market. Although Lemonis hasn't identified any permanent negative changes, he acknowledges the importance of the credit market to maintain the business's momentum.
RV Industry Surge in Demand Amidst Crisis: The RV industry is seeing a surge in demand due to the pandemic, with younger demographics, including Millennials, embracing the RV lifestyle for flexibility and affordability. This trend is expected to continue post-crisis.
The RV industry is experiencing a surge in demand due to the early start of summer and people's desire for travel while staying socially distanced. This trend is expected to continue even after the crisis, with the demographics of RV buyers becoming more diverse and younger as towable RVs have become more portable and affordable. The Millennial generation, in particular, is embracing the RV lifestyle, despite their preference for flexibility and technology. On a related note, Jim Cramer's investment show, "The Prophet on CNBC," receives an overwhelming number of applications each year, and he deliberately chooses to do minimal research before meeting with the companies to keep the process unpredictable and exciting.
Jamie Dimon acknowledges the value of Prophet podcast for large corporations: JPMorgan Chase CEO emphasizes the importance of treating small businesses equally and applying fundamental business principles consistently, regardless of the business's size.
The Prophet podcast, started by Marcus Lemonis, was initially intended to make business ownership cool and educational for the younger generation. However, it gained recognition from unexpected quarters, including Jamie Dimon, the CEO of JPMorgan Chase. Dimon acknowledged the applicability of the show's fundamental business principles to both large corporations and small businesses. He emphasized the importance of treating small businesses as equals, holding them accountable, and investing in them with the same rigor as larger companies. The conversation underscores the significance of understanding business basics and applying them consistently, regardless of the business's size.
The optimal number of stocks for an individual investor: Active investors should consider managing 20-30 stocks, while passive investors might own up to 50. Owning too many could lead to diversification risk, but an S&P 500 index fund offers market matching.
The number of stocks an individual investor should own depends on their level of participation and expertise. Ron Gross suggests that if one intends to be hands-on and review companies frequently, it might be difficult to effectively manage more than 20 to 30 stocks. On the other hand, those who prefer a more passive approach and check-in less frequently could potentially own upwards of 50 companies. However, as Jason Moser points out, owning too many stocks could lead to diversification risk and underperforming stocks dragging down the portfolio. Ultimately, owning an S&P 500 index fund is recommended as a safety net for market matching. During the show, they discussed IntelliTherapeutics, a biotech company focused on CRISPR Cas9 gene editing technology, which recently saw a 20% bump due to promising developments in disease treatments.
Axon Enterprise: Leading Law Enforcement Tech Company with Hardware and Software Solutions: Axon Enterprise is a market leader in conducted energy weapons, officer body and car cameras, and digital evidence management, offering a unique combination of hardware and software solutions, making it a compelling investment opportunity during the pandemic.
Axon Enterprise (AAXN) is a leading company in the law enforcement technology industry, known for producing conducted energy weapons like TASERS. However, they offer more than just weapons; they also provide software, sensors, body and car cameras, and a digital evidence platform. Axon is not only the market leader in conducted energy weapons but also in officer body and car cameras, and digital evidence management. Recently, they have expanded their offerings to include augmented reality and virtual reality training services for law enforcement. This unique combination of hardware and software solutions, along with their market leadership, makes Axon a compelling investment opportunity, especially during the pandemic where safety and technology are increasingly important. Additionally, there are other companies in this line of work that Jason is researching and plans to reveal at a later time. Intelliatherapeutics was also mentioned as a potential watchlist addition.
