Tuesday May 19, 2020.
Facebook Shops launches
In an update posted today to his idea long Facebook (FB: US), SumZero CEO Divya Narendra reports that Facebook has launched a new small business initiative, Facebook Shops. “In a previous update,” Narendra writes, “I had stated that FB could become the homepage for millions of small businesses around the world in its efforts to incorporate e-commerce into its business. FB Shops is by design a free digital storefront. The disruption caused by COVID-19 to physical brick and mortar shops is a strong catalyst for SMBs to move their goods & services online. The fact that it's free will only help accelerate adoption and drive engagement, particularly for those store owners who don't have the budget to build standalone websites.” FB saw a 3.2% rise in stock price in afternoon trading.
Welcome to the D-List:
Amidst reports of possible acquisition interest from Amazon (AMZN: US), J.C. Penney, which declared bankruptcy last Friday, has been delisted from the NYSE and is currently trading over the counter as JCPNQ. AMZN traded at +2% through the day, with company representatives declining to comment on the speculated deal. Amazon stock is up around 31% this year. J.C. Penney, on the other hand, has fared poorly over the last few years.
China-based coffee company Luckin Coffee (LK: US) reported in an SEC filing today that they received a delisting notice from Nasdaq after last month’s revelations that the company’s earnings through 2019’s last three quarters contained information that was “substantially inflated by fabricated transactions.” LK shares plummeted more than 75% until trading, which has yet to resume, was halted on April 6th. LK will remain listed pending a hearing before a Nasdaq panel during which the company will request continued listing. According to LK, the hearing should take place sometime within the next 30 - 45 days.
Clearing the Air
An email sent to Delta Airlines (DAL: US) frequent flyers details some of the steps the company is taking to ensure passenger safety as the COVID-19 pandemic blunts air travel. Passengers will board planes sanitized before every flight from back to front in groups of ten and will receive in-flight snacks accompanied by sanitizing wipes (what, no free mini bottles?). Despite the inherent risk posed by COVID-19, flying could become more comfortable due to the need for social distancing. The company adds that every flight is “capped at 60 percent capacity and middle seats are blocked for (passenger) protection. The air on all aircraft is completely recirculated 10 to 30 times per hour with fresh, outside air or through industrial-grade HEPA filters with similar performance to those used in hospital operating rooms and other highly sensitive environments.”
Southwest Airlines (LUV: US) stock climbed 5% today after reporting this morning that cancellations and cash burn are slowing. Southwest is slowly adding more flights and anticipates June’s overall annual capacity decline to be in the ballpark of 45 - 55% in comparison to May’s 60 - 70% drop. New Constructs LLC CEO and frequent SumZero contributor David Trainer remains bullish on LUV, calling the company the “best-positioned not only to survive, but also to further widen its advantages over the competition” in the most recent update to his long idea.
Contest Results In
The SumZero team is excited to announce the winners of The Value Amidst Volatility Contest. As a reminder, the winners will be awarded a charitable donation in their name to Direct Relief sponsored by Sentieo.
Our first place winner, Javier Lopez Bernardo, for his idea on Berkshire Hathaway (BRK/B: US). Javier is awarded a $3K donation in his name, as well as a six month subscription to Sentieo and an annual subscription to Canalyst. Non-buyside members can read a shorter version of his thesis posted on Barron’s.
Our second place winner, Chris Colvin, for his idea on Aimia (AIM: CN). Chris is awarded a $2K donation in his name, as well as a six month subscription to Sentieo and an annual subscription to Canalyst.
Our third place winner, Kyle Pinkerton, for his idea on Aramark (ARMK: US). Kyle is awarded a $1K donation in his name, as well as a six month subscription to Sentieo and an annual subscription to Canalyst.
Earnings before open tomorrow, May 20, 2020: