Quarantine Log Day 92
Hello and welcome to another beautiful weekend in Quarantineland. There’s been a mutiny on board and I’ve taken over from Jamie this week as he’s on a well-earned holiday so please be gentle, it’s my first time. Instead of the usual harrowing insight into the mind of a cooped up financial writer, I’m going to leave you all with a quote by Erna Bombeck that should hopefully set you in good stead to grab this coming weekend by the horns:
“Seize the moment. Remember all those women on the ‘Titanic’ who waved off the dessert cart.”
The Quick Fix
#ThatsGottaHertz— In one of the most audacious displays of white-collar snake-oil salesmanship since WeWork, Hertz (NYSE:HTZ) tried to issue almost $500 million of new shares before being intercepted by the SEC.
#FedInShiningArmour — As markets looked to start the week with a major dip, the Fed rushed in to save the day, announcing plans to purchase $250 billion worth of individual corporate bonds.
#EnGardeBezos! — Two of Amazon’s (NASDAQ:AMZN) fiercest competitors, Shopify (NYSE:SHOP) and Walmart (NYSE:WMT), have joined forces to take on the almighty egghead at his own game.
#PodKings — Spotify (NYSE:SPOT) has signed two exclusive podcast deals yesterday, the first with the queen of reality tv Kim Kardashian West, and the second with DC Comics and Warner Brothers.
#AndFinally — Elon Musk, meet Las Vegas. The eccentric CEO’s Boring Company will be busy in The City of Sin.
Hertz has rowed back on plans to sell up to $500 million of new stock after the SEC stepped in the review the plans.
Oh btw, these could be worthless
Hertz has seen an influx of speculative retail traders pumping the stock up since it filed for bankruptcy (yes, after it declared it was bankrupt!) at the end of May. Management said that the issuance of new stock was “a unique opportunity” to raise capital for its restructuring efforts.
The shares may well be worth absolutely zilch. In the same statement that announced they were planning to issue up to $500 million worth of shares, Hertz casually threw in the fact that these shares will be worth nothing until those with higher priority in the bankruptcy proceedings — aka debtholders — are paid in full. Oh and that there needs to be a massive turnaround in the progress of COVID-19 and travel will need to pick back up almost immediately for this to happen. Thankfully the sale will not be going ahead as the SEC stepped in to scupper their plans, with Hertz actually halting trading of their stock after the commission stated it would investigate the bankrupt company’s proposed sale.
Bet you didn’t know
The first rental car company was started in 1916 by a man named John Saunders, who rented out one borrowed Ford (NYSE:F) Model T. In ten years he expanded to 56 cities (hopefully he borrowed more cars to do so), and The Saunders System was eventually bought by Avis (NASDAQ:CAR) in 1955.
On Monday, the Federal Reserve announced its plans to buy up to $250 billion of individual corporate bonds.
Well that was good timing
The announcement came on Monday when the market was having an uncharacteristic down-day off the back of fears of a second wave of COVID-19 infections. However, that was until Jerome Powell charged in on his white horse to save the market in distress and live happily ever after. The Federal Reserve announced that it would be buying up to $250 billion of individual corporate bonds in addition to ETFs, essentially providing a backstop to companies most in need of financing. On hearing the news, the market did the hokey-pokey, turned itself around, and that’s what it’s all about.
Bet you didn’t know
On Monday, the S&P 500 fell 2.5% intraday before going on to fully recover its losses. This has only happened 3 times in the last 10 years.
Amazon’s biggest competitor in e-commerce, meet Amazon’s biggest competitor in retail. Shopify and Walmart have penned ink on a deal that will open Walmart’s Marketplace to Shopify’s army of smaller retailers.
Should Amazon be worried?
By the end of 2020, the two companies will look to bring 1,200 Shopify sellers to Walmart Marketplace. This will be a huge turn out for the retailers in question as Walmart’s Marketplace garners around 120 million monthly visitors. This deal is already drawing comparisons to Amazon’s leading e-commerce platform — which promises its retailers the ability to reach more than 300 million customers worldwide — and could represent a uniting of forces against Bezos’ e-commerce behemoth. While there is so much more to Amazon than its marketplace (ahem… multi-billion-dollar, incredibly profitable, cloud storage and server business…ahem) this deal may have Bezos looking over his shoulder just a tad.
This deal has pushed Shopify to new all-time highs and in turn made it the first twenty-bagger in the MyWallSt shortlist!
Bet you didn’t know
Walmart once owned the world’s largest private satellite network. In 1987, the company launched the $24 million dollar project, which was used to connect every one of its stores to its Arizona headquarters.
Just look at our returns versus that of the S&P 500! Click here to find out how we continue to beat the market and view the list of stocks we think will turn out to be the next Amazon, Tesla, or Netflix!
Your favorite playlist compiler since you and boo used to trade mixtapes has just signed two deals to cement its place as the podcast king.
Busy day for Spotify
Yesterday, Spotify signed an exclusive podcasting deal with Kim Kardashian West which will see the reality star cover topics of justice reform and wrongful convictions. Then, later in the day, it was revealed that the company would also work with Warner Bros and DC Comics to produce a series of narrative scripted podcasts featuring popular comic book characters from the DC universe, including Superman, Wonder Woman, and Batman. The moves show Spotify’s commitment to podcasting as the future of audio, with Kardashian and DC Comics the latest in a string of exclusive deals penned by the Swedish music giant, including the wildly popular Joe Rogan Experience and the Ringer.
I must admit if I ever thought we were going to cover the Kardashians in this newsletter it would be in the form of a joke at their expense, but well done KKW on using your platform and influence to shed light on an issue that has been overlooked for far too long.
Bet you didn’t know
At the start of 2020, there were over 500,000 podcast titles on Spotify, and in an unofficial poll MyWallSt’s Stock Club was voted the best of the lot!
There’s a new show coming to Vegas, and it goes by the name of Elon Musk.
What the hell is going on?
As if Las Vegas didn’t have enough problems right now, Elon Musk is moving in. The Tesla (NASDAQ:TSLA) CEO’s eccentric Boring Company of flamethrower and Hyperloop fame has already completed excavations of underground tunnels under the Las Vegas Convention Center which is known as the Convention Center Loop. Wynn Resorts (NASDAQ:WYNN) and Resorts World were picking up what the Boring Company was putting down, with both companies submitting similar plans to connect their casinos to the center via these tunnels this week. The tunnels will turn a mile walk on the surface into a two-minute trip.
Oh did I mention the cherry on top? Users of the tunnels will be transported by Teslas! We knew it was inevitable that Musk would eventually start building an underground army of robots to take over the world, I just never knew it would start in Vegas!
Bet you didn’t know
The longest-running Las Vegas show, Legends in Concert, has been running for 35 years and a whopping 18,500 shows. Celine Dion, eat your heart out!
The Week In Numbers
Is the number of vehicles in Hertz’s fleet at the end of fiscal year 2019. That’s going to be some fire sale!
Is the number of Americans who filed first-time unemployment claims last week, reminding us that we are very much still in the midst of a recession.
Is the price at which we first picked Shopify in the MyWallSt Shortlist, it has since risen to $869, making it our first 20-bagger.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above Read our full disclosure policy here.
Financial Analyst at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.