- Travel companies like Delta, Airbnb and Expedia have shown clear signs of recovery in recent earnings reports.
- Stay-at-home stocks like Peloton, Zoom and Netflix sold out this week.
- Dr. Scott Gottlieb told Businesshala on Friday that Kovid-19 could be over in the US by early January.
As travel industry executives tout the rapid resurgence of tourism and entertainment, the pandemic’s stock portfolio is turning upside down.
Shares of airlines are rallying along with online booking sites, ride-hailing companies and Airbnb, after earnings reports showed clear signs of improvement in travel. At the same time, stay-at-home stocks are falling as borders reopen and health experts have indicated that the end of the COVID-19 pandemic may be coming sooner than expected.
“We’ve seen it everywhere,” Expedia CEO Peter Kern told analysts on an earnings call Thursday after his company reported a 97% jump in revenue from a year ago. “Cities are growing. International has picked up. Growth has been seen in almost every area.”
Shares of Expedia rose 16% on Friday and rival Booking Holdings jumped more than 7%. Airbnb rose 13% and closed its best week since its IPO late last year, with the home-sharing company reporting better-than-expected revenue and a 280% increase in profit.
Airlines are finally back. Delta had its best week in nearly a year, climbing 13%, as the US prepares to lift international travel restrictions. American Airlines jumped 14% and Southwest Airlines jumped more than 10% for the week.
The rally across the board followed an announcement from Pfizer, which said on Friday that its COVID-19 pill, when combined with a common HIV drug, could increase the risk of hospitalization or death in adults at high risk. The risk is cut by 89%. to virus. Pfizer board member Dr Scott Gottlieb told Businesshala’s “Squawk Box” that COVID-19 could end in the US as early as January, when President Biden’s workplace vaccine mandate goes into effect.
“These mandates that are going to be in effect by January 4th are really coming to the fore of this pandemic,” said Gottlieb, who is also a former commissioner of the Food and Drug Administration.
Meanwhile, Peloton had its worst day on the market since the home workout company’s IPO in 2019. Peloton reported a widely expected quarterly loss late Thursday as it faces demand slack from supply chain constraints as it reopens gyms.
Shares of Peloton fell 35% on Friday to their lowest level since June 2020.
Chief Executive Officer John Foley said, “We anticipated that fiscal year 2022 will be a very challenging year to forecast, given unusual comparisons to the year before, demand uncertainty amid reopening economies, and widely reported Given supply chain constraints and commodity cost pressures.” letter to shareholders.
During an all-round meeting on Friday, Peloton suspended hiring across all departments with immediate effect, Businesshala has learned.
While not as dramatic as Peloton’s plunge, Netflix dropped 6.5% this week, its worst stretch since April for the streaming-video company. Zoom, the video-chat company that headlines everyone’s pandemic portfolio as revenue in 2020 fell more than 6% on Friday. Food-delivery provider Doordarshan, which became a household name last year, fell over 4%.
Workers returning to the office and consumers going back to theatres, concerts and restaurants could spell some trouble for Netflix, Zoom, Doordarshan and other stay-at-home companies. To get from one place to another, people will need rides, which helps explain why investors are turning to Uber and Lyft.
On Thursday, Uber reported 72% revenue growth from a year earlier, with the number of active mobility drivers rising nearly 60%. Lyft, which has also invested millions in incentives, said drivers are holding back. Shares of Lyft rose 17% and Uber about 8% this week.
Uber CEO Dara Khosrowshahi said on the company’s earnings call that some of the supply and demand challenges faced during the pandemic are working themselves out. Surge pricing incidents have come down by almost half, and wait times average less than five minutes, he said.
“The rebound is unmistakable,” Khosrowshahi told Businesshala’s “Squawk Box” on Friday, with both airport and business travel coming back, although the magnitude of the rebound varies by geography. “The human condition of wanting to walk, the desire to travel, the desire to step out of the house, is true for all and it is universal.”
Broadway shows began to reopen in September, while movie ticket sales are surging and theaters and concerts open their doors. Shares of Live Nation Entertainment were up 15% on Friday after the company reported strong third-quarter earnings, and Eventbrite gained more than 5%.
“Live music roared back in the last quarter,” said Live Nation CEO Michael Rapinoe on the company’s earnings call. Rapinoe said ticket sales for major festivals were up 10% in the quarter from 2019 levels, adding that “many of our festivals are selling out in record time.”
Watch: Suppressed demand for entertainment is driving the sector