Christmas came early this year!
The world was greeted with a present from Pfizer and BioNTech on 9 Nov 2020 when they jointly announced their vaccine was 90% effective against SARS-CoV-2 infection. They would submit the safety data required by the FDA for the vaccine to be put to use by the third week of November. If successful, they expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021.
The news buoyed the stock market with large movements seen during pre-market trading hours in the U.S.
In general, the travel stocks jumped while the stay-at-home stocks slumped.
Let’s look at some of the gainers and losers among the U.S. stocks on 9 Nov 2020.
Cruises up
The three musketeers – Carnival, Royal Caribbean and Norwegian – really had a bad time in 2020, seeing their stock prices declined as much as 90%. They will probably be the ones that would rejoice the most.
Investors expect the vaccines would get people back on the ships and start touring again. I’m not sure how soon that would be but there’s definitely a good dose of optimism seen in the jump in their share prices on 9 Nov 2020 alone.
- Carnival +39%
- Royal Caribbean +29%
- Norwegian Cruise Line +27%
Airlines up
The airline stocks were up less than the cruises. Probably because the latter had seen much larger declines in their share prices and the rebounds had to be stronger (by Newton’s third law… I made it up).
- United Airlines +19%
- Delta Airlines +17%
- American Airlines +15%
- Southwest Airlines +10%
Aircraft manufacturer, Boeing, was also up 14%.
Hotels up
Hotels not used for quarantine purposes saw record low occupancy rates. Large conferences and events were non-existent for most of 2020 and ballrooms were kept empty. Hotels can have some respite now.
- Hyatt +20%
- Wyndham +16%
- Marriott +14%
- Hilton +12%
Casinos, Cinemas and Amusement Parks up
Entertainment outlets had a rude shock during the lockdown. But their businesses didn’t get any much better thereafter. Cinemas probably relied on the vaccine discovery more than the other entertainment spots as their share prices surged more than 40% in one day.
- AMC Entertainment +51%
- Cinemark +45%
- Wynn Resorts +28%
- MGM Resorts +15%
- Disney +12%
- Caesars Entertainment +11%
- Las Vegas Sands +9%
Travel Sites up
Online travel agencies had saw fewer visitors than they desired since Covid-19 struck. They didn’t know how long they had to wait before people travel again. Well, it is now closer than ever before.
- Expedia +25%
- Tripadvisor +22%
- Trivago +20%
- Booking +19%
- Trip.com +14%
Credit cards up
I was surprised to see Mastercard and Visa reporting lower revenues in their recent quarter results. I thought that they would benefit with the rise of e-commerce. I didn’t expect the lack of travel spending to have such a huge impact on the credit card business.
With the possibility of travel coming back, credit card business may come roaring back.
- American Express +21%
- Mastercard +10%
- Visa +7%
Oil & Gas up
This is less obvious than the travel stocks but not difficult to make the connection. We are going to burn more fuel if we are travelling again (poor Earth going to absorb all the carbon emissions). Hence, oil price jumped up almost 10% in a day!
Here are some oil and gas stocks that saw a bump in their stock prices:
- Marathon Oil +23%
- Phillips 66 +22%
- Schlumberger +20%
- ConocoPhillips +14%
- Exxon Mobil +13%
- Shell +13%
- Chevron +12%
Stay-at-home stocks down
The stay-at-home stocks boomed because of Covid-19.
They kept the world connected and going while we were physically separated. Investors are anticipating that the vaccine would put more people back to office, entertainment spot, travel and closer to the pre-Covid lives we had, and there would be less demand for stay-at-home stocks.
Here are some stay-at-home stock performances on 9 Nov 2020:
- Amazon -5%
- eBay -5%
- Home Depot -5%
- Slack -5%
- Atlassian -5%
- Adobe -5%
- Facebook -5%
- Dominos Pizza -6%
- FedEx -6%
- Twilio -6%
- Elastic -7%
- Okta -7%
- JD.com -8%
- Netflix -9%
- PayPal -9%
- Take-Two -9%
- Ring Central -9%
- Mercadolibre -10%
- Crowdstrike -11%
- Shopify -13%
- Teladoc -14%
- DocuSign -15%
- Pool -16%
- Etsy -17%
- Zoom -17%
- Peloton -20%
Too early to tell…
Year 2020 is a gift that keeps on giving. Surprises after surprises. Covid-19, lockdowns, elections and now a vaccine came early.
The stock market had the wildest rides this year.
Has the trend reversed after a vaccine has been found? Would stay-at-home stocks continue to wane while the travel stocks recover?
I am more inclined to think that this is a knee jerk reaction. That said, I believe the travel stocks should see better days from now but it isn’t going to be as rosy as what the market suggested on 9 Nov 2020. There’s some excitement in the stock prices. Stocks are likely to be volatile like what we have experienced during the Mar-Apr period. 2020 hasn’t end yet.
There may be more surprises coming. Stay tuned.
