20 May Watchlist 👀
Today we are watching…
1. Spotify (#spotify)
Shares in Spotify went parabolic yesterday as the world’s number one podcast was acquired exclusively for the service, comedian Joe Rogan’s podcast. This was unusual price behavior. If investors are treating this as an acquisition, the acquirer’s stock should’ve plummeted as it weakened its balance sheet to make an uncertain deal. But Joe Rogan’s Podcast is proven, less risky in the eyes of the market, and it validates the more profitable podcast strategy that Spotify is going for. The deal closed for $100 million, according to the Wall Street Journal.
2. Qantas (#qantas)
Cost curves are not looking good for airlines in the near-term. If social distancing measures are enforced, a far lower load factor (how full the plane is) will require fares to increase dramatically. According to Qantas Airlines of Australia, the increase could be nine-fold. You would be fitting 28 people on a 128-seat aircraft. Qantas is now flying about one-twentieth of its flights pre-corona, but chief executive Alan Joyce thinks domestic demand should return significantly in July. There probably won’t be social distancing measures, just masks, but we’ll have to wait for confirmation.