Today we are watching…
1. Canopy Growth (#weedc)
The Invstr community loves nothing more than an acquisition, and for good reason. The target company in a buyout sees its share soar as the acquiring firm’s offer is made, anchored to a much higher valuation. The steps to approve a merger or acquisition are important to keep up the excitement, but antitrust panels can spoil the fun. There’s uproar as long-time Justice Department official John Elias testifies in court that Attorney General William Barr blocked pot stock mergers last year because he didn’t like weed, and that’s the only reason. It’s only cool to block a merger if it risks a monopoly, but he blocked two unnamed companies merging that would have combined for just 0.35% market share! Justice for cannabis?
2. Delta Air Lines (#delta)
The renewed coronavirus spread across the United States has prompted the state of New York to prolong quarantines for travelers moving through JFK, Newark, and LaGuardia. These airports are hubs for several mainline carriers. Delta Air Lines and American Airlines use JFK as a hub, and their routes extend out like spokes from New York. The stocks of these airlines dropped yesterday as the airports were deemed “hot spots” for the virus. United also has a hub at Newark. These airlines shares should trade at almost nothing given their zombie status. The stimulus isn’t all free, it’s debt to be paid back. These airlines will be paying it back for years to come before equity can be repaired.