A humorous look at the companies that caught our eye, for better or worse, this week.
DraftKings (DOG)
How to lose a bundle of money: 1) Bet on the Leafs; 2) Bet on the Blue Jays; 3) Bet on DraftKings. Shares of the online sport betting and casino company plunged faster than the Leafs' and Jays' playoff hopes after DraftKings announced an offering of 32 million shares – half from the company and half from early investors in the business, which went public in April. DraftKings’s announcement two days later that the deal would be priced at US$52 a share – well below the market – extended the stock’s skid. Watching your team lose in overtime is more fun than owning this thing.
Cineplex (DOG)
If this were a Hollywood movie, a superhero would swoop in and vanquish the evil coronavirus. Unfortunately, this is reality and the virus is proving to be a stubborn foe. Shares of Cineplex Inc., Canada’s largest cinema chain, sank to a record low after MGM delayed the release of the James Bond flick, No Time to Die, until April – the latest film to be pushed back because of the pandemic. Further rattling investors, Cineworld Group PLC, the world’s second-largest theatre chain, announced the temporary closing of all of its cinemas in the United States and Britain, warning that the industry is becoming “unviable." Hey, Iron Man. Pick up the damn phone.
Domino’s Pizza (DOG)
If pizza is too hot, it can burn the roof of your mouth. Investing in a red-hot pizza stock is also a good way to get burned. Shares of Domino’s had soared about 47 per cent this year, as consumers staying home during the pandemic ordered more pies for delivery. But even as the chain’s revenue jumped 17.9 per cent in the third quarter, Domino’s posted earnings well below expectations, hit by higher wages for frontline workers, expenses for personal protective equipment and rising costs for cheese and other ingredients. Investors are reaching for the ice water.
Netflix (STAR)
Well, that’s one way to get your investment firm noticed. Pivotal Research slapped a US$650 price target on Netflix Inc. – the highest of any firm on Wall Street – citing what it sees as the virtuous circle driving the streaming service’s growth. “The larger their subscriber base grows … the more they can spend on original content, which increases the potential target market for their service (and reduces existing subscriber churn) and enhances their ability to take future price increases,” Pivotal said. Netflix’s stock is already experiencing some big price increases.
Canada Goose (STAR)
Maybe the Goose isn’t cooked after all. After tumbling nearly 80 per cent from their peak in 2018 to their low in March, shares of Canada Goose Holdings Inc. have regained roughly a third of their point loss. With cold weather coming and people who work from home because of the coronavirus looking to spend more time outdoors, “we expect outerwear to be a beneficiary,” RBC analyst Kate Fitzsimons said in a note. Canada Goose’s strong e-commerce exposure and recovering business in China are also providing a tailwind, said Ms. Fitzsimons, who raised her price target to $47 from $43. Honk if you like paying $1,000 for a winter coat.
A humorous look at the companies that caught our eye, for better or worse, this week
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John Heinzl