BEACH Stocks: $332B in Value Washed Away
The market’s latest storm has plunged the global travel industry into uncharted territory.
Since the S&P 500 market high on February 19, 2020, market capitalizations across BEACH industries—booking, entertainment, airlines, cruises, and hotels—have tumbled. The global airline industry alone has seen $157B wiped off valuations across 116 publicly traded airlines.
Investor confidence in cruise lines has also dropped. Between Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings, over half of their market value has evaporated—equal to at least $42B in combined market capitalization.
Today’s infographic profiles the steep losses across BEACH companies. It looks at the ripple effects across individual companies and industries from the February 19 peak to date*.
*All numbers as of market close on March 24, 2020
Falling Off A Cliff
As the COVID-19 pandemic has spread to over 100 countries, many governments have implemented sweeping travel restrictions.
The impact across BEACH industries is far-reaching, with some valuations declining to nearly a quarter of their previous total.
|Company||Ticker||Category||Market Cap: 02/19/2020||Market Cap: 03/24/2020||% Change|
|Live Nation||LYV||Entertainment & Live Events||$16.3B||$9.1B||-44%|
|Six Flags||SIX||Entertainment & Live Events||$3.2B||$1.1B||-66%|
|Cedar Fair||FUN||Entertainment & Live Events||$3.1B||$1.3B||-58%|
|The Walt Disney Co||DIS||Entertainment & Live Events||$255.1B||$177B||-31%|
|Penn National Gaming||PENN||Entertainment & Live Events||$4.3B||$1.6B||-63%|
|Delta Air Lines||DAL||Airlines||$37.5B||$17.8B||-52%|
|Alaska Air Group||ALK||Airlines||$8B||$3.7B||-54%|
|Air Canada (in USD)||AC||Airlines||$8.3B||$2.8B||-67%|
|Carnival||CCL||Cruise & Casino||$30.8B||$10B||-67%|
|Royal Caribbean Cruises||RCL||Cruise & Casino||$23.2B||$7.5B||-68%|
|Norwegian Cruise Lines||NCLH||Cruise & Casino||$11.1B||$3.1B||-72%|
|Las Vegas Sands||LVS||Cruise & Casino||$52.8B||$35.1B||-34%|
|MGM Resorts International||MGM||Cruise & Casino||$16.2B||$6.2B||-68%|
|Wynn Resorts||WYNN||Cruise & Casino||$14.6B||$7.2B||-51%|
|Caesars Entertainment||CZR||Cruise & Casino||$10B||$4.2B||-58%|
|Eldorado Resorts||ERI||Cruise & Casino||$5.4B||$1.3B||-76%|
|Marriott International||MAR||Hotels & Resorts||$48.3B||$25.7B||-48%|
|Hilton||HLT||Hotels & Resorts||$31.3B||$19.4B||-38%|
|Hyatt Hotels||H||Hotels & Resorts||$9.1B||$4.9B||-46%|
|Choice Hotels International||CHH||Hotels & Resorts||$6B||$3.2B||-46%|
|Wyndham Hotels & Resorts||WH||Hotels & Resorts||$5.6B||$2.9B||-48%|
|Park Hotels||PK||Hotels & Resorts||$5.5B||$1.9B||-66%|
|Vail Resorts||MTN||Hotels & Resorts||$9.98B||$5.8B||-41%|
|Marriott Vacations Worldwide||VAC||Hotels & Resorts||$5.3B||$2.2B||-59%|
For instance, the consequences on various travel bookings brands have been severe. Booking Holdings, the parent company to Booking.com, Priceline, Kayak and OpenTable, witnessed share price declines of over 35% since the peak.
Across the entertainment industry, ticket sales for concerts, movies, and other events are falling precipitously due to cancellations or postponements.
Upwards of $5B in global film industry losses could result from the COVID-19 pandemic.
Chilling footage of the Las Vegas strip, as well as other tourist epicenters around the world, shows deserted streets as visitors opt to stay home instead.
Bracing For Impact
Meanwhile, worldwide airline revenue is estimated to fall by as much as $113B in 2020.
In under two months, the share price of Delta Airlines has fallen over 50% as the company anticipates a capacity reduction of 40%, the largest in its history.
|Company||Ticker||Feb 19 2020 Share Price||Mar 24 2020 Share Price|
|Delta Air Lines||NYSE:DAL||$58.5||$26.9|
|Alaska Air Group||NYSE:ALK||$65.2||$28.9|
|Air Canada (in CAD)||TSX:AC||$45.3||$15.1|
The global airline industry—which employs over 10M people—supports $2.7T in global economic activity across an average of 12M passengers per day.
Aruba, Jamaica No More
As for the cruise line industry, global operations came to a 30-day standstill in mid-March. Over 800 COVID-19 cases and 10 deaths across three cruise ships have been discovered.
“COVID-19 on cruise ships poses a risk for rapid spread of disease, causing outbreaks in a vulnerable population, and aggressive efforts are required to contain spread.”
Carnival, a Miami-based company, has witnessed its share price fall to around one third of its February 19 value. Similarly, Royal Caribbean Cruises, which has seen its market cap plummet almost 70%, announced that it will suspend trips until mid-May.
As the hotel industry is impacted by the global outbreak, share prices have also realized a significant slump. In the U.S., an estimated $1.4B in revenue is vanishing each week. If occupancy levels fall by just 30% this year, the U.S. hotel industry could see approximately 4 million jobs wiped out.
The Baird/STR Hotel Stock Index, which serves as a benchmark for the sector’s overall health, has declined over 47% year-to-date.
Global Stimulus Response
A number of travel industries around the world are calling for stimulus packages.
On March 25, the U.S. Congress finalized a historic $2T deal, which includes $25B in grants for the airline industry. In the UK, officials are providing small businesses in hospitality and leisure grants that are worth up to $30,000 as part of its $400B bailout plan.
China, Germany, Italy, and Spain have outlined multibillion dollar proposals in response to COVID-19. Overall, at least eleven countries have announced stimulus plans along with the European Commission and the IMF.
When Will the Travel Wave Hit Again?
Amid the COVID-19 pandemic one thing is clear: the impact on the travel industry will have a marked effect on the broader economy.
Travel is closely linked with oil, as transportation accounts for over 60% of global demand. In Q2 2020, global oil consumption is projected to fall by 25M barrels per day.
Along with this, discretionary consumer spending makes up over one third of America’s GDP. The impact of the pandemic across this sector is expected to contribute to a 10% decline or more in U.S. GDP for the second quarter.
As conditions materially improve around the world—with China beginning to open up flights—positive signs are emerging from under the surface. Will BEACH industries quickly bounce back as infection rates drop, or will a slow and painful recovery unfold in the months ahead?
The Periodic Table of Commodity Returns (2012-2021)
Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.
The Periodic Table of Commodity Returns (2022 Edition)
For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.
The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.
This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.
Commodity Prices Surge in 2021
After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.
The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.
Source: U.S. Global Investors
The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.
Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.
Energy Commodities Outperform as the World Reopens
The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.
After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.
Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.
Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.
High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.
Base Metals Beat out Precious Metals
2021 was a tale of two metals, as precious metals and base metals had opposing returns.
Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.
Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.
On the other end of the spectrum, precious metals simply sunk like a rock last year.
Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.
Grains Bring Steady Gains
In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.
Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.
As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.
Apple’s Colossal Market Cap as it Hits $3 Trillion
Apple’s market cap recently hit $3 trillion. To put that scale into context, this visualization compares Apple to European indexes.
Apple’s Colossal Market Cap in Context
In January of 2019, Apple’s market capitalization stood at $700 billion.
While this was perceived as a colossal figure at the time, when we fast forward to today, that valuation seems a lot more modest. Since then, Apple has surged to touch a $3 trillion valuation on January 3rd, 2022.
To gauge just how monstrous of a figure this is, consider that Apple is no longer comparable to just companies, but to countries and even entire stock indexes. This animation from James Eagle ranks the growth in Apple’s market cap alongside top indexes from the UK, France, and Germany.
Let’s take a closer look.
Apple Takes On Europe
The three indexes Apple is compared to are heavyweights in their own right.
The FTSE 100 consists of giants like HSBC and vaccine producer AstraZeneca, while the CAC 40 Index is home to LVMH, which made Bernard Arnault the richest man in the world for a period of time last year.
Nonetheless, Apple’s market cap exceeds that of the 100 companies in the FTSE, as well as the 40 in each of the CAC and DAX indexes.
|Stock/Index||Market Cap ($T)||Country of Origin|
|CAC 40 Index||$2.76T||🇫🇷|
|DAX 40 (Dax 30) Index*||$2.50T||🇩🇪|
*Germany’s flagship DAX Index expanded from 30 to 40 constituents in September 2021.
It’s important to note, that while Apple’s growth is stellar, European companies have simultaneously seen a decline in their share of the overall global stock market, which helps make these comparisons even more eye-catching.
For example, before 2005, publicly-traded European companies represented almost 30% of global stock market capitalization, but those figures have been cut in half to just 15% today.
Here are some other approaches to measure Apple’s dominance.
Apple’s Revenue Per Minute vs Other Tech Giants
Stepping away from market capitalization, another unique way to measure Apple’s success is in how much sales they generate on a per minute basis. In doing so, we see that they generate a massive $848,090 per minute.
Here’s how Apple revenue per minute compares to other Big Tech giants:
|Company||Revenue Per Minute|
Furthermore, Apple’s profits aren’t too shabby either: their $20.5 billion in net income last quarter equates to $156,000 in profits per minute.
How Apple Compares To Countries
Lastly, we can compare Apple’s market cap to the GDP of countries.
|Country (excluding Apple)||Total Value ($T)|
What might be most impressive here is that Apple’s market cap eclipses the GDP of major developed economies, such as Canada and Australia. That means the company is more valuable than the entire economic production of these countries in a calendar year.
That’s some serious scale.
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