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The Hardest Hit Companies of the COVID-19 Downturn: The ‘BEACH’ Stocks

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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.

CompanyTickerCategoryMarket Cap: 02/19/2020Market Cap: 03/24/2020% Change
Booking Holdings
BKNGBooking$80.8B$51B-37%
Expedia GroupEXPEBooking$17.1B$8.1B-53%
Allegiant TravelALGTBooking$2.7B$1.4B-47%
Live Nation LYVEntertainment & Live Events$16.3B$9.1B-44%
Six FlagsSIXEntertainment & Live Events$3.2B$1.1B-66%
Cedar FairFUNEntertainment & Live Events$3.1B$1.3B-58%
The Walt Disney CoDISEntertainment & Live Events$255.1B$177B-31%
Penn National GamingPENNEntertainment & Live Events$4.3B$1.6B-63%
Delta Air LinesDALAirlines$37.5B$17.8B-52%
United Airlines UALAirlines$19.7B$8.4B-57%
American Airlines AALAirlines$12.1B$6.1B-50%
Southwest AirlinesLUVAirlines$29.5B$19.7B-33%
Alaska Air GroupALKAirlines$8B$3.7B-54%
Air Canada (in USD)ACAirlines$8.3B$2.8B-67%
CarnivalCCLCruise & Casino$30.8B$10B-67%
Royal Caribbean CruisesRCLCruise & Casino$23.2B$7.5B-68%
Norwegian Cruise LinesNCLHCruise & Casino$11.1B$3.1B-72%
Las Vegas SandsLVSCruise & Casino$52.8B$35.1B-34%
MGM Resorts InternationalMGMCruise & Casino$16.2B$6.2B-68%
Wynn ResortsWYNNCruise & Casino$14.6B$7.2B-51%
Caesars EntertainmentCZRCruise & Casino$10B$4.2B-58%
Eldorado ResortsERICruise & Casino$5.4B$1.3B-76%
Marriott InternationalMARHotels & Resorts$48.3B$25.7B-48%
HiltonHLTHotels & Resorts$31.3B$19.4B-38%
Hyatt HotelsHHotels & Resorts$9.1B$4.9B-46%
Choice Hotels InternationalCHHHotels & Resorts$6B$3.2B-46%
Wyndham Hotels & ResortsWHHotels & Resorts$5.6B$2.9B-48%
Park HotelsPKHotels & Resorts$5.5B$1.9B-66%
Vail ResortsMTNHotels & Resorts$9.98B$5.8B-41%
Marriott Vacations WorldwideVACHotels & 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.

Empty Stadiums

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.

CompanyTickerFeb 19 2020 Share PriceMar 24 2020 Share Price
Delta Air LinesNYSE:DAL$58.5$26.9
United Airlines NASDAQ:UAL$79.4$33
American Airlines NASDAQ:AAL$28.3$13.9
Southwest AirlinesNYSE:LUV$56.89$37.7
Alaska Air GroupNYSE: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.”

—CDC

 

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.

Occupancy Dilemma

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.

baird hotel stock index

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?

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COVID-19

Visualizing How COVID-19 Antiviral Pills and Vaccines Work at the Cellular Level

Despite tackling the same disease, vaccines and antiviral pills work differently to combat COVID-19. We visualize how they work in the body.

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Current Strategies to Tackle COVID-19

Since the pandemic started in 2020, a number of therapies have been developed to combat COVID-19.

The leading options for preventing infection include social distancing, mask-wearing, and vaccination. They are still recommended during the upsurge of the coronavirus’s latest mutation, the Omicron variant.

But in December 2021, The United States Food and Drug Administration (USDA) granted Emergency Use Authorization to two experimental pills for the treatment of new COVID-19 cases.

These medications, one made by Pfizer and the other by Merck & Co., hope to contribute to the fight against the coronavirus and its variants. Alongside vaccinations, they may help to curb extreme cases of COVID-19 by reducing the need for hospitalization.

Despite tackling the same disease, vaccines and pills work differently:

VaccinesPills
Taken by injectionTaken by mouth
Used for prevention Used for treatment only
Create an enhanced immune system by stimulating antibody productionDisrupt the assembly of new viral particles

How a Vaccine Helps Prevent COVID-19

The main purpose of a vaccine is to prewarn the body of a potential COVID-19 infection by creating antibodies that target and destroy the coronavirus.

In order to do this, the immune system needs an antigen.

It’s difficult to do this risk-free since all antigens exist directly on a virus. Luckily, vaccines safely expose antigens to our immune systems without the dangerous parts of the virus.

In the case of COVID-19, the coronavirus’s antigen is the spike protein that covers its outer surface. Vaccines inject antigen-building instructions* and use our own cellular machinery to build the coronavirus antigen from scratch.

When exposed to the spike protein, the immune system begins to assemble antigen-specific antibodies. These antibodies wait for the opportunity to attack the real spike protein when a coronavirus enters the body. Since antibodies decrease over time, booster immunizations help to maintain a strong line of defense.

*While different vaccine technologies exist, they all do a similar thing: introduce an antigen and build a stronger immune system.

How COVID Antiviral Pills Work

Antiviral pills, unlike vaccines, are not a preventative strategy. Instead, they treat an infected individual experiencing symptoms from the virus.

Two drugs are now entering the market. Merck & Co.’s Lagevrio®, composed of one molecule, and Pfizer’s Paxlovid®, composed of two.

These medications disrupt specific processes in the viral assembly line to choke the virus’s ability to replicate.

The Mechanism of Molnupiravir

RNA-dependent RNA Polymerase (RdRp) is a cellular component that works similar to a photocopying machine for the virus’s genetic instructions. An infected host cell is forced to produce RdRp, which starts generating more copies of the virus’s RNA.

Molnupiravir, developed by Merck & Co., is a polymerase inhibitor. It inserts itself into the viral instructions that RdRp is copying, jumbling the contents. The RdRp then produces junk.

The Mechanism of Nirmatrelvir + Ritonavir

A replicating virus makes proteins necessary for its survival in a large, clumped mass called a polyprotein. A cellular component called a protease cuts a virus’s polyprotein into smaller, workable pieces.

Pfizer’s antiviral medication is a protease inhibitor made of two pills:

  1. The first pill, nirmatrelvir, stops protease from cutting viral products into smaller pieces.
  2. The second pill, ritonavir, protects nirmatrelvir from destruction by the body and allows it to keep working.

With a faulty polymerase or a large, unusable polyprotein, antiviral medications make it difficult for the coronavirus to replicate. If treated early enough, they can lessen the virus’s impact on the body.

The Future of COVID Antiviral Pills and Medications

Antiviral medications seem to have a bright future ahead of them.

COVID-19 antivirals are based on early research done on coronaviruses from the 2002-04 SARS-CoV and the 2012 MERS-CoV outbreaks. Current breakthroughs in this technology may pave the way for better pharmaceuticals in the future.

One half of Pfizer’s medication, ritonavir, currently treats many other viruses including HIV/AIDS.

Gilead Science is currently developing oral derivatives of remdesivir, another polymerase inhibitor currently only offered to inpatients in the United States.

More coronavirus antivirals are currently in the pipeline, offering a glimpse of control on the looming presence of COVID-19.

Author’s Note: The medical information in this article is an information resource only, and is not to be used or relied on for any diagnostic or treatment purposes. Please talk to your doctor before undergoing any treatment for COVID-19. If you become sick and believe you may have symptoms of COVID-19, please follow the CDC guidelines.

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