A humorous look at the companies that caught our eye, for better or worse, this week
Cenovus Energy (STAR)
Normally when a company eliminates its dividend, shareholders express their disgust by pummelling the stock. But in the case of Cenovus Energy, investors were thrilled. Aiming to cut costs as it rides out the double-whammy of the coronavirus pandemic and depressed energy prices, the oil and gas producer suspended its dividend, slashed its capital spending plan by an additional $150-million – on top of a $450-million reduction in March – and announced salary reductions for all employees from the CEO on down. The news was so bad, it’s good.
A&W Revenue Royalties Income Fund (DOG)
Questions about A&W that we don’t know the answer to yet: 1) How will the guy in the A&W commercials hand out free burgers while still maintaining two metres of social distancing? 2) When will A&W’s dining rooms open again so we can put back on the weight we’ve lost eating canned soup and crackers every day? 3) When will A&W resume its monthly distribution, which the company suspended this week as it faces a steep drop in sales amid the coronavirus pandemic? Judging by the drop in A&W’s stock price, some investors think they could be waiting for a while.
For years, investors wondered what would stop the explosive rally in Shopify’s stock price. Now, they have the answer. Even as the e-commerce software company said it expects first-quarter revenue and adjusted operating income to be “within or ahead of the range of expectations” provided in February, Shopify suspended its 2020 financial outlook, citing “uncertainty surrounding the duration and magnitude of COVID-19.” Investors should consider themselves lucky: Even after this week’s tumble, the stock is still up about 80 per cent in the past year.
Luckin Coffee (DOG)
Do you feel Luckin, punk? Shareholders of Luckin Coffee felt very unlucky indeed after the China-based coffee chain, which went public on the U.S. market last year, suspended its chief operating officer and several employees after an internal investigation alleged that they had fabricated sales transactions. With the stock tanking on the news and China’s securities regulator investigating the allegations, investors could use something stronger than a cup of coffee to soothe their nerves.
Carnival Corp. (DOG)
For investors in the cruise industry, the nightmare never stops. Shares of Carnival Corp., already sinking badly as the coronavirus hammers the travel industry, took on more water after the company announced a US$500-million equity offering priced at US$8 a share – a steep discount to the market price before the deal was announced. In addition to the stock sale – which had been reduced from US$1.25-billion announced previously – Carnival is selling US$4-billion of bonds with an eye-popping coupon of 11.5 per cent and US$1.75-billion of convertible notes yielding 5.75 per cent. You cruise, you lose.