A humorous look at the companies that caught our eye, for better or worse, this week
RioCan REIT (DOG)
Being a landlord is a great way to make money – until the tenants stop paying their bills. With retailers temporarily closing their doors or suffering a sharp drop in business, RioCan – one of Canada’s largest real estate investment trusts – collected just 55 per cent of April rents, with another 17 per cent deferred and the rest up in the air. RioCan said it anticipates collecting “most, if not all, that is owed to us,” but with the coronavirus causing a deep economic contraction and many retailers skating close to the line, RioCan might have to resort to some extreme collection tactics: “We don’t stop tickling until you pays us, see.”
General Electric (DOG)
Amid all the upheaval and uncertainty caused by the pandemic, you can still count on some things: General Electric’s stock price continuing to fall, for example. Adding to the myriad challenges GE was grappling with long before the coronavirus came along, the industrial giant now faces mounting pressure in its jet engine and components business – its largest division – as speculation grows that the steep drop in air travel could lead to airline bankruptcies. GE’s stock has already come in for a hard landing, plunging to a near three-decade low this week.
Applied DNA Sciences (STAR)
Donald Trump may claim that coronavirus testing is “overrated” (for reasons that have absolutely nothing to do with politics, of course). But for shareholders of Applied DNA Sciences, testing is a ticket to wealth. Shares of the biotech company soared after the U.S. Food and Drug Administration provided emergency-use authorization for the company’s COVID-19 test. Unfortunately for Mr. Trump’s re-election chances, more tests probably means more confirmed coronavirus cases.
SmileDirectClub investors just got punched in the mouth. The shares tumbled after the company, which sells teeth-alignment kits, posted a wider-than-expected quarterly loss of US$107-million, up from a loss of US$20.5-million a year earlier, as sales rose 11 per cent but missed expectations. With the company cutting its marketing budget by 90 per cent and temporarily closing all of its SmileShops except for those in Hong Kong, shareholders might not be smiling for a long time.
This doesn’t look good. Women’s apparel retailer Reitmans was already struggling before the coronavirus hit. Now, with its 587 stores closed and its lenders slashing available credit, the company’s survival is in question. Since Reitmans – whose other banners include Addition Elle, Penningtons, RW & Co. and Thyme – announced on May 1 that it “may be unable to continue as a going concern” unless it can find additional financing, the shares have lost about three-quarters of their value and are down about 97 per cent in the past year. In Reitmans’ case, the trend is not your friend.
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