A roundup of some of the North American equities making moves in both directions today
On the rise
Dollarama Inc. (DOL-T) was up 3.7 per cent in early afternoon trading after it beat estimates for quarterly sales on Wednesday, as consumers bought more groceries and other essentials per visit to its stores amid the coronavirus crisis.
Deemed an essential business, Dollarama saw higher demand for basic products, including cleaning supplies and packaged foods, in late March and early April, as most of its stores remained open while the coronavirus crisis brought many Canadian businesses to a virtual halt.
Dollarama said it witnessed a 22.6-per-cent increase in average transaction size even as the number of transactions declined 17.9 per cent, as consumers visited less frequently yet bought larger quantities of goods.
Same-store sales, excluding temporarily closed stores, rose 0.7 per cent, while analysts on average had expected a 1.76-per-cent decline. As of June 8, 32 Dollarama stores were temporarily closed, it said.
Sales rose to $844.8-million from $828-million, beating estimates of $839.8-million. Excluding items, it earned 27 cents, compared with Wall Street estimate of 26 cents, according to IBES data from Refinitiv.
Tesla Inc. (TSLA-Q) rose 7.7 per cent after chief executive Elon Musk said that it is time to bring its Semi commercial truck to “volume production”, as the U.S. electric vehicle maker ramps up vehicle production after a brief virus-related shutdown.
“Production of the battery and powertrain will take place at Giga Nevada,” Mr. Musk said in an email seen by Reuters.
He said most of the other work will probably take place in other states.
Mr. Musk did not specify a timeframe for the production.
Electric truck company Nikola Corp. (NKLA-Q) was down 17.2 per cent on the Tesla news.
The Phoenix-based company's shares have more than doubled since the completion of a merger with an VectoIQ, a publicly traded shell company, on June 3.
On Monday, Nikola jumped 103 per cent. It added per cent on Tuesday, leading Citron Research to express skepticism over the rapid rise.
$NKLA back to $40 in a month. The anti-Tesla If you buy here you deserve to lose your $$ considering Milton sold just a week ago at $10. When $TSLA had this mkt cap the Model S was scaled and X was produced. There is no real IP at $NKLA and PR's have been overly promo— Citron Research (@CitronResearch) June 9, 2020
AMC Entertainment Holdings Inc. (AMC-N) jumped 10 per cent in the wake of saying after the bell Tuesday it was expecting to reopen its theaters globally in July after shutting them down in mid-March due to the COVID-19 pandemic.
The world’s largest movie theater operator said it was planning to reopen almost all its U.S. and UK theaters in time to showcase Christopher Nolan’s Tenet, slated for release on July 17, and Walt Disney Co’s Mulan on July 24.
AMC said it expects to run with limited capacity and blocked seating to maintain safety at its theaters, besides taking the usual precautionary measures.
Last week, it flagged “substantial doubts” about its ability to continue operations, if it was forced to keep its theaters closed for a longer period.
Much like most other out-of-home entertainment businesses, movie theater chains have also been hit by lockdowns and social distancing measures, which further added to the challenges due to a broader consumer shift to streaming services.
AMC on Tuesday said it was conducting an “exhaustive analysis” of its theaters to determine which ones to shut permanently, due to lack of profitability.
On the decline
Ford Motor Co. (F-N) slid 4.5 per cent after announcing with Volkswagen AG that they would make up to 8 million units of medium pickup trucks and commercial vans during the lifecycle of the vehicles as part of an alliance announced last year.
The automakers will collaborate on a city van built by Volkswagen, a 1-ton cargo van developed by Ford, and a Volkswagen medium pickup built on the Ford Ranger platform, from 2022.
The No. 2 U.S. automaker will also make a new electric vehicle for Europe by 2023, built on Volkswagen’s Modular Electric Drive toolkit, and could deliver more than 600,000 units over several years.
Ford and VW announced their partnership in January 2019, as carmakers around the globe join forces to invest in electric and self-driving technology to help save billions of dollars.
Separately, Ford Chief Operating Officer Jim Farley said the company expects to have its U.S. vehicle assembly plants return by early July to building at the rates they did before the coronavirus pandemic shut down the U.S. auto industry for two months.
“By July 6, we will expect to have all of our U.S. plants operating at pre-COVID patterns,” Mr. Farley said on a webcast of a presentation at a Deutsche Bank auto conference.
Starbucks Corp. (SBUX-Q) slid 5 per cent after it forecast its third-quarter operating income to plunge by about US$2.2-billion, hit by coronavirus-induced store closures.
The world’s largest coffee chain projected a third-quarter adjusted loss of 55 US cents to 70 US cents per share and said it expects U.S. same-store sales to drop by up to 45 per cent.
Starbucks also said it expects full-year adjusted earnings of about 55 US cents to 95 US cents per share.
It also announced it’s pulling back on its presence in Canada with plans to close up to 200 coffee shops.
The Seattle-based chain says it intends to restructure its company-operated business in Canada under a two-year plan.
Starbucks says some of the Canadian stores up for closure will be “repositioned,” which suggests they could either move to a new area or change format.
The company has been experimenting with locations that are pick-up only coffee shops. The first Canadian location using the new format launched in January in Toronto.
Delta Air Lines Inc. (DAL-N) lost 6.6 per cent after it forecast a 90-per-cent plunge in second-quarter revenue and warned it would need to renegotiate its debt agreements to avoid a default next year.
The company said it expected to end the year with US$10-billion in cash, cash equivalents, short-term investments and borrowing capacity.
Delta had US$6-billion in unrestricted liquidity at the end of its first quarter.
“Based on the reduction in demand that we have experienced and are continuing to experience as a result of the COVID-19 pandemic, we expect that we will not be able to satisfy the current minimum fixed charge coverage ratio by early next year,” the company said.
Delta said it added 100 domestic flights in June as state-wide lockdowns are lifted and domestic leisure travel returns, and expects to reduce its average daily cash outflow to zero by the end of 2020.
Simon Property Group Inc. (SPG-N), the biggest U.S. mall operator, was down 3.2 per cent after saying on Wednesday it would terminate its US$3.6-billion deal to buy Taubman Centers Inc. (TCO-N) due to the damage done by the coronavirus pandemic to its rival’s business.
Simon Property said that COVID-19 caused an adverse impact on Taubman’s business, leading it to breach the covenants in the merger agreement.
Taubman shares slid almost 19 per cent.
Merck & Co. (MRK-N) was down 0.6 per cent after saying on Tuesday its blockbuster therapy Keytruda used along with chemotherapy failed to meet the main goals of a late-stage study testing the combination as a first-line treatment for bladder cancer.
The trial did not meet the main goals of overall survival or progression-free survival, compared with standard-of-care chemotherapy alone, the company said in a statement.
The company said Keytruda helped improve overall survival and progression-free survival, but failed to achieve statistical significance.
Keytruda, which brought in sales of US$3.28-billion in the first quarter, has already received three U.S. regulatory approvals for different types of bladder cancers.
With files from staff and wires