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Can JetBlue Dare to Thrive Once This Nightmare Is Over?

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Airliners Stock News Corona

JetBlue Airways Corporation (NASDAQ:JBLU) will hold its quarterly conference call to discuss first quarter 2020 financial results on May 7th. Under the CARES Act, the airline will receive close to $685 million in grants from the government and an additional $251 million in form of a low-rate interest loan with an extended payback period. This cushion pillow will will help it absorb losses from disrupted operations as COVID-19 has put an end to travel.

But unlike its peers, JetBlue will actually be able to weather the storm quite well with the help of the government and even thrive after this nightmare ends due to its strong balance sheet, one of the strongest in the industry. Also, JetBlue is on good track due to surpassing earnings estimates with its last two reports.

The industry

The stock market was literally pushed off a clif as COVID-19 has put the global economy to a virtual standstill. As for airlines, Alaska Air (NYSE:ALK) and Ryanair (NASDAQ:RYAAY) were among the most heavily injured. While the market is slowly recovering, it is not excluded that there will be another major market selloff just like there being a possibility of a second wave of COVID-19. But when it comes to airlines, things couldn’t possibly get any worse they are now so most likely, the majority of stocks are trading close to the bottom. The good news is that once things restart, they will also slowly start to appreciate. But Buffet’s sell off was really the final drop as his Berkshire Hathaway Inc. (NYSE:BRKB) owned shares of American Airlines Group Inc. (NASDAQ:AAL), Delta Air Lines Inc. (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV) and United Airlines Holdings Inc. (NASDAQ:UAL), all of which slumped as he bailed on the industry. Air Canada (OTC:ACDVF) gave a depressing outlook forecasting a ‘smaller airline world’ whereas Southwest Airlines dared to be a bit optimistic as its CEO believes the worst is behind for the company.

The downside of CARES Act

The government will do whatever it takes to help the airlines to weather this storm but the downside of the CARES Act is the inability of airlines to issue dividends and repurchase their shares, at least until the loan is paid back. But considering the severity of this unprecedented crisis the world has woken up to, this still seems like a fair trade.

Jet Blue has things to do!

During this quiet time, JetBlue has enough time to make all the necessary preparations to enhance its additional competitive advantages and create additional shareholder value.  The airline has been replacing its old and expensive fleet with a much more efficient one, while also refurbishing its planes in order to increase their capacity. The overall project being forecasted to boost annual income by $70 to $80 million. Considering the forced pause, this project might even be finished sooner than expected so the company could enjoy the fruits of its labour once things go back to normal.

Strong balance sheet is key

The company ended 2019 with $1.3 billion in cash. Moreover, it has more than $700 million in credit lines with the option to easily borrow against the majority of its fleet in case of an emergency. This is why JetBlue should have no problems with staying alive for an extended period.

Outlook

All airlines are being rescued by the government in the same manner but maybe JetBlue is in a position to benefit the most from this aid. Unlike its other bigger peers, JetBlue is not a hub-and-spoke carrier so it will be easier for it to restart its origin and destination traffic without major delays. But at the moment as the economy is far away from fully opening sometimes soon, all airlines are in the same position with their stock down to as much as 60% and there is the impact of new guidelines that the government will issue to enable them to carry on with their businesses like it was in pre-COVID-19 days. The airlines will continue to be trading in a depressed territory for a while and things will not be the same even after lockdown measures loosen- the only thing that can truly make things go back to normal is the vaccine. But JetBlue has the odds to not only survive but also thrive once we successfully beat COVID-19.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

BenzingaEditorial

Even Oil Giants Are Under Tremendous Pressure

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Canadian Oil

The global oil market is in a state of hysteria. And not only COVID-19 is to blame, although its impact is being felt all over the globe. It is inevitable for the near future to be filled with bankruptcies, cost savings and cuts in spending as businesses are looking for ways to get through this historically difficult period.

The troubled industry

The year already began with over supply thanks to decades worth of expansion in U.S. onshore production. The price war between OPEC and Russia only further amplified the oversupply problem. That issue has at least been resolved. But the real hit was the global economic shutdown from COVID-19 which resulted in a drop in demand. With too much oil and too little demand, oil prices have plummeted to historic lows.

Cutting dividends

The current headwinds are intense, and have led many energy companies to trim their dividends. Royal Dutch Shell (NYSE:RDS.B) and Equinor are two direct competitors that have taken this drastic step to ensure they have ample cash to survive and they have a long histories of reliably returning cash to investors. Even Helmerich & Payne (NYSE:HP) which had a streak of 47 annual dividend hikes under its belt along with a rock-solid balance sheet still felt it necessary to cut the dividend in March.

It’s only logical to question whether or not peers ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) will be forced to do the same.

Chevron cutting jobs

Chevron has increased its dividend annually for 33 consecutive years. At the end of the first quarter, Chevron’s total long-term debt had increased roughly 20% from the start of the year. At the end of May, it announced a 15 percent cut of its global workforce.

Exxon has no layoff plans

Exxon’s dividend streak is even longer as it has increased its dividend annually for 37 consecutive years. But Exxon’s long-term debt jumped even more than Chevron since the beginning of the year as it rose by nearly a third.

Top and bottom lines at Exxon and Chevron are clearly driven by the price of oil which reached historic lows. Even Russia’s second-largest oil producer PJSC Lukoil (OTC:LUKOY) hurt by lower oil prices as it reported a first-quarter net loss of $669 million on Wednesday.

Shell and Equinor Vs Exxon and Chevron

Thus, Shell and Equinor chose to preserve cash by cutting their dividends. Starting out with much lower leverage, Exxon and Chevron have more balance sheet flexibility and they are using to protect their dividends, for now. Paying a consistent and growing dividend is important to the boards of these energy giants. But the energy market is at a painful place right now.

The boards of Exxon and Chevron will make the hard call to cut their dividends if need be.

Whichever the scenario, the big guys actually have a shot at pulling through thanks to the help of the Trump Administration, unlike many of their small peers which won’t even be able to afford Chapter 11 bankruptcies.

Uncertain future

There have been multiple ups and downs in the historically cyclical energy sector over the last three decades. But the biggest change is yet to take place: the green revolution. Exxon and Chevron have taken steps toward the low-carbon future. Exxon is developing biofuels from algae, while Chevron has invested in solar, wind and geothermal power sources. But environmental activists say they haven’t done enough. So, even with the support of the Trump administration, oil has an uncertain future. And even oil giants will need to fight for survival in the post-COVID-19 era.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

COVID-19 Has Catapulted Zoom Into a Powerhouse

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Microsoft News

As expected, Zoom Video Communications Inc (NASDAQ:ZM) reported a blockbuster first quarter. The platform became the place for video chats while half of the world’s population was in self-isolation forcing companies to install home offices. Its quarter results were impressive on almost every measure. Consequently, its share price increased 152% over the past year. This resulted in its market value expanding from $19bn to $58bn since the start of 2020.

Q1 Earnings Report

Revenue for the quarter was $382 million. This is a 169% increase from the same quarter a year ago. More impressively, customer growth almost tripled. New customers accounted for 71% of revenue growth during the quarter, with the remainder coming from subscriptions added by existing customers. The biggest growth was among individuals and smaller organizations with fewer than 10 employees. These two groups contributed almost 1/3 of the revenue during the quarter. This is an increase compared to a 20% share in the previous quarter. This infrastructure also influenced the billing mix, as these customers typically pay monthly fees rather than opting for annual contracts.

This top line resulted in a GAAP net income of $27.0 million, or $0.09 per share. To give you a better idea, one year ago it was $0.2 million, or $0.00 per share. Cash at the end of the quarter totaled $1.1 billion.

Zoom expects the good times to continue through the year as it almost doubled its revenue guidance for the fiscal year from $910 million to $1.79 billion.

Privacy issues- the only dark spot

Zoom’s CEO admitted that the company could have done better regarding various security flaws that came to light as Zoom use rocketed among individual consumers. But Zoom attracted new criticism by announcing users will have to pay for the end-to-end encryption. Or perhaps the CEO’s justification that the company wants to work together with FBI and local law enforcement in case some people use Zoom for bad purposes was just not well framed.

Google, Microsoft and Facebook muscling in on Zoom’s video boom

Deep-pocketed rivals including Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) have immediately jumped to take their own piece of the video conferencing pie. Microsoft announced it would launch a version of its video-conferencing service for individual consumers in March. In April, Facebook introduced a group video-calling feature called Messenger Rooms. The social media giant managed to cause a dip in Zoom’s share price. Also in April, Google announced its own contender called Meet.

Zoom’s strategy- “best of breed” in video and voice

Despite its experience of the past few months, Zoom is sticking to its focus on larger enterprise customers as its major growth opportunity. Its aim is to be the go-to provider of video and voice for business customers. The company is happy to leave other aspects of digital teamwork, such as messaging and content sharing to Slack Technologies Inc (NYSE:WORK), Microsoft Teams, Box (NYSE:BOX) and Dropbox Inc (NASDAQ:DBX). It’s betting on a best-of-breed strategy. The CEO also reiterated his belief in extending into cloud-based PBX with the Zoom Phone service as a significant opportunity to build on the success of the video conferencing service. If anything, Zoom seems not to be at all afraid of its big tech rivals.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

COVID-19 Was Powerless Against FAANG Stocks- But There Are More Battles to Be Won!

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Facebook Earnings News

FAANG is an acronym that stands for the five most popular and best-performing US technology stocks in the market. They are Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet’s Google (NASDAQ:GOOG). Well, Facebook, Amazon and Netflix hit record highs recently but this doesn’t mean all is bright.

Alphabet Trails Behind Facebook. But Despite Hitting Highs- Controversies Remain.

Facebook’s stock (NASDAQ:FB)  is up by about 16% since early 2018 which is below 28% gain for Google’s parent Alphabet’s stock (NASDAQ: GOOGL) over the same period. Facebook’s revenues have expanded 74% between 2017 and 2019. This is 1.6x those of Google in the same period. Facebook’s higher revenue growth over recent years and its higher multiple imply higher potential earnings growth in the future. The hype is led by its big push into e-commerce with the launch of Shops.  And it took Shopify Inc (NYSE:SHOP) for the ride as well, which became Canada’s most valuable company. But controversies remain at Facebook’s side as Zuckerberg recently refused to act against President Trump’s posts.

Alphabet’s Potential Could Be Stronger Than We Realize

It can be argued that the company has a higher quality revenue mix, especially due to its highest-growing segment, Google’s Cloud business that gives more resilience to Google’s revenues. Google has very large advertising exposure but unlike Facebook that earns 98% of revenues from it, ads contribute 80% to Google’s revenues. So Google’s pay per click advertising, for which marketers only pay when their ads get results, could hold up stronger than anticipated. While many of Google’s offerings don’t make much money yet, they could imply that Google is being undervalued.

Amazon Stock May Have Soared With Restarted Non-Essential Deliveries But Its Biggest Weakness Remained

The company is at a crossroads as it is facing sharp criticism over its treatment of employees – and the way the company responds to the objections may well determine its future.

The e-commerce giant made it easier for employees to juggle day care amid the COVID-19 pandemic. It announced ten days of subsidized emergency backup child or adult care. By covering more more than 90% of the cost of care, the e-commerce giant will invest several million dollars to offer this benefit during the next few months. What we don’t know is if the spending is part of the $4 billion Amazon took aside for its COVID-19 response during the current quarter.

But it is unclear whether the importance the company now seems to be placing on its employees is just a forced response to the criticism or if it truly reflects its commitment to the wellbeing of frontline employees. After all, the company was known for its poor working conditions long before the pandemic.

You could think that Amazon performed well anyway but workforce management also matters to investors. In last week’s shareholder meeting, they showed concern for the company’s reputation to be permanently damaged by this increased scrutiny. Bezos is being pressured to improve the treatment of Amazon’s workforce.

Apple

Shares of Apple have been on a good track for a while. Investors have applauded the company’s shift from a business model that is dependent on hardware revenue to a more services-based structure. As a reward, its stock went up 80% over the past year. Since surpassing a $1 trillion market cap in 2019, shares of Apple have continued to climb sharply. The company’s value has come near $1.4 trillion. Further robust growth in Apple’s services and wearables businesses and strong operational tailwinds over the next for years will help the tech company go forward. But with sales of the iPhone having hit a saturation point, which is why Apple has only grown its revenue by a total of 20% over the last three years, the switch or innovation is a must.

Netflix Achieved Record Figures but Analyst Fear Collapse

Despite short term headwinds, Netflix gathered a fast-growing member base of 182.86 million. It blew away expectations by adding 15.77 million new subscribers in the first quarter. But sceptics are not a fan of its high cash burn as Netflix is heavily spending on content. It burned more than $3.2 billion in cash last year. Also, whether Netflix will continue to be able to raise prices to offset its rising costs in light of this increased competition.

Outlook

The overall performance of the FAANG stocks is optimistic for the global economic recovery. No one seems to be afraid of holding any of FAANG stocks right now. But that doesn’t mean each doesn’t have its own concern.

The most ‘threatened’ seems to be Amazon. Amazon should direct all its resourcefulness and superior operational capabilities towards employees.  Bezos must see Amazon’s workforce as an energizing wheel that propels the company’s productivity and not as a hit to the bottom line. In other words, Amazon must give the same attention to its employees as it did to its customers.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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