Thanks for checking out This Week In The Market for August 6, 2021. Let's dive in!
Hot Girl Fall: Are You Vaxxed and Waxed?
The BFD: The Biden administration is done messing around, and it seems like the private sector is also headed that way. This week, President Biden announced that all federal employees must be vaccinated in order to return to work. Many larger private companies are stopping short of mandating vaccines (except shoutout to United Airlines for demanding vaccinations), but are running large public relations campaigns to promote vaccinations in their employees. The NFL is running awareness campaigns and attempting to battle back against the negative PR of anti-vaccination stances by some high-profile players. Investment manager Vanguard is offering their employees up to $1,000 to get vaccinated. All of these measures have helped the U.S get to a rate of 70% of its citizens with at least one dose of the vaccine.
In Plain Speak: Historically, we have had two camps: vaccinators and anti-vaxxers. The COVID-19 vaccine has brought about a strange new category: vaccine-hesitant. These include people that see the merits of getting vaccinated, but are worried about the accelerated timeline of the vaccine, despite endorsements from both political parties and the governing bodies that judge the safety and efficacy of the vaccine. The political divide is important. There is a stark difference in vaccination rates between areas that are strongly Democrat versus strongly Republican, and political leaders have taken notice. The state with the lowest vaccination rate, the staunchly Republican stronghold of Alabama, has seen its governor declare "it's time to start blaming the unvaccinated folks" as the hospitalizations in the state rise to mid-2020 levels.
How Can This Make Me Rich?: First thing's first: get vaccinated. That's the only way we can return to normal life and your portfolio can get back to normal. Second, there are essentially two ways this could go:
The world shuts down again in an attempt to stifle the Delta and newly discovered Delta+ variants
Vaccinations improve and we wipe this thing out
Obviously, the trades here are different. In scenario one, it's the same play as last year in investing in stay-at-home sectors: telehealth, home workouts, video conferencing. In scenario two, it's the reopening stocks: travel and leisure, gaming and anything else you associate with masses of people (LiveNation maybe?) Honestly though, I'd wait. Big companies are beginning to push their back-to-work plans back in the calendar. Several big banks have pushed their employees a month or more, and Google has delayed until 2022 with the rise in Delta and Delta+.
Weird Story of the Week
This is an update to last week's story that centered on the legal action Scarlett Johansson brought against Disney for the co-release of Black Widow in theaters and Disney+ Premier Access. If you missed it last week, Johansson's compensation, per her contract with Disney and Marvel, was partially dependent on the box office revenue the film generated. Johansson even reportedly sought assurances on the theatrical exclusivity, but then was stonewalled by Disney and Marvel in discussions prior to the release of the film. Disney, in releasing the film both in theaters and on Disney+ on the same day, cut into her overall compensation, bringing about the lawsuit. Since I published that story, Disney released a statement on the matter and let's just say it's not in the "bridge-building" business:
"There is no merit whatsoever to this filing. The lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic. Disney has fully complied with Ms. Johansson’s contract and furthermore, the release of Black Widow on Disney+ with Premier Access has significantly enhanced her ability to earn additional compensation on top of the $20M she has received to date."
WOW. So Disney is effectively claiming that Johansson is placing money ahead of human lives with the "callous disregard" for the global pandemic. As you might imagine, the backlash from those in the industry has bee...severe. The "Women in Film" organization labelled Disney's statement as "a gendered character attack" and Johansson's agent released a similarly scathing statement in response. Johansson is reportedly "shocked," and now there is reporting around some other potentially unsettled Disney stars.
The two other Hollywood actresses directly affected by this co-release schedule from Disney are Emma Stone for her film "Cruella" and Emily Blunt for her role in the recently released "Jungle Cruise." As soon as the Johansson lawsuit reared its head, reports of Stone joining the suit were released, but that is still a rumor at this point. Emily Blunt is the much more interesting case due to her history with co-release scheduling with Paramount. "A Quiet Place II," a film developed by Blunt and her husband John Krasinski, was released in theaters earlier this year to relatively good box office success, considering the pandemic. Krasinski and Blunt reportedly held a strong stance against a co-release of the film on Paramount+, winning the battle and forcing a 45 day exclusivity period before the film came out on streaming. This is a space to watch.
Stock of the Week
Nothing about Robinhood's IPO has been normal. They released their S-1 where they were the first company to report millions of dollars of public revenue directly attributed to Dogecoin trading. Then, they had a public investor roadshow where they took questions from the public. They also held 30% of their float just for Robinhood users to purchase through their own IPO tool. Now, they've rode the wave from $38 all the way to $85 and now back to the mid-$50's. At current levels, they have a market capitalization of $46.69 billion, which makes them bigger than Dow Chemical, Kraft-Heinz, eBay, or Barclays.
I'm a detractor of this company, well documented here, but I didn't expect this. This company lost no time in becoming completely divorced from reality. There are no fundamentals in play here. This is slowly becoming a cult-like stock, similar to a Tesla or an GameStop. I'd stay away for a while, at least through the first earnings call, in order to judge how this inherently controversial company stands up to the scrutiny of the public markets.
Thanks for reading! Don't forget to sign up for my email list, and make sure you check out my company deep dive releasing tomorrow morning. Have a great weekend!