☑️ Cruisin'. Carnival cruise lines shares rose more than 20% yesterday thanks to Saudi Arabia's sovereign wealth fund announcing that it scooped up 8.2% of the beleaguered company's public shares. The Public Investment Fund purchased 43.51M shares (valued at $369.4M) after the stock price cratered thanks to coronavirus concerns.
Despite the obvious risk associated with the company and industry (see: Diamond Princess), PIF felt the bargain basement price was too good to pass up. In fact, the Saudi fund also took stakes in Uber, Tesla, and Penske at what it hopes is a steep discount. With the current oil outlook, why not diversify?
☑️ All the way up. Shares of online furniture retailer, Wayfair (try not to say "you got just what I need"), surged 37% Tuesday, after it announced that sales growth doubled in March to near;y 40% thanks to people decorating their new home offices and getting ready for spring. New throw pillows always help me feel better in times of crisis.
The increase in sales doesn't change the fact that Wayfair isn't profitable, nor does it have positive cash flow. But what it lacks in financial stability, it makes up for in Kelly Clarkson ad spots.
☑️ Fed of a deal. The Federal Reserve revealed a plan to finance loans given out by banks and other lenders as part of the $350B allocated to small businesses under the stimulus package signed last month. Things hit a bit of a snag on Friday as some of the biggest lenders said they couldn't process loan applications due to balance sheet constraints.
Having the Fed backing loans gives the lenders relief on their own balance sheets, and allows them to issue more loans. Jerry Interest Rates to the rescue.
☑️ Coffee stain. Luckin Coffee is having an April to forget. An entity held by its Executive Chairman, Charles Zhengyao Lu defaulted on a margin loan worth $518M after Luckin's stock price cratered 80% last week when it was revealed that roughly half of its total sales for 2019 were falsified. Rounding error. The loan, provided by various banks who chose to remain nameless, was secured (I use that term lightly) by Luckin shares.
As a result, Lu and CEO Jenny Zhiya Qian had to fork over 76.3M depository shares that were put up for sale by Goldman Sachs who will act as the "disposal agent." The shares were worth $410M as of last Friday but the number keeps dropping along with the company's share price.The dregs, apparently.
The banks who lent the money in the first place stand to lose more than $100M...
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