A collapse in oil prices caused havoc on Wall Street this week, while Chipotle’s ‘poisonous burrito’ costs them big, and Netflix reels millions of new subscribers in. It was another wacky week on Wall Street.
The Quick Fix
#OilTrouble — The latest victim of the COVID-19 pandemic was oil, with barrel prices falling to record lows as demand plummets.
#AppleWho — Shares in music streaming giant Spotify (NYSE: SPOT) have continued to rise despite growing competition from Apple Music (NASDAQ: AAPL).
#ThatsAWrap — An impressive earnings call was dampened for Chipotle Mexican Grill (NYSE: CMG) this week after it was hit with a hefty fine.
#StreamingWars — As the world braces for several more months of pandemic, Netflix (NASDAQ: NFLX) is reaping the rewards in the form of 15.7 million new subscribers.
#AndFinally — Unfortunately, our canine companions could have reason to be sad once this whole pandemic is ended…
Oil is the lifeblood of the world’s economy, and unfortunately, the economy is bleeding out right now.
Why is oil affecting the market?
We were greeted on Monday to a red market as the economy reeled from the shock drop in oil prices worldwide. In fact, at its lowest point this week, the price of oil was coming in at -$40 per barrel. So technically, you could be paid $1 million for purchasing 25,000 future oil contacts. Of course, then you’d have to figure out how to sell all that oil in a market where nobody is buying, everyone is stuck in isolation, and you’d probably lose everything… But what’s life without a bit of risk? Anyway, jokes aside: The oil and gas industry is an important sector of the economy, amounting to $1.7 trillion in 2019, and with COVID-19 dropping oil demand to unprecedented levels, just after Russia and the Saudis cleared up an oil war-of-words, we already had far more supply than demand. The market adjusted itself later in the week, but there’s no denying that the oil industry is in for a shaky few months.
Bet you didn’t know
The average daily consumption of oil worldwide is a whopping 93 million barrels per day.
Who says two competing services can’t coexist? Disney (NYSE: DIS) and Netflix are doing it (though it’s early days) and Spotify seems to be doing just fine despite Apple Music’s rise.
What’s changed in music streaming?
Amid talk of the ‘Streaming Wars’, we often forget about the $8.8 billion music streaming industry. Even Apple seemed to have forgotten its music segment, which we last heard of 9 months ago when the company revealed that Apple Music had reached 60 million subscribers. At the time, it had just passed out Spotify in U.S. subscriptions, but still trailed the market-leader’s 124 million global paid audience. As the saying goes though, it’s either a feast or a famine with these guys: Apple announced new features this week, including: a web app for non-Mac users, availability in 167 countries, over 60 million songs, and the world’s largest catalog of podcasts (supposedly). How did Spotify react? Well, it didn’t really, because it still has twice the amount of paying subscribers as Apple, and is up nearly 20% in the last month. It goes to show that if you do just one thing better than everyone else, not even industry titans can stop you.
Bet you didn’t know
Streaming services accounted for close to 80% of the music industry’s musical output in 2019 alone.
For years Chipotle was plagued by an E. coli scandal, and after an impressive earnings call this week, that scandal was finally wrapped up…
What was the verdict of the scandal?
The verdict was a record-breaking $25 million criminal fine. The fine served to resolve allegations by federal prosecutors that its food sickened more than 1,100 people across the U.S. from 2015 to 2018, and is the largest fine ever imposed in a food-safety case. “Chipotle failed to ensure that its employees both understood and complied with its food safety protocols, resulting in hundreds of customers across the country getting sick,” U.S. Attorney Nick Hanna said in the statement announcing the deferred-prosecution agreement. It wasn’t all bad for Chipotle this week, with the company announcing at its earnings call that revenue in Q1 rose 7.8% to $1.41 billion, digital sales 81%, and comparable sales ticked up 3.3%. The company even reassured investors that it had more than enough cash to survive a worst-case scenario of shutdown during this pandemic. However, that $25 million is one expensive burrito, and has still got to sting.
Bet you didn’t know
It takes around 60 avocados to make just one batch of Chipotle’s famous fresh guac. Holy guacamole!
We all know exactly why Netflix is making headlines this week… ‘Tiger King’ of course! We need more episodes to guide us through this pandemic.
Oh yeah, and the small matter of earnings…
Ok, so maybe ‘Tiger King’ isn’t the only reason to talk about Netflix. I should probably mention the fact that Netflix also knocked subscriber growth out of the park at its earnings call this week. It helps that we’re all stuck at home with nothing to do. Expected to bring in 8.2 million new subs in Q1, the company said: ‘meh, we can do better’, and brought in a whopping 15.7 million fresh new audience members. Sure, they missed on earnings per share, and just about matched revenue expectations, but let’s conveniently ignore that for now and focus on the new subscribers. After all, isn’t that what Disney did with its 50 million Disney+ subscribers? Sure, the ‘House of Mouse’ is bleeding $30 million a day, and is furloughing up to 100,000 employees, but who cares, look at how pretty Disney+ is? I jest of course, but Netflix’s growth is impressive, despite management voicing concerns over whether it could maintain this growth when the COVID-19 pandemic subsides.
Bet you didn’t know
Between its release on March 6, and April 21, ‘Tiger King’ had raked in a whopping 64 million views.
I regret to say that I must end this week’s newsletter with a heart-wrenching report. According to animal psychologist Dr. Roger Mugford, a consultant for the British Royal Family, our pets are going to be quite sad when we get back to work after this pandemic. If, like me, your Instagram (NASDAQ: FB) and Twitter (NYSE: TWTR) account consists solely of animal videos, then you’ll be well aware that our doggo friends are having the time of their lives at the moment. I’ve even seen a story of how one little pup was so excited about his human friends being home all the time that he even managed to break his tail from wagging it too hard. And while all these additional walks and playtimes have been great, according to Dr. Mugford, we should introduce short “separation breaks” to get the dogs used to time without you around again.
What can we do to avoid causing pooch anxiety?
According to Dr. Mugford, all we can do is make sure our dogs are prepared for the inevitable return to normality. So as much as it hurts to say it, it might be worth putting Fido out on his own for a few hours a day. He’ll thank you later.
Bet you didn’t know
In an interview in 2013, Paul McCartney said that he added a frequency only dogs can hear to the end of the Beatles song ‘A Day in the Life’. So watch your dog when you play the song!
The Week In Numbers
people in the U.S. filed unemployment claims last week, totaling 25 million who’ve lost jobs due to the coronavirus pandemic.
released by Airbnb to help its hosts has been labeled a ‘publicity stunt’, as complaints of tiny payments from the bookings-giant emerge.
in coronavirus relief aid money was passed by the Senate this week, which is to be used in helping small businesses and hospitals deal with the coronavirus.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.