Zoom and Slack are worth nearly $50 billion more since coronavirus hit, and now we see the results

The COVID-19 outbreak brought waves of new users to Zoom Video Communications Inc. and Slack Technologies Inc., but this week we find out how many are actually paying for the services, and how much it is costing the companies to support them.


will report quarterly earnings Tuesday afternoon, after announcing in April that it had topped 200 million “daily meeting participants” — 20 times more than its record at the end of last year — as companies and schools around the world rushed to adjust to widespread remote work. Slack

Chief Executive Stewart Butterfield has already disclosed to MarketWatch that “simultaneously connected” users on his software grew by 25% in a single week in March, and that Slack added 80% more many paying customers in two months than it had in full previous quarters. Slack reports Thursday afternoon.

Since both companies offer free plans with more limited feature sets, it’s still unclear just how well Zoom and Slack are capitalizing on work-from-home trends financially, even as their shares have soared in recent months. And both have had to secure the computing power necessary to support those users, adding costs that will eat into Zoom’s potential profit and further erode Slack’s losses.

For more: We need tech more than ever, but that doesn’t mean we are willing to pay for it

The results will put nearly $50 billion in freshly minted valuations to the test. Zoom’s market capitalization crossed the $50 billion mark on its own for the first time Friday, and shares — which sold for $36 in its 2019 initial public offering — closed higher than $200 for the first time Monday. Slack is trading for its highest prices since the stock debuted last June, and is now worth more than $20 billion after riding up 65% so far in 2020. Combined, the two stocks have added roughly $48 billion in market cap since the beginning of the year, which tops the entire valuations of other prominent cloud-software names like Workday Inc.

and Atlassian Corp.

Zoom has not emerged from its sudden success unscathed. Look for Chief Executive Eric Yuan to address any fallout from safety and security lapses on its platform after Zoom began facing heavy backlash in March about its encryption claims, as well as default settings that allowed those who weren’t hosting a meeting to share their screens and potentially broadcast inappropriate messages.

For more: Zoom Video lurches from boom to backlash amid privacy issues, ‘Zoom bombing’ attacks

The criticism prompted some companies to ban the use of Zoom for corporate purposes. The New York City Department of Education also stopped using Zoom, though the school system eventually came back to the service with new security features, such as letting meeting hosts mute participants without giving them the option to unmute. Zoom ultimately made changes to its default settings for all users, clarified its encryption policies, and prioritized security improvements within its feature-development teams.

“We now have a much broader set of users who are utilizing our product in a myriad of unexpected ways, presenting us with challenges we did not anticipate when the platform was conceived,” Yuan said in an April blog post, one of a number of public writings about the company’s response to the backlash.

So how many companies did stop paying for Zoom as a result of security issues and Zoom-bombing scandals? Cantor Fitzgerald analyst Drew Kootman doesn’t believe it will be important.

“We do not expect a material impact from recent privacy/security issues as we believe the company is taking appropriate steps to improve the problem,” he wrote in an April note to clients.

Zoom’s rivals in video meetings have also pointed to big spikes in activity in recent months: Alphabet Inc.


disclosed that its Meets platform has seen a “thirtyfold increase” in usage since January, and Cisco Systems Inc.

said Webex was running at three times its February capacity. Microsoft Corp.’s

Teams saw “more than 200 million meeting participants” in a single day during April.

For more: Microsoft adds as many users to Teams in a week as Slack has in total

Teams is seen as a direct competitor to both companies, but especially Slack, with its ability to offer a similar text-based service and video meetings to corporate clients who may already have access through their corporate Microsoft Office cloud-software packages. Slack may have a more youthful vibe in the world of enterprise messaging apps, but still trails behind Teams in terms of its user base.

MKM Partners analyst Rohit Kulkarni believes there is room for multiple services to thrive in the market.

“The likelihood of a ‘winner takes most’ competitive dynamic outcome in the enterprise collaboration software market is quite low,” he wrote. Kulkarni models 19,000 paid net additions for the fiscal first quarter, compared with 22,000 for the entirety of Slack’s last fiscal year.

See also: Slack CEO details ‘most productive’ week in company history, hits back at Microsoft

Slack will be joined Thursday afternoon by DocuSign Inc.

, which should also be benefiting from at-home trends due to growing need for e-signatures on legal documents. Other software companies expected to report earnings this week include CrowdStrike Holdings Inc.

, Smartsheet Inc.

, Cloudera Inc.

, Guidewire Software Inc.

, MongoDB Inc.

and PagerDuty Inc.

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Is American Airlines Worth Saving? (NASDAQ:AAL)

The airline industry and investors continue to try to adapt to the rapidly changing world left by the coronavirus and the governmental steps that were taken to contain it. From the suspension of travel from China on January 31, 2020, to March 11 and the order to suspend visitor travel from Europe to the weekend of March 13 when newscasts were filled with CDC briefings advising Americans to social distance and stay at home, the airline industry has been attempting to build new business plans for whatever may become the new normal. Just six months before the 9/11 anniversary, 3/11 will go down in airline industry history as yet another infamous date.

Parked American Airlines aircraft at Tulsa Source: Tulsa World

The U.S. government responded quickly to airline industry concerns about the lack of revenue that could permanently damage the airline industry. The $50 billion in financial support for U.S. airlines is part of the $125 billion in government support being offered to airlines worldwide. A number of airlines worldwide have already ceased flying or entered judicial reorganization.

Recent investor updates including from Southwest Airlines (LUV) show that LUV’s operating revenue fell from 90-95% for April with very slight improvement to an 85-90% reduction for May which will mirror the revenue reduction for the June quarter. No airline is providing revenue or cash burn guidance beyond the current quarter, but the recovery is clear, even as some tout the doubling of traffic demand that is being seen at TSA checkpoints. Moving from a 95% to a 90% reduction is indeed laudable, but the size of the hole the airline industry is currently in cannot be underestimated.

As I noted in my most recent article on Seeking Alpha, the keys to survival for airlines depends on these four points:

  1. Adapt to the new business normal including about social distancing and increased cleanliness for those that do travel
  2. Obtain sufficient liquidity and cash to fund operations during the downturn
  3. Cut costs to be in line with revenues to reduce cash burn
  4. Be able to sustain the level of debt that each airline will take on as a result of this virus crisis

While I stated in my SA article why I believe Delta Air Lines (DAL) is executing the industry’s best recovery plan, the reality is that not all airlines will be able to meet each of those four criteria for survival and success, even in the medium term. Now that the U.S. Treasury has put $25 billion into airline industry bank accounts via grants and partial loans for payroll support, it is time for investors and taxpayers to understand the next steps the industry faces, how the business models for airlines might change, and how investors might benefit from airlines that adapt better than others to the new realities of air travel.

Figuring out how the world has changed

In the midst of crisis, survival takes precedence. Once the prospect of immediately perishing is vanquished, a reassessment of life as a result of the crisis begins to take shape. Airlines will continue to be subject to medical advice regarding how the disease is spread (which continues to change), the steps necessary to limit the spread of disease, and guidance for community interaction.

Regardless of the outcome of COVID-19, the near global stay-at-home routine has caused many businesses to quickly pivot to teleworking and working from home could become part of the new normal for their businesses. Enormous parts of the global economy are at risk because of these changed work dynamics, including all aspects of the transportation, food service and hospitality, and real estate industries. Compound these changes which some companies will choose to embrace with the weaker economy and significant segments of the economy will face a much longer recovery and a bleaker future.

The democratization of air travel that accelerated over the past decade might unravel, esp. as the cost of providing disease-free travel increases its costs. Personal perception of space will likely be permanently changed; being told to remain distant from those whose disease status is not known will not be quickly unwound. Americans have always demanded some of the greatest amounts of personal space in the world and have generally had the resources to create space that is lacking in many cultures. Many Americans have been challenged to wear facial coverings in the interest of the common good, a concept that clashes with individualism and the group norms that are part of many societies. Airlines, esp. in the U.S., are at the pointed edge of yet another spear with which society has to wrestle.

Public policy considerations

The U.S. airline industry spent the majority of its nearly 100-year life under government regulation which limited market access and regulated fares. In 1978, the Civil Aeronautics Board was disbanded and the free market assumed responsibility for setting domestic airline capacity, route selections, and fares. Airline failures, mergers, and bankruptcies were plentiful during the first 22 years of domestic airline deregulation but 9/11 provided such a major jolt to the airline industry that the federal government stepped back into the industry. Grants were given to U.S. airlines for security enhancements while a loan program was established to help U.S. airlines access capital markets. In the ten years that followed 9/11, all of the largest legacy airlines took a trip through chapter 11 bankruptcy and reorganization. While the first 20 years of deregulation claimed such legendary airline names such as Eastern and Pan Am through business failures and liquidations, all of the remaining airlines at 9/11 that do not exist today were acquired through mergers or acquisitions in the ten years that followed 9/11.

While the U.S. airline industry is the product of dozens of mergers and acquisitions, the four largest U.S. airlines now control 80% of U.S. airline traffic; the largest legacy carriers American (AAL), Delta, and United (UAL) have been joined by Southwest, a low cost airline that only burst on the national scene during the deregulated era. It is unlikely that there is any way the big four carriers can combine or even acquire significant assets from each other or acquire any of the remaining half dozen smaller carriers which largely function in niche and/or regional roles.

Boeing’s CEO, David Calhoun, put voice behind the fears of a U.S. airline failure in his interview on a national news show by responding affirmatively to a question whether he believed that a U.S. airline would fail. While some airlines privately objected to his comments and cited Boeing’s own financial and strategic failures, the business world could not help but perform a quick mental game of airline musical chairs. In contrast, Delta’s CEO commented after Boeing’s CEO’s comments that Delta does not believe any U.S. airline will “go out of business” in 2020. Seeking Alpha contributors and analysts are divided on the long-term prospects and structure of the airline industry.

The CARES Act followed the same principle that the Treasury Secretary provided to American business as a whole in the early days of the economic shutdown: viable businesses that lacked access to capital would be provided with the resources to remain in business, largely through loans. The U.S. airline industry received payroll support grants during the first phase of the CARES Act to be followed by loans for which all airlines can apply. Most U.S. airlines have made application for federal loans but they do not have to decide if they will accept them at this time; even those airlines that say they want the loans will know in the next weeks if the Federal government will extend loans to them.

With the prospect of tens of billions of dollars of taxpayer money at risk and with the possible distortion of the free markets, the question must be asked if we as a country want to rebuild the airline industry that existed pre-COVID-19 or if this isn’t an ideal time to require significant structural changes in the industry. Further, the question must be asked if the U.S. has already saved the airline industry, even if not every carrier can be saved going forward. In order to answer those questions, we need to more deeply discuss how the U.S. airline industry does its job and how well the industry and specific carriers contribute to the national aviation system. The answers to these questions will have profound impacts on airline equity and bond investors.

While this article specifically addresses American Airlines, I believe the same principles apply if a minority number of airlines or U.S. airline capacity requires further federal financial assistance.

Is this what we want to rebuild?

There were only two major requirements that airlines had to comply with by accepting the first phase of the CARES Act which was based on summer 2019 payroll expenses for each airline. First, airlines have to maintain some level of service commensurate with what they operated in 2019 or planned to operate this summer; there have been numerous exemption requests from carriers for the minimum service requirements and most have been granted by the Dept. of Transportation. Second, airlines have to commit to not furloughing or laying off employees or cutting salaries but do have some ability to reduce the number of hours worked and paid. Several airlines have already stated that they will furlough personnel when they are permitted to do so in October. In addition, in response to early opposition to the amount of money that was spent on stock buybacks, airlines are prohibited from certain capital management practices including stock buybacks. Beyond these specific guidelines that are being equally applied to all carriers, there is broad discretion given to airlines regarding how they should restructure their business in order to survive.

Alaska, American, Delta, Hawaiian, and United are legacy airlines that engaged in interstate air transportation prior to 1978. They all operate hub and spoke route systems enabling them to distribute traffic from multiple cities across their networks through one or more hubs. American, Delta, and United are often called global airlines because they provide service on at least five continents as well as serve hundreds of small cities throughout the U.S. The legacy airlines have the most complex pricing model by offering multiple levels of service and pricing their product to target each type of customer, including fares offered by low cost and ultra-low-cost carriers. All other U.S. airlines cater to more narrowly defined customer bases without a focus on serving small cities, offering global networks, and using a variety of aircraft types to match supply with demand in different market types. It is impossible to know if less than three U.S. global/nationwide network airlines can adequately connect and serve America’s transportation needs.

In determining how effective each type of airline and each specific airline is in achieving its mission of serving the public and investors, it is worth considering four key factors: depth and quality of service including level of fares, profitability, and investor returns.

In aggregate, the U.S. has one of the most enviable positions in global aviation and the system is very well-used. According to DOT data, there are 363 U.S. airports served by U.S. commercial airlines. Each of the AAL, DAL, and UAL networks served more than 200 cities as of the end of 2019, Allegiant (NASDAQ:ALGT) is the only carrier that served between 100 and 200 airports; all of the remaining U.S. airlines other than SkyWest (NASDAQ:SKYW) served less than 100 cities. DAL served the most cities with large jets (148) while SkyWest provided regional carrier service (typically aircraft less than 76 seats) to 255 cities, largely under contract to one of four larger legacy carriers.

Nearly 1.1 billion passengers flew to, from or within the United States, meaning nearly every American, on average boarded three flights during 2019. Approximately three-fourths of passenger boardings were for domestic flights while, on average, the equivalent of nearly two-thirds of the U.S. population arrived or departed the U.S. on a U.S. or foreign carrier international flight.

Airfares, both internationally and domestically, continued to fall in 2019 and are now 28% lower on an inflation adjusted basis since 1995.

The U.S. has built the world’s most valuable air transportation system that is more affordable and is used by more people than ever, at least before the virus crisis.

The U.S. DOT has been tracking airline customer service metrics for years and, despite the general dislike of the airline industry, airline customer service in the United States is better than it has been since deregulation. There are, however, significant differences in how well specific airlines perform on DOT customer service metrics.

For 2019, 79% of U.S. domestic airline flights were on-time (within 15 minutes of scheduled arrival) with Delta and Southwest operating their networks at four and one points, respectively, above-average while, rounding out the four largest airlines, American and United both operated their networks at below average on-time.

DOT Air Travel Consumer Report

Across most of the DOT’s metrics, Delta and Southwest operate above average on DOT metrics including baggage and wheelchair handling, cancellations, involuntary denied boardings, and consumer complaints while American and United operated below average.

There clearly is not a defined difference in the performance on DOT metrics based on the business model; Delta is a legacy/global carrier while Southwest is a low cost carrier. The only consistent connection between business model and DOT metrics is that the ultra low cost carriers such as Spirit (NYSE:SAVE) and Allegiant consistently perform worse than the industry in consumer complaints. The DOT measures the reasons for consumer complaints and their data shows that the largest reason for complaints is flight problems, which include delays, cancellations, and misconnection. The second highest complaint category is customer service; Southwest does particularly well in this category because of its ability to resolve problems when they occur. The legacy/network airlines operate more complex business models in part because they connect more passengers and baggage; in some cases, legacy carriers do not perform as well in delivering on their business model as low cost carriers which promise less but often deliver much more what consumers want. However, Delta’s complaint ratio is about one-third of American and United’s indicating that execution rather than complexity of the business model is a more significant factor.

DOT Air Travel Consumer Report

Profitability is and should be a key metric to determine the level of success for U.S. airlines. It is not a surprise that Delta and Southwest, which lead the industry in most of the DOT’s consumer metrics, also lead the industry in profitability; Southwest’s net income (NI) margin for 2019 was 10.2% while Delta’s was 10.1%. Spirit and Alaska posted NI margins in the 8.7% range for 2019 while JetBlue and UAL posted 7.0% NI margins. American brought up the rear of the industry with a 3.7% net income margin for 2019. Once again, business model is not necessarily indicative of profitability.

The DOT measures profitability of airlines in each of three international regions in addition to the domestic market. The largest global region for U.S. airline profits was in Latin America; American, which is by far the largest carrier in the region, accounted for two-thirds of the profits. Most U.S. airlines serve Latin America since the same type of domestic aircraft can be used to serve much of Latin America. In contrast to Latin America, American reported that both its transatlantic and transpacific route systems did not make money. Delta reported the largest profits in the transatlantic region while United, the largest airline across the Pacific, said it was unprofitable in transpacific service. Delta is the only U.S. airline that reported profits in all three global regions as well as the domestic market.

The domestic market has clearly been the most profitable for U.S. airlines and its recovery will be the fastest based on most airline executive comments. The Pacific has been the least profitable global region while the Latin America region is the global region served by the most carriers and is the most profitable for the US industry as a whole even though the transatlantic region generated more revenue in 2019. Based on revenues, the Latin America region is about 10% of the size of the domestic region and slightly larger than the Pacific region which is itself 60% of the size of the Atlantic region. The Pacific region has not been profitable on an aggregate basis for U.S. airlines for three years as of the end of 2019.

Current Big Four Airline Financial Positions

Several airline metrics have been closely watched since the virus crisis began: cash on hand, access to capital markets, unencumbered assets, and cash burn rate.

Cash burn includes passenger refunds for tickets that were not used and were as high as $100 million/day according to DAL. Most airlines expect their cash burn to drop to half or more of their highest levels. Based on carrier estimates, American expects to have a cash burn rate of $70 million/day for much of the second quarter, dropping to $50 million/day while Delta and United expect to be at about $40 million/day and Southwest expects to be in “the low $20 million/day.” Other than American, most carriers June quarter cash burn rate is roughly equal and proportional to their pre-virus crisis expenses. Several airlines have recently said they are not burning cash on select days.

Delta and Southwest indicate that they will have approximately $12 billion plus in cash on hand as of June 30. United says it had nearly $10 billion on hand at the end of April which could fall by several billion dollars by June. American said it had nearly $7 billion as of March 31. Smaller carriers have proportionate cash levels. American is guiding to approximately $11 billion in cash at the end of June although that estimate includes $4.8 billion in proceeds from the second phase of the CARES Act loans.

Delta and Southwest have each raised more than $10 billion in the capital markets since the beginning of the year. Southwest’s total includes approximately $2 billion in equity while Delta’s total is all debt. American and United have raised considerably less with UAL raising equity but scrubbing a recent debt offering while AAL raised $2 billion in debt in the first quarter.

Finally, the value of unencumbered assets is key to how much capital each carrier can raise whether from the federal government or from private lenders since the Treasury has required that airlines pledge collateral, even for the loan portion (approximately 30%) of total phase one CARES Act financing. Delta and Southwest recently provided updated information on the value of their unencumbered assets and each stated they have about $6-7 billion in remaining unencumbered assets excluding their loyalty programs. United did not provide updates on the value of their remaining unencumbered assets but United’s debt deal failed in part because it offered hundreds of aircraft, some of which are older, indicating that they probably have limited amounts of high-value collateral remaining. American’s previous statements indicate that it has limited remaining aircraft collateral which means its remaining collateral would have to include airport slots, spare parts, and its loyalty program – but it is unclear how much of those types of collateral is available to them. American did recently indicate, perhaps for the first time, that it offered its AAdvantage loyalty program to the U.S. Treasury as collateral for its phase one CARES Act loans. This would indicate that American either has very little collateral remaining other than its loyalty program or is reserving that collateral for its phase two loan. Given the changing value of collateral, it is difficult to determine how much collateral any airline has remaining and how much of it can be used for private-sector or government loans.

Most carriers have said they applied for phase two loans but have not decided whether they will take them if approved. American has stated that it has a right to $4.75 billion in phase 2 CARES Act loans and will take those loans if their application is approved.

From a financial perspective, it appears that most airlines other than American and United can cut their costs to be able to align with new revenues, have sufficient cash or can raise additional liquidity in the capital markets, AND have sufficient collateral remaining to obtain financing from either the private capital markets or the Federal government.

While it is not entirely clear, United can probably cut its costs to align with new revenues but may not have sufficient collateral other than its loyalty program to pledge to private lenders or the U.S. Treasury. It is possible that United may be able to slow its cash burn rate such that it will not need further cash beyond what it will have on June 30. United has already announced early retirement and voluntary separation programs and has said furloughs and layoffs are likely after September 30.

American probably does not have sufficient cash on hand to fund its operations given its current cash burn, probably does not have sufficient remaining collateral other than its loyalty program available to offer any lender and probably cannot access the capital markets. The loyalty program for a large U.S. airline has never been the primary remaining collateral for a private or government loan, so it is uncertain what percentage of the value of a loyalty program could be accepted as collateral. American has apparently already pledged part of the value of its AAdvantage program.

source: JT Genter

Just as in the immediate post 9/11 bankruptcies, it is perhaps two legacy carriers that face a liquidity crisis while this time it appears that Delta can remain outside of bankruptcy and without government aid while American and/or United might need one or both.

There is not an industry-wide inability to control costs, access private capital markets, or apparent need for further government financial assistance even though it has been committed as part of the CARES Act.

Returning to our discussion about the structure of the airline industry, it is clear that the segments of the U.S. airline industry that are most at risk by a potential failure of American or a chapter 11 bankruptcy of American or United are long-haul international service and regional airline service to small and medium cities. There are multiple airlines that serve the mainline domestic and near international markets and most of the carriers serving those markets are not at risk of chapter 11 bankruptcy or shutdown.

American faces a potential collateral crisis. AAL is the only U.S. airline that needs additional capital to fund operating losses beyond the cash it has on hand or can raise. Their cash projections have included expected federal loan proceeds. AAL management has resisted suggesting that furloughs are necessary even though DAL and UAL have both already begun the process of reducing their staffing. LUV says that it might be forced to drop its practice of not furloughing. Yet, American, which has tens of thousands more employees than Delta or United, believes it can reduce costs without furloughs – but is counting on federal money to fund its continued operating losses. Chapter 11 has historically been a powerful force that airlines have used to reduce labor costs and yet, American, the most recent airline to have been in chapter 11, has had the industry’s highest unit labor costs for most of the seven years it has been out of bankruptcy.

However, a chapter 11 bankruptcy requires debtor-in-possession financing. Given the level of remaining collateral that AAL has, it is doubtful that American has enough remaining collateral for DIP financing if AAL needed to file for chapter 11 and to pledge collateral for a federal loan. AAL’s strategy appears to be to obtain a federal loan and get its costs down outside of bankruptcy even though it has been unable to do so during the best years of the industry and with the most recent trip through bankruptcy among U.S. airlines. If AAL has the collateral to obtain a loan under the CARES Act but not from private lenders, then the risk of bankruptcy appears to be the reason why AAL does not have access to private capital markets. It is not a given that the U.S. Treasury will assume risks that the private markets would not accept.

Before we consider the implications of chapter 7 and 11 bankruptcy reorganizations in the U.S. airline industry, it is worth looking back to the post 9/11 period and the U.S. government’s financial involvement in the U.S. airline industry’s recovery.

Remember the ATSB

The Air Transportation Stabilization Board was created less than two weeks after 9/11 to help inject liquidity into the airline industry and administered through the U.S. Dept. of Treasury. It was authorized to loan up to $10 billion to U.S. airlines but ended up making loans for 12% of that amount.

United was the largest airline that applied for but was denied an ATSB loan, ATSB saying that UAL could obtain financing from other sources. Denial of the ATSB loan led to UAL’s chapter 11 bankruptcy which lasted for more than three years. The most notable aspect of United’s chapter 11 reorganization is that it terminated all of its defined benefit pension plans and turned them over to the Pension Benefit Guarantee Corporation. United cut many cost categories including employee costs but emerged from bankruptcy, later to merge with Continental in 2010.

The ATSB approved loans for seven airlines but none of those airlines exist today in the form in which they were granted the loans.

America West, a Phoenix-based post-deregulation airline, was the largest airline that applied for and received a loan from the ATSB. It paid the loan off with interest and immediately engaged in a merger with the larger USAirways which was in bankruptcy for the second time post 9/11. Nearly five years later, USAirways followed the same tactic and pursued American during its chapter 11 filing, merging with the larger carrier upon AAL’s exit from bankruptcy in 2011. Doug Parker, American’s current CEO, began his career at American and worked at America West and USAirways where he was the CEO at the time USAirways presented a competing bid to AMR Corp’s standalone plan of reorganization. USAirways failed at the same strategy of presenting an alternate plan of reorganization during Delta’s chapter 11 reorganization.

American Airlines heritage jet Source: thestreet.com

The medium-term results from the ATSB show that United Airlines was able to find funding and restructure in chapter 11 where many U.S. airlines have spent time both before and after 9/11, often resulting in mergers using private capital. The America West ATSB loan, even though profitable for the U.S. Treasury, likely facilitated a merger with USAirways which would not have occurred had the U.S. government not injected capital into America West; United was just emerging from chapter 11 and Delta and Northwest were entering at the time of the America West-USAirways merger; the airline industry that did not receive government money was still recovering from 9/11. Most low cost carriers avoided bankruptcy and grew rapidly in the decade after 9/11 as legacy carriers reorganized their businesses.

Implications if American Airlines Fails

Many businesses have already failed as a result of the coronavirus lockdowns even with the trillions of dollars that the U.S. government has injected into the economy. Corporations will fail including others in the travel industry such as Hertz that did not receive government aid. Because the airline industry received not only direct grants but also now has access to federal loans, the discussion about the future of the airline industry is a public discussion with implications for airline investors.

The original basis for providing direct grants and loans to the U.S. airline industry was because airlines are considered essential to the U.S. economy and they needed to provide service during the lockdown as well as once the economy begins to recover. Grants were given to airlines so that they could retain and pay their workforces. There were ample indications that airlines could not access capital markets even though many had investment-grade credit ratings.

One of the justifications for arguing for support for airlines is that specific airlines are too big to fail; that statement requires examination. The economy of the U.S. was not directly harmed by the successive chapter 11 filings by most of the legacy carriers post 9/11 so a chapter 11 filing of one or more airlines now will not likely risk failure to the U.S. economy. There were no shutdowns of large U.S. airlines in the decade post 9/11 other than TWA which had been acquired by American prior to 9/11.

American is the largest U.S. airline by employment with over 130,000 employees including at its subsidiaries. Its largest employee bases are predominantly in the southern U.S. which has been less impacted by COVID-19. American froze all of its defined benefit pension plans in chapter 11; they would likely be terminated if American either files another chapter 11 or is liquidated. Chapter 11 filings typically result in downward pressure on other airline salaries. It is not as likely that other airlines’ salaries would fall as much if AAL was liquidated. American’s headquarters is in the Dallas/Ft. Worth metroplex which is also home to Southwest Airlines.

American operates hubs in multiple cities in the United States. The only metro areas where it has more than a 50% local market share and no competitor has at least 20% share is in Miami/Ft. Lauderdale, Charlotte, and Philadelphia. All three of these cities have sufficient local demand as well as facilities to support other carries should American fail. There are other carriers with large operations at the same airport or other airports in the regions of Chicago, Dallas/Ft. Worth, Los Angeles, New York City, Phoenix, and Washington D.C. which host American hubs. American has called its hubs at Charlotte, Dallas/Ft. Worth and Washington National as its most profitable; other airlines probably have low profitability.

American is the second-largest slot holder at NYC’s LaGuardia airport and the third-largest at JFK. It is the largest slot holder at Washington National Airport. In the past, the FAA has relaxed slot controls and the DOJ has helped ensure increased competition via slot divestitures and creation of additional slots. AAL is one of the largest foreign slot holders at London Heathrow airport where it has a joint venture with British Airways, the largest carrier from the United Kingdom to the U.S. Slots at London Heathrow can be traded on commercial terms and routinely trade for more than $50 million per slot pair.

Airports in the United States are almost entirely locally owned but partially federally funded through user fees which are generally proportionally spread between the size of each airline’s operations. The loss of a hub – which requires a disproportionate amount of airport real estate compared to the amount of local traffic – has happened when cities like Cincinnati, Cleveland, Memphis, Raleigh-Durham, and Pittsburgh have lost their hub status. In some cases, the airport consolidated remaining operations into newer facilities while others still have more gates than they need for their current level of air service, years after losing hub status. In most cases, former hubs have more low-cost airline service than they had as hubs and other carriers including other legacy carriers have added service which had been cut.

American operates one of the world’s largest fleets of aircraft; it owns more than 500 mainline and 300 regional jet aircraft, nearly all of which have been pledged as collateral or do not have enough value to serve as collateral. AAL’s annual interest expense is approximately $1 billion which could amount to more than 3% of AAL’s operating revenue for 2020. Since most of American’s current debt is aircraft-backed, it is doubtful that they can significantly reduce their debt without disposing of some of their aircraft, a process that is very hard to do outside of bankruptcy. American leases hundreds more aircraft from leasing companies that would be forced to place those aircraft with other lenders. If American failed after providing aircraft-related collateral to the U.S. Treasury, the responsibility of placing those aircraft could fall to the U.S. government which might also be involved in selling off parts of American’s loyalty program which has also been pledged as collateral. If American files a chapter 11 reorganization, it would most likely reject leases on aircraft before attempting to dispose of owned aircraft. American has over $12 billion in commitments for aircraft-related purchases, mostly from Airbus and Boeing.

While American Airlines has a business which is capable of generating tens of billions of dollars in annual revenue, their strength markets are spread throughout in the U.S. such that other airlines can and will step in to provide air service where it is economically viable to do so if necessary. Again, this principle is true not just for American but just about every U.S. airline. The livelihoods of tens of thousands of American employees and retirees would likely never recover, assets would have to be redistributed to other airlines and that process could take years given the financial state of the airline industry. If a failure of American were to occur without further government intervention, most of the economic impact would be born by private investors and suppliers as well as American employees and retirees. If American filed chapter 11, some, but not all of its stakeholders would suffer complete loss while others could sustain partial losses.

It is also worth noting that the growth strategies that several airlines announced before the virus crisis would have increased chances of success if either American or United reduced service as part of a chapter 11 bankruptcy or a potential liquidation. JetBlue has stated that it intends to fly to Europe using long-range A321 aircraft from its bases in Boston and New York. JBLU, LUV and SAVE all have major operations at Ft. Lauderdale including with the potential to expand deeper into S. America. Delta is applying for a joint venture with Latam which is the largest foreign airline in Miami and serves many of the largest countries in S. America. American and United share the only remaining rival legacy same airport hubs at Chicago O’Hare.

American’s market cap is currently $4.1 billion, less than one-fourth of the market cap of LUV.

AAL’s contractual obligations and stockholders’ deficit are noted below.

Note that AAL has underperformed the S&P 500 Index and the NYSE Arca Airline Index every year for the past five years.

source for all: AAL 10-Q March 31, 2020

Credit default swaps for AAL are currently roughly twice as expensive as they are for UAL, four times more expensive than for DAL, and ten times more expensive than for LUV.

Next Steps: U.S. Treasury

The CARES Act, just as with the ATSB, does not say that the federal government must provide financial support, including loans, to every airline; there are qualifying requirements including the ability to provide collateral. The U.S. Treasury will have to answer these questions as well as many others in determining the future of loans to American and any other airlines that choose to accept them:

Is a loan necessary to preserve the U.S. air transportation system as well as its current structure?

How long will this era of depressed revenue last and does each airline’s business plan reflect the necessary adaptations to the new revenue environment?

Do carriers have sufficient collateral to secure a loan?

Can carriers that are applying for loans obtain capital in the private markets?

Will American (or any other airline) fail if the Treasury does not extend loans?

Did airlines that apply for loans have viable business models before the virus crisis?

Do carriers applying for loans have the ability to: support the debt levels they previously had in addition to new debt they will have to take on?

Will the remainder of the airline industry recover and will air service be maintained if a loan is not made to American (or any other airline)?

The U.S. Treasury has two options with various outcomes for AAL equity and bondholders:

  1. Approve the loan, believe that AAL can cut costs outside of bankruptcy, and the industry and AAL recover sufficiently to avoid bankruptcy. AAL would likely not improve its financial performance metrics relative to the industry, would have debt that far exceeds annual revenues, and would likely not reduce the size of its operations. The recovery of the rest of the industry would be delayed and/or limited. AAL equity and bondholders would be preserved.
  2. Deny the loan because the Treasury determines that AAL has sufficient collateral to obtain a private sector loan. The market, not the U.S. Treasury takes all future risks regarding American. AAL equity and bondholders would be preserved if AAL does not file chapter 11 or 7.
  3. Approve the loan, AAL later files for bankruptcy, and does not have sufficient collateral to support DIP financing as well as the federal loan. AAL could be liquidated. AAL equity and bondholders would potentially suffer complete loss.
  4. Deny the loan due to lack of a viable business plan which would result in chapter 11. AAL would then use the collateral earmarked for a loan to obtain DIP financing. Given the current low revenue environment, AAL would likely spend a protracted period in bankruptcy and would emerge smaller but not be eliminated. All AAL stakeholders would suffer some economic damage but far less than in a Chapter 7 liquidation. AAL equity holders would likely suffer a complete loss but the majority of debt holders would eventually recover losses if some AAL assets are placed with other airlines. Several AAL hubs would likely be cut in chapter 11 given that they have repeatedly highlighted the financial strength of some of their hubs but said others financially underperform. Based on history, competitors would likely grow in AAL markets during a chapter 11 filing.
  5. Deny the loan, AAL would file for Chapter 11 bankruptcy, exhaust its DIP financing during bankruptcy and be unable to successfully reorganize, and then liquidate. AAL equity and bondholders would potentially suffer complete loss but on a delayed basis.

American executives have said they expect a decision from the U.S. Treasury in the second quarter.

Disclosure: I am/we are long LUV, DAL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Maxar Technologies Could Be Worth $13 Per Share (NYSE:MAXR)

Maxar Technologies (MAXR) has been a volatile stock in the market. In the past three years, its stock price has fluctuated in the wide range between $4 and $64 per share. Previously, Maxar had been extremely leveraged, which scared investors. With the recent MDA business divestment, we think Maxar’s balance sheet would be stronger, and the stock price could rise from the current level.

The biggest customer is the U.S. government

Maxar Technologies has two main business segments: Earth Intelligence and Space Infrastructure. Earth Intelligence generated 60% of the company’s 2019 revenue, with two products & services: Data Generation and Data Analytics/Platform. Maxar’s Data Generation provides customers high-resolution satellite imagery, mission-ready geospatial intelligence and sensor, ground system optimization. In the Data Analytics/Platform services, Maxar uses artificial intelligence and machine learning to analyze geospatial data sets on many platforms, which could be accessed by many users globally. All of these business segments provide products and services to customers via multi-year contracts. As a result, most of Maxar’s revenue is recurring. What we like about Maxar is its customer concentration. Its largest customer has been the U.S. Federal Government and agencies. In 2019, the U.S. government accounted for 56.4% of its total revenue. It is the best customer that Maxar could have in the current COVID-19 crisis.

The acquisition of DigitalGlobe has driven its service revenue significantly higher, from $380 million in 2017 to more than $1.1 billion in 2019. In 2019, only the Earth Intelligence business generated positive EBITDA of $548 million, whereas Space Infrastructure’s EBITDA came in at -$17 million. While hardware business requires high capital expenditure but is a low margin business, the software services would deliver higher growth and generate a much higher margin. We believe that the Data Generation and Data Analytics/Platform businesses in the Earth Intelligence segment would lead Maxar’s future.

Highly leveraged balance sheet but still below debt covenant

What makes investors worry is its highly leveraged balance sheet. As of March 2020, it had only $12 million in cash but nearly $2.96 billion in both long and short-term debts. The total pension and post-retirement benefits were $193 million. Most of its long-term debt includes $1 billion in 2023 Notes, maturing in 2023, and $1.955 billion in Term Loan B, maturing in October 2024.

Source: Maxar’s 10-Q filing

We expect Maxar’s balance sheet will be stronger, due to its recent divestiture of the Canadian space robotics business, MDA. The sale of MDA would bring Maxar around $680 million, after closing expenses associated with the sales. If Maxar uses all of the proceeds to pay down the debt, its total debt will decline to $2.275 billion. Under Maxar’s debt covenant agreement, the maximum debt leverage ratio has increased to 7.50x at the end of the first quarter, 7.75x at the end of each quarter until September 2021 and 7.50x until September 2022. By 2020, Maxar’s expected adjusted EBITDA could stay in the range of $370-$410 million. If we assume that its 2020 EBITDA is $400 million, and the debt coverage ratio is roughly 5.7x. If its adjusted EBITDA comes in at the lower range of $370 million, its debt coverage ratio could increase up to 6.15x, which would still be well below its covenant restrictions of 7.50x.

Maxar should be worth $13 per share

Maxar is trading at $10 per share, with the total market capitalization of roughly $490 million. With the 2020 expected net debt of $2.275 million, the total enterprise value would be approximately $2.765 billion. As a consequence, given the 2020 expected EBITDA of $400 million, the market is valuing Maxar at roughly 6.9x forward EV/EBITDA. We believe that with the improvement in balance sheet strength, Maxar should be valued at approximately 9x EBITDA. Its share price should be worth around $13 per share, 30% upside from the current trading price.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Dana Still Worth A Look On Better Decrementals And Recovery Potential (NYSE:DAN)

Up another 25% from my last write-up on the company, I still believe Dana (DAN) has more upside from here. Not only is Dana leveraged to recoveries in autos, trucks, and other commercial vehicles, but the company’s surprisingly strong decremental margins so far lends a lot of credibility to management’s past comments about the resilience of its margin and cash flow structure. Further down the road, Dana has a portfolio of electrification technologies that should enable it to preserve its business as manufacturers and customers shift to electric powertrains.

Low single-digit revenue growth and low-to-mid single-digit FCF margins can support a fair value in the high teens, though the near-term margin-driven EV/revenue fair value is more in the mid-teens. Either way, I think these shares offer appealing potential here even with the risk of a protracted downturn in the company’s major markets.

Better Decrementals The Main Highlight Of Q1

Looking back at first quarter results, Dana managed to outperform reasonably well on the top line (around 5%), but significantly on the EBITDA line (about 25% better than expected). Of course, this outperformance has to be viewed in the context of lowered expectations going into the quarter, but I believe the margin outperformance is a significant takeaway and one that reduces some of the risks at this still-early point in the downturn.

Revenue declined about 14% in organic terms, with the auto business doing considerably better than the commercial vehicle business. Light vehicle driveline revenue declined about 9%, outperforming underlying production by about 1,400bp, while the Power Technologies business declined 6%, outperforming by about 1,700bp on platform/program launches.

On the commercial side, Off-Highway declined about 22%, while Commercial Vehicle declined about 20%. Good data on underlying production volumes are hard to find, but looking at the results from companies like Commercial Vehicle (CVGI), Cummins (CMI), and Tenneco (TEN) suggest to me that Dana’s results were basically in line.

Gross margin declined about three points, and EBITDA declined 20%, with margin down about 130bp, but the decremental margins in the low 20%s were meaningfully better than expected. Margins declined in all segments, but three of the four units maintained double-digit margins (Commercial being the exception). This quarter’s results underling a lot of what management has been saying about its flexible cost structure, and management sounds as though they will be prudent about what costs they add back as the end-markets recover.

Time Will Tell How The Recovery Shapes Up

I’m still expecting a pretty healthy recovery in passenger volumes in 2021, helped by what I expect will be government-led stimulus programs in multiple markets. On top of that, Dana stands to benefit from ongoing outperformance of trucks relative to cars and additional upcoming platform launches. Backlog conversion was a positive driver in the first quarter, and I don’t think that is completely tapped out yet.

I’d also note that Dana’s commercial markets (particularly heavy and medium-duty trucks) were already going into cyclical decline before COVID-19. Clearly, this cycle has already been different, with factories forced to close and many customers slashing capex to bare minimums, but I don’t yet see any reason to believe that the total “area under the curve” will be substantially different in this downturn versus past truck downturns.

The rest of the commercial business is a tougher call; I think construction equipment demand could be pressured for a few years without an infrastructure stimulus bill, and I’m likewise not as bullish on agriculture or mining equipment.

The biggest risk I see to Dana, and parts supplier valuations, is an extended or double-dip decline. If there were another wave of COVID-19 infections sufficient to lead to another round of shutdowns, whether later in 2020 or in 2021, the recoveries across Dana’s markets would definitely be delayed, and the company would be looking at another year of weak margin leverage. On the other hand, I don’t see that changing the overall magnitude of the eventual recovery; the relationships between vehicle/fleet ages and volumes tend to be pretty consistent, and older vehicles would still need to be replaced.

The Outlook

Dana management believes that the company is FCF breakeven at around $6B billion in revenue or a 30% decline from the prior year. Based on past results and the margin/cash flow resilience seen this quarter, I believe that’s credible guidance, and I don’t see revenue breaking that threshold.

I’m still looking for long-term revenue growth in the low single-digits (or low-to-mid single-digits on an adjusted basis). Although Dana doesn’t have the same leverage to electrification as BorgWarner (BWA) or Valeo (OTCPK:VLEEY), it’s better-positioned than companies like Allison (ALSN) and Cummins, and I believe Dana will be much more of a participant in electrification than a victim. I’m not expecting significant long-term margin leverage versus past cycles, and it remains to be seen whether parts/components companies can attain the same level of margins with electrical components as they have with internal combustion components. In any case, I’m expecting FCFs margins to bounce off a low in 2020 and average out in the low-to-mid single-digits.

The Bottom Line

Between discounted cash flow and margin-driven EV/revenue, I believe the fair value for Dana is in the mid-to-high teens. Dana has more debt than you’d like to see, but I believe Dana will still be FCF positive, and I’m not concerned about the company’s liquidity or solvency situation. While some of the easy money has been made with Dana up significantly off the March panic lows, I still see meaningful upside from here and this remains one of my preferred names in the parts sector.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Drive Shack: Worth A Swing Here (NYSE:DS)

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Drive Shack Inc. (NYSE:DS) is one of the largest golf course operators in the U.S. with 59 properties across public and private facilities. The company has been pivoting towards a new business model centered around innovative golf driving ranges as an entertainment and recreation venue combining a social setting with food and beverage options. The company currently has four of these “Drive Shack” locations which unfortunately have been closed since March amid the ongoing coronavirus pandemic. While Drive Shack has some fundamental weaknesses including recurring losses and negative cash flows, we think a turnaround is possible as the business reopens. While speculative, we think the stock has value with the Drive Shack concept offering an attractive growth opportunity with impressive unit-level economics.

(source: finviz.com)

Q1 Earnings Recap

Drive Shack reported Q1 earnings on May 8th, with a GAAP EPS loss of -$0.28. Revenue of $61.1 million on the quarter was up by 13.3% year over year and favorably, $7.2 million ahead of expectations.

Management highlighted how the trends were strong between January and February before a decision was made to close venues on March 17th. Steps made in response to the coronavirus pandemic included furloughing over 4,000 staff and deferring all capital projects to focus on liquidity and the financial position.

(source: Company IR)

The sales of food and beverages reached $12.5 million, up 36% compared to the period last year as the company opened 3 “Drive Shack” venues in the second half of 2019 for a total of 4 currently. These locations are seen as the growth driver and expected to support cash flows and future profitability with more planned locations in development. The traditional golf course operation has proven to be resilient as some golf courses were among the first type of activities to reopen in April and benefit from being an outdoor activity. From the earnings conference call:

The great thing about golf courses is that they’re outside, right? So we don’t have a lot of the issues that we have or that you might see with a mall or a restaurant that’s just indoors. Similarly, we’re positioned in a great way at Drive Shack because we’re mostly outdoor, all of our driving-bays are outdoor. But specifically, when we’re looking at the golf courses, that team and the AGC team has done a lot to manage the tee sheets and to ensure that there aren’t groups of – depending on the local rule. It could be singles that have to play, it could be – you could only play in groups of 3 or 4. It largely varies.

I can tell you, the demand has been – it has not actually subsided at all. In fact, we saw a surge in demand for tee times across all of our golf courses when coronavirus kind of shut down everything else. Because in many cases, golf was outlined as an activity that was still permissible even under lockdown due to it being a great way to get your exercise and be outside because the virus can’t spread outside is essentially what they were saying at one point.

It’s important to recognize that the company not currently profitable but was on track to narrow its loss this year with the accelerating “Drive Shack” business. Favorably, the operating loss in Q1 of $14.8 million was below the $18.3 million loss in Q3 last year. This is impressive considering the entire business was essentially shut down for the final two weeks of March.

(source: Company IR)

Through the time of the earnings release, the company mentioned that about half of its golf course properties are now open while the entertainment “Drive Shack” venues remain closed. Management is working with a timetable that suggests most golf courses will open through the end of May while the entertainment venues will need to operate with an initial 50% reduced capacity given social distancing requirements and safety precautions.

What was encouraging was comments suggesting the liquidity and cash flow situation was at least stable. The company expects to be cash-flow positive with all the golf courses open and eventually EBITDA positive with 75%-80% capacity for the entertainment venues in a few months. From the conference call:

We can absolutely get to cash flow positive with all of our 60 golf courses open. We have about half of them open right now, 35. We are expecting that very quickly in the next, call it, 2 weeks that we’ll have, hopefully, the remainder open…

So in our minds, when we open, we’re hoping that we’re open at 50% capacity (for the entertainment venues). 50% capacity for us is greater than what a 50% capacity for a restaurant would be because we’re largely – we’re outdoors. So we will look at limiting the group sizes to help with social distancing, and we will seat people outdoors. So we’re looking at potential EBITDA loss in the first month. In the second month, if we’re able to scale up from the 50% to, say, 75% or 80%, we’re looking at being EBITDA positive.

The company ended the quarter with $20 million in cash against $70 million in total corporate debt with limited maturities through 2022. Total liabilities are mainly in the form of operating leases and the golf course membership deposits. Also, note there are outstanding shares of Drive Shack preferred stock which trades with under ticker (DS.PB)(DS.PC)(DS.PD). Collectively, dividends on the three issuances represent a quarterly cash payout of about $1.4 million.

(source: Company IR)

We expect that as the operating environment for the “Drive Shack” locations normalizes through the end of this year, the financial position can remain relatively stable. This considers that the legacy “golf course” business still generates over 80% of total revenues and can likely recover faster as the activity is completely outdoors and less restricted by social distancing requirements.

Management’s decision to defer construction projects on new Drive Shack locations will help to support cash flows in the immediate term. The company will still require financing for growth opportunities, but the existing business can be self-sustaining.

Growth Opportunities

The future of the Drive Shack is dependent on the new entertainment venues as a higher margin and high growth concept potential. Besides the “core” Drive Shack venue locations as a mega-golf destination type of attraction, there is also a smaller format “Urban Box” anchored around adult beverages as a sport-bar alternative. A separate mini-golf concept named “The Puttery” is also in development.

(source: Company IR)

The economics of the growth projects appear promising. Considering the larger Drive Shack core venues with a development cost of approximately $25-$40 million, the company thinks each venue can generate between $4-$6 million in EBITDA per year. The smaller Urban Box is seen as even more profitable with a development cost of $7 to $11 million per location and site-level EBITDA of $2-$3 million per year implying an average 30% development yield.

(source: Company IR)

With a goal of building 4+ Drive Shack venues and 50+ Urban Box venues by the end of 2024, the two combined concepts could generate between $132 million and $198 million in EBITDA per year according to company estimates. Keep in mind that this would require a significant acceleration in the pace of new developments over the next four years and could be aspirational depending on market conditions.

The company intends to use a combination of asset sales potentially including some of its legacy golf course properties, sale-and-leasebacks, along traditional financing to fund the projects. The current pandemic has added uncertainty to the timing and even viability of all these plans, but we think they can get back on track by 2021 assuming there is a containment to the virus.

Analysis and Forward-Looking Commentary

We like the concept and think the unit-level economics of the Drive Shack venues appear attractive. That being said, it’s important to recognize that equity investors here have a long road ahead to capitalize on these trends and plans for developments through the next 3-4 years.

The numbers we’re looking at is that the Drive Shack with a market cap of just $81 million is currently cash flow negative with significant recurring losses expected to continue for the foreseeable future. That being said, with the stock down by 70% this year, we think the risk-reward dynamics have improved compared to a market cap of $250 million at the start of the year.

ChartData by YCharts

We rate shares of DS as a buy with a year-end price target of $2.00 implying 60% upside potential (based on $1.30 share price at time of writing). Longer-term, the stock has the potential to climb significantly higher if management executes on its strategy of building out the new venues. Even with the setback this year, the growth opportunity is still there and investors getting in now are looking at a more attractive valuation. This is a speculative stock with the possibility of higher debt levels and the potential of capital issuances down the line to fund growth opportunities. Considering the risks and upside potential, we like the common stock over the preferred shares.

The next quarter’s earnings release will be important to gauge trends with the Drive Shack venues beginning to reopen at reduced capacity. To the downside, the risk is that the outlook for the coronavirus containment deteriorates adding to operational pressures that could continue through next year. Overall, we think DS is “worth a swing” at current levels and recommend any investor interested in the stock to only take a small position with the expectation of continued volatility.

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Disclosure: I am/we are long DS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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