…a look into the business of getting around
| Checkin' in on the travel industry (Myung J. Chun/Getty Images) | |
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Last Week's Market Moves | | Dow Jones
39,150 (+1.45%) | S&P 500
5,465 (+0.61%) | Nasdaq
17,689 (+0.00%) | Bitcoin
$63,991 (-3.88%) |
| Dow Jones
39,150 (+1.45%) | S&P 500
5,465 (+0.61%) | Nasdaq
17,689 (+0.00%) | Bitcoin
$63,991 (-3.88%) |
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Hey Snackers, The clock just officially started on a summer travel season that's expected to see 212M US adults hit the road, take to the skies, or catch a train. In this special transportation edition, we're zeroing in on the business trends behind the ways people — and our things — get around. The records are stacking up for the S&P 500, which notched its 31st record close of the year last Tuesday after Nvidia's market cap briefly broke past No. 1 Microsoft's. Markets took some mid-week PTO for Juneteenth and came back to cooling shares as tech stocks receded. Meanwhile, May home prices surged but sales and construction slowed.
ð§ Let's get quizzical: Pop into our Snacks Seven quiz to test your knowledge of last week's biz news. Here's the first Q: | |
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Airlines could see record summer travel, but sky-high costs are causing profit turbulence | The runway… More than four years after the pandemic began, "revenge travel" is roaring in the skies. Global air travel has surpassed prepandemic levels, and as of last year US domestic air travel has nearly rebounded. Last month, the TSA screened a record 2.9M passengers in a single day, and this summer is forecast to see the most fliers ever on US airlines. While vacays have mostly led the rebound, business travel is also picking up (although it's not expected to hit 2019 levels until 2026). To compete with budget airlines like Spirit and Frontier, legacy carriers like Delta and United have offered more no-frills fares. United's "basic economy" sales jumped 35% last quarter from a year ago. The turbulence… Despite high demand, US carriers lost a combined $1.3B in the first quarter (48% more than last year) as they grappled with higher fuel and labor costs. Psst: it's the fifth year in a row that Q1 has been unprofitable for the industry. Boeing's 737 fallout is also causing a summer squeeze, with US airlines expected to receive 32% fewer planes than planned. Southwest (which fully relies on Boeing jets) had to slash capacity for the year. Meanwhile, a coalition of airlines sued the US Department of Transportation last month over a new rule requiring them to show extra fees (think: checked bags) upfront. An airline lobby said the rule will "greatly confuse consumers," but the gov't estimates it could cut $543M/year in fees. |  | THE TAKEAWAY |
| The long-haul... Global airline revenue is forecast to hit a record $996B this year, but higher expenses may keep profits grounded. Now, carriers are coming up with more ways to bring in $$. This year, nearly all major US airlines have hiked their checked-baggage fees. And United this month said its fliers would begin seeing targeted ads on their seat backs. Read this online | |
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| | Two Brothers Solving This $100B Problem | |
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US rail is on track to move fast, but freight's still battling safety issues | The track… After years on the quiet car, American rail is picking up steam. Ridership for rail biggie Amtrak is up 20% on the year, hitting a record last month and on track to break its annual ridership record of 32M. Brightline, the US's only private passenger railroad, is cutting into Amtrak's market dominance: it reported a nearly 50% jump in ridership in April for its Florida passenger system and doubled its revenue YoY. Rail work… Despite bright spots in passenger rail, freight rail cos like Norfolk Southern, Union Pacific, BNSF, and CSX are still on a bumpy track. The industry's faced regulatory scrutiny following Norfolk's toxic derailment in Ohio last year (cleanup cost: $1.1B+). In April, federal officials announced new rules that would require two-person crews on freight lines to boost safety. Railroads oppose the rule, scheduled to take effect this month, and have asked a federal court to toss it. Over the past decade, freight has both significantly shrunk its workforce and lengthened its trains under a strategy called Precision Scheduled Railroading. Long train: A study published last month found that replacing two 50-car trains with one 100-car train increased the risk of derailment by 11%. From 2013 to 2022, Norfolk's accident rate jumped 80%, 3X the industry average.
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| Full steam ahead… Next up for US rail: fast trains. Six high-speed rail projects are planned or already in construction. Brightline broke ground on a $12B Vegas to LA high-speed project in April, and Amtrak recently resurrected a Dallas to Houston plan. Both projects could help the US catch up to the 26 countries that already have high-speed rail. But some congressional Republicans have pushed back on lofty price tags, threatening to derail high-speed plans. Read this online | |
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| | | Times are o'charging… 2024 has served investors a bull market, outsized performance by mega cap tech, and an AI boom. While market uncertainty still looms large, a Nasdaq survey suggests some investors are taking a more aggressive investment approach than before… but a healthy risk appetite doesn't have to involve investing recklessly. Staying Sharpe… tools like the Sharpe Ratio help investors weigh up the risk/reward ratio of an investment. But in Nasdaq's survey, 54% of investors indicated they didn't use the Sharpe ratio or weren't familiar with it. It's one of several must-know strategies covered in Nasdaq's latest piece on Sherwood.news — read it in full for free. ð 5 min read: Investing with Risk, not Recklessness available on Sherwood.news now. |
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US carmakers drive slowly toward an electric future as China speeds ahead | The street… 84% of last year's US car sales were traditional gas guzzlers, their lowest-ever share of sales as the avenue gets more electric. This year, six of the US's top electric vehicle makers reported EV sales gains of more than 50% annually in the first quarter. But overall growth slowed, dragged down by misses from GM and Tesla (Tesla is still the only EV maker putting out US models en masse). As electric demand cools, GM, Ford, and Tesla have put billions of $$ in planned EV-vestments on ice. Others including Toyota and Nissan have switched gears to focus on hybrids. In the gas world: The vehicles that typically have the worst miles/gallon (SUVs and trucks) are outselling sedans, causing automakers to discontinue several sedan models (bye, Chevy Malibu). Looking ahead, EV makers are racing to sell electric SUVs and trucks (hi, Cybertruck).
The traffic… Competitors are clogging the EV road, and the congestion's led to jams. EV startup Fisker declared bankruptcy last week, following Lordstown Motors last year. It's not just smaller players struggling: GM recently cut its annual EV sales forecast on slowing demand, while Tesla deliveries fell 9% in Q1 (its first year-over-year quarterly drop in nearly four years). And Tesla told employees it planned to shed 10% of its workers. Competition isn't just coming from the US: | | THE TAKEAWAY |
| The road ahead… Automakers could see hybrids as a necessary middle ground on the long road to EV mainstream-ification. Two big all-electric hurdles: range anxiety and affordability. Car companies are racing to debut EVs that last longer on one charge and ring up closer to $25K. Read this online | |
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| 20%: The rise in US car-insurance prices in May from a year earlier. Insurers like State Farm have made double-digit premium hikes, citing factors like rising repair costs. 31.7M: The # of cruise passengers last year, up 7% from prepandemic times. More than one-fourth of cruise takers over the past two years are "new-to-cruise." 12.6 years: The average age of US cars, trucks, and SUVs — a record. Americans are keeping their cars for longer as driving costs spike.
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| | Per a 2023 Nasdaq survey, 71% Gen Z investors are also taking a more aggressive investment approach… but what could/should they be doing to effectively leverage risk in today's market? Nasdaq dives into the dynamics investing with risk, not recklessness — read the full article on Sherwood.news |
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What else we're Snackin' | Shift: Teens are increasingly choosing e-bikes as their primary rides (even when they're old enough to drive). US e-bike sales tripled between 2019 and 2023, and last year e-bikes outsold electric cars and trucks. HullUp: Cruises boomed after the pandemic; now, they may be too popular. Hotspots like Alaska, Venice, and Barcelona have restricted cruise visitor access (Greece is reportedly considering similar moves). Voler: Air taxis plan to fly passengers at next month's Paris Olympics. 24+ electric vertical takeoff and landing (eVTOL) companies were founded in the past decade and several are now close to commercial certification. Sunk: After pandemic highs, boat and RV demand spun out with Brunswick, Winnebago, and Airstream maker Thor reporting deflating sales. Now, it's a buyer's market for the recreational vehicles.
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Snack Fact Of the Day | Tesla produced 47K more cars than it sold last quarter, its biggest imbalance ever | | |
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Authors of this Snacks own shares of: Delta, GM, Nvidia, Microsoft, and Tesla Advertiser's Disclosure:
This is a paid advertisement for Aura Health's Regulation CF Offering. Please read the offering circular at invest.aurahealth.io. Start-up investments are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investment tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms are accurate or in agreement with the market or industry valuations. Further, investors may receive illiquid and/or restricted stock that may be subject to holding period requirements and/or liquidity concerns. DealMaker Securities LLC, a registered broker-dealer, and member of FINRA | SIPC, located at 105 Maxess Road, Suite 124, Melville, NY 11747, is the Intermediary for this offering and is not an affiliate of or connected with the Issuer. Please check our background on FINRA's BrokerCheck.
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Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... See more | |
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