Newspapers’ Comeback

By Hoda Mehr Fri, May 8, 2020

Hey Scoopers,

As is customary these days, the unemployment data didn’t scare the stock market investors, and the market finished in the green zone on Thursday. — More on that in the “Overall Market” section.

Beyond the overall market, one company’s stock price jumped despite laying off 25% of its staff while another company suffered from a double whammy. — More on that in the “What’s Up?” and “What’s Down?” sections.

Oh, by the way, do you think there is a future for the newspaper industry? At least one company thinks so. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

• U.S. markets: All three indices ended Thursday in the green zone. Scroll down to the “Overall Market” section to read more.
• Cryptocurrency: Bitcoin’s price almost touched the $10,000 mark, and Bitcoin miners are expecting an even higher price in the next few days.

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Unemployment Doesn’t Scare Us.

The department of labor reported another million-figure unemployment data on Thursday. With the recent report, the total count of unemployment claims since the start of the COVID-19 pandemic adds up to more than 33 million. Moreover, ADP reported its version of national unemployment data for April 2020. In this new report, the non-farm, payroll employment figure was down more than 20 million in April, with large companies accounting for nearly 40% of the total unemployment.

However, as expected, the stock market investors ignored the unemployment reports, and all three indices ended Thursday higher than where they started the day.

Growing Despite Layoffs

So, what happened?

Shares of Lyft (Ticker: LYFT) were up more than 25% on Thursday. The price jump is quite surprising because the company has recently announced that it is laying off 20% of its staff. In the company’s quarterly earnings report, Lyft shared a 57% contribution margin, which means of every dollar earned, Lyft spends 43% on the costs associated with delivering the service. It’s similar to gross margin, and it’s an important figure that shows the company is on the path to profitability. Despite the COVID-19 pandemic impact, the company has also increased its revenue compared to last year, the same quarter, and had more riders using the service this year.

It seems that the company used the COVID-19 pandemic as an opportunity to streamline its business, and it didn’t need the layoffs to stay afloat.

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A Double Whammy

So, what happened?

Shares of Vista Outdoor (Ticker: VSTO) were down more than 26% on Thursday. The company has a $600 million market capitalization, and it “designs, develops, and manufactures outdoor sports and recreation products.” Because of the COVID-19 pandemic, the company has experienced a significant decline in its revenue. Not only retail stores were closed during that last few weeks, but also, no one was going out. When you sell sports and outdoor recreation products, you are dealing with a double whammy. Unprofitable, declining revenue and a lot of cash is a recipe for disaster, and Vista Outdoor had it all

Are Newspapers Coming Back?

So what happened here?

It’s no surprise to anyone that newspapers are having a tough go at staying relevant. Just ask Warren Buffett, who consolidated all his newspaper businesses and passed the helm to another company. Buffett still has kept a share in the consolidated business, but at the time, the move was seen as the final blow to the newspaper industry.

However, not all newspapers are failing.

The New York Times (Ticker: NYT) just announced that it added more than half a million subscribers, despite the fact that advertising revenues are down more than 50%.

Do you subscribe to a digital newspaper? Let us know by emailing us at members@tradestocks.com.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card