There’s definitely uncertainty in the Twitter story. It’s also more expensive relative to earnings than social media powerhouse Meta Platforms (NASDAQ: FB). It might be an interesting time to buy on the dip if a change in leadership can turn the story around, but the risks are clear.
Finally, there was carnage among travel stocks, especially for cruise lines. Carnival (NYSE: CCL), Norwegian (NYSE: NCLH), and Royal Caribbean (NYSE: RCL) all fell 17% to 24% in November due to renewed COVID-19 fears. Obviously, we all hope that the spiking case numbers in various parts of the world are controlled and that the new omicron variant winds up having only mild effects on public health.
Even in that case, a return of travel restrictions is likely. Consumers are also less likely to venture out in the face of increased risks. These companies are getting well acquainted with these challenges, but they can’t experience steep disruptions indefinitely. These businesses are the opposite of nimble. They tend to use a lot of debt in their capital structure, and their heavy physical equipment requires significant capital expenditure. With all those fixed cash outflows, investors are quick to run whenever sales are threatened.