Here’s why Live Nation, TripAdvisor and Middleby stocks are soaring today


What happened

Many consumer-focused stocks rose dramatically on Monday on promising results from an early coronavirus vaccine trial. The news sent stock prices soaring across all sectors and industries as investors jumped to bullish conclusions. For example, travel services specialist TripAdvisor ( TRAVEL -2.12% ) was trading up 14.6% as of 12:10 a.m. EDT, while parent Ticketmaster National Live Entertainment ( LYV -0.75% ) reached a peak gain of 18.3% 45 minutes earlier, and the catering supplier Middleby ( MIDD -0.28% ) posted a 9.9% increase as of 9:50 a.m. EDT.

So what

Rapid access to an effective coronavirus vaccine would be great news for all of these companies.

  • Live Nation has closed its events and ticket sales until further notice, raised $1.2 billion in new debt last week to keep the lights on until this crisis is over.
  • TripAdvisor reported sales down 26% in the first quarter with an even weaker outlook for the second quarter, as traveling just isn’t an option for most people these days. Daily travel bookings fell 90% at the end of March and all of April.
  • Fast-food restaurants with drive-in windows are doing well, but table-dining chains are suffering in this climate. Take-out orders and home delivery options can’t make up for lost on-site sales, and you won’t see most restaurant chains investing in their food prep equipment anytime soon. Kitchen equipment sales could fall as much as 85% this year, according to short-selling market analyst Prescience Point Capital Management, fatal spelling for industry leader Middleby.

Operating under these Damocles swords, investors are looking for any sign of progress toward a strong vaccine, an effective treatment method for active COVID-19 cases, or anything else that would open the world back to normal operations. Today positive test results from the coronavirus vaccine researcher Modern (ARNM -0.65% ) is a good example of investors looking for signs of normality.

Image source: Getty Images.

Now what

The results of Moderna’s study are promising, but we are still a long way from having a safe and effective coronavirus vaccine for everyone. The company hopes to start a larger phase 3 trial in July if all goes well in the currently ongoing phase 2 study, followed by an expedited filing with the FDA. In the best of all possible worlds, Moderna might be able to start producing the vaccine in early 2021.

So we’re nowhere near the number of rock concerts, travel bookings and sit-down meals in last year. Middleby, Live Nation and TripAdvisor have many months of rocky road ahead, even if Moderna (or other hopeful coronavirus vaccine developers) find success in upcoming Tier 3 trials.

This is why today’s strong jumps are far from a full recovery. Live Nation is still trading 40% below all-time January highs, Middleby shares are 55% below their 52-week peak prices, and TripAdvisor investors continue to suffer a 59% drop from at the zenith of last year in July. I wouldn’t be surprised to see them give up recent gains based on negative COVID-19 reports along the way. Handle these fragile tickers with care until we have an effective vaccine for everyone.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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