Entertainment Companies and Retailers Could Face Mass Extinction
Whether or not the country decides to enact official lockdown measures in an attempt to halt the spread of the coronavirus, some cities like Los Angeles New York City are taking their own measures to try and halt the spread.
Mayors in both cities ordered bars to close and restaurants to only offer take-out and delivery services.
On top of that, movie theaters and concert venues in both cities have been ordered to close.
How other cities handle the coronavirus outbreak remains to be seen, but it’s clear that any business that relies on people gathering in one place could face a serious survival threat in the coming weeks and months.
Here are a few industries and businesses that could face extinction in the coming months if the coronavirus outbreak become a full on pandemic here in the US:
The first ones to come to mind are theater companies if the order to close becomes widespread. The largest two are Cinemark (NYSE: CNK), AMC Entertainment (NYSE: AMC). Also consider National CineMedia (NASDAQ: NCMI) which runs all the ads you see before a movie.
Michael Pachter, an analyst at Wedbush Securities says “There is a genuine concern that [coronavirus] will limit theatrical attendance globally, whether driven by theater closures or fear of contamination.”
Also look at financial pressure being put on companies in the food and entertainment space like Dave & Buster’s (NASDAQ: PLAY).
Particularly vulnerable could be Diversified Restaurant Holdings (NASDAQCM: SAUC), which operates 64 Buffalo Wild Wings Franchises. With restaurants forced to shut down, the company could focus more on take-out orders for it’s popular wings and appetizers.
However, with nearly every major sports league shut down, including the upcoming NCAA March Madness tournament, there’s little need for large orders of wings to feed family and friends at home.
Most vulnerable could be the already struggling retailers like Ascena Retail Group (NASDAQ: ASNA) which owns brands like Ann Taylor, Loft and Lane Bryant.
JCPenney (NYSE: JCP) has managed to hold on a lot longer than many predicted, but this latest blow could be the final one for the company originally founded in 1913. The company’s footprint is now so small that any drop in business due to shoppers staying away could be fatal.
The last retailer is GNC (NYSE: GNC), the seller of supplements and vitamins. This one might be a “beating a dead horse” type of investment as the share price has already plunged from 98% in the last five years. But there’s never any foot traffic in the stores despite near-permanent sales and discounts, so this could be the final straw.
On the other side of the coin, if there are quarantine efforts put into place, it’s clear that a vast majority of Americans will simply double or triple their orders from Amazon for all their purchases. We will also likely see viewing time on Netflix soar.
Also expect a massive uptick in business for delivery companies like GrubHub (NYSE: GRUB).