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MARKETS

• Energy: U.S. oil prices extended their winning streak for a fifth straight day with a razzle-dazzle trading session. The hope is that lockdown restrictions will gradually wind down and people will need fuel to get moving again.
• Markets: The economy remains a disaster zone yet stocks keep climbing. Chicago Fed President Charles Evans said it’s “reasonable” to expect economic growth in the second half of the year, but that’s far from a guarantee.

ENTERTAINMENT

Disney’s World Is Getting Real Small

After reporting earnings yesterday, Disney might be looking to downgrade from castle to fifth-story walkup. Revenue for the quarter edged out expectations at $18 billion, but COVID-19 cost it $1.4 billion in operating profit.

Bottom line at the top: COVID-19 has caused “considerable disruption,” but keep in mind Disney was reporting the quarter ended March 28. This quarter is expected to be worse.

The foot traffic

Revenue in Disney’s parks segment fell 10% to $5.5 billion while operating income dipped 58%. Execs pegged COVID-19 losses at $1 billion.

• The parks division was the company's profit driver before. Now, it’s feeling like an anchor.

Disney’s attractions in Asia felt COVID-19 earlier, with parks in Shanghai and Hong Kong closing down in late January.

• But as things return to “some semblance of normalcy in China,” the reopening of Shanghai Disney on May 11 could provide clues as to how parks will bounce back elsewhere.
• Disney will limit attendance and practice containment measures including masks, temperature screenings, and contact tracing.

The eyeballs

Revenue in Disney’s Direct-to-Consumer & International segment was a bright spot, growing to $4.1 billion last quarter from $1.1 billion a year earlier. No fairy godmothers there, just the addition of streaming platform Disney+, which now has 54.5 million subscribers—an increase of more than 20 million since the quarter ended.

Big picture

Prior to the pandemic, Disney was coming off a remarkable year, but the last few weeks have stung. It furloughed 100,000+ workers and delayed major releases. One analyst estimates it’s losing at least $30 million a day.

While brand affinity is as strong as ever...Disney was built around Dole Whips, not La-Z-Boys. Lightshed Partners’ Rich Greenfield downgraded Disney stock ahead of earnings, noting “Disney is built on shared group experiences. Until there is global comfort health-wise with that behavior again, Disney’s earnings are fundamentally impaired.”

FOOD

When There's a Meat Shortage, It's Good Not to Sell Meat

Get your spatulas and Steve Miller Band, it’s time for burger news. The big takeaway? The coronavirus-related meat shortage is a boost for some and food poisoning for others.

First up is Beyond Meat. The plant-based meat company beat top and bottom-line expectations in earnings reported yesterday.

• Beyond may be plant-based, but Q1 net sales of $97 million packed plenty of protein. Its stock has jumped more than 85% since mid-March.
• The company is angling to benefit from animal meat’s woes. Founder Ethan Brown told Yahoo Finance, “this is the industry’s moment.”

Rival Impossible Foods agrees. Grocery chain Kroger, which had to limit meat purchases per customer to deal with the shortage, inked a deal to sell Impossible Burgers in 1,700 stores.

As for traditional meat purveyors...
They're purveying less meat. Yesterday, Wendy’s announced some menu items aren’t available due to the meat shortage. To clarify that “some,” 18% of Wendy’s U.S. restaurants are not serving meat-based items, the financial firm Stephens estimates.

GIG ECONOMY

California Hits Uber and Lyft While They're Down

Step 1: Flatten the curve. Step 2: Resume blows with your favorite punching bags. Yesterday, California sued Uber and Lyft for allegedly failing to reclassify contracted workers as employees under AB5, a new law that went into effect in January.

• AG Xavier Becerra is accusing the ride-hailers of depriving drivers of the minimum wage rights, overtime pay, and other benefits they'd be entitled to as employees.
• The lawsuit seeks millions in penalties and unpaid wages for drivers.

The backstory: After AB5 went into effect, Uber, Lyft, and other gig economy companies refused to comply, then went on the offensive.

• They started talking to lawmakers about creating a new category of workers, essentially contractors with benefits.
• Uber and Postmates filed a lawsuit challenging AB5. And gig companies poured $100+ million into a November ballot measure that would exempt them from the law.

Looking ahead...legal battles will be a problem for another week, since Lyft reports earnings this afternoon and Uber's up tomorrow. Both are teetering from the pandemic. Lyft recently announced plans to lay off 17% of workers, and Uber is reportedly considering a 20% reduction in headcount.

ECONOMY

State Reopening Tracker

Green: Green means go...with extreme caution. Governments have allowed many nonessential businesses to reopen (with heavy restrictions) in these states.

Yellow: Restrictions will start to ease in the next week or two.

Blue: Broader reopenings have a slightly longer timeline than the yellow states, but there's movement and already some easing of lockdowns.

Gray: These states are still watching, waiting before putting more aggressive opening plans into place.

Important to note...just like U.S. states aren't easing restrictions at the same time, neither are local jurisdictions within those states. Pennsylvania, for example, has a color-coded system that guides strategy.

Also important to note...COVID-19 cases are still rising outside of the NYC metro area, and experts warn reopenings could lead to a surge in cases.

See your state's reopening timeline here.

NIGHTLIFE

When You’re Starving for Untz

You’ll take it any way you can get it. The neon-clad raver community is finding creative ways to vibe while respecting social distancing.

In the U.S., LA design studio Production Club created the Micrashell, a post-pandemic form of concertwear.

• How it works: The suit goes on the top half of your body, can be disinfected, and features a ventilation system and an audio setup that lets you mute people IRL. Production Club plans to partner with venues to distribute the suit and ensure epidemiologically responsible vibing.

In Germany, ravers are simply doing what nature intended—going to raves, in their cars. At drive-in raves in Schüttorf, Lower Saxony, partygoers could listen either to the stage soundsystem or tune in to an internet broadcast.

• Attendees showed their appreciation for the DJs by laying on their horns. Yes, it was a bizarre scene.

Online, rave culture is flourishing in the absence of physical music festivals. Here's a list of upcoming EDM.

WHAT ELSE IS BREWING

• Airbnb is laying off a quarter of its employees as it braces for a revenue drop to 50% of 2019 levels.
• Norwegian Cruise Line said it might seek bankruptcy protection and warned there is “substantial doubt” about its future as a company.
• Starbucks expects to open 85% of its U.S. stores by the end of this week.
• U.S. household debt increased to a record $14.3 trillion in the first quarter of 2020.
• Pickup trucks outsold sedans in the U.S. for the first time ever in April.
• An interior design service was launched...in the video game Animal Crossing: New Horizons...offering more than $50/hour...

GOOD BOY TRIVIA

For the 29th year running, one dog breed was named the most popular in the U.S. by the American Kennel Club. What’s the breed? And if you’ve got some extra time, can you guess the top 10?

GOOD BOY TRIVIA ANSWER

1. Labrador Retriever
2. German Shepherd
3. Golden Retriever
4. French Bulldog
5. Bulldog
6. Poodle
7. Beagle
8. Rottweiler
9. German Shorthaired Pointer
10. Pembroke Welsh Corgi