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At least the airlines will get another bailout, after selfishly spending billions on stock buybacks while shrinking seats and hiking fees. Meanwhile, Joe Average, who ended up running a food truck when Wells Fargo "right sized" him during the last recession, will find a comfortable slab of concrete upon which to rest his head, under the viaduct.
> after selfishly spending billions on stock buybacks I've been seeing this on twitter a lot. Is there some context you can provide for why these particular repurchases were in bad taste, given no awareness of the upcoming pandemic. I am assuming you don't view repurchases as 'selfish' generally.
Improvements in leg room, amenities, services, infrastructure, etc, are a form of capital return to customers.
When executive compensation is tied to operating profit or market capitalization, there is an incentive to reduce the product quality (the air traveler experience, in this case) to the minimum competitive level and boost the share price. A buyback boosts the share price in two inter-related ways. First, it reduces the amount of shares available in the secondary market (the "float"), which distributes the market cap across a smaller number of shares. Second, it provides artificial demand for the stock, impacting the price upward by buying shares.
Warren Buffett has stated that he likes investing in equities in part because companies reinvest their profits in their business. A buyback doesn't do that because when you spend $5B on your own stock, you're not spending it on providing a better experience to your customers, and you're not spending it on R&D. You're just spending it on concentrating shareholder ownership and driving up the stock price.
Guess who often gets paid in shares? Executives. It's common for a CEO to get a small portion of his compensation as salary and a large portion as shares and options.
The point is that these companies could have reinvested that money in their business, but instead they aimed to boost share price and financial optics.
That's not to say the airlines don't care about the little guy. Some shareholders are regular folks. Plus, at least Delta paid out a bonus to employees a few months ago. But there is indeed a reason to dislike large buybacks.
Amazon seems pretty constrained by supply to me right now. Everything I have looked for to stock up on from them due to the current conditions (alcohol wipes, nonperishable food, etc) is sold out. But maybe they have scaled up supply more than I realize and workers are becoming more of a bottleneck than inventory. Even if everything was in stock I'd expect my overall online purchases to decline in the next few months…
Do you have any idea what the full industrial capacity of the American economy is? These type of basic items are all dead-simple to manufacture, and highly unlikely to run into supply-chain interruptions.
I guarantee you that once Americans get the full on prepping instinct out of their system, the inventories will all be replenished by next week at the latest. This isn't the collapse of industrial civilization. The factories are churning at 100% capacity.
People won't keep stockpiling six months of toilet paper every single week. There's virtually zero chance that there's any significant supply interruption beyond a few days.
Where is the comment here on billionaire taxes? Literally Amazon is the only company because of which I feel comfortable right now sitting in my house vs. panic buying.
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We need taxes on vacancies. Encourage people to let property go to people who can put it to some use. Prevent blight and crime, etc, too.
Ah yes, the California solution to everything - tax it.
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You mean like American Airlines that had a profit of $7.6 billion in 2015, and didn't save dollar one for a rainy day? Instead, it bought back $15 billion worth of stock over six years while raising fees and shrinking seats? “I don’t think we’re ever going to lose money again,” -Doug Parker, American Airlines CEO, 2017. Let 'em fail.
Letting them all fail would do more harm to others than warranted. But letting the weakest one fail as a warning to the others that the bailouts are over and perhaps they should learn to save against rainy days isn't the worst idea.
Given climate change, air travel is not a public good we should be prioritising.
One of the more worrying things to me is how this pandemic (and/or our response to it) will disproportionately affect small businesses and individuals. As Amazon hires 100k workers how many jobs are being lost by small businesses failing?
Marginal businesses of any size are going to fail, and the less marginal will become marginal. Larger businesses have a proportionately larger need for money to sustain themselves. Big business doesn't mean rich business. Look what's happening to the airlines.
Buy Amazon stocks?
Not on the basis of retail demand. Their retail margins are horrible, as with most of the industry. AWS and advertising are where their margin and profit centers are. In terms of retail support action - Costco's stock is one of the few large companies that hasn't cratered. It's not much lower than its average for the year, whereas most everything else has been hammered. You could double Amazon's retail sales in the U…
I mean, here in Brooklyn you literally cannot order AmazonFresh. No delivery slots no matter how far in the future you scroll. And it's been this way for at least a couple of days now. So makes sense.