🐄 Fart Taxes are Coming for Farmers

MARKET UPDATE

Good Morning Investor! Shares of Hims & Hers Health ($HIMS) took a nosedive, crashing almost 8% on Thursday after a scathing short report from Hunterbrook Media. Meanwhile, in the land of pet stocks, things are barking up. Shares of Chewy ($CHWY) and BarkBox ($BARK) surged 11% and 3.15%, respectively, all thanks to a picture of a dog posted by "RoaringKitty" on X (yes, you read that right).

TODAY’S BIG HEADLINES

The Cruise Industry is Flying Thanks to Record Demand

Fart Taxes are Coming for Farmers

The Fall of Walgreens Boots Alliance

TRAVEL

The Cruise Industry is Flying Thanks to Record Demand🚢

Around the World and Back: Thanks to record-breaking levels of demand from first-time and Gen Z travelers, the cruise industry is sailing towards a full recovery. Prices for next year’s cruises are skyrocketing, and occupancy rates are keeping pace. One thing’s for sure, the analysts really missed the boat on this one.

• Believe it or not, the share prices of cruise line companies are reflecting this resurgence, with shares of Carnival Cruise ($CCL) and Royal Caribbean Cruise ($RCL) up 6.6% and 32% respectively.

• Royal Caribbean is now officially trading above its pre-pandemic peak and is looking to hire an additional 10,000 staff to keep up with demand.

• Meanwhile, this week Carnival Cruise reported its second quarterly profit since 2020 and has raised its financial outlook for the full fiscal year, boasting the confidence of a lion.

Pirates of the Dubai?: Believe it or not, the cruise industry's turnaround has nations vying to become the next cruise ship hotspots, hoping to dethrone the Caribbean and Miami.

• Dubai is making waves, aiming to grow its cruise tourism from roughly 170,000 passengers annually to a whopping 1.3 million in an effort to boost its tourism sector and diversify away from its overreliance on fossil fuels.

• Some more interesting developments within the industry include Viking Holdings ($VIK), a company focused solely on the luxury cruise market, which went public earlier this year. Even Iceland is experiencing increased cruise demand, driven by high Northern Lights activity attracting Aurora chasers.

AGRICULTURE & CLIMATE

Fart Taxes are Coming for Farmers🐄

Denmark's Gassy Gamble: Europe is breaking wind—and new ground—with Denmark leading the charge, or should we say discharge, by enacting the world’s first “fart tax”. From 2030, Danish livestock farmers will be taxed for the greenhouse gases emitted by their cows, sheep, and pigs. That’s right, the burps and flatulence of farm animals are now subject to taxation as part of Denmark’s ambitious plan to tackle methane emissions, one of the most potent contributors to global warming.

• The aim? To cut greenhouse gas emissions by 70% from 1990 levels by 2030. It’s a bold move, especially considering the uproar it has caused among Dutch farmers when similar emissions restrictions were imposed on them.

• The Dutch response was nothing short of a barnyard rebellion—hay bales set ablaze, manure dumped on highways, blockades at supermarket distribution centers, and protests right on politicians' doorsteps. Whether Danish farmers will mimic their neighbors' fiery protests remains to be seen.

Money Making, or Genuine Concern: Initially, Danish farmers will face a tax of 300 kroner ($43) per ton of carbon dioxide equivalent in 2030, ramping up to 750 kroner ($108) by 2035.

• But why the focus on methane? While carbon dioxide hogs the spotlight in climate change discussions, methane is a heavyweight in the greenhouse gas arena, trapping about 87 times more heat over a 20-year period.

• With livestock responsible for around 32% of human-caused methane emissions globally, targeting these emissions could make a significant impact.

Lessons from the Kiwis: Interestingly, Denmark isn’t the only country trying to put a lid on livestock emissions. New Zealand had passed similar legislation slated for 2025, only to see it repealed after intense backlash from farmers and a governmental shift in the 2023 elections. Whether Denmark’s approach will hold firm or falter under pressure will be a tale worth watching.

RETAIL & CONSUMER DISCRETIONARIES

The Fall of Walgreens 🏥

The End of the Pharmacy: It looks like Walgreens Boots Alliance ($WBA) is in deeper trouble than anyone initially thought. Back in early 2023, the retailer reported a staggering $3.7 billion loss due to "retail shrinkage" — a fancy term for theft. Though the CFO later admitted that these figures might have been a tad exaggerated, it’s now clear that the company’s problems go far beyond petty shoplifting.

• Shrinking Profits, Shrinking Stores: Thursday morning saw Walgreens’ shares nosedive by 25% after the company announced a grim profit forecast and a multi-year plan to shutter as many as 8,700 of its unprofitable stores. It's a move that’s less about trimming the fat and more about a desperate bid to stop the bleeding.

• Boots on the Ground, But No Buyers: In a bid to shore up its finances, Walgreens has been trying to sell its UK-based Boots business, valued at £7 billion ($8.85 billion). But, alas, no takers have come forward, leaving Walgreens holding onto an asset it hoped would be a golden ticket.

Sharks are Circling: Weak consumer spending has forced Walgreens to cut its profit forecasts. Newly appointed CEO Tim Wentworth is now spearheading a turnaround strategy that includes store closures, axing multiple mid-level executives, and implementing a $1 billion cost-cutting plan. For context, the company is now forecasting an annual adjusted profit of $2.80 to $2.95 per share, down from its earlier estimate of $3.20 to $3.35.

• These dampened forecasts come not long after the drugstore operator halved its dividend to 25 cents per share, in an attempt to conserve cash earlier this year.

• Shares of Walgreens are now trading at the same level as they were as far back as 1997 — a throwback chart that’s making the rounds as meme fodder on Twitter.

MORE NEWS

Additional market-moving events🌎

Billion Dollar Studio: A24 — the independent film and TV house behind hits like Everything Everywhere All at Once and HBO’s Euphoria — scored a $100 million investment at a valuation of $3.5 billion. (Variety)

Solana Joins the Club: VanEck files for Solana ETF in the US, claiming SOL is a commodity. (The Block)

Amazon’s Temu Competitor: Amazon ($AMZN) also plans to launch a discount storefront to compete with Temu and Shein. It will debut this fall and ship items directly from China to U.S. consumers. (CNBC)

SpaceX Valuation Rises Again: SpaceX valuation and contract: SpaceX is set to conduct a tender offer at $112 per share, raising its valuation to nearly $210B, up from $180B last December. (Bloomberg)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500. Then on the 10th of June we released our next stock selection.

Here’s how the three stocks have performed since:

• Evolution AB: 1,110.00 SEK (📉-15.42%)

• Hims & Hers Health: $20.00 (📈+38.18%)

• PayPal: $58.38 (📉-7.98%)

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