We're now just a dozen days away form the 2020 presidential election. If President Trump wins, things may not be materially different come January from how they are now. However, if former Vice President Joe Biden emerges victorious, things could get a bit more complicated for some companies.
The GEO Group (NYSE:GEO), Lyft (NASDAQ:LYFT), and Norwegian Cruise Line Holdings (NYSE:NCLH) are three companies that may want to raise some money before the votes are tallied on Nov. 3. They can all use a liquidity boost, and secondary offerings may be hard to come by after a Biden win. Let's break down the challenges.
The GEO Group
When life hands you a "Go to Jail" card, you may find that The GEO Group is the banker. The GEO Group is a leading player in private prisons and other detention centers. This sector isn't going to fare well under Biden, and investors have been dumping the stock in 2020. The GEO Group is structured as a real estate investment trust (REIT), and Wednesday's new low pushes the yield north of 15%.
A stock hitting a 52-week low isn't going to get a lot of support on the secondary market, but The GEO Group may as well raise money while it still can. With minimal greenery on its balance sheet and $2.8 billion in debt, it may want to drum up some more liquidity before having to sell assets to survive under a Biden presidency, during which we'd probably see fewer private prisons and U.S. Immigration and Customs Enforcement detainment facilities.
The ride-hailing business is under fire in more ways than one, and both battles will come to a head on Nov. 3. Out in California, Lyft and other ridesharing and food-delivery apps are bankrolling Proposition 22, a ballot measure would make them exempt from the state's Assembly Bill 5 (AB5) that wants to treat contractors in the gig economy as full-time employees with full benefits. Lyft had warned over the summer that it would leave California if AB5 went into effect. We may soon find out if it was only bluffing.
Lyft has a healthy balance sheet, as its nearly $2.8 billion in cash and equivalents is more than enough to offset its $1.1 billion in long-term debt. However, between the possibility of losing out on Proposition 22 and Biden's platform calling out the gig economy's practice of employer misclassification, it may as well load up the till. Lyft isn't expected to a turn a profit until 2022 at the earliest, and that breakeven point may prove to be ambitious if it becomes too expensive to stay in the country's most populous state. It may as well raise money now before the dark clouds burst into rain.
Norwegian Cruise Line Holdings
Cruise lines have been raising money, and it's easy to see why. The Centers for Disease Control and Prevention (CDC) keep delaying the industry's restart date on safety concerns, and it may tap the snooze button for even longer stretches under Biden. Reports earlier this month claimed that the Trump administration was pressuring the CDC to shorten the ban on new sailings that it was hoping to roll out at the end of September. Biden isn't likely to take a heavy hand against a regulatory agency.
Norwegian Cruise Line's biggest rival raised $1 billion last month. It may as well follow suit with the clock ticking to Election Day. Norwegian Cruise Line is burning through $160 million in cash every month it's not sailing again. It has $2.3 billion in cash and cash equivalents on its books, but that's weighed down by $10.3 billion in debt. With an industry-high 60% cash refund request rate from passengers on nixed sailings, it needs the money.