To a first approximation it’s a dead loss. If you see 50% demand shortfall on a 100k monthly revenue for 3 months, and say your open falls from 50k to 25k, and capex stays same (assuming no debt relief/restructuring), you’ve basically lost 75k income for the year, period
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That’s off gross margin. If your SAG is high enough, you’ll be in the red for a quarter. If your cost of capital us high enough, you might never catch up.
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At most a lot of discretionary spending will see a small spike that will recover a small amount of lost ground. When aggregate demand return to pre-Covid levels it will be distributed very differently, a lot heavier on the lower part of Maslow pyramid.
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In the minds of people advocating for this: I don't think it's the demand that is "pent-up" I think it's the disposable income or available credit lines.
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A lot of the disposable income doesn’t exist through the pandemic. The credit will almost entirely go towards minimal viable rescue.
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Not so. The demand is for being outside and in a state of enjoyment and consumption. It's an emotional tide, not a specific logical need for products listed on a neatly-coiffed spreadsheet, my friend.
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Some demand perishable, some not. Premature end to this debate, perhaps.
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I am curious how sticky quarantine habits will be. If wfh sticks, on-the-go coffee/breakfast and lunch joints never reach the same levels. Do people keep making sourdough? Do kids ever go back to school?
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Funny thing about school boards: they had to carry crumbling school building maintenance while cutting spend on core programs and still delivering in mechanisms that would have been largely familiar 40 or even 80 years ago. High time something shook it up.
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