MICRO NODETimestamp: March 11, 2020

HLT

Hilton Worldwide

COVID Hotel Shutdown

UNJUSTIFIED PANIC

PandemicHotelsTravelLockdowns

The Catalyst

“The COVID-19 pandemic severely impacted the hospitality industry, including Hilton Worldwide Holdings Inc. (HLT), as global travel came to a halt. Lockdowns led to widespread hotel closures and a dramatic drop in occupancy rates, severely affecting revenue streams. The demand for leisure and business travel plummeted, causing significant financial strain on the company. **Macro Context:** 10Y Treasury Yield: 0.82%”

The Aftermath

“The thesis shifted as realized data stabilized and liquidity conditions normalized, undermining the worst-case assumptions embedded at the lows. As forced sellers exhausted and expectations reset, HLT repriced higher with improving risk appetite and better forward visibility.”

Company Profile

Fundamental Overview (Current)

About

Hilton Worldwide Holdings Inc., formerly Hilton Hotels Corporation, is an American multinational hospitality company that manages and franchises a broad portfolio of hotels and resorts.

Sector

CONSUMER CYCLICAL

Industry

LODGING

Market Cap

$73.44B

P/E Ratio

51.54

Beta

1.11

Div Yield

0.19%

52W High

$333.86

52W Low

$195.7

Hindsight Engine

Normalization of Historical Volatility Clusters

Entry Delta

-60.6%

Recovery Alpha

+622.0%

Reference Peak

$111.1

Pre-Panic High

Panic Floor

$43.76

Moment of Capitulation

Drawdown Magnitude

-60.6%

Peak-to-Trough Delta

Alpha from Bottom

+622.029%

Total Return Delta

Macro Environment

Economic Indicators at Time of Event

Fed Funds Rate

1.09%

Inflation

1.23%

Unemployment

4.40%

10Y Treasury

0.82%

2Y Treasury

0.50%

30Y Treasury

1.30%

CPI

258.12%

Earnings Catalyst

Quarterly Report Data

Q4 2019Reported Feb 11, 2020

Reported EPS

$1.00

Estimated EPS

$0.96

Surprise

+0.04

Surprise %

+4.2%

Anatomy of the Crash

Sentiment Breakdown & Strategic Pivot Points

Stage 01: The Fear

At the panic low, there was widespread fear that companies in the hospitality sector might not survive the prolonged downturn. Headlines warned of potential bankruptcies and massive layoffs, with analysts downgrading stocks due to the uncertain timeline for recovery. The prevailing narrative was that the industry could take years, if not a decade, to return to pre-pandemic levels.

Stage 02: The Turnaround

The turnaround for Hilton began with the announcement of effective vaccines, which spurred optimism about the resumption of travel. Additionally, massive fiscal and monetary stimulus by the Federal Reserve provided liquidity and support to the markets. As restrictions eased, pent-up demand for travel fueled a faster-than-expected recovery in the hospitality sector.

Stage 03: Opportunity

If you had bought Hilton stock at its panic low of $55.25, you would be up approximately 472% today. The COVID crash serves as a stark reminder that panic selling during black swan events can lead to significant wealth destruction. Investors who maintained a long-term perspective were rewarded as the market rebounded strongly.