5 Stocks That Could Get Pricked By Corporate Vaccine Mandates

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Federal vaccine mandates will cost millions per week, and these companies will feel the pinch

The novel coronavirus was first detected in late 2019. And although we are close to the end of 2021, it is still a part of our lives and shows no signs of going away. However, life, as they say, must move on. And overall, we are now in a much better place through a comprehensive vaccine rollout program. But even though vaccines are now available, there is also skepticism about the vaccines that we have had to tackle. It is especially complicated since many companies have instituted corporate vaccine mandates.

In an environment where companies were already suffering because of a global shutdown last year, corporate vaccine mandates might seem like a double whammy. It isn’t easy hiring right now. Many people are still skeptical of returning to work despite companies offering widespread incentives. Understandably, these developments also affect the bottom line. Companies will have to spend millions on implementing new hiring practices. You’ll need verification tracking, testing and paid time off in addition to the time needed from business leaders or HR professionals to organize these programs.

On top of all this, there is a risk of alienation. According to at least one poll, approximately 1 in 3 Americans say they certainly or most likely will not get the vaccine. If a company insists on a vaccine in an environment where many remain skeptical, it can hurt the hiring process. That said, not many companies can afford this. However, some are more likely to get hit harder than others.

With all of that in mind, let’s get granular with five companies with corporate vaccine mandates and see how it’s affecting them.

  • DoorDash (NYSE:DASH)
  • Delta Air Lines (NYSE:DAL)
  • McDonald’s (NYSE:MCD)
  • Amazon (NASDAQ:AMZN)
  • Netflix (NASDAQ:NFLX)

Now, let’s dive in and take a closer look at each one.

Companies Enforcing Vaccine Mandates: DoorDash (DASH)

DoorDash’s corporate office does not require employees to come back until January. However, those employees who come in before then must show proof of vaccination. Meanwhile, DoorDash is working to keep its drivers safe by following public health guidance that requires either vaccinations or masks.

At the moment, however, drivers for services like DoorDash and Instacart are treated as contractors rather than employees. Thus, forcing them to get vaccinated at some stage may lead to a change in their status and require various legal hurdles.

Moreover, DoorDash’s biggest challenge last quarter was the lack of couriers — known as Dashers — available for work. The company overcame this problem by increasing incentives like pay for performance and bonuses, resulting in a small increase in couriers. It is commendable when you think about stronger-than-expected consumer demand, severe weather conditions, and the impact of stimulus checks. The undersupply of deliveries caused major headaches for consumers and merchants. The less than satisfactory experience also led to higher costs while limiting the number of completed orders.

Now, if vaccine mandates become the norm, it will only add to DoorDash’s problems. Profits will decline, and the bottom line will worsen. In a poll conducted in mid-May by the Associated Press-NORC Center for Public Affairs Research, less than 50% of Americans surveyed said they would get a coronavirus vaccine whenever it becomes available. Although the numbers are getting better, a large percentage of the population remains skeptical. And many of these are potential Dashers that will be tough to recruit.

Delta Air Lines (DAL)

The Atlanta-based air carrier is beginning to enforce a $200 monthly surcharge for non-vaccinated employees and those that refuse vaccinations. That said, Delta Air Lines CEO Ed Bastian says that 90% of employees have taken the vaccine without a company mandate.

“We’re not opposed to vaccine mandates,” asserted CEO of Delta Air Lines, Ed Bastian. “In fact, we’re the very first company, back in the spring, to put a vaccine mandate in for any new employee coming into Delta. We’ve hired 8,000 people this year, all who had to be vaccinated in order to come and work for our company.”

Furthermore, Delta Air Lines is looking to recruit an additional 1,000 pilots by next summer to meet rebounding demand. The Atlanta-based air carrier canceled hundreds of flights during the holidays due to understaffing. Now, it wants to make sure these things do not happen in the future.

All of this is well and good. However, in the longer run, the vaccine mandates may lead to staffing shortages. It is especially concerning considering Delta Air Lines and the rest of the airline sector are the most affected by the virus. In addition, the vaccine mandates will cost the legacy carrier, which is still recovering from a terrible year.

Companies Enforcing Vaccine Mandates: McDonald’s (MCD)

The world’s largest fast-food chain is also serious about vaccine mandates. An internal note reveals McDonald’s mandated all U.S.-based office workers and visitors to get their shots by Sept. 27. The requirement will not extend to restaurant-level employees. But they will need shots because they can still easily come into contact with fellow employees and customers through shared utensils or cups if we don’t take steps now.

But there is one difference between the company and others on the list. McDonald’s is one of the biggest and most successful companies and is tremendously cash-rich. Quarter after quarter, it beats earnings estimates. And considering its position, it can afford to take on any additional cost that the vaccine mandates entail.

Just as an example, McDonald’s recently handily surpassed Wall Street’s estimates for its third-quarter profits and revenue.

Net income finished at $2.15 billion, or $2.86 per share, a substantial uptick from $1.76 billion, or $2.35 per share, a year earlier. Net sales jumped 14% to $6.2 billion, beating forecasts of $6.04 billion. However, staffing shortages hit many locations across America — impacting customer service and leading longer wait times for food orders at some restaurants.

Additionally, understaffed locations led executives to scale back late-night hours and reduce profits overall in this area. With the issues highlighted above, these staffing issues could get severe with vaccine mandates. But the latest earnings report highlights an indomitable fact: it is very tough to hurt McDonald’s.

Amazon (AMZN)

Amazon is running sweepstakes to encourage vaccinations. The company gave away cars and $100,000 cash bonuses as part of the promotion to stay healthy and protect themselves from illness that could spread through their workplaces.

Amazon is helping employees stay healthy by providing on-site vaccinations, which has led to a significant reduction in workplace infections. The company says that 1 out of 10 people who get infected work at Amazon. So, getting the vaccinations done will help protect their community members and them when they are away from home or visiting family for holidays. Much like McDonald’s, the company can afford to spend money on its vaccine policies. However, the U.S. government is slowly losing patience with this approach.

Amazon stands alone among major tech giants by refraining from demanding proof of vaccination against Covid-19. However, President Joe Biden has launched an aggressive campaign against businesses that refuse his orders. If you don’t comply, expect $14,000 per violation. Considering the size of Amazon’s workforce, this will have wider implications.

Companies Enforcing Vaccine Mandates: Netflix (NFLX)

All cast and crew working on U.S. production will have to get the vaccine. It complicates matters for the streaming service because several prominent celebrities and actors such as Nicki Minaj, Jessica Biel and Black Panther actress Letitia Wright have all shared anti-vaccine sentiments on various forums. There are several other names on that list. Understandably, Netflix as a brand will have trouble roping them in terms of talent for their movies and series.

The company was already struggling due to stop-start production last year. In 2020, an extended halt in production due to coronavirus severely impacted streamers, leaving them without new content from major studios. On top of all this, the subscription video-on-demand space is more competitive than ever. Disney+, WarnerMedia, Paramount+ and AppleTV+ are just some of the major competitors out there that Netflix has to contend with. With margins razor-sharp, vaccine skeptic celebrities only add to its woes.

This article originally appeared at InvestorPlace.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.