Not all companies that experienced a surge in the past 20 months have come back to Earth.
Etsy is up 63 per cent in 2021. This is due to Etsy’s success at turning repeat customers who came to the site for face covers into regular customers. And the online security company Zscaler — which soared more than 300 percent last year — has only continued to climb, rising 83 percent so far this year.
“The market liked to group them all together: the pandemic trade vs. the reopening,” said Chris Mack, a stock portfolio manager at the investment adviser Harding Loevner in Bridgewater, N.J. “The market, now, is having to go through and look at the underlying fundamentals. There are company-specific differences.”
Recent earnings reports have provided some answers — and sometimes violent investor reactions. Shares of Chegg — which provides digital textbook rental and online tutoring — fell by half earlier this month, wiping out more than $4 billion of market value, after quarterly results fell just short of expectations. The company was seeing “significantly fewer enrollments than expected this semester” as more customers cut back on their studies to return to work, Chegg’s chief executive, Daniel Rosensweig, told analysts.
Peloton’s big drop came after it also missed earnings expectations, with a single day of losses accounting for much of its decline this year. (Planet Fitness disclosed much better than expected results the same day, as a surge of new customers pushed its gym memberships to 97 percent of the company’s peak. Its shares have risen 14 percent this month.
But the pandemic darlings aren’t finished, even if their most explosive growth has petered out. Investors believe that two years of living at home have changed our behaviours so much that companies like Zoom Video or Peloton will still be part of our daily routines in the near future.
Bill Cynecki, a 31-year-old military officer living in Milford, Mich., said he had been a true believer in Peloton since “10 minutes” into his first ride, when he tried one of the bikes out while visiting his sister in Manhattan in February 2020.
Mr. Cynecki bought shares when the stock was around $30 and then continued to buy shares as the pandemic drove the stock up to $150 by year’s end. He sold some shares at first, but he bought more shares as the stock fell below $100.
Peloton closed Thursday closing at $48.40 per Share.
“Obviously, you know, hard times right now,” said Mr. Cynecki, who still believes that Peloton will have a strong business over the long term. “But this is a part of investing.”
Source: NY Times