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Stay at home the stock is smoked
Tech stocks jumped dramatically after the pandemic spread and the world became virtual. We pushed it on Pelotons (PTON) instead of hitting the gym, and watched Netflix (NFLX) like it was our second job. Zoom (ZM) really became when we started chatting and socializing via video conferencing; And thanks to DocuSign (DOCU), we didn’t even have to do serious work in person.
But it turns out that people don’t want a completely virtual world. I’ve had my vaccinations and boosters, I’m out of mask-wearing in stores and on the subway, I’m mostly back to normal life — except for working from home three days a week. I still spend hours playing video games, but that’s nothing new.
And chances are, if neither you nor anyone in your life is immunocompromised, you are probably living an almost normal life as well. At home, tech stocks are paying the price.
DocuSign and Netflix are far from their pandemic highs, while Zoom, which traded at $559 in October 2020, is down to $87.63 as of Wednesday afternoon.
Peloton took a hit even harder after CEO Barry McCarthy revealed the company was “undercapitalised” and its turnaround is “hard work,” during the company’s third-quarter earnings on Tuesday.
In other words, the party is over for tech stocks at home.
We won’t be home forever
Throughout 2020 and 2021, the pandemic has dominated daily life. We spent the holidays far from our loved ones, avoided travel, and dreaded every trip to the grocery store.
To stay sane, many of us indulge in the technique of staying at home. Played a virtual beer beer ball with friends via Zoom, (the free version of course), the songs “Tiger King”, “The Office” and “Schitt’s Creek”; I ordered anything I could get on amazon.
Investors took note, piling up on local stocks and sending their values soaring.
On January 2, 2020, Zoom shares were trading at $68.72. By October 19, they reached $569.43 per share. Netflix shares are up for even longer, rising from $329.81 on January 2, 2020 to $691.69 on November 17, 2021.
Meanwhile, Peloton shares jumped from $29.74 on January 2, 2020 to $167.42 on January 13, 2021. DocuSign stock, which was trading at $75.90 on January 2, 2020, rose to $310.05 by September 3, 2021.
But those stock prices started falling from those lofty heights after the world reopened, vaccines became easier to access, and people finally got off their sofas.
Zoom shares are down 83.96% from $559 to $89.67 since their October 2020 high. Netflix is down 74.58% from $691.69 to $175.81, while Peloton is down 92.52%, with shares crashing from $167.42 to $167.42 $12.52 USD. DocuSign fell 78% from $310.05 to $68.19.
All of these stocks, except Zoom, are trading below their January 2, 2020 stock price.
It’s not just a return to normal life
These stocks aren’t just dropping because we finally left our homes. Take Peloton, for example; The company issued a voluntary recall of the Tread + treadmill in May 2021, sending stocks down, unable to control their spending and slowing growth.
I brought in McCarthy to address these two issues, but it will take some time for the company to return to the home gym it once was, if any.
The company has a lot of its bikes on hand, and this drains its cash reserves. It is set to borrow about $750 million from JPMorgan and Goldman Sachs to help continue running the business.
Then there is Netflix. Not only is the company’s stock good, but the company, which revolutionized video streaming, is now losing customers. The company said in its latest earnings report that 200,000 users have abandoned the platform. Wall Street had expected the business to add 2.5 million subscribers.
The company and analysts have warned of the speed with which it has been adding customers during the pandemic for some time, and that comparisons to previous quarters will be difficult. Furthermore, Netflix has much more competition in Disney+, Apple TV+, HBO Max, and others.
On top of all of this, there is an additional crunch of inflation and rising interest rates, which are upsetting stocks across the board. However, while the broader S&P 500 is off as much as 15.8% since the start of the year, each of the above stocks has fallen anywhere from 51% to 71%.
Of course, we will continue to use many of these companies’ products and services for a long time to come. But it seems their days of greatest growth are behind them.
by Daniel Holly, technical editor at Yahoo Finance. follow him Tweet embed
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