“Stay at home” stocks tumble as global covid restrictions ease
“Stay at home” stocks that boomed during the pandemic have slumped since the start of the year in a sign that investors and economies are beginning to shake off habits picked up through covid lockdowns.
Shares in Netflix and Peloton were among the biggest fallers last week as bosses cut back growth projections and warned that astronomic demand seen through the pandemic was beginning to wane.
Netflix bosses warned investors on Thursday that the firm would add just 2.5 million subscribers in the first three months of the year, well below analysts’ expectations and last year’s first-quarter subscriber growth of four million.
The update sent shares in the streaming giant plummeting more than 20 per cent in Friday trading.
Danni Hewson, financial analyst at AJ Bell, said the slowdown in subscriber growth put “a question mark over Netflix’s goal to be cash flow positive every year from 2022”.
She added that Netflix now faced the reality of price hikes as a means of earnings growth “rather hoovering up millions of more subscribers every month”.
Netflix slump follows a similarly turbulent week for home fitness firm Peloton. Shares in the business known for its interactive home exercise bikes fell more than 20 per cent after CNBC reported on Thursday that the firm had halted production of its exercise bikes in line with a slowdown in demand.
Peloton founder and boss John Foley denied that it had paused production entirely but wrote to employees that the firm was “resetting our production levels for sustainable growth.”
Peloton and Netflix are the latest in a wider trend of investors voting with their feet as restrictions ease around the world.
Shares in video-conferencing service Zoom have tumbled more than 15 per cent since the start of the year, while shares in Amazon and eBay, which benefited from a boom in demand for online retail, have slumped 16.6 per cent and 8.2 per cent in the past month, respectively.
Gregori Volokhine, president of Meeschaert Financial Services, told AFP that Netflix, Amazon, PayPal, eBay and Etsy have all fallen between 20 and 50 percent from their peaks.
The Virtual Work and Life Multisector ETF, launched by asset management giant BlackRock to track companies that would benefit from lockdowns, reflects the signs that investors are beginning to flee pandemic darlings. The ETF has plunged nearly 12 per cent since the start of the year.