Pandemic darling stocks Netflix, Peloton, Zoom, and DocuSign face reckoning
Netflix (NFLX), Zoom (ZM), Peloton (PTON) and DocuSign (DOCU), are some of the bottom performers of the Nasdaq 100 year-to-date. The once pandemic darlings known as stay-at-home stocks have been increasingly in the sell category.
All of these names are down more than 40% year-to-date. In the case of streaming giant Netflix, the decline is a staggering 63% since the start of the year. E-signature platform DocuSign is 44% lower YTD.
The downward performance isn't just this year. A one-year chart shows connected fitness firm Peloton is down 79%, followed by video conferencing software Zoom shedding 68%.
The shift from stay-at-home stocks into reopening trades has been going on for some time. But Netflix’s surprising subscriber loss and the violent stock reaction, accentuated the steep cuts in the stocks' valuations.
“Some of the COVID winners that had a massive multi-expansion — their share prices did really, really well — now that its falling by the wayside, the market is rationing into the reopening winners,” Niladri Mukherjee head of portfolio strategy at Merrill and Bank of America Private, told Yahoo Finance.
But will the stocks keep declining in the face of an increasingly tighter monetary policy from the Federal Reserve?
“The stay at home stocks obviously — they've been challenged for quite some time now. They were some of the biggest beneficiaries. So you saw the price to earnings multiples rise to really astounding numbers,” Megan Horneman, CIO for Verdence Capital Advisors, told Yahoo Finance.
“These things were not necessarily sustainable. So I think there still is plenty of room for those stocks to reprice [in] what is not only a higher interest rate environment but also bigger reopening trade going forward,” she added.
Retail traders saw an opportunity to buy on Wednesday when Netflix dropped 35%. The stock was at the top of Fidelity's retail customer orders, with more Buy than Sell orders. NFLX was the #1 trending ticker on Yahoo Finance on Wednesday.
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