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In this series, we break down the jargon and explain a popular investing term or topic. Here are the winners of the pandemic era.
Who or what are these?
The group of stocks that soared during lockdown but are now bottoming out, which probably means they should now be called post-pandemic losers.
Shares in 50 tech and other companies that thrived on pandemic trends, such as the shift online, have collectively fallen $1.3 trillion since the end of 2020. This is according to a Financial Times study based on Bloomberg data.
Name some names
The list includes Zoom Video Communications, the platform that allowed colleagues and families to stay in touch during the pandemic period. Remember Zoom dinner, where multiple households prepared the same meal and shared the experience through their screens?
What goes up…: The pandemic sparked interest in all aspects of technology and its power to solve all our problems
Zoom shares soared to $559 on Christmas 2020, but fell to $62, as a result of the return to offices and in-person socializing. Last summer, Zoom ordered its own workers to return to the office.
I guess the platoon is on the list.
In fact, it is. Shares of the exercise bike business jumped to $162 at the end of 2020 as fitness-conscious people were locked out of the gym.
Shares are trading at $4, which is partly due to the high cost of their bikes and their lack of reliability.
The loss-making company is now implementing a refinancing and restructuring plan (jobs will be lost). But there are rumors that private equity bidders could be circling.
Any other name?
The pandemic sparked interest in all aspects of technology and its power to solve all our problems. As part of this concern, shares of electric car manufacturer Tesla rose from $235 in Christmas 2020 to $407 in November 2021. The price is now $177.
But this drop is also related to falling sales and the controversial outbursts of Tesla boss Elon Musk.
Where did the enthusiasm for these actions begin?
People began discussing the potential of Peloton and the other pandemic winners on the Reddit message board forums.
The platform went public in March of this year. There is currently a lot of excitement surrounding its shares. Well, at least currently.
Have any of the pandemic winners bucked the trend?
Shareholders should not despair. Amazon shares were trading at $162 at the end of 2020, now they are at $189.
In 2020, some investors, attracted by the potential of artificial intelligence (AI), began buying shares of the Nvidia semiconductor business.
Its shares, which were $131 at the end of 2020, are now 569 percent higher at $905, thanks to enthusiasm for generative AI.
Amazon and Nvidia are members of the Magnificent Seven group of tech stocks, which were the favorite stocks of 2023.
Unfortunately, its recent performance has been affected by the decline of Tesla, another among them.
What are the lessons from this?
The fate of pandemic favorites illustrates the importance of diversification, in any era.
