Aug 25, 2022 - Economy & Business

Zoom boom meets doom

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Remember the stay-at-home stocks? How the trendy have fallen.

Why it matters: The saga of the stay-at-home stocks is a useful reminder that hot new technology stocks can fall out of favor fast.

Driving the news: Two of the companies whose businesses seemed custom made for the COVID era — Zoom Video and Peloton — are making a splash this week.

The big picture: While such moves are fairly large for any given week, they obscure the big story of these companies — a familiar one on Wall Street.

  • It's called boom-and-bust.

Flashback: During peak COVID, a number of companies that were optimized for the WFH era posted remarkable gains, as customers flocked to their services.

  • In 2020 alone, shares of both Peloton and Zoom were up an astounding 400%.
  • Shopify, which helps brick-and-mortar retailers set up online stores, rose nearly 200%.
  • Chegg, which offered digital textbook rentals, roughly doubled.

Today: Almost all those gains have vaporized.

Yes, but: Not all the companies that surged during COVID have collapsed.

  • With many workplaces going to a hybrid home/office model, the need for online security continued to grow.
  • Online security firms CrowdStrike and Zscaler rose more than 300% in 2020, and they've both held on to most of those gains.

Editor's note: This story has been updated to reflect Peloton's earnings report and stock price reaction.

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