With people unable (or unwilling) to go to the gym, consumers rushed to buy its fitness equipment and, most importantly, sign up for its online classes. Peloton reported first-quarter earnings for the 2020 calendar year as revenue rose 139% and the stock rose 434%.
The increase was short-lived. As gyms reopened and class subscriptions and equipment sales declined, so did the company’s outlook.
However, despite the challenges, McCarthy is doing great things for the company, claiming that Peloton has made significant progress in its turnaround efforts and halted its cash-burn rate.
Investors do not share his belief. The stock has lost more than 90% of its value since the end of 2020 and is now less than half of what it was at the beginning of that year.
The peloton is hardly the only pandemic victor to have been defeated recently. Numerous companies who had convinced themselves and investors that they were well positioned to continue growing once Covid receded have been proven wrong.
Here are other 2020 studs that became duds in 2022.
Wayfair
The pandemic forced people to stay at home and, in millions of cases, start working from there. Many took the money they saved by not traveling or going on vacation to buy furniture and other items to improve their homes.
“We’ve grown Wayfair significantly to keep pace with e-commerce growth in the home category. We’ve seen the tailwinds of the pandemic accelerate the adoption of e-commerce shopping, and I’ve personally worked hard to hire a strong team to support this growth,” CEO Niraj Shah said in a letter announcing the layoffs. “This year, that growth hasn’t materialized as we expected. Our team is too big for the environment we’re in right now, and unfortunately we have to adapt.”
It’s not just that the company isn’t growing as fast as it used to. Like Peloton, Wayfair has gone in reverse and red ink. Revenue fell 14% in the first six months of this year and reported a net loss of $697 million, compared with a profit of $149 million in the same period in 2021.
Wayfair stock, which rallied 482% between the end of March 2020 and the end of March 2021, gave up all of those gains.
Shopify
A Canadian software company that helps retailers sell online has also been a big winner when businesses are forced to switch to e-commerce due to the pandemic. Last month, its founder and CEO announced that Shopify was laying off 10% of its workforce because it “wasn’t betting” on continued growth.
The company’s pre-Covid He said e-commerce growth was steady and predictable, but the early days of the pandemic brought an unexpected surge in sales.
“Was this growth a temporary effect or a new normal? So given what we’ve seen, we’ve made another bet: We’re betting that the channel mix—the share of dollars traveling through e-commerce rather than physical retail—will be permanently five, even 10 jump forward a year,” he said. “At the time, we couldn’t say for sure, but we knew that if it had any chance of being true, we would have to expand our company to accommodate.”
The good times didn’t evaporate as quickly as they did for some other pandemic winners. But they certainly backed off.
While revenue rose 18% in the first six months of the year compared to a year earlier, Shopify’s expenses, including research and development costs, nearly doubled. The company also suffered a $1 billion paper loss on equity investments in the second quarter, leading to a net loss of $2.7 billion for the period from a profit of $2.1 billion a year earlier.
The company’s shares continued to hold until 2021, but have fallen 75% so far this year.
Zoom
Zoom shares are down 56% year-to-date and 86% since peaking in late October 2020, when the pandemic intensified and vaccines were not widely available.
Some of the blame for the slide can be laid at the feet of investors who got ahead of themselves and drove the stock price up 765% between the end of 2019 and its peak 10 months later.
netflix
Netflix was very successful long before anyone heard about Covid-19. Even amid increased streaming competition, the platform had a successful 2019, as two original films, Martin Scorsese’s The Irishman and Noah Baumbach’s Marriage Story, captured both audiences and best picture nominations. “The Crown” returned for the third season with a new cast.
Netflix shares have also more than doubled since the start of 2020, hitting a record high of $691.69 in November 2021.
The company is also losing investor support. Netflix shares have lost nearly two-thirds of their value year to date, though they have rebounded from a 12-month low in May as investors braced for deeper subscription losses.
