With people unable (or unwilling) to go to the gym, consumers rushed to buy its exercise equipment and, more importantly, sign up for its online classes. Peloton posted its first quarterly profits in calendar year 2020 as revenue jumped 139% and the stock soared 434%.
The boost was short-lived. As gyms reopened and class subscriptions and equipment sales plunged, so did the company’s outlook.
McCarthy, however, sees great things ahead for the company despite its woes, claiming that Peloton has made significant progress in its turnaround efforts and stemming its rate of burning through cash.
Investors don’t share his faith. Shares have lost more than 90% of their value since the end of 2020, and are now worth less than half of what they were at the beginning of that year.
Peloton is hardly the only pandemic winner to recently turn into a post-pandemic loser. Numerous companies that convinced themselves — and investors — that they were well positioned to keep growing once Covid retreated have been proven wrong.
Here are some other studs of 2020 that have become duds in 2022.
Wayfair
The pandemic forced people to stay home, and in millions of cases, to start working from there. Many took the money they were saving by not commuting or vacationing to buy furnishings and other items to spruce up their homes.
“We’ve grown Wayfair significantly to keep pace with the e-commerce growth in the home category. We were seeing the tailwinds of the pandemic accelerate the adoption of e-commerce shopping, and I personally pushed hard to hire a strong team to support that growth,” said CEO Niraj Shah in a letter to staff announcing the layoffs. “This year, that growth has not materialized as we had anticipated. Our team is too large for the environment we are now in, and unfortunately we need to adjust.”
It’s not just that the company isn’t growing as fast as it had been. Like Peloton, Wayfair has shifted into reverse and into red ink. Revenue in the first six months of this year is down 14%, and it just reported a $697 million net loss compared to a $149 million profit in the same period of 2021.
Wayfair stock, which soared 482% between the end of March of 2020 and the end of March 2021, has essentially given up all of those gains.
Shopify
The Canadian software firm that helps retailers sell online was also a huge winner when companies were forced to pivot to e-commerce because of the pandemic. Last month its founder and CEO announced Shopify was cutting 10% of its staff because its ongoing growth “bet didn’t pay off.”
The company’s pre-Covid e-commerce growth had been steady and predictable, he said, but the early days of the pandemic brought a never anticipated spike in sales.
“Was this surge to be a temporary effect or a new normal? And so, given what we saw, we placed another bet: We bet that the channel mix — the share of dollars that travel through e-commerce rather than physical retail — would permanently leap ahead by five or even 10 years,” he said. “We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match.”
The good times didn’t evaporate quite as quickly as they did for some of the other pandemic winners. But they have certainly receded.
While revenue is up 18% in the first six months of the year compared to the prior year, Shopify’s costs, including for research and development, have nearly doubled. The company also suffered a $1 billion paper loss on its equity investments in the second quarter, causing it to swing to a $2.7 billion net loss for the period from a $2.1 billion profit a year earlier.
The company’s stock continued to hold up through 2021 but is down 75% so far this year.
Zoom
For the year Zoom shares are off 56%, and are down 86% since their peak in late October 2020, when the pandemic was raging and there were no widely available vaccines.
Some blame for the slide can be laid at the feet of investors, who got ahead of themselves and drove the price of the stock up 765% between the end of 2019 and its peak 10 months later.
Netflix
Netflix was plenty successful long before anyone heard of Covid-19. Even in the face of increased streaming competition, the platform had a successful 2019, as two original films, Martin Scorsese’s “The Irishman” and Noah Baumbach’s “Marriage Story,” attracted both viewers and best picture nominations. “The Crown” returned for a third season with a new cast.
Netflix shares also skyrocketed, more than doubling in value from the start of 2020 to a record high of $691.69 in November 2021.
The company has also been losing investor support. Netflix shares have lost nearly two-thirds of their value year-to-date, although they have rebounded from a 12-month low in May when investors were bracing for even deeper subscriber losses.
