Saxo Group
Summary: During the pandemic lock down, the share price of so-called "pandemic darlings" were thriving. However, it seems that, for many of these companies, the party is over.
One of the most talked-about market trends of the pandemic was the astonishing rise of the share price of so-called "pandemic darlings" i.e. the companies that were best positioned to thrive in a world of working from home, ordering in, and pandemic-driven hobbies. There are plenty of examples that even the most casual investor can recall.
There were notable surges in many sectors, such as the share price growth of the e-conferencing platform Zoom in 2020, which became all the rage when companies across the world had to switch to remote meetings almost overnight. Then there are the record gains experienced by streaming giants such as Netflix, which saw its share price briefly hit $690 a share at the height of the pandemic streaming boom.
However, it seems that, for many of those pandemic darlings, the party is over. Around the world, people, businesses, and society are returning to normal, and those once-popular stocks are no longer in vogue. Let's take a closer look at the pandemic darlings that investors are no longer so hot on.
When looking at the pandemic darlings that have quickly shaped up to be post-pandemic losers, streaming services stand out more than almost any other sector. The case in point here is Zoom, which saw its stock close at a record high of $559 a share in October 2020 before dropping 74% to $143 in January 2022. The same can be seen among the TV streaming giants, with Netflix and Roku seeing their share price fall 44% and 68% respectively from their pandemic highs, as more and more of us returned to pre-pandemic lifestyles.
Some of the biggest stock market trends of the pandemic age cannot be divided neatly into sectors. If you recall, the past two years have seen several "fad" stocks that have seen record growth for a short time, before falling not long after.
Many examples are symptomatic of this pandemic-era investing mania that has since settled down. There's the Virgin Galactic stock, which soared to $55 a share in June 2020, before plummeting to just $8 a share by 2022, an 85% decrease.
And who can forget the enthusiasm for QuantumScape, the US company that researches lithium batteries for electric cars? In December 2020 alone, its share price tripled to $114 a share, before promptly falling a month later. More recently, the price reached $14.12 in January 2022, an 87% drop that makes this one of the worst performers of the entire pandemic era.
Of course, many of the biggest losers in society's gradual return to normal were those companies that profited in the early days of isolation and remote cocktail parties.
A standout example is the exercise bike company Peloton, which saw its share price skyrocket in the summer of 2020, but fell 85% through the course of 2021, as many realised they no longer needed indoor gym equipment as much as they thought.
Another parable for the post-pandemic era is the fall of Zillow's share price. The online house-hunting platform surged in popularity as millions of us spent the pandemic searching for greener pastures, only to lose 77% of its market cap in 2021, as the real estate boom fizzled out. Please note stocks listed in this study have been commonly identified by media as companies whose stocks soared during 2020 and 2021 and which have since seen a dramatic drop in 2022. We have looked at Saxo Bank’s trading platform pricing data from January 2020 -Dec 2021 (pandemic), and January 2022 till 08/02/2022 (post-pandemic).
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.