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NEW YORK: The surge in shares of Netflix, Zoom and other of this year’s corporate stay-at-home winners has come to a sudden halt due to promising vaccine data suggesting a possible exit from the COVID-19 pandemic.
However, the jury was still out on Tuesday on whether that setback, triggered by positive data from trials conducted by US drug giant Pfizer and Germany’s BioNtech, would last.
Shares of video conferencing network Zoom fell 4 percent Tuesday after falling 17 percent the day before. But both exercise bike maker Peloton, which sank more than 20% on Monday, and Netflix, gained ground on Tuesday.
Tech heavyweights from Alphabet, Google’s parent company, to Apple and Amazon, also suffered, but its value has still skyrocketed this year.
“Even if a vaccine proves effective, inoculating a large enough portion of the population will take time and leave these segments prone to the consequences of the economic lockdown,” said Commerzbank analyst Christoph Rieger.
The instability of the movements may have reflected both doubts about the speed at which a vaccine can be produced and distributed, and remaining doubts about whether it will work as a long-term solution.
But there is also the conviction that the pandemic has fundamentally changed the business of many of these companies in ways that will not be reversed.
“Investors are now focused on what the ‘new normal’ looks like … and how sustainable the tailwinds are for such companies as the direct impact of the pandemic on consumer behavior begins to wane,” said the MKM Partners analyst Rohit Kulkarni.
Peloton, which has seen demand for its home fitness systems skyrocket due to gym closings, recently posted a 274 percent increase in quarterly profits from its unit that sells interactive fitness equipment.
A standout beneficiary among work-from-home tech stocks is Zoom, whose shares have risen more than 460 percent this year as corporate businesses, schools and organizations hold countless virtual meetings on its video conferencing app.
Amazon.com Inc and Microsoft Corp have seen a substantial boost in their business, but the capital they have available for new investments has exploded as a result, potentially giving them more influence in the future.
Shares of companies related to video games and esports, which benefited from prolonged cancellations of traditional sports leagues, fell after Pfizer’s announcement, and game studios like Activision Blizzard and Take-Two Interactive Software ended the session Monday down.
Makers of gaming peripherals such as Turtle Beach and Corsair Gaming also fell on Monday, while the publicly traded shares of game developers and esports organizers Bilibili Inc and Sea Limited saw their worst day since March.
Yet they are all still up 50-350% since March, while Corsair is up 57% since its initial public offering in September.
“The market is likely to rule out a slowdown in industry growth in 2021,” said Will Hershey, CEO of Roundhill Investments.
“However, I think the growth in games due to the pandemic probably increased the trajectory of game adoption in the next few years.”
