Layoffs, Losses, Stocks Plummeting, Pandemic Winners Are Struggling Now

Peloton thrived during the economic pandemic. Consumers flocked to buy its fitness equipment and join up for its online programs because they couldn’t go to the gym. Peloton achieved its first quarterly profit in 2020, with revenue up 139% and shares up 434%.
Short-lived increase. The company’s outlook deteriorated as gyms reopened and class memberships and equipment sales fell.

Peloton CEO Barry McCarthy wrote to investors Thursday after disclosing a worse-than-expected fourth-quarter loss “Naysayers will witness sliding sales, negative gross margin, and deeper operating losses in Q4. They think these jeopardize business survival.”

McCarthy said Peloton has made substantial progress in its recovery efforts and cash burn rate. Investors aren’t convinced. Since 2020’s end, shares have lost more than 90% of their value and are now worth less than half as much.

Peloton isn’t the only post-pandemic winner to lose.

Many enterprises who believed themselves and investors they could thrive once Covid withdrew were wrong.

Wayfair
The pandemic prompted millions of individuals to work from home. Many used money saved by not commuting or vacationing to buy house furnishings.
Stop buying household items! Many households have cut back on non-essential purchases due to sky-high food and petrol prices. Now, such purchases are more likely to be for travel than for more possessions.
The spending shift has hurt Walmart and Target. Wayfair, an online home products store, just announced a 5% employee reduction. The CEO said the company had been overly confident about its expansion.
“We’ve scaled Wayfair to match home e-commerce growth. We saw the epidemic drive e-commerce usage, so I hired a strong team to support that growth “CEO Niraj Shah announced the layoffs in a letter. “This year’s growth hasn’t met expectations. Our crew is too big for our current setting, so we must change.”
The corporation isn’t only expanding slower. Wayfair, like Peloton, is in the red. First-half revenue is down 14%, and it announced a $697 million net loss compared to a $149 million profit in 2021.
Wayfair stock, which rose 482% between March 2020 and 2021, has lost all of those gains.

Shopify
The Canadian software company that helps businesses sell online also benefited from the outbreak. Last month, Shopify’s CEO said the company’s expansion “investment didn’t pay off.”
“This is how we succeed,” CEO Tobi Lutke wrote in a memo announcing the layoffs.
Pre-Covid, the company’s e-commerce development was stable and predictable, but the epidemic caused a sales jump.
“This surge: transitory or new normal? Given what we saw, we wagered that the channel mix — the share of revenues that go through e-commerce — would permanently surge ahead by five or 10 years “saying “At the time, we didn’t know for sure, but we knew we’d have to expand if this was true.”
Not as rapidly as for other pandemic winners. They’ve retreated.
Shopify’s revenue is up 18% in the first half of the year, while costs, especially R&D, have nearly doubled. The corporation also experienced a $1 billion paper loss on its stock investments in the second quarter, turning a $2.1 billion profit into a $2.7 billion loss.
The stock held up till 2021 but is down 75% this year.

Zoom
Online meeting platform doesn’t face identical hurdles as other epidemic winners. Millions of people still work remotely, and Zoom (ZM) is profitable. First-half earnings fell 71% due to higher costs. The company’s share price is slightly over pre-pandemic levels.
Zoom reported weaker-than-expected sales and a disappointing outlook, sending shares down 17%.
Zoom shares are down 56% this year and 86% from their peak in late October 2020, when the pandemic was raging and vaccines were scarce.
Investors propelled the stock price up 765% between the end of 2019 and its high 10 months later.
Plus, good news about beating Covid was bad news for Zoom: Pfizer’s November 2020 Covid vaccine clinical trial victory sent shares tumbling 25% in two days.

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Netflix
Netflix was popular before Covid-19. Even with increased streaming competition, the platform had a successful 2019, with two original films attracting viewers and best picture nominations. “The Crown” returned with a fresh cast.
Netflix (NFLX) shares jumped 21% in 2019, while revenue rose 28%. The service gained 27 million customers worldwide.
Pandemic lockdowns accelerated things. Netflix added 16 million subscribers in the first quarter of 2020 and completed the year with 200 million.
Netflix shares doubled from the beginning of 2020 to November 2021, reaching $691.69.

Increased competition. In the first quarter of this year, the business lost 200,000 members globally, the first decline in a decade and far from the 2.5 million growth predicted. Second quarter: 970,000.
Investors are leaving the company. Netflix shares have lost about two-thirds of their value year-to-date, but they’ve recovered from a 12-month low in May when investors feared more subscriber losses.