Why Shares of Netflix, Peloton, and Zoom Plunged Today
Investors sold off stay-at-home stocks on Wednesday, following positive news on the COVID-19 vaccine front. By the close of trading, shares of Netflix (NASDAQ:NFLX), Peloton (NASDAQ:PTON), and Zoom Video Communications (NASDAQ:ZM) were down 5%, 8%, and 8%, respectively.
President Joe Biden said on Tuesday that the U.S. would have a sufficient supply of COVID-19 vaccines to inoculate every adult in the nation by the end of May. That’s two months earlier than his previous projection.
Biden’s accelerated timeline follows the U.S. Food and Drug Administration’s decision to issue emergency use authorization to Johnson & Johnson for its single-shot coronavirus vaccine. J&J is working with its rival Merck to strengthen its manufacturing capabilities and accelerate the drug’s rollout. “Extraordinary times take extraordinary efforts,” J&J CEO Alex Gorsky said during an interview on CNBC yesterday.
Many investors took the news as a reason to sell stocks that have performed well during the coronavirus pandemic. This included so-called stay-at-home leaders Netflix, Peloton, and Zoom.
The positive vaccine news will likely save countless lives and should certainly be celebrated. However, it doesn’t mean the end is nigh for businesses that have seen their sales grow during the COVID-19 crisis.
People will continue to watch movies on Netflix, exercise at home on their Peloton bikes, and use Zoom’s software to conduct video meetings. Yes, their growth could slow, but with their stocks pulling back sharply in recent weeks, this may already be reflected in their share prices. Thus, long-term investors may wish to use any further declines as an opportunity to buy shares of Zoom, Peloton, and Netflix at a discount from their recent highs.
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