Netflix, Peloton latest among market’s pandemic stars to lose shine

Netflix expects to add a paltry 2.5 million users in the current quarter, well short of estimates. Peloton is slashing costs amid slowing demand for its stationary bikes.

Netflix shares fell as much as 23% on Friday, the biggest drop since October 2014, while Peloton shares climbed 17% on the Nasdaq, reversing some of Thursday’s tumble.

The two are the latest darlings of 2020 to sink to levels not seen since early days of the Covid-19 outbreak, when investors deduced lockdowns and the Federal Reserve’s easy-money policies would send stocks like Netflix soaring.

Others are suffering as well. Zoom Video Communications, owner of the ubiquitous videoconferencing software, is trading at the lowest level since May 2020.

This is true of e-signature company DocuSign Inc too. Both stocks have lost more than half of their market values from record highs and slid further after Netflix’s results.

Etsy Inc, the ecommerce company that saw strong pandemic demand for face masks and other products, is down more than 45% from a November peak. It closed Thursday at its lowest since May.

Traditional media companies that have styled themselves as streaming businesses also took a hit in post-market trading. That includes Walt Disney Co and ViacomCBS Inc.

Everyone expected a company like Peloton to suffer a slowdown as it emerged from the pandemic. But the severity of it came as a surprise. Late Thursday, the company pushed back on the idea that it was idling factories to save money, but confirmed that Peloton was cutting jobs and “resetting” production.

“We thought there could be a softer landing in terms of post-Covid demand,” Paul Golding, an analyst at Macquarie Capital, said in a note. “This dashes those hopes to some extent.”

The irony of pandemic favourites collapsing now is that the Covid-19 threat has by no means subsided, and many areas are reimposing virtual schooling and even lockdowns. But the resurgence fueled by the Omicron variant is showing signs of easing.