Covid lockdown winners Peloton to Zoom at risk of further shares fall

"Frothy expectations are being priced out completely in these stocks," said Peter Garnry of Saxo Bank.

Estimates for video conference provider Zoom have been cut by 20%.

The brutal selloff in Covid-19 lockdown winners may not be over yet.

After losing more than $218bn (€207bn) in combined market value since their pandemic-driven boom, shares of Peloton, Zoom, and DocuSign are at risk of even more losses, if the earnings season is any guide.

First-quarter results for stay-at-home stocks kicked off two weeks ago with an alarm bell when Netflix shares plunged 35% after saying it had lost customers for the first time in a decade. And last week, shares in telemedicine company Teladoc Health had their worst day ever, tanking 40% after the company slashed its forecast amid a slowdown in sales. 

Analysts have cut estimates for stay-at-home winners, with full-year earnings forecasts slashed by nearly 40% for home fitness equipment maker Peloton.

Estimates for video conference provider Zoom have been cut by 20%, while those for electronic-signature company DocuSign have been reduced by 7.6%, according to data compiled by Bloomberg.

After meteoric rallies in 2020 as lockdowns kept consumers at home, shares in pandemic darlings have suffered amid vaccine rollouts, return to office mandates and people going back to brick-and-mortar stores.

“Many of the names are recognised as the winners during the pandemic, but frothy expectations are being priced out completely in these stocks,” said Peter Garnry, head of equity strategy at Saxo Bank. 

Bloomberg