Pandemic darlings face the boot as investors watch the return to normal life

LONDON, Jan 21 (Reuters) – Netflix’s darling stay-at-home market slumped on Friday, joining a wide drop in the market value of other pandemic favorites this week as investors heed expectations of a back to normalcy as more countries gradually ease COVID restrictions.

The selloff that began after Netflix and Peloton (PTON.O) reported disappointing quarterly results has spread to the broader stay-at-home sector as analysts judge the novel coronavirus variant Omicron won’t produce the same headwinds economic than those observed during the first phase of the pandemic. in 2020.

“It’s confirmation that the economy is gradually heading towards some kind of normalization,” said Andrea Cicione, chief strategy officer at TS Lombard.

“What we think is very interesting is that Omicron, due to its very high infectivity, very low morbidity compared to previous waves such as the Delta variant, might actually be the first tangible sign that the pandemic is moving in the direction we all expected, which is to become a manageable endemic disease like the flu.”

Shares of Peloton (PTON.O) lost nearly a quarter of their value overnight, wiping out nearly $2.5 billion in market value after the exercise bike maker’s CEO said that he was revising its workforce size and ‘resetting’ production levels, although he denied the company was temporarily halting production. Read more

France will relax work-from-home rules from early February and allow nightclubs to reopen two weeks later. read more People should return to the office to benefit from in-person collaboration, Britain’s business secretary said on Friday. Read more

Meanwhile, Netflix shares fell nearly 20% after forecasting first-quarter new subscriber growth to be less than half of analysts’ forecasts. Read more

Shares were down 20% in premarket trading, with the stock expected to open at its lowest level in 21 months.

HOME DELIVERY

The two companies were part of a group, with others such as Zoom (ZM.O) and Docusign whose shares soared in 2020, and in some cases in 2021 as well, as people around the world were forced to stay at home in the face of the coronavirus.

However, thanks to vaccine deployments and the spread of the milder Omicron strain of COVID-19, life is returning to something approaching normal in many countries, leaving companies like Netflix and Peloton struggling to maintain high sales figures.

According to data from S3 Partners, short sellers doubled their profits betting against Peloton in 2021, the third best short performer in the United States.

“With a return to the office and the opening of travel lanes, WFH (work from home) themed darlings reflect the growing reality that the world is slowly but surely moving towards a new normal,” said Justin Tang, Head of Asian research. at United First Partners in Singapore.

Direxion’s Work from Home ETF fell more than 9% in the first three weeks of the year, compared to a 6% decline in the fall of the broader US stock market (.SPX) The ETF Blackrock’s virtual work-and-life multi-industry has weakened more than 8% this year.

Lockdown winners in Europe are also having a tough time, with fears over the decline of the Omicron wave adding to the stress that rising bond yields are putting on growth and tech stocks.

British online supermarket group Ocado (OCDO.L), German meal kit delivery company HelloFresh (HFGG.DE) and food delivery company Delivery Hero (DHER.DE) who have become European champions of maintaining at home early in the pandemic have underperformed the pan-European STOXX 600 so far in 2022.

Reporting by Alun John and Julien Ponthus; Additional reporting by Anisha Sircar; Editing by Saikat Chatterjee and Alison Williams

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