Trendspotting: Stay-at-Home Stocks Nosedive

NewsWire: 11/20/21

• Companies whose stocks soared during the stay-at-home era are coming back down to earth. Onetime winners like Zoom are struggling to keep up as the economy reopens. (Axios)
• NH: Buy on the rumor, sell on the news. When a big new trend arrives whose extreme implications seem unbounded, investors bid each other up the ladder. When the actual facts arrive, that ladder gets sawed off. 
• During the height of the initial lockdown panic, investors piled their money into stay-at-home stocks like Peloton (PTON) and Zoom (ZM). Covid-19 was raging. There was no vaccine. And people were scared to leave their homes. How could the world ever return to normal? 
• But as time went on, society began to adjust, adapt, and reopen. Vaccines have convinced many to return to in-person activities. And the stay-at-home stocks that soared have all nosedived, while stocks like Planet Fitness (PLNT) and Live Nation (LYV) have soared. 
• Of course, the pandemic isn't over. But investors’ were overzealous on how long we would stay cooped-up in our homes.

Did You Know?

• Big Spenders Wanted. In the early days of the pandemic, credit card spending plunged, and balances did too. From January 2020 through April 2021, balances on credit cards fell by $166 billion, according to Equifax--the result of Americans spending less and also paying off their debts more. Some people got rid of them altogether: The number of open credit cards fell by 7% between January 2020 and March 2021. In recent months, credit card spending has returned to pre-pandemic levels, but balances have not. As a result, credit card companies are going all out to get consumers to spend. Capital One, for instance, spent 165% more on marketing in Q3 2021 compared to the year before. American Express spent 26% more. They’re sending out more mailers, increasing signup bonuses, and sweetening their rewards programs. The average amount of cash-back, miles, and points that cards offer have all climbed to their highest levels in over a decade.