Companies Suffer with COVID Vaccine News

By: Paxton Lin

It has been no secret businesses across the US and Canada have been suffering from COVID-19 .Outside of hand sanitizer and mask providers, it may come to our surprise some businesses have benefited from the pandemic. Peloton, slack, amazon, and Netflix have flourished under quarantine and their stocks have been steadily increasing as the situation with COVID progresses. Peloton is “a home exercise bike that features a large screen on the front and rear speakers” (Pocket-lint, Maggie Tillman, 25 January). According to the New York times, Peloton grew 172 percent in total revenue on September 10th, 2020. The skyrocketing demand can be explained by the closure of gyms and fitness clubs due to COVID-19, and with more people turning towards home work-out equipment. Peloton along with other fitness equipment, tripled in revenue(New York Post, Reuters, September 10). Peloton seemed to establish their success, with the company forecasting $3.50 or$3.65 billion in revenue for the fiscal year of 2021. However, a turn of events has planted a seed of uncertainty for peloton and all businesses previously growing under the pandemic.

As of November 9th, 2020, Pfizer announced they are getting closer to creating a coronavirus vaccine, one that would allow people to return to their offices and work in person. Peloton, which had been growing for months, tumbled 20 percent in stocks with the arrival of the news(New York Post, Nicolas Vega, November 9th 2020). Other companies who previously thrived under the pandemic were not exempt from the situation peloton is now facing. Netflix dipped by 8.6 percent in stocks on November 9th, 2020 when the announcement of the vaccine was dropped, and Amazon slid by five percent. According to Wedbush analyst Dan, the vaccine could cut the growth of Zoom by 50, 60, or 70 percent. Dan also explains “what’s unique with Zoom is there’s such a direct correlation between going to the office and a significant decline in usage”.

Peloton has seen their stock drop before, with something similar happening in late September when Apple came forward with their own fitness subscription service (New York Post, Nicolas Vega, November 9th 2020). Peloton recovered within 3 days after this announcement. However, the drop of 20 percent in stock with the vaccine announcement seems to press on a different effect on Peloton.

An analyst, Camilla Yanushevsky, is currently covering Peloton for CFRA Research and viewed Peloton’s drop to be simply reactionary. She says “Peloton has a lot of product innovation ahead beyond the bike and treadmill,” and “They’re going to be able to keep consumers engaged”. It is expected that Peloton will likely rebound as the markets realise that the vaccine won’t be available until late next year 2021 (USA today, Janie Haseman, March 12, 2021).

Peloton’s success is widely tied to the pandemics restrictions and the closure of gyms, and with the arrival of the vaccine, many are witnessing a new challenge for numerous companies. It now has become apparent that forward thinking, especially in times with COVID-19, will become essential for investors and companies.

References

Haseman, J. (2021, March 25). When will everyone be vaccinated for COVID-19? Here’s how the VACCINE rollout is going. Retrieved April 04, 2021, from https://www.usatoday.com/in-depth/graphics/2021/03/12/when-will-everyone-be-vaccinated-for-covid-19-when-will-we-reach-us-herd-immunity-projection/6840512002/

Pocket-lint. (2021, January 25). Peloton: How does it work? Cost, features, and alternatives. Retrieved April 04, 2021, from https://www.pocket-lint.com/gadgets/news/peloton/150700-peloton-how-does-it-work-cost-features-and-alternatives

Reuters. (2020, September 10). Peloton revenue surges as pandemic boosts demand for fitness equipment. Retrieved April 04, 2021, from https://nypost.com/2020/09/10/peloton-revenue-surges-as-pandemic-boosts-demand-for-fitness-equipment/

Vega, N. (2020, November 09). Zoom, peloton shares TUMBLE 15 percent on COVID VACCINE NEWS. Retrieved April 04, 2021, from https://nypost.com/2020/11/09/zoom-peloton-shares-tumble-15-percent-on-covid-vaccine-news/