Companies that reason COVID-driven demand for their products during the early years of the pandemic will see their fortunes return to Earth. Whether some of the biggest names in the cohort have another act will be an open question.
In fact, could it be that companies that have fallen out of favor due to COVID-induced shifts in the economy are the best prepared to excel this year?
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It’s never fun to hang out and list bad news. But the numbers are starting to pile up: The current value of Robinhood, the consumer stock and crypto trading service, boosted by the savings and investment boom, is worth just over $10 a share, far from the 52-year mark. week high of $85 a share. Coinbase, another company that has seen demand for its fintech trading services soar during COVID, is worth just over $130 a share today, well below its 52-week high of $368.90 a share.
The list goes on: Instacart’s growth is slowing after a torrid period of expansion, leading to a valuation reset at the company. And recently, the Financial Times reported that the value of Hopin’s stock has fallen sharply on secondary exchanges, and some externally visible data could indicate a decline in demand. The company made layoffs earlier this year.
Seeing a growth storm is never unwelcome to companies. And such a boom is particularly coveted by companies that are typically valued more for growth than profitability. (Startups, in other words.)
That which has gone up, it seems, comes down. Let’s talk about it.
The global economy is being hit from many sides at once. Inflation worries in some markets are stacked against growth concerns in others. Geopolitical tensions are running high as the United States and China spar over trade and hot topics such as Taiwan’s right to self-government. Russia is busily digging into a quagmire in Ukraine, disrupting the energy market as supply chains crack and crash – not to mention the catastrophic loss of life. COVID lockdowns in China are also fueling fears of increased supplies, or worse.
The ebullient mood of late 2020 and most of 2021 is not this. And startups seeing their growth rates slow as their pandemic-led boom in demand fades, and therefore holding twice at a time.