LONDON, Jan 21 (Reuters) - Stay-at-home market darling
Netflix slumped on Friday, joining a broad decline in
shares of other pandemic favorites this week as investors
priced in expectations for a return to normal life with more
countries gradually relaxing COVID restrictions.
The selloff, which began after Netflix and Peloton
posted disappointing quarterly earnings, spread to the
wider stay-at-home sector as analysts judged the new Omicron
coronavirus variant will not deliver the same economic headwinds
seen in the first phase of the pandemic in 2020.
"This a confirmation that the economy is gradually moving
towards some sort of normalization," said Andrea Cicione, head
of strategy at TS Lombard.
France will ease work-from-home rules from early February
and allow nightclubs to reopen two weeks later, while Britain's
business minister said people should get back to the office to
benefit from in-person collaboration.
"With a return to the office and travel lanes opening,
darlings of the WFH (work from home) thematic are reflecting the
growing reality that the world is moving slowly but with
certainty towards a new normalcy," said Justin Tang, head of
Asian research at United First Partners in Singapore.
Netflix tumbled nearly 25% after it forecast new
subscriber growth in the first quarter would be less than half
of analysts' predictions.
The stock, a component of the elite FAANG group, was on
track for its worst day in nearly nine-and-a-half years
following rare rating downgrades from Wall Street analysts.
"It is hard to have confidence that Netflix will return to
the historical +26.5 million net subscriber add run rate post
the 2022 slowdown," MoffettNathanson analyst Michael Nathanson
"The decay rate on streaming content is incredibly rapid.
'Squid Game?' That's so last quarter. 'The Witcher?' Done on New
Exercise bike maker Peloton lost nearly a quarter
of its value on Thursday, leading at least nine brokerages to
cut their price target on the stock.
The selloff erased nearly $2.5 billion from its market value
after its CEO said the company was reviewing the size of its
workforce and "resetting" production levels, though it denied
the company was temporarily halting production.
Peloton's shares were up nearly 5% on Friday morning,
bouncing back somewhat from a 23.9% drop on Thursday, its
biggest one-day percentage decline since Nov. 5.
Both companies were part of a group, along with others such
as Zoom and Docusign whose shares soared in
2020, and in some cases 2021 as well, as people around the world
were forced to stay at home in the face of the coronavirus.
However, thanks to vaccine rollouts and the spread of the
less severe Omicron strain of COVID-19, life is returning to
normal in many countries, leaving companies like Netflix and
Peloton struggling to sustain high sales figures.
According to data from S3 Partners, short-sellers doubled
their profits by betting against Peloton in 2021, the third best
returning U.S. short.
Direxion's Work from Home ETF has fallen more than 9%
in first three weeks of the year, compared to a 6% drop in the
fall of the broader U.S. stock market. Blackrock's
virtual work and life multisector ETF has weakened more
than 8% this year.
In Europe, lockdown winners are also going through a rough
patch as rising bond yields pressurize growth and tech stocks.
Online British supermarket group Ocado, Germany's
meal-kit delivery firm HelloFresh and food delivery
company Delivery Hero which emerged as European
stay-at-home champions in the early days of the pandemic have
underperformed the pan-European STOXX 600 so far in 2022.
(Reporting by Alun John and Julien Ponthus; Additional
reporting by Nivedita Balu, Anisha Sircar and Chuck Mikolajczak;
Editing by Saikat Chatterjee, Alison Williams and Saumyadeb