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DYING FOR A RIDE
A weird dystopia where a potential global pandemic benefits business? That’s capitalism, baby!
US markets have gotten slaughtered this week as the world (rightfully) freaks the f*ck out about the coronavirus. But that doesn’t mean all companies are suffering. Two in particular, Zoom and Peloton, have flipped the script over corona concerns, as investors seemingly think the disease is good for business.
Peloton stock rose over 7% to $29.19 yesterday on the expectation that the fear of an infected stranger breathing heavily near you will cause more people to work out at home. As opposed to the fear of people laughing at your squat form keeping you home. US consumers may feel more comfortable getting their sweat on in their own personal dojo, making millennials more likely to purchase a $2k exercise bike instead of risking a hospital trip just to go to a Barre class.
It’s already had an impact on gyms in China, which are forced to live stream classes in order to keep people off the streets. And you thought Instagram live was annoying...
Dust off that webcam, because videoconferences are back, too. Zoom has already added more monthly active users (MAUs) in the first two months 2020 compared to all of last year. With an increase of 2.22M in under three months, it’s eclipsed 2019’s total of 1.99M, as businessmen and women are more likely to meet over voice and video calls instead of in-person as they stockpile canned soup and fear for the worst.
The ChatRoulette alternative’s stock price has risen 40% in February, as investors see a strong correlation between Zoom’s revenue and its MAUs, DAUs (daily active users, not to be confused with DUIs), and downloads. Zoom recently removed a 40-minute meeting limit on free users from China, and while many of the new users are free, there’s a chance that those freebies would be converted to premium members down the line.
The bottom line ...
Let’s not forget that at the beginning of the week $PTON was still under its September IPO price of $25.24. While the 7.67% jump is certainly great on the day, it’s still about 20% off from its ATH of $35.23. Has anyone considered that these companies could be flourishing because all of their short-sellers are dying off?
Of course, for every company making a killing (sorry, I had to) from coronavirus fears there are hundreds getting absolutely steamrolled (think: airlines, casino operators, chip-makers, and even Microsoft.)
Not all companies fear coronavirus [Barrons]
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