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“Work from home” companies’ post-pandemic performance: some have suffered dramatic falls on the stock markets, others continue to shine
Market commentary by eToro analyst for Romania, Bogdan Maioreanu
The 2020 pandemic seems to be a distant memory but the changes that the lockdown induced in society are still producing effects. One of the most visible is the work from home trend that emerged in the pandemic, evolved into a hybrid work environment now as companies want workers back in the office at least some of the time.
Many of the “pandemic heroes companies” that helped hundreds of millions workers navigate the lockdown and the shift from office to working from home showed surprising resilience even though some of them are not in the public eye anymore in the past couple of years as the situation returned to normal.
We put together a basket of 15 stocks that emerged during the pandemic as the champions of the “work from home” environment, that includes gaming, home improvement and fitness, e-commerce and home delivery, data centers and cloud computing, web hosting and conferencing. We included stocks such as Electronic Arts, Peloton and Zoom to Domino’s Pizza, Campbell Soup and huge retailers like Lowe’s and Home Depot. At the end of 2021 this basket was showing an increase of 70% compared with its value on January 1st, 2020, outperforming the S&P 500 index that was up only 48%.
But four years after the beginning of the 2020 pandemic, the work from home basket is showing an overall increase of just 47%, slightly underperforming the S&P 500 index, which rose 57% (see attached graph). The reasons are complex. We had pandemic favorites like Peloton that reached highs of $170 per share are now trading below $5, and Zoom, which once traded at over $580 and is trading now at only $68. But we also had companies that managed to navigate well the 2022 downturn and keep their value up, like Home Depot and Lowe’s but also EA and Godaddy just to mention a few.
A recent study on 130 CEOs is showing that 99% are still seeing positive benefits of flexible working options. Only 5% declared that they will return to the office on a full time basis, in the next two years. As for the hybrid work companies, the consensus seems to be two or three days of working from home for 54% of the respondents. But working hybrid or remote has its own challenges, effective communication being one of these. The survey is showing that Slack is now the most popular communication platform (67%), followed by Zoom (62%), the Google suite (26%), Microsoft Teams (13%), email (9%), Discord (5%), Whatsapp (5%) and on the last place is Skype with 4%. When it comes to video-conferencing the star is one of the pandemic favorites - Zoom (57%, followed by Microsoft Teams (25%), GoToMeeting (9% and Google Meet (6%).
While Zoom’s chances to see again peak values like in 2021 are very slim, the video conferencing market leader’s shares price surged by over 12% after reporting better-than-expected results for Q4 and providing a strong outlook. For Q1, the company expects to earn an adjusted earnings of $1.18 to $1.20 per share, surpassing the estimated $1.15 per share. Sales are projected to be approximately $1.13B, in line with expectations. The company also announced a new $1.5B buyback program, highlighting its confidence in its financial performance and future prospects.
Some work from home trends have survived the pandemic and are here to stay, but investors seem to have moved on to other, newer trends like EV’s and AI, while tech giants are among the few that kept their place as investors’ favorites. At the end of 2023 the most held stocks by the Romanian investors on the eToro social trading and investing platform were in order Tesla, Nio, Apple, UiPath, Amazon, Microsoft, Meta, Alphabet and Nvidia.