End of Covid Boom?

COVID devastated a majority of people, economies and governments worldwide, barring a lucky few COVID was the boom they had never seen. These companies albeit a few really raked it in with people unable to physically do anything other than shop online or simply browse. To name a few, companies like Amazon, Citrix, Zoom, Pinterest, DoorDash, GrubHub and Uber Eats gained patrons while the world was dealing and reeling with COVID.

This was mainly attributable to the fact that people were barred from socialising, however now with lockdowns opening and things getting slowly back to normal, it seems that good times may be over for some.

This is further evidenced by the fact that Amazon has been on a continuous dropping spree, falling more than 6% since July 30, in the pre-market trading thereby missing its sales target in a surprisingly long time. This somewhat resulted on conversations about other e-commerce companies under the ambit of Amazon as shares of eBay, Wayfair and Etsy also fell. The question on everyone’s mind being whether the Boom could be kept going?

As stated by Amazons own, the reason for the sudden decline was because people were finally out there in the real world doing things other than online shopping. To be fair, Amazon did bring in $113 billion as sales in its last quarter, however the prediction is that this sales figure will drop to $106 to $112 billion (still not too bad for this giant, eh?). Experts weighing in on this phenomenon are calling it ‘Reopening Headwinds’.

Bigwigs taking a hit due to restrictions being lifted, include:

  • Etsy: Post the publication of the Company’s financials for the first quarter of 2021, Etsy shares dipped by 15%, with its internal management gearing up for a slower year, however till the end of the second quarter, Etsy shares were still riding high of 64% compared to last year.
  • Amazon: investors also awoke to a rude shock post its second quarter results, as Amazon fell 7.6% essentially erasing approximately $75 billion in market value. With Amazon’s finance chief again attributing the fall to the now increasing holidaying and socialising consumers who were once stuck at home.
  • Wayfair: In quick succession to Amazons stock fall, Wayfair too dipped by 8% loosing approximately $2.4 billion as revenue shortfall. Post the second quarter results shares of Wayfair were being traded at 35% below their previous and all time high on July 30.
  • Pinterest: Post the second quarts results, shares of Pinterest took a sharp dive of 18.24% wherein it was also disclosed that the app had lost 5% of its active monthly users, which now stood at 454 million against its previous 478 million users.

If history is to be seen, public memory fades fast, with big selling items of 2020 being face masks, sanitisers, medical devices etc becoming a thing of the past.

With increasing vaccinations, public outings are likely to become the norm again, however, the giants that have done will continue to do so, maybe at a smaller scale, with most of them gearing up for a slow run rate in the coming quarters.

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