You remember the early days of the pandemic, when millions of office workers started doing their jobs from home for the first time.
Video conferences — for business check-ins and happy hours — became a feature of daily life. Gym memberships were swapped for stationary bikes. Parents raced to crack the difficult code of remote learning.
Now, as restrictions in the United States and Europe have been rolled back, people are sick of spending so much time at home. And companies like Peloton, Zoom Video and DocuSign are paying the price.
Peloton’s stock dropped almost 9% on Tuesday after the company said it had lost $757 million last quarter. Sales tumbled 15% from one year ago. [Shares closed Wednesday at $12.34 and were down again early Thursday in pre-market trading.]
It’s quickly running out of money. Peloton said it had just $879 million in cash in the bank at the end of its most recent quarter. It’s borrowing heavily from banks like JPMorgan Chase and Goldman Sachs to keep the lights on.
Peloton ‘thinly capitalized,’ turns to Wall Street for money as cash burn grows
CEO Barry McCarthy, who took over the top job from founder John Foley in February, acknowledged in a letter to shareholders that Peloton is “thinly capitalized for a business of our scale.”
While he’s working on a turnaround, McCarthy noted that the company grew too fast during the pandemic. Peloton is now sitting on way too much inventory for current levels of demand. Other issues tied to a rapid expansion — like wonky code — still need to be sorted out, too.
The home workout company is now worth just $4.3 billion, down from a peak of almost $49 billion in January 2021. Its shares are down 64% year-to-date.
Peloton’s problems have garnered plenty of attention. But it’s not the only darling of the work-from-home era that’s now getting pummeled by investors.
Zoom Video’s stock is down 51% since the start of 2022. It reports earnings later this month.
“We are really in a very interesting transition point for the company,” Chief Financial Officer Kelly Steckelberg said at a conference in March, explaining that Zoom wants to pivot from a “killer meetings app” to a broader platform for workplace collaboration.
She said Zoom has not lost any big customers, but noted that “companies are sort of past that panic-buying stage of the pandemic,” which means sales are becoming “more normalized.”
Shares of DocuSign, meanwhile, are 54% lower this year. Online learning platform Chegg is down 42%.
The takeaway: Few companies have been exempt from the recent stock market sell-off. Investors have dumped shares of American retailers even as people have returned to their stores. Gym chain Planet Fitness is off 25% year-to-date.
But work-from-home favorites have been getting hit especially hard as Wall Street skeptically assesses where the economy heads next.
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