October 5, 2022

Premarket: Work-from-home stocks are getting crushed

4 min read

Video conferencing – business check-ins and fun times – has become a feature of everyday life. Gym membership changed to stationary bikes. Parents raced to break the difficult code of remote learning.

Now, as restrictions have been lifted in the United States and Europe, people are sick of spending so much time at home. And companies like Pilot (PTON), Zoom video (ZM) And Document sign (DOCU) The price is paid.

It’s running out of money fast. Piloton said he had only 87 879 million in cash at the bank at the end of his most recent quarter. It is borrowing heavily from banks such as JPMorgan Chase and Goldman Sachs to keep the lights on.

CEO Barry McCarthy, who took over from founder John Foley in February, acknowledged in a letter to shareholders that the pilot “has invested very little in our scale business.”

As he worked on the transformation, McCarthy noted that the company grew rapidly during the epidemic. Peloton is now sitting on too much inventory for the current level of demand. Other issues related to high-speed extensions – such as winkey code – also need to be addressed.

The homework company now stands at just $ 4.3 billion, down from a peak of about ً 49 billion in January 2021. Its shares are down 64% year-over-year.

Pilot’s problems have received a lot of attention. But it is not the only loved one of the home-working age who is now being harassed by investors.

Zoom Video’s stock is down 51% since the beginning of 2022. It reports earnings at the end of this month.

“We’re at a very exciting transition for the company,” Chief Financial Officer Kelly Stickelberg told a conference in March, noting that Zoom is one of the “killer meetings app” for collaboration in the workplace. Wants to be the focus of a broad platform.

He said Zoom has not lost any major customers, but noted that “companies are like in the past that the epidemic panic buying phase”, which means sales are becoming “more normal”.

Shares of DocuSign, meanwhile, are down 54% this year. Online learning platform Cheg (CHGG) 42% less.

Techway: Some companies have been exempted from recent stock market sales. Investors have tossed shares of American retailers until people have returned to their stores. Gym China Planet Fitness is 25% off year to date.

But home-based favorites are particularly affected, as Wall Street is skeptical of where the economy is headed.

Even if inflation is high, the markets will not be calm.

Inflation in the United States may be at an all-time high.

UPDATE: The government will release consumer price data for the year starting April from today. Economists expect the consumer price index to rise 8.1 percent during the period, up from 8.5 percent in the year to March.

But don’t expect investors to start celebrating right now.

Inflation began to rise sharply last spring, which means that year-on-year comparisons look a little less eye-watering. However, the underlying dynamics of price rise remain.

“In the absence of major improvements in supply chains and geopolitical tensions, the decline is up to 2%. [inflation] The target will be very slow and may not be achieved by the end of 2023, “said James Knightley, ING’s chief international economist, in a note to clients.

The latest National Federation of Independent Business Survey, released earlier this week, found that net 70% of companies raised prices in the last three months. According to ING. This is slightly lower than the previous survey, but still the second highest reading on record.

Most importantly, even if inflation is not rising every month, the Fed has a lot of work to do, and is expected to continue to aggressively raise interest rates. This is a recipe for a turbulent market in the near future.

President Joe Biden said in a speech Tuesday that combating inflation was his top national priority and acknowledged that “families across the United States are suffering.”

“They’re disappointed. I don’t blame them. I don’t really blame them,” Biden said.

Can Tesla Mining Company Buy?

Elon Musk, CEO Tesla (TSLA) And SpaceX and, of course, the soon-to-be owner of Twitter, have their hands full in many industries. He may soon add mining to the list.
Musk caused a stir yesterday when he said he would overthrow former President Donald Trump. Lifetime ban on Twitter If he manages a social media company.

Also note: Musk said that while Tesla’s rival was unlikely to buy the automaker, it could acquire a mining company as it seeks to gain more control over its supply chain.

“This is not out of the question,” Musk said at the FT’s Future of the Car Summit, adding that such a move could be necessary to “accelerate the transition” in electric vehicles.

Last week, Tesla signed a supply agreement with Brazil’s Cancun Val to get the nickel needed for its batteries.

But Musk’s comments are a reminder that car companies are reluctant to believe more because of the jump in raw material prices and the limited supply of key components.

Musk did not say if there was a specific miner that Tesla had an eye on. Last month, shares of Nevada-based mining firm Lithium Corporation went viral after rumors circulated that Tesla had scrapped it.

The company said in a statement that it had received “nothing more than a show of interest from Tesla.”

“We would be happy to talk to Elon if he were interested, but there is currently no relationship between the two companies,” he said in a statement.


Olaplex and Wendy’s report results before US markets open. Raven and Disney (DIS) Follow after closing.

Even today: The latest US inflation data arrives at 8:30 AM ET.

Check it out: Want to know how the war in Ukraine is shaking the world economy? But listen to me. CNN’s “Tug of War” podcastWhere we talk about the pain at the pump, how the food crisis and rising prices can create more political instability.

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