Why Amazon, Salesforce, Zoom, and Other Home Actions Were Dropped Today


What happened

On Monday, investors sold many stocks that performed well during the early stages of the pandemic, following encouraging news about a new antiviral drug for COVID-19 late last week.

Here are the performances of some of the most popular stocks today:

So what

Friday, Merck (NYSE: MRK) shared provisional data from a Phase 3 study that suggested that its experimental oral antiviral therapy could reduce the risk of hospitalization or death by nearly 50% for patients with mild or moderate cases of COVID. The drug maker said it plans to seek emergency use authorization for the drug from the Food and Drug Administration “as soon as possible.”

Image source: Getty Images.

The news prompted many investors to pull out of so-called home-based stocks and look to the companies that could benefit the most if the pandemic ended sooner than expected.

Now what

It is true that some homemaker winners are likely to see their rate of growth slow as the economy reopens. For example, Peloton might see moderate home exercise equipment sales as people return to gyms. Zoom might also find it more difficult to market its cloud-based communication tools. And Pinterest could face challenges growing its user base if people spend less time online.

Still, the impact on companies like Salesforce and Roku may be less severe. Even as their employees return to their traditional offices, Salesforce is expected to continue to experience strong demand for its software solutions as businesses continue to transition to the cloud. And while people may spend less time watching TV when they return to more outdoor activities, the switch to connected TV is expected to continue to fuel the growth of Roku’s booming advertising business.

Investors may also overestimate the risk to Amazon and Shopify. The growth of e-commerce may slow as consumers return to stores in the coming months, but more retail sales are still expected to migrate to online channels over the coming decade.

So, patient investors may want to consider using this sale as an opportunity to grab some shares of Amazon, Shopify, Salesforce, and Roku, especially if their stock prices continue to decline in the coming days.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Joe Tenebruso owns shares of Amazon and has the following options: Long January 2023 $ 2,400 calls on Amazon. The Motley Fool owns stock and recommends Amazon, Peloton Interactive, Pinterest, Roku, Salesforce.com, Shopify, and Zoom Video Communications. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon, January 2023 long calls at $ 1,140 on Shopify, January 2022 short calls at $ 1,940 on Amazon, and short calls January 2023 at $ 1,160 on Shopify. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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