Earlier this week news of a Covid-19 vaccine on the near-term horizon sent a number of work-from-home adjacent stocks into a dive. Our emotions can get the best of us at times. And we’d argue that Monday’s vaccine news triggered a bunch of emotional selling. We are pretty confident there wasn’t much else behind this selloff. And some of these stocks have partially recovered.
Let’s examine a few of the companies impacted by this week’s news.
Zoom’s stock is down 15% this week. It was done as much as 22%, so there’s been some rebound for the week’s lows. To us, it seems doubtful that Zoom’s business prospects are any less bright today than they were a week ago. We will still see for the foreseeable future tons of demand for video conferencing and engagement. With Covid-19 cases on the rise and winter on the doorstep, it would not surprise us if Zoom saw another large spike in adoption and usage. We’ve written here that many companies will not return to a full-time, in-office model after the crisis. At least not for all of their employees. This means that the demand for Zoom’s services will continue to be robust. We would argue that Zoom is more at risk from competition than from declining demand.
This stock is down about 9% from Monday before the vaccine announcement. We’d ask the simple question. Why would anyone want to sign documents in person or do the signing dance where you print, sign, scan, and then email? That is yesterday’s model. The efficiency and ease of use DocuSign offers to those signing documents and those needing signatures just seems a transition we should expect from any company requiring a signed document. The ease of use DocuSign offers will surely eliminate dozens of hours that staff at a small or medium-sized business might otherwise use for customer engagement and customer outreach. This seems like a shift that is completely independent of COVID.
The in-home exercise company watched its market value shrink 17.5% over the course of this week. The company, which went public at $29 in September 2019, had risen to over $130 by mid-October 2020. It benefited from dual tailwinds. The shift to WFH and the broad-based shutdown of local gyms were key contributors to its rapid rise. In-home exercise equipment has historically been an odd category. We can all probably relate to some in-home exercise equipment finding different uses over time. You know, the free weight that is used to hold a door open, the exercise bike that is now a dirty clothes hanger, or the treadmill that is used as a storage platform.
As WFH continues there will be an ongoing balancing act between an employee’s need to get out and hit the gym vs. preferring the new homebound lifestyle once the risk of Covid-19 recedes with a vaccine.
The instant messaging and collaboration platform fared better than many of the other stocks that dropped this week. Slack usage has certainly benefited from the shift to WFH as employees can no longer wonder by the water cooler for a conversation about a marketing initiative or a product issue. Or whatever the binge-watched over the weekend. The widely used platform has the risk of driving some WFH employees to burn out by keeping employees engaged well beyond “normal” business hours. Whatever that means these days. Any tools or technology that is hard to “turn off” runs a similar risk. That said, collaboration is an absolute must in any work environment and Slack is a key driver of this. We expect it will see more usage growth over time.
The company has seen a significant bump as Covid-19 risks moved the physician/patient interaction online. The company, whose stock has declined by 5.5% this week, has fueled a latent, but much needed shift to telemedicine. By offering patients a secure and protected experience in terms of privacy issues, the move to telemedicine has accelerated during the pandemic. We don’t see this trend reversing.
There’s No Going Back
As we speak with business leaders on a daily basis, it is pretty clear to us, at least those of us in the San Francisco Bay Area, that the WFH shift that we’ve witnessed over the last nine months will take on some permanence. Will in-person meetings replace a portion of Zoom calls? Absolutely. Will people return to local gyms? Absolutely. Will patients return to physicians’ offices? Totally.
But the technologies that employees and consumers and small businesses have turned to during the pandemic will find levels of adoption and use. Scott Galloway, the noted industry observer in his keynote remarks at Thryv’s Connect20 demonstrated that trends such as eCommerce had been following a gradual but consistent line for years. Those curves bent up and to the right dramatically during the pandemic. As Galloway said, we’ve seen shifts that we expect would take another decade, happen in six months.
Behavioral change is difficult. Most of us are creatures of habit. Had the pandemic lasted a month or two, many of the behavioral changes we’ve observed might have snapped back to pre-pandemic levels. But as the pandemic continues, the chances of our new behaviors locking increase with each passing week.