Why corporate pandemic winners like Peloton, Netflix, and DoorDash are suddenly stumbling

In the early days of the pandemic, there were some clear corporate winners.

We all devoured episodes of Tiger King, while singing the praises of Netflix. We hopped on our Peloton bikes, wondering why we ever went to the gym. We used DoorDash to bring us our groceries and takeout. Zoom meetings kept us productive (and were used nearly as often for virtual get-togethers and happy hours with friends and family). And we spent those long hours in isolation deep diving through Etsy and Shopify to find cloth masks and unique products that charmed and distracted us.

They were, in their own unique way, heady days.

But now, companies that saw their stock soar in the heart of the pandemic are falling to earth. In the past year, Netflix shares have fallen more than 30%. Peloton is down a whopping 81%. DoorDash has fallen 39%. Zoom has plunged 61%. Etsy and Spotify? Both have slipped more than 20%.

Even Amazon has seen its share price drop 12% from a year ago–and is 23% off of its 52-week high.

Some of that drop is tied to larger market issues. The S&P 500 is down 8% this month and Nasdaq is firmly in correction territory, falling 13% in the past 30 days, as of midday Tuesday. But the poor performance of these pandemic darlings is especially curious, given that we’re in the midst of the biggest COVID-19 outbreak since the start of the pandemic. What’s going on?

The short answer? Time changes everything.

Consumer habits, which evolved so quickly out of necessity in March 2020, are shifting again. With vaccines widely available, more knowledge about the virus and a seemingly less lethal mutation being the most dominant, we’re falling back into some of our old ways. 

And that’s resulting in a slowdown at all of these companies. New customers are bypassing Peloton, for instance, in favor of returning to the gym. And people who did join up during the pandemic are less active. 

“We are seeing a number of these customers evolving into new habits,” says Dan McCarthy, a professor at Emory University’s Goizueta Business School. “No habits are permanent after all. What’s worse, at businesses like Peloton, Netflix, and DoorDash, we are seeing a very rapid decline in customer adoption. So, for customer adoption, it seems fair to say that the new normal for these services is the same as the old normal, perhaps with a period of time below normal to flush out all of the demand that had been pulled forward.”

McCarthy says his research shows restaurant dine-in activity is more or less back at pre-pandemic levels. And people are rushing back to the gyms, hoping to shed the COVID spare tire. Planet Fitness, in November, said membership was almost back to where it was in early 2020.

“While the pandemic is still with us, its external pressure on how we spend can and has been going away in some categories,” says McCarthy.

There are, of course, other pressures. Peloton went on a buying spree last year to increase its supply when demand was high. Now, as its revenues shrink, that’s making the company more vulnerable. And Netflix is seeing some investor chop after announcing a weak subscriber growth outlook.

There is some good news for these businesses, though. Many of the people who started using their products and services during the pandemic have become loyal customers, whose usage might drop some, but won’t disappear completely–which should improve the comparison to pre-pandemic bottom lines. It just might take investors a little while to do that kind of comparison.

“Customers who had been users of services such as Peloton and DoorDash before the pandemic have made persistent habits around those services,” says McCarthy, “continuing to be heavy users even though the external forces that pushed them to use these services more have eased or gone away entirely.”