While the May 5 stock market crash shook a lot of investors, it really just continued a trend. A number of stocks that had delivered tremendous returns during the pandemic have seen their prices fall dramatically over the past year. That’s not a one-day phenomenon. It’s something that has been happening for quite a while.
To put the losses into perspective, let’s look at a few pandemic-era darlings and how they have performed over the past 12 months (as of market close on May 6):
All of these companies have taken a beating over the past year — which you can blame on the world opening back up and services/products built around being at home being in less demand — but that’s not the whole picture. Share prices rise and fall not just on business metrics or how a company actually performs, but by perception.
Some of these companies have been hurt, perhaps irreparably, by the end of the pandemic, but others on this list will not only recover but should prosper. That creates a challenging question for anyone who currently owns shares in the companies (or any others perceived as pandemic stocks).
Should I Sell My “Pandemic” Stocks?
If you already own shares of a company there’s no point in lamenting your original decision to purchase the stock. You should, however, consider your original reason for buying shares, what’s often called an “investing thesis.”
Was your thesis (whether you thought of it or got it from a hopefully credible source) that shares would do well because of pandemic-driven demand? If that was your sole reason for owning a company, then your sell decision likely comes down to whether you believe that demand situation might occur again.
Most people who bought shares for that sole reason likely (hopefully) began getting out when vaccines first became available and the world began opening back up. The reality is that most people who own any of the above companies as a long-term investor believed that they had advantages beyond people being stuck at home.
Yes, the pandemic helped Netflix and Amazon, but are their prospects bleak now that it’s easier to go…
..
