Retail investors have had just one obsession over the past week: ‘The Great Reopening’.
But is Wall Street jumping the gun here and setting up the industry to fall once more?
Vaccines may be working, but COVID’s still here
The companies hit hardest by the pandemic are back to mass hiring, consumers are jetting off to far-flung places that have been closed off until now, and stay-at-home winners are being ditched.
And there’s evidence to support retail investors’ decisions to move towards travel stocks once more, most notably in the Q3 earnings reports of companies such as Airbnb, Expedia, Delta, and more. These pandemic-stricken travel stocks knocked expectations out of the park last quarter, perhaps the pinnacle of which came from Airbnb’s 280% surge in year-over-year net income.
Add to this celebratory fire the news of an allegedly effective Pfizer pill and comments from Dr. Scott Gottlieb, a Pfizer board member, that COVID-19 could end in the U.S. by early January.
The flip side of this: as investors pile into travel stock, stay-at-home winners such as Peloton, Netflix, Zoom, and more are being ditched. Workers returning to offices and consumers returning to restaurants and theaters is expected to spell trouble for these stocks in the short term.
What investors need to remember though is that this is short-term. Netflix, Zoom, et al. are not going away just because we can go outside again. The global landscape has been irrevocably changed by COVID-19 and it’s difficult to see the world ever going back to ‘normal’.
And while travel stocks may be on the rise, there is still an awful lot of uncertainty surrounding the industry, and it may be much too early to bank on a mass recovery.
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Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.