RUTH SUTHERLAND examines the decline of firms that boomed in lockdown

Proof we aren’t all a nation of takeaway-guzzling, house-bound hermits after all! From Peloton bikes to online food giants, RUTH SUTHERLAND examines the sudden decline of firms that boomed during Covid lockdown

  • Most of us created new habits during lockdowns but the novelty is wearing off
  • Many people are cutting back on subscriptions such as Netflix over cost of living
  • Covid winners were all, in the end, substitutes for more sociable experiences

When the filmmakers of the future want to evoke a middle-class household in the time of Covid, they will show us baking sourdough, exercising with Joe Wicks — and glued to Netflix.

Most of us acquired new habits during the lockdowns. But the novelty — and indeed the necessity — of adapting to that life is rapidly wearing off.

Normal life, or whatever passed for normal life in your family before the pandemic, is reasserting itself with a vengeance.

This is a simple fact that investors in companies such as Netflix are learning the hard way.

Netflix has become one of the biggest post-pandemic casualties on the stock market. Its huge growth in subscribers had actually gone into reverse. File picture

At their height, shares in the Californian streaming company were around £535 ($700), but they have now lurched down to around £170 ($220).

A great many highly intelligent people in the City and on Wall Street filled their boots in the belief that Covid had brought about a permanent change in people’s behaviour.

Unfortunately for them, such thinking was premature, to say the least.

Netflix has become one of the biggest post-pandemic casualties on the stock market. A shocking £40 billion was wiped off its value at a stroke when it revealed this week that the huge growth in subscribers had actually gone into reverse.

The number of subscribers using the streaming service fell by 200,000 in the first three months of the year as it faced stiff competition from rivals such as Apple TV, Prime Video and Disney+.

And the situation is likely to get worse: Netflix has warned shareholders that another two million subscribers are likely to leave in the three months to July.

What has gone so badly wrong?

We may have devoured Netflix’s offerings during lockdown, but once the curbs were lifted, many of us have found we quite simply have better things to do. File picture

Well, the cost of the subscription — £10.99 per month for a standard service — is a factor. People are facing the worst cost-of-living crisis in a generation and are forced to cut back on luxuries.

Netflix also blames the high number of households sharing accounts. It estimates that around 100 million households worldwide are breaking its rules by sharing passwords to access the service.

That is no doubt a factor, too. But in my view there is another reason. We may have devoured Netflix’s offerings during lockdown, but once the curbs were lifted, many of us have found we quite simply have better things to do.

Of course, Netflix and the other streaming services still pose a threat to traditional broadcasters. And it is fantastic to be able to watch almost any programme we want, whenever we please.

But the truth is that we have passed the Netflix pinnacle — and peak Covid culture in general.

The stock market experts who touted Netflix and other firms that thrived off our enforced isolation as long-term, big money spinners are having to think again.

The premise was that the likes of Zoom, Asos and Just Eat would reap huge gains for investors and this effect, we were told, would not fade when Covid ended. The pandemic was merely accelerating changes in people’s behaviour that were happening anyway.

Riding your stationary bike in your basement, even with an on-screen instructor urging you on, is not as much fun as a spin class. File picture

It was an analysis, however, that ignored a very obvious point. These so-called Covid winners were all, in the end, just substitutes for better, more sociable experiences.

Riding your stationary bike in your basement, even with an on-screen instructor urging you on, is not as much fun as a spin class, surrounded by other huffing and puffing spinners. While actually riding a bike outside beats them both.

Perfunctory online purchasing doesn’t match up to a day at the shops with your girlfriends. A takeaway isn’t the same as a convivial dinner at a restaurant.

Netflix isn’t the cinema. And the dismal, paranoia-inducing experience of meetings on Zoom is more than enough to make anyone miss their colleagues.

Don’t believe me? Well just look at what families did over this glorious Easter break. They weren’t slouched on sofas in their living rooms, but out and about visiting museums, zoos and aquariums — at double the rate before the virus, according to new figures from Barclaycard.

Our parks and beaches were filled with blossom and people enjoying the sunshine.

Life in lockdown was far removed from what most of us consider to be reality, and companies need to wake up to it.

These so-called Covid winners were all, in the end, just substitutes for better, more sociable experiences, including riding your bike outside. File picture 

I was reminded of just how surreal our pandemic life was by one of those ‘this time a year ago’ notifications popping up on my Facebook feed.

Rather bizarrely, I was running the Royal Parks Half Marathon, not as I had planned, in the centre of London with thousands of others, but alone in the Wiltshire countryside.

The event had been cancelled because of Covid restrictions, so the organisers had created an app which did its best to simulate the real event.

When the app told me I was on the last leg of the route, speeding past hundreds of cheering spectators, I was in fact plodding past a rather irritated bull, thankfully behind a fence.

My husband awarded me my medal when I passed the finishing line, aka our garden gate.

It was perfectly pleasant but, of course, it could never compare to the atmosphere in London’s Hyde Park.

Indeed, on the subject of fitness, Peloton is another pandemic phenomenon that has failed to stay the course.

At one point, the enthusiasm for the high-tech bikes, costing around £1,800 for the top model, reached cult-like levels.

One senior civil servant, Sarah Healey, memorably boasted last year about how working from home during Covid had given her more opportunity to ride her Peloton, saying it was a ‘huge benefit’ to her wellbeing.

But we are now well past the Peloton fad, too: shares in the company have fallen by 87 per cent since early last year. At its highest, it was valued at around £38 billion ($50 billion) on Wall Street, but it has dropped to just under £6 billion ($8 billion) as gyms reopened.

The moral: many people find it joyless to exercise alone in their homes.

Perhaps the pandemic stock par excellence is U.S. technology company Zoom, which brought work meetings into our kitchens and back-bedrooms. Between March and October 2020, its share price rose from £80 ($105) to £435 ($568), a stellar performance.

As for the food delivery fixation that took hold during Covid, it is also waning. File image

Businesses and staff do owe Zoom a debt of gratitude. Its technology pulled off a miracle in allowing millions of us to carry on working under emergency virus conditions. Nevertheless, its shares were driven to unsustainable levels.

Investors seemed to forget that for every militant WFH warrior, others were eager to catch up with office gossip at the coffee machine.

And how draining it was, trying to divine the temperature of disembodied meetings over wobbly technology. There’s nothing like actually being in the room to enable one to read the room.

Perhaps we should not be surprised that shares in Zoom have sunk by 82 per cent since its peak.

As for the food delivery fixation that took hold during Covid, it is also waning.

The value of Just Eat, one of the leading players, at one point last year hit nearly £11 billion, surpassing Britain’s premier industrial giant Rolls-Royce.

But its shares have fallen by 70 per cent in the past 12 months, valuing it at just £5 billion, which is less than Rolls-Royce.

Online fashion firm Asos has seen its shares fall from a peak of more than £59 last spring to around £14, as High Street clothes shops have opened their doors once again.

All of this is very painful for investors in these shares. The silver lining, though, is it shows we are not all a nation of junk food guzzling, square-eyed, house-bound hermits. File image

Traditionalists will see this as a reassertion of stock market sanity and they are right.

Like millions, I’m grateful to Netflix, Zoom et al for helping us survive the depths of lockdown, but the stock market bubble was totally overblown. Their services are valuable, but there are limits to the desirability of living through a screen.

All of this is very painful for investors in these shares. The silver lining, though, is it shows we are not all a nation of junk food guzzling, square-eyed, house-bound hermits.

Why opt for house arrest — or indeed buy shares in the companies that cater to that confinement — when there is a world out there to explore again. Places to go, events to see and participate in, people to meet . . .

We are social animals and any business ignoring that fundamental truth of human nature does so at its peril. 

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