Fads come and go in fashion. (Are skinny jeans no longer a thing?) The same is true of the stock market.
Investors occasionally get too wrapped up in the latest big consumer or corporate trend, only to see companies get crushed when fickle tastes change — or even worse, a trend goes mainstream and there’s too much competition.
Take a look at Boston Beer (SAM), for example. The Sam Adams brewer, which also owns the hard seltzer brand Truly, is struggling as the popularity of alcoholic seltzer appears to be fading fast.
“The continuing decline of the hard seltzer segment … is deeper than previously expected,” said Boston Beer founder and chairman Jim Koch on the company’s earnings call in July.
Boston Beer will report its latest results after the closing bell Thursday. Investors are hoping for a turnaround. The stock is down nearly 35% this year.
Snap (SNAP)’s social media platform Snap (SNAP)chat is another example of a product that was incredibly popular for awhile. But tweens and teens have since discovered TikTok and BeReal instead.
It didn’t help that the company’s augmented reality glasses, called Spectacles, were a big bust, showing how difficult it is for a social media company to diversify. The same can be said for Facebook and Instagram owner Meta given its recent VR struggles.
“Competition, whether it’s with TikTok or any of the other very large, sophisticated players in this space, has only intensified,” Snap chief financial officer Derek Andersen said during the company’s second quarter earnings call in July.
Snap, which also reports earnings after the closing bell Thursday, is in even worse shape on Wall Street than Boston Beer. The stock has plunged more than 75% in 2022.
Some recent fads took off in the pandemic — only to fall back down to Earth.
Peloton (PTON), a stay at home workout darling, is now mightily struggling as its popularity has faded. Sales have slowed, the company is still losing money, its founders have left, and the stock has plunged nearly 80% this year.
Video conferencing leader Zoom (ZM) has also taken a big hit this year, plummeting about 60%.
That’s partly because more workers are going back to the office. There’s also intense competition from larger tech firms such as Microsoft (MSFT), which owns Teams and Skype, WebEx parent Cisco (CSCO) and Google owner Alphabet (GOOGL), which owns Meet and Chat. Investors view Zoom as more of a one-trick pony compared to those tech giants.
E-signature software company DocuSign (DOCU) and virtual health company Teladoc (TDOC) have also plunged this year after getting huge boosts from Covid in 2020. DocuSign (DOCU) is down nearly 70% while Teladoc (TDOC) has fallen about 75% .
And although life-saving Covid vaccines were certainly not fads, the investor fervor for the companies that produced them sure looks like one. The Covid vaccine stocks are getting hit hard this year, as investors have already more than priced in the initial boom from sales of the shots and boosters and now wonder what’s next.
Shares of Moderna (MRNA) have plunged more than 50% this year, after a 450% pop in 2020 and more than doubling in 2021.
Shares of BioNTech (BNTX), which partnered with Pfizer on a vaccine, have also lost more than half their value this year after surging in both 2020 and 2021.
Pfizer (PFE), a far more diversified company, is “only” down 27% this year. Novavax (NVAX), another biotech with a Covid vaccine, has fared even worse. Its stock has cratered nearly 90% in 2022.
It just goes to show that investors, much like fashionistas, are always looking for the next big thing. To quote Heidi Klum’s line from the glory days of “Project Runway” on Bravo, “one day you’re in and the next … you’re out!”