Investors are selling these previously high-performing growth stocks. But perhaps they should be buying.
What happened
Investors sold off many pandemic-related stocks on Monday after health officials issued less restrictive social distancing guidelines for vaccinated people.
Here's how some of the most popular stay-at-homestocksperformed today:
- Zoom Video Communications(NASDAQ:ZM), down 7.9%
- Square(NYSE:SQ), down 6.7%
- Teladoc Health(NYSE:TDOC), down 6.6%
- JD.com(NASDAQ:JD), down 5.8%
- DocuSign(NASDAQ:DOCU), down 5.6%
So what
COVID-19 infection and hospitalization rates are beginning to decline. Government officials, in turn, are moving to reopen the economy. On Monday, The Centers for Disease Control and Prevention (CDC) said fully vaccinated people can safely visit with other vaccinated people, as well as some unvaccinated people who are at low risk of severe COVID-19.
Better still, President Joe Biden said last week that the U.S. would have enough doses of coronavirus vaccines to inoculate every adult in the country by the end of May. Meanwhile, Congress is nearing the passing of a $1.9 trillion stimulus bill to further the economy's recovery.
These developments have led many investors to sell the stocks of companies that have performed well during the COVID-19 crisis, and buy shares of businesses that could benefit from a post-pandemic economic recovery.
Now what
Progress toward an eventual end of the health crisis is certainly good news. But it's not a great reason to indiscriminately sell stocks that have outperformed during the pandemic.
People will continue to use Zoom's and Teladoc's videoconferencing software and DocuSign's e-signature solutions, because they offer time- and cost-saving advantages. Digital payments and e-commerce will also continue to grow, and along with them, so too will Square's and JD.com's revenue and profits.
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