Drivers of the Rally
Peloton, Zoom, and Nvidia benefited from the shift in customer behaviour caused by the pandemic. Lockdown measures led to gym closures, prompting people to purchase Peloton’s home exercise equipment. However, revenues dwindled when gyms gradually reopened. In fact, the company slashed its annual revenue guidance by $1 billion during its Q3 earnings release.
In a similar vein, Zoom benefited from large enterprises facilitating remote teams. While the trend continues, behemoths like Google and Microsoft showed great agility in enhancing their offerings. And, they had the advantage of a strong ecosystem (emails, calendar, documents, presentations) that could be seamlessly integrated with video call scheduling. Stiff competition from companies that have just way too much muscle led to Zoom struggling to meet its customer acquisition targets.
Nvidia had different problems. It found itself in the middle of global semiconductor chip shortage. The shortage persists, and Nvidia’s problem is not dry order books, rather un-serviced potential customers.