Sector Watch: Work-from-home stocks look to rebound (NYSEARCA:WFH)

Work-from-home stocks tracked the broader technology selloff into correction territory last week.

The Nasdaq Composite is down 10.7% from its recent high, in what’s considered a correction. The Nasdaq 100 is also down 10.7%. Both fell below their 50-day simple moving averages this week.

“Prudence, rather than conviction about what the future may hold, suggests that a partial rebalance out of QQQ and its richly-valued components is probably a good idea at current levels,” D.M. Martins Research wrote on Seeking Alpha.

The Direxion Work From Home ETF (NYSEARCA:WFH) is down 2.2% in the last five days, but is off 10.7% from its recent September highs.

Cloud communications company Twilio (NYSE:TWLO) is the largest holding, at 4.95% of the ETF. It’s down nearly 4% in the last five days and off more than 20% from the recent closing high hit on Sept. 1. But it’s still up more than 157% in the last six months.

This week holds work-from-home stock events that may give the sector a bounce after the recent shakeout.

On Tuesday at 1 p.m. ET, Peloton Interactive (NASDAQ:PTON) holds a Virtual Investor and Analyst Session that will include a Q/A session.

Analysts expect more details on the in-home total addressable market for Peloton in a revelation that could give even more legs to the recent rally. Options volatility already implies a big share price movement in the next few weeks.

Peloton bucked the trend and rose more than 4% in the last week after strong guidance.

“We believe PTON’s installed base of large connected video screens in wealthy, health-focused homes are a valuable installed base for many ancillary fitness businesses, services, and apps,” Needham said after boosting its price target to $110/share. “Maximizing the value of its screens could be a meaningful driver of incremental economics.”

“Peloton’s pace of growth is almost challenging to comprehend,” Gary Alexander wrote on Seeking Alpha. “In FY21, the company’s guidance calls for revenue and connected fitness subscribers to approximately double. And neither is Peloton sacrificing profitability in order to grow at this pace: the company notched tremendous Adjusted EBITDA gains in Q4 and plans to continue doing so in FY21.”

Check out more work-from-home events at Seeking Alpha’s Catalyst Watch.

 

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Author: iwano@_84