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3 Coronavirus Winners Hitting New Lows

By Rick Munarriz - Mar 5, 2020 at 10:22AM

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A marketplace for contractors, a ridesharing specialist, and a proactive tech support provider are hitting new lows despite models that should be resilient to the COVID-19 worries.

You don't need to be a distributor of hand sanitizer or a promising biotech racing against the clock to find a COVID-19 vaccine to be seen by the market as an all-weather investment in this challenging climate. Some of the stocks bucking last week's sell-off included video conferencing, in-home fitness, and telehealth specialists.  

Upwork (UPWK 3.72%), Lyft (LYFT 0.49%), and LivePerson (LPSN 1.56%) haven't been as fortunate. All three stocks have hit fresh 52-week lows over the past week, despite having some traits that should find them surviving (if not outright thriving) in a climate with the coronavirus threat intensifying. Let's look at why these three out-of-favor investments seem to be positioned well for challenging times. 

Three passengers and a Lyft driver in an imaginary car with a Lyft beacon on the dashboard.

Image source: Lyft.

Upwork

One of the first companies specializing in the gig economy to go public was Upwork, the online marketplace for contractors and freelancers that hit the market at $15 in late 2018. It's been a broken IPO for the past four months, falling to the single digits in recent weeks. 

Revenue rose 19% in last week's quarterly report, ahead of its earlier guidance. It cranked out a small profit on an adjusted basis, and even the reported loss it delivered was better than analysts were targeting for the fourth consecutive quarter. Guidance was problematic. It sees revenue decelerating for the current quarter as well as all of 2020. The $340 million to $345 million it's targeting for the year ahead would be a mere 13% to 15% advance. Upwork was conservative last time out, and you have to like the business model at a time when companies may have to turn away from in-house talent, casting a worldwide net for freelancers. 

Lyft

The country's second largest ridesharing company has struggled since going public at $72 last year. The stock went on to surrender more than half its value by the time it bottomed out at $35 during last week's sell-off.

Lyft may not seem like a company built for the coronavirus. Do people really want to hop into a car with a steady flow of different passengers? Is signing up to be a Lyft driver a smart idea with so many potential riders going through your vehicle? 

Let's approach Lyft differently. It isn't usually a service for car owners. The alternative to Lyft is often a crowded bus or train, and those options are naturally even more potentially hazardous given the sheer volume of riders when it comes to mass transit. You don't have to take my word for it. Lyft shares soared 9% on Wednesday, following an analyst conference presentation where it stressed that it has not felt the impact of COVID-19. Lyft went on to point out that it had its best week ever last week, even with the market crashing on coronavirus concerns. 

LivePerson

LivePerson provides high-tech customer support solutions. In the new coronavirus normal, we find companies looking for remote support options and customers trying to resolve matters online before heading out into the wild. LivePerson scratches both itches. Its platform can sense when you're ready to abandon an online shopping cart or when you're surfing through a site without finding what you're looking for, and that's when it pops up as a way to receive live support. 

Despite cranking out three consecutive quarters of accelerating growth -- including better than 20% growth for the first time in nearly five years in its latest quarter -- the market isn't all in on LivePerson. The stock hit a new 52-week low on Tuesday, and that's saying a lot since the stock nearly doubled in 2019. The path to profitability has been stubborn, and a recent CFO change is never a good look. LivePerson may have gotten ahead of itself last year, but it's now one of the better bargains among software-as-a-service stocks with a model made for the potentially thorny near-future. 

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Stocks Mentioned

LivePerson, Inc. Stock Quote
LivePerson, Inc.
LPSN
$14.36 (1.56%) $0.22
Upwork Inc. Stock Quote
Upwork Inc.
UPWK
$21.45 (3.72%) $0.77
Lyft, Inc. Stock Quote
Lyft, Inc.
LYFT
$13.35 (0.49%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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