Investors in Pinterest (PINS -9.02%), Shopify (SHOP -5.48%) and Square (SQ -3.73%) had another rough day Wednesday. All three of these stocks dropped as much as 10% in afternoon trading. As of the market close, they were down 8%, 7%, and 6%, respectively.
It was a quiet day on the news front for all three of these companies. None of them published a press release. There were no noteworthy SEC filings. None of them were hit by a surprise analyst downgrade, either.
However, it was another wild day of trading on Wall Street generally. The S&P 500, Dow Jones Industrial, and Nasdaq all fell about 5% in the afternoon before recovering slightly. The huge plunge was once again caused by fears related to the continued spread of the novel coronavirus pandemic.
When markets fall, highly valued growth stocks like Pinterest, Shopify, and Square tend to fall faster than the market in general.
Investors witnessed that principle play out in real time today.
I'm a shareholder of all three of these businesses, so the last month has been particularly painful. However, I take solace in the fact that all three of these companies executed at a high level in 2019.
Let's start with Pinterest. In 2019, Pinterest's revenue grew 51% to $1.14 billion, and it produced non-GAAP net income of $17.9 million (up from a net loss of $47 million in 2018). For 2020, management is guiding for total revenue of $1.52 billion, and the company's long-term opportunity remains enormous. Those numbers should excite any growth-focused investor.
2019 was also (another) great year for Shopify. Revenue jumped 47% to $1.6 billion, showing that its platform is as popular as ever. While investments in the business cause its bottom line to turn negative, this company has a great track record of using its capital to drive continued growth. For 2020, management is guiding for revenue to land between $2.13 billion and $2.16 billion, which represents an increase of about 36%.
Finally, there's Square. Last year, revenue grew 43% to $4.7 billion, and the growth would have been even better if it wasn't for the sale of Caviar to DoorDash. Square is nicely profitable, and adjusted EPS grew 70% to $0.80. Square's management team expects revenue will land between $5.9 billion and $5.96 billion in 2020, which represents growth of at least 25%, so the gravy train doesn't appear to be ending anytime soon.
It's possible that these companies might have to dial back their 2020 guidance if the coronavirus (which causes the disease COVID-19) continues to wreak havoc on the global economy, but as of right now, these companies appear to be doing just fine. While there's no telling where any of their stocks might head in the short term, the long-term thesis for owning all of them appears to remain intact.