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Why Paycom Software, Pinterest, and The Trade Desk Are Plunging Again

By Brian Feroldi - Updated Mar 16, 2020 at 2:58PM

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Even an emergency stimulus plan couldn't keep the markets from tumbling today.

What happened

Shares of Paycom Software (PAYC 2.64%), Pinterest (PINS -0.99%), and The Trade Desk (TTD -1.94%) are all tumbling today. Each of these stocks experienced a double-digit drop in early-morning trading on Monday. As of 10:57 a.m. EDT, they were down 13%, 18%, and 13%, respectively.

So what

All three of the big U.S. stock market indices nosed-dived right out of the gate on Monday. The S&P 500, Dow Jones Industrial, and Nasdaq were all down by more than 9% at one point. Once again, the drop was so severe that an emergency trading circuit breaker was tripped, which temporarily halted all buying and selling activity.

Stock chart showing up-and-down movements.

Image source: Getty Images.

On Sunday, the Federal Reserve launched a huge monetary stimulus program to help offset the decline in business activity related to the continued spread of the novel coronavirus. The benchmark interest rate was cut by a full 100 basis points to between 0% and 0.25%.

The Fed also stated that it expects to maintain this interest rate target range "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."

As part of the stimulus package, the Fed has decided to increase its holdings of Treasury securities by "at least $500 billion" and its holding of agency mortgage-backed securities by "at least $200 billion."

Even this historic action by the Fed couldn't keep Wall Street from selling stocks en masse as fears surrounding the coronavirus continue to escalate.

Now what

While nearly all stocks are out of favor right now, growth stocks such as Paycom Software, Pinterest, and The Trade Desk have been hit particularly hard. These stocks are currently down around 40%, 68%, and 49%, respectively, from their all-time highs.

Will the coronavirus put a halt to these companies' growth rates? That's hard to say.

Paycom sells specialized software that is used to run payroll and meet other human resources needs. If the coronavirus leads to lower employment, it might impact this company's near-term ability to grow. On the plus side, Paycom's board just authorized an upsized stock-buyback program to take advantage of its lower share price.

Advertisers might not have as much money to throw at Pinterest over the next few weeks (or quarters), but it's possible that the company's usermetrics could actually get a boost from the coronavirus, since so many people will be self-quarantining at home. If true, that could make the platform even more attractive to advertisers down the road.

If the downturn causes ad budgets to get cut, that probably wouldn't be great news for the Trade Desk in the near term, either. However, the company's programmatic ad-buying platform provides advertisers with insights that other mediums can't, so it's possible that a downturn could also accelerate the company's share gains, too.

There are so many unknowns in the air right now that it's impossible to predict where the markets could be heading next. With volatility so high, it's very likely that each of these companies' stocks will continue to trade wildly for the foreseeable future.

As a shareholder of all three of these companies, I remain steadfast in my belief that all of them are well positioned to grow for many years to come. That's why my plan is to hang on to my position in all of them, even if it feels awful to do so in the short term.

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Stocks Mentioned

Paycom Software, Inc. Stock Quote
Paycom Software, Inc.
PAYC
$276.79 (2.64%) $7.13
The Trade Desk Stock Quote
The Trade Desk
TTD
$52.64 (-1.94%) $-1.04
Pinterest Stock Quote
Pinterest
PINS
$22.91 (-0.99%) $0.23

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

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