Some of this year's biggest winners didn't start out that way. Shares of Wayfair (W +4.49%), Pinterest (PINS 5.03%), and Camping World (CWH +6.91%) have all more than doubled in 2020, but at one point they were among the market's biggest losers.
Wayfair, Pinterest, and CampingWorld were down at least 45% year to date during the initial COVID-19 sell-off. They have bounced back in a major way, and it all makes perfect sense now. Online furniture retail, visual discovery, and RVs were destined to shine in the pandemic. Let's see how the market got these three turnaround stories wrong at first.
Image source: Getty Images.
Wayfair
You have to wonder what the market was thinking when on March 19, Wayfair traded as low as $21.70, a whopping 76% plunge since the start of the year. Weren't we going to be spending a lot of time at home, prompting us to want to update our surroundings? Weren't we going to be limited to online retailers, with local furniture showrooms shuttered?
Wayfair had low prices and free shipping for most of its merchandise. It had neat digital tools, like one that uses augmented reality to embed some of its items into your home so you could look before you leapt into a purchase. It was bound to thrive.
After growing its net revenue by 35% for all of last year and slowing to 20% in the first quarter, Wayfair saw its business surge 84% in the second quarter. Wayfair isn't going to keep growing at that blistering pace, but it did report nearly halfway through the third quarter that ended this week that net revenue was locking in 70% higher.
Wayfair has been game-changing investment for folks who got in at the bottom. The stock has more than tripled in 2020, but if we draw the starting line at its mid-March low, it's a 13-bagger.
Compared to Wayfair and Camping World, Pinterest had it easy this year. Its stock was down only 45% in 2020, when it hit rock bottom in the middle of March. This was another head-scratcher.
Pinterest is a graphical hub for folks to get ideas on recipes, decorating their homes, and other crafty interests. Of course it was going to be a hotbed of traffic with folks stuck at home. We paid more attention to our home decor. We did a lot more cooking. We had time to pursue new hobbies. The advertising market was going to be a challenge, with companies scaling back on marketing expenditures, but traffic was going to be strong.
It may be surprising to see that revenue has decelerated sharply at Pinterest for five straight quarters. We've gone from 62% top-line growth early last year to 8% in its latest report. However, given the marketer drought, analysts were bracing for Pinterest to only grow at half that pace. The real story here is that Pinterest is growing in popularity. Monthly active users have soared 39% over the past year to 416 million.
Camping World
If you want to hear another story of a company that shifted into drive after barreling downhill in reverse, try Camping World on for size. The leading retailer of new and used recreational vehicles was trading 76% lower year to date -- just like Wayfair -- when it bottomed out in March.
Camping World was another obvious bounce-back candidates. With folks worried about vacations involving flying or staying in a hotel, it only made sense to see the RV industry stage a comeback. If it's not safe to leave home to travel, why not travel in a house on wheels? It was just the ticket for Camping World. RV sales have been on the rise since Memorial Day weekend, and buyers are skewing younger so there's going to be a lot of money to be made as the undisputed top dog in RV supplies and maintenance.
Wayfair, Pinterest, and Camping World are some of this year's top growth stocks. It makes the story that much juicier knowing that Wall Street got it wrong at first.
