This year has been feast or famine for investors. If you bought into the fast-growing companies that were built to thrive in the current conditions, your portfolio is rocking in 2020. If you weren't as fortunate to own this year's hot stocks, you're probably in a funk.
AMC Entertainment Holdings (AMC 8.56%), TripAdvisor (TRIP -1.01%), and Yelp (YELP -0.89%) are some of this year's biggest sinkers. They enter this new trading week falling between 37% and 67% in 2020. Investors may blame the COVID-19 crisis for their recent sluggish performance, but the grim reality is that things weren't so hot for any of these three portfolio sandbags before the pandemic.
Image source: Getty Images.
AMC Entertainment
Outside of perhaps cruise lines, it's hard to think of an industry hit harder than multiplex operators. AMC Entertainment watches over the country's largest chain of movie theaters, and even though most of its projectors are now running, the big screen has never felt so small. Folks aren't coming to the movies, and when Tenet bombed at the box office, it scared away most major releases into 2021 theatrical debuts or forced a decision to bypass the multiplex entirely and go straight to digital delivery.
The pandemic has made life brutal for AMC, and the way the chess pieces are moving on the board right now, things may never be the same for multiplex operators. However, it's not as if AMC was holding up well in the past. Last year should've been the mother lode for exhibitors. The final installments in the Star Wars and Avengers sagas as well as highly anticipated Toy Story, Frozen, and It sequels weren't enough to save 2019 at the box office. AMC's revenue rose a mere 0.2% last year, months before the pandemic-related shutdowns.
AMC has lost more than two-thirds of its value in 2020 because the pandemic has sped up the obsolescence of its industry, but movie theater chains were already fading. If AMC bounces back next year, it will be because innovation and an industry shakeout gave it a fighting chance, but its business model was doomed before the coronavirus calamity.
TripAdvisor
Leisure and corporate travel is dead right now, and that's bad news for the online portals that help folks research or book their next treks. TripAdvisor lost more than half of its active users in the second quarter, and naturally its performance is a mess. COVID-19 fears and travel restrictions are making it less compelling to book travel plans for business or pleasure, but TripAdvisor wasn't a rock star before this year's decimation.
You have to go back to 2015 to find the last time TripAdvisor has come through with the double-digit revenue gains growth investors crave. This will be the third year of the past five that TripAdvisor has seen its revenue decline.
TripAdvisor is still a massive resource of crowdsourced takes on travel options. It has collected more than 860 million reviews of 8.7 million accommodations. Unfortunately, it's a bit of a dinosaur. Research now starts on social media, and we are more connected than ever these days to people we trust. Like AMC, TripAdvisor's shortcomings have been blown up in the new normal but they were already there.
Yelp
Unlike AMC's flat performance in 2019 and TripAdvisor's declining revenue Yelp emerges as the relative victor with its nearly 8% top-line advance last year. Another crowdsourcing giant, Yelp puts its emphasis mostly on restaurants, stores, and other local businesses and experiences. Yelp relies on having companies pay up for enhanced visibility and control, and that's a dead zone this year.
With so many indie businesses going under this year, Yelp's model will take a long time to recover. However, Yelp's growth rate has been decelerating sharply -- every year -- since 2013.
- 2013: 69.4% revenue growth
- 2014: 62%
- 2015: 45.6%
- 2016: 30.3%
- 2017: 18.8%
- 2018: 10.8%
- 2019: 7.6%
Yelp's revenue probably wouldn't be negative this year if there wasn't a pandemic, but it's clear which way the model was heading. The allure of Yelp was sliding well before we forgot about the platform in the quarantine.
AMC Entertainment, TripAdvisor, and Yelp stopped being growth stocks long before this year. They will need more than a cure for the pandemic to get back on track.
