The market overall had a great start to the week on Monday with the S&P 500 index climbing 1.2% during the day. But shares of gig economy stocks, which benefit from temporary, short-term work, got pummeled, a reversal of how they have performed so far in 2020.
Shares of Grubhub (NYSE:GRUB) fell as much as 11.7% today, Fiverr International (NYSE:FVRR) was down as much as 19.1%, and Upwork (NASDAQ:UPWK) dropped up to 14.6%. The stocks were down 11.1%, 18.5%, and 4.4%, respectively, at market close.
Gig economy stocks like food delivery companies (Grubhub) and remote work facilitators (Fiverr and Upwork) have been some of the biggest beneficiaries of the pandemic, like it or not. Demand has been forced to companies who could provide these kind of services, and that's resulted in higher stock prices for them in 2020 and a sharp rise in revenue. So, news that Pfizer's COVID-19 vaccine has 90% effectiveness in its final trial could mean that consumers and businesses will return to "normal" in the coming months, pulling the rug out from some of those gig economy gains.
The reality is that we don't know when the vaccine will be available or how quickly it will impact our life or work situations, so today's sell-off is purely speculative.
What's a little ironic about these stocks, in particular, is that they're all set up well to succeed even post-pandemic. Upwork and Fiverr likely accelerated the move to remote and freelance work over the last nine months, an overall trend that's not likely to stop when people start returning to the office. Even food delivery is likely to pick up long-term as restaurants and consumers become used to the delivery process.
There are plenty of companies that will see demand fall when we return to "normal" modes of work and play, but I think these stocks are ones built to thrive over the long haul. The pandemic only accelerated the move to more working from home and ordering out, which have now become staples to millions of people's lives.
This could be a great buying opportunity for some of these gig economy tech stocks long-term, particularly those that are building two-sided networks connecting customers with freelancers or businesses. Today's market reaction has been swift, and a lot of companies have been swept up with the initial reactions of traders. But if we take a long-term view, Grubhub, Upwork, and Fiverr have a lot going for them -- and that doesn't change with the positive vaccine data released today.