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Why Peloton, Shopify, and Booking Holdings Stocks All Sank Today

By Rich Smith - Jan 4, 2021 at 3:40PM

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Analysts mostly move to support growth stocks with their ratings today, and mostly fail to do so.

What happened

Shares of home-exercise company Peloton Interactive ( PTON -2.43% ), e-commerce titan Shopify ( SHOP 1.28% ), and online travel agency Booking Holdings ( BKNG 5.34% ) all started off 2021 on a low note Monday. As of 2:20 p.m. EST today, all three stocks were down, with Peloton off 4.6%, Shopify 3.9%, and Booking Holdings 2.8%. And all probably for the same reason: Wall Street analysts.

3 colorful arrows all pointing down

Image source: Getty Images.

So what

In a rapid-fire series of stock initiations, Barclays came out today with an overweight rating on Peloton but only an equal-weight rating on Shopify.

Why would both stocks be down today despite these different ratings? Barclays set a $1,060 price target on Shopify stock, reports, but it closed last week just shy of $1,132 a share. So what looks like a pretty neutral hold rating is in fact a prediction that, 12 months from now, Shopify stock will have fallen more than 6%.

Similarly, Barclays says it thinks that Peloton shares are a buy, and yet it picked a price target of only $148 for them. For investors who exited 2020 holding Peloton shares worth nearly $152 each, that works out to a prediction of a 3% decline in price over the next 12 months. That's not what investors wanted to hear at all.

Now what

The situation with Booking Holdings is a bit different, and a whole lot less clear. So far today:

  • Bank of America has raised its price target on Booking Holdings to $2,285 per share.
  • Deutsche Bank boosted its price target to $2,585.
  • Loop Capital initiated coverage of the stock as a hold with a $2,029 price target.
  • And Barclays initiated coverage with an overweight rating and a $2,290 price target.

Booking Holdings stock closed at $2,227 last year, which means that three of these four analysts are bullish on it. Only Loop's rating and price target are actually downbeat. Even so, the stock is down today.

I can only surmise it's because investors are looking at the latest coronavirus numbers (with vaccinations proceeding much slower than initially predicted) and thinking that it may be longer than Wall Street thinks before people resume flying and booking hotels.

With Booking Holdings stock trading for 39 times what may be overly optimistic projections for 2021 growth, investors may be thinking now is the time to exit the stock -- before the numbers start looking even worse.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Booking Holdings Stock Quote
Booking Holdings
$2,227.28 (5.34%) $112.84
Shopify Inc. Stock Quote
Shopify Inc.
$1,428.12 (1.28%) $18.12
Peloton Interactive, Inc. Stock Quote
Peloton Interactive, Inc.
$42.49 (-2.43%) $-1.06

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

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