What happened

Several prominent stay-at-home stocks that benefited from trends spurred by the COVID-19 pandemic were losing ground Monday amid a broad sell-off of growth companies in the technology sector. The tech-heavy Nasdaq Composite is meaningfully underperforming both the Dow Jones Industrial Average and the S&P 500. Additionally, progress in vaccine distribution has led to an encouraging decline in the daily new case numbers, and investors are now questioning how sustainable demand for these companies' offerings will be as the pandemic slowly subsides.

As of 1:40 p.m. EST, here's how these stocks were performing:

  • Peloton (PTON 3.67%): Down by 7%.
  • Zoom Video Communications (ZM -1.37%): Down by 4%.
  • DocuSign (DOCU 0.37%): Down by 7%.
  • Teladoc (TDOC 1.10%): Down by 5%.

So what

On the vaccine front, New York City has now administered more than 1.5 million doses, according to Mayor Bill de Blasio. The Food and Drug Administration has announced that vaccines designed for new coronavirus variants will not require lengthy clinical trials, which should accelerate their development timelines. In an encouraging sign, new cases in the U.S. have been steadily sinking over the past month, though they only in recent days dropped back below the levels where last summer's spike peaked.

Bottles of COVID-19 vaccines

Image source: Getty Images.

Meanwhile, British Prime Minister Boris Johnson has detailed a plan to ease lockdown restrictions in the U.K. over the next four months. Recent studies have also shown that vaccine distribution is helping to reduce COVID-19 hospitalizations and deaths in countries such as Scotland and Israel.

Now what

All four of the companies mentioned have seen their revenue growth accelerate significantly due to the crisis, which upended nearly all aspects of daily life, pushing people to exercise at home, conduct business remotely, and seek healthcare virtually.

Demand for Peloton's connected fitness equipment surged to the point where the company has struggled to keep up. That has resulted in ongoing supply constraints and other logistical challenges. Peloton is acquiring Precor for $420 million, in part to establish a domestic manufacturing footprint. It's also investing $100 million in its supply chain to address bottlenecks and expedite shipping. Argus boosted its price target on Peloton stock last week to $180, with analyst John Staszak expressing confidence that the shift toward home exercise is here to stay.

Zoom has become a household name while also establishing itself as an indispensable service provider for enterprises large and small, allowing them to maintain productivity while more of their employees work from home. Investors weren't impressed with its third-quarter results, though, even as Zoom's revenue skyrocketed by 367%. The stock's meteoric rise in 2020 has raised concerns regarding its valuation. Zoom also closed a $2 billion secondary stock offering  last month, which diluted shareholders. The company will report fourth-quarter results on March 1.

DocuSign also played a vital role in keeping businesses running last year, helping organizations process paperwork digitally. Its share price, too, rallied in 2020, which may have overstretched its valuation. The company is scheduled to report fourth-quarter results on March 11. Last week, Wedbush reiterated an outperform rating on DocuSign shares while analyst Daniel Ives boosted his price target from $270 to $300, citing checks that point to strong deal flow.

Teladoc has allowed patients to receive healthcare remotely, which has been an appealing option given how contagious SARS-CoV-2 is. As a result, the company has been rapidly growing: Its paid membership base in the U.S. now stands at 51.5 million. Teladoc will report its fourth-quarter results on Wednesday after the close.