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Why Twilio, Pinterest, and Peloton Stocks Fell Sharply Thursday

By Daniel Sparks - Mar 4, 2021 at 1:28PM

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Growth stocks are getting slammed. Is this a buying opportunity?

What happened

Many tech stocks were hit hard on Thursday. And growth stocks like Twilio (TWLO 1.75%), Pinterest (PINS 7.89%), and Peloton Interactive (PTON 4.76%) were hit even harder. As of 1:15 p.m. EST, these stocks were down 7.1%, 8.4%, and 6%, respectively.

These losses extend a beating they've taken in recent weeks as the overall market has declined. The market sell-off has been particularly unkind to many of the growth stocks that surged in 2020.

Highlighting how a bearish day in the overall market weighed on these stocks, the S&P 500 was down 1.4% at the time of this writing and the tech-heavy Nasdaq Composite was down about 2.4%.

A chart showing a stock price falling

Image source: Getty Images.

So what

These three companies' stocks performed exceptionally well in 2020, with Twilio, Pinterest, and Peloton up 244%, 254%, and 434%, respectively. It's not surprising, therefore, to see these stocks taking a breather now. Year to date, they are down 3%, 7%, and 30%, respectively. Of course, long-term shareholders likely aren't too concerned with their recent performance.

Now what

When stocks fall sharply like this, investors should remember that a declining price doesn't always mean the underlying business is facing some unexpected challenge. Indeed, there haven't been any new negative developments about these businesses recently. Quite the opposite is true; all three companies recently reported stellar quarterly results.

Twilio, a cloud-based communication tools and services specialist, recently announced fourth-quarter revenue of $548.1 million, up 65% year over year. The tech company's active customers were 221,000, up from 179,000 a year earlier. Pinterest's fourth-quarter revenue surged 76% higher year over year as monthly active users grew 37%. And Peloton's revenue in its most recent quarter soared 128% year over year. Its paid digital subscriptions notably increased 472% year over year to 625,000. 

Sell-offs of great companies like this could create good buying opportunities. During declines like this, fear can lead to irrational selling. While investors should do their own due diligence on these stocks before buying them, it's safe to say that they are more attractive at these lower prices.

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Stocks Mentioned

Twilio Inc. Stock Quote
Twilio Inc.
$99.12 (1.75%) $1.71
Pinterest Stock Quote
$21.47 (7.89%) $1.57
Peloton Interactive, Inc. Stock Quote
Peloton Interactive, Inc.
$11.01 (4.76%) $0.50

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

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