After various degrees of economic lockdowns around the world, economies are beginning to reopen. Several vaccines have proven successful in slowing the spread of the coronavirus. Still, the reopening is not on even footing. Countries that were early in getting access to vaccines were the quickest to reopen economies and remove mobility restrictions.
Overall, more than 3.5 billion doses of vaccines have been administered, and the pace of administration has surged to over 30 million shots per day. According to Bloomberg, it would take just nine months to vaccinate 75% of the world's population at that pace.
The effectiveness of the vaccines, the rapid pace of vaccine administration, and the overall fatigue from staying at home are all trends that will help the broader economy but will likely hurt companies like Roblox (NYSE:RBLX) and DoorDash (NYSE:DASH). These two stocks benefited tremendously when folks were cooped up at home, but they could get hurt as economies reopen.
DoorDash started the pandemic mainly as a meal delivery business and has since expanded to delivering groceries and other items folks want in a hurry. Of course, demand for such a service surged when folks were looking to avoid going to crowded places and restaurants were closed for in-person dining. Indeed, revenue for DoorDash nearly tripled in the most recent quarter from the same quarter a year ago.
In the last several months, states in the U.S. have swiftly removed restrictions on restaurants. That has the potential to reduce demand for DoorDash's meal delivery service. Further, when restaurants were closed to in-person dining, they were eager to partner with DoorDash to offer meal delivery. It was the only way for some restaurants to generate sales. Still, many complained of the high fees DoorDash would charge restaurants.
As economies reopen, DoorDash could get hurt on two fronts; restaurants will stop partnering with them or will require better terms, and folks ordering less often -- preferring to dine inside instead.
Roblox is a co-experience platform working to bring people together through play that has been geared mainly toward kids. At the onset of the pandemic, kids were sent home from school and many have been learning remotely ever since. It's no surprise, therefore, that player sign-ups and engagement exploded during the pandemic as kids had more free time with little else to do. From its fiscal fourth quarter of 2019 through its first quarter of 2021, Roblox increased daily active users from 19.1 million to 42.1 million.
School districts worldwide have started bringing students back, and by the fall semester of this year, millions more will return to in-person learning. That will also coincide with the resumption of many after-school activities, and will overall leave less time for kids to engage with their electronic devices. This has the real potential to slow Roblox's growth.
Valuations aren't cheap
DoorDash and Roblox are trading at forward price-to-sales ratios of 12.87 and 16.40, respectively, which means the stocks are not trading cheaply. That suggests the market still thinks these two stocks have some potential, regardless of the pandemic. For investors interested in starting a position in either of these two stocks, it might be prudent to wait for a large pullback in share price before entering.
There is no telling how consumers will change their habits as economies reopen. It would be better for still-interested investors to pay less per dollar of sales to account for the risk that a reopening economy brings to these two stocks.