What happened
Shares of edge computing specialist Fastly (FSLY +11.22%), telehealth company Teladoc Health (TDOC +6.68%), and insurer Lemonade (LMND 0.04%) all took a hit on Monday. The three stocks declined as much as 6.2%, 4.5%, and 4.1%, respectively. As of 11:05 a.m. EDT, shares of these three companies were down 4.9%, 4.1%, and 1.7%, respectively.
The three companies' shares were likely primarily down because of an overall bearish day in the market. Moreover, growth stocks seem to be getting hit particularly hard on Monday. Fastly, Teladoc, and Lemonade are all growth stocks -- so it makes sense that their shares would fall sharply with many other growth stocks.
Image source: Getty Images.
So what
Capturing the down day for the overall market, the S&P 500 slid about 0.6% as of this writing and the tech-heavy Nasdaq Composite was down 1.2%. But many growth stocks were down several percentage points or more.
Selling pressure on the overall market was likely driven by news of slowing economic growth in China and a dip in the 10-year Treasury note. In addition, news that the Federal Reserve is increasingly considering a plan to begin tapering bond purchases later this year could also be leading to some skittishness in stocks.
The decline in shares of Fastly, Teladoc, and Lemonade may also represent an extension of generally bearish trends for all three stocks. The companies' shares have slid 54%, 30%, and 41%, respectively this year. All three stocks are down between 7.5% and 15% over the past week.
Now what
Despite downward pressure on these companies' stocks, all three management teams are guiding for meaningful top-line growth this year -- even when excluding benefits from recent acquisitions made by Fastly and Teladoc.
Fastly is guiding for full-year revenue to be between $340 and $350 million, up from $291 million of revenue in 2020. Teladoc expects 2021 revenue to exceed $2 billion, up from about $1.1 billion in 2020. These figures include the benefits of recent acquisitions. Lemonade expects revenue to increase from $94 million in 2020 to between $123 million and $125 million this year.
Of course, one concern with all three of these companies is that they are not profitable yet. However, this is largely because there are significant growth opportunities for each of these businesses to invest in. Still, investors should look for these companies to increasingly demonstrate there is a clear path to significant profits over the long haul.
