This year has been a peculiar one for the stock market. The primary underlying factors, of course, are the stages of the pandemic. The world got some good news as several effective vaccines were developed, and over 8 billion doses have been administered as of this writing.
That allowed governments that had put economies on lockdown in 2020 to start reopening large swaths of business activity. Still, it's not easy stopping and starting trillion-dollar economies, and bottlenecks emerged, slowing progress. As a result, there was a divergence in the stock market, and some companies ended up winners in 2021 while others were not so fortunate.
Walt Disney (DIS -1.83%), fuboTV (FUBO 7.69%), and Chegg (CHGG 1.62%) were in the latter group in 2021 but could do better in 2022.
You would think that Disney's stock did well in 2021, considering that the company reopened many of its previously shut down businesses. But you would be wrong.
Theme parks, hotels, resorts, cruise ships, and movie theaters are lucrative sources of revenue and profits for The House of Mouse that were significantly constrained in 2020 and got more freedom of operations in 2021. Indeed, revenue from the segment that includes theme parks increased to $5.5 billion in its fourth quarter (which ended Oct. 2), from $2.7 billion a year earlier.
Still, Disney's stock is down 15% year to date in 2021. That's because its streaming services did not fare as well this year compared to last. But with more folks being vaccinated, Disney's content production engine is ramping up, and management expects fresh content to invigorate subscriber growth in 2022.
Like Disney, fuboTV had a better year in 2020 than in 2021. The streaming substitute to cable TV thrived at the onset of the pandemic when millions of folks were looking for in-home entertainment. On the contrary, the company had to boost the amount of content it offered to entice subscribers to join in 2021 when economies were reopening.
The result was a surge in content-related expenses that was not offset by a sufficient increase in the average revenue generated per user.
That being said, as fuboTV grows, subscriber-related expenses are being leveraged across more viewers. The metric has fallen from 122% of revenue in 2019 to 100% in 2020 to 91.5% in 2021. And the company is growing subscribers rapidly, from 316,000 in 2019 to 548,000 in 2020 to an estimated 1.065 million in 2021.
The stock fell 29% in 2021 but could do better in 2022 if it keeps growing subscribers at its current rate.
One of the first actions governments took at the pandemic's onset was to send home millions of students worldwide. Classrooms moved out of schoolyards and into online video calls. As college campuses closed, students lost access to several valuable resources such as the school library, in-person tutoring, and in-person office hours with their professors, which boosted demand for the online student-help platform Chegg. The company soared in 2020 when its revenue growth doubled from the prior year to 56.8%.
However, as colleges began to recall students to physical classrooms during 2021, an interesting trend emerged: Fewer students attended college, and those who did were taking fewer courses. It's not hard to see that students (vaccinated or not) are not yet comfortable returning to classrooms with high levels of COVID still in circulation. Of course, that does not bode well for Chegg, hence its stock being down 68% in 2021.
However, the company does have an opportunity to do well in 2022. Students can delay taking their required courses for only so long. Moreover, Chegg's more than 70 million pieces of proprietary content are helpful to students whether they take a course online or in person.
Disney, fuboTV, and Chegg each got hammered in 2021 mainly because of the lingering effects of the pandemic. That being said, each is in an excellent position to become a winner in 2022 and beyond.