Premarket: Work-from-home stocks are getting crushed

Video conferences – for business check-ins and happy hours – became a feature of daily life. Gym memberships were swapped for stationary bikes. Parents raced to crack the difficult code of distance learning.

Now, as restrictions in the United States and Europe have been rolled back, people are sick of spending so much time at home. And companies like Peloton (PTON), Zoom Video (ZM) and DocuSign (DOCU) are paying the price.

It’s quickly running out of money. Peloton said it had just $ 879 million in cash in the bank at the end of its most recent quarter. It’s borrowing heavily from banks like JPMorgan Chase and Goldman Sachs to keep the lights on.

CEO Barry McCarthy, who took over the top job from founder John Foley in February, acknowledged in a letter to shareholders that Peloton is “thinly capitalized for a business of our scale.”

While he’s working on a turnaround, McCarthy noted that the company grew too fast during the pandemic. Peloton is now sitting on way too much inventory for current levels of demand. Other issues related to rapid expansion – like wonky code – still need to be sorted out, too.

The home workout company is now worth just $ 4.3 billion, down from a peak of almost $ 49 billion in January 2021. Its shares are down 64% year-to-date.

Peloton’s problems have garnered plenty of attention. But it’s not the only darling of the work-from-home era that’s now getting pummeled by investors.

Zoom Video’s stock is down 51% since the start of 2022. It reports earnings later this month.

“We are really in a very interesting transition point for the company,” Chief Financial Officer Kelly Steckelberg said at a conference in March, explaining that Zoom wants to pivot from a “killer meetings app” to a broader platform for workplace collaboration.

She said Zoom has not lost any big customers, but noted that “companies are sort of past that panic-buying stage of the pandemic,” which means sales are becoming “more normalized.”

Shares of DocuSign, meanwhile, are 54% lower this year. Online learning platform Chegg (CHGG) is down 42%.

The takeaway: Few companies have been exempt from the recent stock market sell-off. Investors have dumped shares of American retailers even as people have returned to their stores. Gym chain Planet Fitness is off 25% year-to-date.

But work-from-home favorites have been getting hit especially hard as Wall Street skeptically assesses where the economy heads next.

Markets won’t calm down even if inflation has peaked

Inflation in the United States may have peaked at last.

The latest: The government will release data on consumer prices for the year to April later today. Economists expect to learn that the Consumer Price Index climbed 8.1% during that period, compared to 8.5% in the year to March.

But don’t expect investors to start celebrating just yet.

Inflation started to rise sharply last spring, which means year-over-year comparisons may look a bit less eye-watering. However, the underlying dynamics of pushing up prices remain entrenched.

“In the absence of major improvements in supply chains and geopolitical tensions, the descent to the 2% [inflation] target will be very slow and may not be achieved until the very end of 2023, “James Knightley, ING’s chief international economist, said in a note to clients.

The latest National Federation of Independent Business survey, released earlier this week, found that a net 70% of companies raised prices in the past three months, according to ING. That’s down a bit from the previous survey, but is still the second highest reading on record.

Most important: Even if inflation isn’t climbing higher every month, the Fed has a lot of work to do, and is expected to continue aggressively hiking interest rates. That’s a recipe for markets to remain turbulent in the near term.

President Joe Biden said in a speech on Tuesday that combating inflation is his top domestic priority and acknowledged “families all across America are hurting.”

“They’re frustrated. I don’t blame them. I really don’t blame them,” Biden said.

Could Tesla buy a mining company?

Elon Musk, the CEO of Tesla (TSLA) and SpaceX and, of course, the soon-to-be owner of Twitter, has his hands full across a range of industries. He may soon add mining to the list.
Musk made waves yesterday when he said he would reverse former President Donald Trump’s lifetime Twitter ban if he takes over the social media company.

Also of note: Musk said that while Tesla was unlikely to purchase a rival automaker, it could acquire a mining company as it tries to gain more control over its supply chain.

“That’s not out of the question,” Musk said at the FT’s Future of the Car summit, adding that such a move might be necessary to “accelerate the transition” to electric vehicles.

Last week, Tesla signed a supply deal with the Brazilian miner Vale to get the nickel it needs for its batteries.

But Musk’s comments are a reminder that car companies are desperate for greater certainty as prices for raw materials leap and limited supplies of key components create strain.

Musk didn’t say whether there was a specific miner that Tesla had its eye on. Last month, shares of Nevada-based mining firm Lithium Corporation popped after rumors circulated that Tesla had scooped it up.

The company said it had “not received so much as an expression of interest from Tesla.”

“We would be happy to chat with Elon if he was inclined, but presently there is no relationship between the two companies,” it said in a statement.

Up next

Olaplex and Wendy’s report results before US markets open. Rivian and Disney (DIS) follow after the close.

Also today: The latest data on US inflation arrives at 8:30 am ET.

Check this out: Want a breakdown of how the war in Ukraine is rattling the global economy? Listen to my conversation on CNN’s “Tug of War” podcast, where we talk about pain at the pump, the brewing food crisis and how rising prices could create more political instability.