The S&P 500 hasn’t made much overall progress since Monday’s historic sell-off. A big Tuesday rally was offset by a Wednesday morning sell-off, but several popular stay-at-home stocks are making big runs as more Americans are social distancing by staying at home.
This week’s king of stay-at-home stocks has been Blue Apron Holdings Inc (NYSE: APRN). Blue Apron gained notoriety in 2017 for its historically bad IPO, but the stock has been on fire since Americans started quarantining themselves. Blue Apron shares are up 100% on Wednesday, 240% since Monday and 380% in the past week.
While Americans staying at home and widespread restaurant closings are certainly good for Blue Apron’s business, the extreme price action has likely been aided by the stock’s relatively low float and large outstanding short position. Following a reverse stock split, Blue Apron has just 8 million shares and a short percent of float of 48.7%, according to Yahoo.
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Other Stay-At-Home Stocks
Other stay-at-home stocks that aren’t getting squeezed by potential short covering are also performing relatively well in the past two days.
Exercise bike company Peloton Interactive Inc (NASDAQ: PTON) has seen its stock price jump 17.9% as Americans are staying away from the gym and opting to work out at home. Some Americans are taking advantage of time away from work to make cosmetic improvements, and SmileDirectClub Inc (NASDAQ: SDC) shares are up 10.4%. Americans are also likely substituting movies and TV for social events, sending shares of Roku Inc (NASDAQ: ROKU) up 8.4%.
The core of the long-term stock market bull thesis right now is that the coronavirus outbreak is only temporary and hasn’t significantly changed anything about the long-term business outlook of most American companies.
However, traders buying the stay-at-home stocks mentioned above (particularly Blue Apron) also need to ask themselves whether the potential boost in business they are getting from the COVID-19 social distancing is a real change in trajectory for the company or just a temporary boost that will evaporate in the coming quarters.
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