It’s time to retire the ‘pandemic stock’ label. Here’s why

Carvana CEO Ernie Garcia III isn’t a fan of the term “pandemic stock,” a label attached to several companies—his included—that saw their share price surge in the COVID era before ignominiously tanking in recent months.

While fellow “pandemic stocks” like Zoom and Netflix saw their markets artificially boom over the past two years, Garcia argues that his company, the nation’s largest online used vehicle dealer, operates in an industry largely detached from the disruption. Carvana certainly benefited from the isolation-induced shift to digital car shopping, but as Garcia told me for a Fortune article published Tuesday, U.S. consumers have bought roughly 40 million used cars annually “for a very long time.”

“I think that’s a mischaracterization in the sense that our market wasn’t created by the pandemic, or wasn’t materially altered by the pandemic,” Garcia said.

On this, Garcia has a point. As the post-pandemic landscape begins to take shape, it’s time to acknowledge that the “pandemic stock” moniker became too broadly affixed on disparate companies. In truth, the members of this unfortunate club—Peloton, Etsy, Robinhood, Roku, Moderna, and DocuSign, among others—hail from industries whose near- and long-term outlooks were affected by the pandemic in vastly different ways.

Carvana presents a prime example of this misappropriation. 

On its face, Carvana looks like a classic “pandemic stock.” It’s an internet-based business. Its unit sales doubled between the first quarter of 2020 and the second quarter of 2021. And its share price increased 13-fold during that time, before plummeting about 90%.

But Carvana’s stock collapse isn’t a product of the so-called “return to normal.” Rather, Carvana was slammed in the second half of 2021 by record-high used car prices, rising auto loan interest rates, and generationally-high inflation. The triple-whammy caused car sales to flatline, pummeling a company that beefed up its head count and vehicle inventory in anticipation of continued growth in demand.

As Garcia noted, too, Carvana also will emerge from the pandemic with huge opportunities for growth. The company owns just 1% of the highly fractured used car market, with surveys suggesting that consumers are increasingly open to buying vehicles online.

Some of Carvana’s “pandemic stock” brethren, by contrast, operate in sectors more directly impacted by the altered environment, with less room for recovery. 

Zoom is banking on continued use of its video conferencing software in a post-pandemic business climate. Its revenue growth slowed significantly in 2021 as offices started to reopen— though the company crushed analysts’ first-quarter earnings estimates Monday and issued a better-than-expected outlook for the current quarter.

Peloton, too, faces the prospect of diminishing demand as exercise enthusiasts return to the gym. A managerial mess hasn’t helped, either.

Netflix, which saw viewership boom in the dark days of the pandemic, now must prove that it didn’t achieve market saturation in the U.S. and Canada, its two most lucrative locales.

To be sure, the “pandemic stock” crew is bonded by the same cloud of investor skepticism looming over their companies. While none appear in danger of total collapse, they all need to prove their product can grow well beyond the pandemic.

Each, however, faces a different road to redemption, rendering the moniker outdated. Zoom must build out its platform, making it an indispensable part of the corporate culture. Peloton must get its C-suite and supply chain in order. Netflix must adapt to the fast-changing streaming landscape.

And Carvana must weather this brutal environment for auto sales, giving it enough runway to continue adding market share, “pandemic stock” label be damned.

“I personally wouldn’t agree with the characterization that we’re a ‘pandemic stock,’ but my opinion is not the one that matters,” Garcia said. “I think people have their opinions, and that’s fine. Our job is to keep building something we’re proud of.”

Want to send thoughts or suggestions for Data Sheet? Drop me a line here.

Jacob Carpenter


Oh, Snap. Shares of social media company Snap tanked 41% in mid-day trading Tuesday after it cut revenue and adjusted earnings forecasts for the current quarter. In a message to employees, Snap CEO Evan Spiegel wrote that the deteriorating economic environment, supply chain shortages, and changes to Apple’s privacy rules have harmed the company’s revenue more than initially expected, CNBC reported. The disclosure caused a broad selloff of social media stocks, with Meta slipping 9%, Twitter falling 4%, and Pinterest plummeting 22%.

Found the price tag. Chip maker Broadcom could pay about $60 billion to acquire software company VMware in a blockbuster deal that may close later this week, The Wall Street Journal reported Monday, citing sources familiar with the negotiations. The potential for a cash-and-stock acquisition emerged Sunday, though a possible dollar figure wasn’t immediately clear at the time. Broadcom would take on roughly $40 billion in debt to finance the purchase, an amount the semiconductor outfit is expected to secure.

Over to you, SCOTUS. A federal appellate court ruled Monday that Florida’s new social media law, which prohibits companies from banning politicians on their platforms, violates the First Amendment’s free speech guarantees, The Washington Post reported. The decision sets the stage for potential intervention by the U.S. Supreme Court, given that a separate federal appellate court earlier this month allowed a similar Texas law barring viewpoint discrimination by social media companies to go into effect. The three appellate judges hearing the Florida case determined that social media platforms’ content-moderation practices constitute speech under the Bill of Rights.

A short stay. Airbnb will no longer offer vacation rentals in China starting this summer, opting instead to focus on providing Chinese travelers with places to stay in other countries, Bloomberg reported Monday. The decision, confirmed to Bloomberg by a source familiar with the matter, follows strict COVID-19 lockdowns and travel bans in China that have stunted tourism there. Airbnb has offered vacation rentals in China for six years, though the company previously warned investors that it might never reach profitability there amid insufficient demand and tensions with the Chinese government.


Welcome to the jungle. Andy Jassy’s first annual shareholder meeting as Amazon CEO won’t have a honeymoon feel. As The Financial Times reported Tuesday, the Amazon chief will face 15 shareholder proposals, the company’s highest total since 2010, as investors square off with the e-commerce giant over executive pay, tax disclosures, employee working conditions, and unionization efforts. History suggests that Jassy shouldn’t sweat too much. Amazon opposes all 15 proposals, and shareholders haven’t amassed majority support for a proposal since 2010. Still, Amazon has already bent to demands from activist investors this year, agreeing to perform a racial equity audit after a top shareholder filed a proposal seeking one.

From the article:

The strength of opposition could force the company to alter its policies and practices, as Big Tech companies are increasingly challenged by investors who want them to become more responsive to public controversies.

Wednesday’s (annual general meeting) also represents a test of leadership for Jassy, who took over from Bezos last July, as he seeks to navigate the high-profile challenges facing the company. That pressure has grown since the start of the year as Amazon’s stock price has fallen almost 40% amid the broad tech sell-off, but also off the back of mounting costs for Amazon’s retail arm.


Meet Google’s chief people officer, who is implementing one of the most challenging return-to-office plans ever attempted, by Beth Kowitt

YouTube CEO Susan Wojcicki speaks out on Roe v Wade: ‘Reproductive rights are human rights, this will be a big setback for women’, by Chloe Taylor

‘A pyramid scheme, worth nothing, not reliable:’ Crypto is being savaged at Davos by critics. Here’s a list of who said what, by Chloe Taylor

SAP and Cloudflare defend themselves after Ukraine accuses them over Russia activity, by David Meyer

Walmart expands drone delivery trial to cover six states and 4 million U.S. households. Here’s where they will fly to, by Christiaan Hetzner

Google Maps workers say they can’t afford to return to the office, by Christiaan Hetzner

Tesla fails to move ‘rampant sexual harassment’ case from open court into closed-door arbitration, by Malathi Nayak and Bloomberg

Activision Blizzard illegally threatened staff, U.S. labor officials find, by Josh Eidelson and Bloomberg


SMH at CA. Red-state legislatures aren’t the only ones coming up with broad, vague laws targeting social media companies. As The Associated Press reported, California’s state Assembly unanimously passed a bill Monday that would allow a minor’s legal guardian to sue social media outfits for up to $25,000 if they can prove their child is addicted to a platform. Social media addiction isn’t a recognized mental health disorder, so California legislators created their own definition: if a child can’t break a preoccupation or obsession with social media; experiences withdrawal or difficulty while trying to reduce social media use; or experiences “physical, mental, emotional, developmental, or material harms” due to social media.” I’m no lawyer, but doesn’t that cover basically every social media user on planet Earth?

This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet